Fidest – Agenzia giornalistica/press agency

Quotidiano di informazione – Anno 31 n° 301

The Upside of Inequality–new book by Ed Conard

Posted by fidest press agency su domenica, 4 settembre 2016

New York, NY: While growing income inequality is a real phenomenon, a misdiagnosis of its causes and consequences leads to policies that slow growth and ultimately weaken America. Ignoring the true sources of rising inequality—namely trade, trade deficits, and immigration, in an economy constrained by properly trained talent and its capacity to take entrepreneurial risk—and blaming high-wage earners creates a dangerous feedback loop. Raising taxes on their success reduces risk-taking and innovation, which in turn slows growth and reduces middle class wages, and consequently increases the demand for redistribution—a recipe for stagnant growth.
Edward Conard’s new book THE UPSIDE OF INEQUALITY: How Good Intentions Undermine the Middle Class (Portfolio; 9/13/16) explains why government intervention to mitigate inequality ultimately hurts the middle and working classes. Conard delivers a robust defense of capitalism and dismantles today’s most popular myths about income inequality and the economy:
the upside of inequalityThe myth that the rich get richer by making the poor poorer: No other high-wage economy has done more to help the world’s poor than the U.S. economy. Regardless, advocates of redistribution press on. Rising income inequality is actually the by-product of an economy that has deployed its talent and wealth more effectively than that of other economies—and not from the rich stealing from the middle and working classes.
The myth that incentives don’t matter: In an innovation-driven economy, there are large and compounding costs to dulling incentives for entrepreneurial risk-taking. As payoffs for success have risen, entrepreneurial risk-taking has accelerated U.S. growth relative to other high-wage economies with more equally distributed incomes. Because of this growth, today, median U.S. household incomes are 15 to 30 percent higher than Germany, France, and Japan.
The myth that mobility has declined: If the success of America’s 1 percent comes at the expense of the middle and working classes, we should see mobility declining. Yet, even with significant immigration, there is little evidence that mobility has declined or that mobility in Scandinavia, the supposed paradise of redistribution, is better than in the United States.
The myth that technology hollows out the middle class: While it’s true the economy has created jobs for 13 million lesser-skilled Hispanic immigrants, the distribution of middle incomes is virtually unchanged but for an upward shift in incomes. THE UPSIDE OF INEQUALITY shows that since the financial crisis, accusations that crony capitalism and the success of the 1 percent slow middle and working-class income growth have only grown louder. Since the financial crisis, the incomes of the very top of the 1 percent have soared, and the growth of middle-class and working-class incomes has remained slow. Many insist that this gap has grown because the wealthy are rigging a zero-sum game to take what rightly belongs to others. Conard addresses these accusations head-on and explains how income redistribution is what hurts the middle and working class.
The growth of the U.S. economy has accelerated relative to other high-wage economies with more equally distributed incomes—the opposite of what one would expect if cronyism had increased enough to account for rising income inequality. Since 1980, U.S. employment has grown twice as fast as Germany and France. Their growth would have been even slower without the disproportionate benefit of American-made innovation. This growth has created a home for 40 million foreign-born adults, their 20 million native-born adult children, and their 20 million children. Despite this enormous influx, median U.S. household incomes are 15 to 30% higher than Germany, France, and Japan, and have grown as fast as, or faster than, other high-wage economies since 1993.
Conard lays out a blueprint for increasing middle-and working-class wages in an economy with a near unlimited supply of lesser-skilled workers and where properly trained talent fuels growth by increasing the economy’s capacity for risk. He calls for America to better train its own talent and to recruit talent aggressively from the rest of the world. He recommends cultivating a climate where business and high-tech entrepreneurial risk-taking thrives rather than where success is undercut and taxed at every turn. Conard proposes changes that reduce the inherent instability of banking rather than simply imposing a litany of regulations that leave risk-averse savings sitting unused. In that environment, America’s institutional capabilities to take risks would compound and grow at a faster rate.
What is the upside of inequality? In the long run, faster grower, more jobs, and greater prosperity for everyone.
Edward Conard is the author of the Top 10 New York Times bestseller, Unintended Consequences: Why Everything You’ve Been Told About the Economy is Wrong (2012). He is a visiting scholar at the American Enterprise Institute. Previously, he was a founding partner of Bain Capital, where he worked closely with his friend and colleague, former presidential candidate Mitt Romney. He has made over 100 television appearances in which he has debated leading economists including Paul Krugman, Joseph Stiglitz, Alan Kruger, Austan Goolsbee, and Jared Bernstein; journalists including Jon Stewart, Fareed Zakaria, Chris Hayes, and Andrew Ross Sorkin; and politicians such as Barney Frank, Howard Dean, and Eliot Spitzer. (photo: the upside of inequality)

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