Friday, March 27, 2015

My Guesses about the Causes of Growth in Inequality

Income and wealth inequality seems to a ht topic lately here are my guesses about the causes of growth in inequality

I agree with those on the left that a lot of income and wealth is random. 
But to me that does not mean that it can be changed. 
  • I for one am not sure what caused the increase in inequality though I have heard many of the theories none seems to work. I think it might be multiple things like: 
  • Growth of finance (maybe Vanguard and the EMH will turn this around). 
  • Investors discovered that better people can raise their profits and started bidding good managers up. 
  • Bigger markets for sports and entertainment. Worldwide markets. 
  • Anti-trust causes in sports. I think monopoly sports leagues would have lower paid athletes with more teams and lower seat prices?
  • Software in network effects. 
  • Growth in healthcare and providers influencing regulation.
  • Taxes were very high in the 1950 + 1960s and that might have had some effect but the rich did not pay much more of their income in taxes then than they do now. So I do not think that was so important.  If taxation had a big effect it could mostly be a  a measment effect in that I bet a lot more income was hidden then.