Finally one economist is breaking through with the facts. The main problem to me is really the proper working of our democratic institutions. Its just not compatible with an extreme sort of oligarchy where 90 percent of the wealth belongs to a very tiny group. The democratic ideal has always been related to a moderate level of inequality. I think one big reason why electoral democracy flourished in 19th century America better than 19th century Europe is because you had more equal distribution of wealth in America. When inequality gets to an extreme, it is completely useless for growth. You had extreme inequality in the 19th century, and (economic) growth was not particularly large. Because the growth rate of productivity was 1 to 1.5 percent per year (in 19th century Europe), and it was much less than the rate of return to wealth, which on average was 4 to 5 percent, the consequence was huge inequality of wealth. Its important to realize that innovation and growth in itself are not sufficient to moderate inequality of wealth.
Posted on: Fri, 25 Apr 2014 23:20:20 +0000
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