The Cure for Inequality in the U.S.

As stated by the Hoover Institute’s Edward Lazear, “In rich countries around the world, the top half of the income distribution has been pulling away from the bottom half.  Productivity growth among high-wage workers, driven by technological change, is the reason.”

Many people think that American capitalism is broken.  They say that there is too much inequality, too much wealth for too few and too much greed.  Some CEOs say that there should be less emphasis on short term profits and more emphasis on treating employees better.
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Right now our economy is growing at a rapid clip and unemployment is at a 50 year low of 3.6%.  Not only does this mean more choices for job seekers and higher wages for most workers, it also means many new opportunities for under-served populations such as women and minorities.

Worker productivity rose 2.4% in the first quarter of 2019, compared to a year ago.  This is the fastest year-over-year growth since 2010.   There is now a huge shortage of high skill workers in the U.S., along with excellent pay for entry level jobs.

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Some people worry that the development and spread of artificial intelligence will eliminate jobs for many workers.  But it sure hasn’t happened yet.  Right now labor markets are getting tighter, not slacker.  Obviously what our economy needs is more skilled workers at all levels, whether it be with high school degrees, associate degrees, bachelor’s degrees or postgraduate degrees.

Summary.  There is indeed increasing income inequality in the U.S. and around the world.  The reason for this growing inequality is a combination of globalization and the advance of technology.  The people with the most education and the highest skill levels are pulling away from the rest.  The best way to fix it is not to pull down the wealthy but to raise up the non-wealthy.  To accomplish this we need better and more relevant education at all levels.

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2 thoughts on “The Cure for Inequality in the U.S.

  1. Jack, your succinct comment about the “need for better and more relevant education at all levels” is right on the money! I would, however, add one additional thought regarding the need for better education. And that is the need to revamp our public education from the bottom up, or the top down. As an educator and former college adjunct faculty member, I have seen the results of public school education so far in the 21st Century. And its not a pleasant observation. I am much more optimistic about the future for private (primarily religious centered schools) students and home schooled students than the majority of students sent out into the real world after a public school education.

    • Chuck – I agree with you that we need educational choice in order to challenge poorly performing public schools. Private religious schools and home schooling are part of the answer. But charter schools in the inner cities of large metropolitan areas are also doing an excellent job of educating low-income minorities.

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