A Different View on Income Inequality, The Times they are a Changing

If you spend some time on discussion boards about politics, you are bound to find some people who rant about rising income inequality and how greedy people are trying to take over the world and make everyone else poorer.  The only thing the people making these posts can’t agree on is whether all of the greedy people trying to take over the world are led by George Soros or the Koch brothers.

Let me offer a different view on income inequality.  It is hard to argue with the facts that the wealthiest in the world have increased the gap between their wealth and that of the poorest  over the years.  But instead of some massive conspiracy, let’s consider a more benign, but real reason why this is happening.  I will readily admit that the concepts I am going to talk about appear in Malcolm Gladwell’s book Outliers.

There are some jobs out there that are constrained by physical limitations.  For example, if you are a plumber, even a really good plumber, you can only fix so many toilets in one day. You have to physically get to all of the locations and do manual work that can only be done so quickly.  So although a plumber may make a decent wage per hour or per job, there is an upper limit on his or her income that only changes a little over the years to adjust for inflation and for some minor fluctuations in supply and demand.

Contrast the plumber with that evil person out to take over the world, Taylor Swift.  If Taylor Swift was alive 200 years ago she could have used her voice and talents to sing songs for local people and may have been able to scrape together a living doing so.  If she had been in business 50 years ago, she could have used her talents to record records that would have likely sold to people only in the U.S. with a population that is smaller than it is now.  But right now, Taylor Swift can record a song, using a process of recording that takes roughly the same work and effort as it did 50 years ago, but that song can be downloaded by billions of people around the world.  Her income potential has increased by a rate almost beyond comprehension simply by being alive in the digital, global age instead of 200 years ago.  Compare that with the plumber or other manual worker who is still just as limited by physical constraints as they were years ago.

You can also apply this concept to corporations.  Before the industrial age, companies were limited in how big they could become.  Products were made by hand and had to be moved over land or by sea, but there were only so many markets with the money to purchase goods.  Now, production capacity is so much greater, transportation is better, there are more people in the world and more of them have a working wage to buy products.  And that does not even include products and services that are not physical any more and can be digitized and spread rapidly throughout the world.  

The world is constantly changing.  Concepts such as the internet, globalization, and digitization all change the way we work and conduct business.  That is a fact of life.  Sometimes people try to see vast conspiracies when the explanation is simpler – the times they are a changing.





About voxlogicae
Using logic and reason to examine current events.

One Response to A Different View on Income Inequality, The Times they are a Changing

  1. Pingback: Karl Marx, Revisited, Oops, Exhumed | elcidharth

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