« The left's ideas | Main | Micro efficient, macro inefficient »

January 30, 2015

Comments

Luis Enrique

I am very sure you know this, but your intro makes it sound like this

http://en.wikipedia.org/wiki/Kuznets_curve

is a new idea

chris

Yes. But that's about the causality from growth to inequality. I'm talking about the other direction, from inequality to growth

Magnus Carlsen

Er, Kuznets is about GDP per capita in levels, not growth.

magistra

One possibility is that in a very unequal society, a lot of productive effort is put into solving the minor problems of the very rich. The classic example is having large numbers of servants for minor tasks (like bootboys); a modern example would be work put into apps that focus on selling restaurant reservations or the like. It's only with a much more equal society that these reserves of physical or mental energy can get diverted into things with wider potential.

Luis Enrique

MC. True, good point. although associated with idea that inequality rises for a while as growth / transition progresses.

David

Simple....
Once the rich have the means, they buy regulation that puts up barriers to new entrants; thereby stifling growth.
David.

Richard

One possibility: people compete mostly for stature (rank within and organization or a subpopulation). When income differentials are large it is a large component of stature; when income differentials are small other factors (technical skills, ability to negotiate, creativity) come into play. Those additional skills (and not just the skills that get someone a bonus this year or this quarter) are the ones that increase productivity.

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