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His thesis is that changes in government policy are the cause of the increasing economic inequality in America. But a simple thought experiment is enough to dis

His thesis is that changes in government policy are the cause of the increasing economic inequality in America. But a simple thought experiment is enough to disprove this: imagine what Larry Page would have done in 1950 vs 1998. In 1950 he would have become a professor or gone to work for Bell Labs. In 1998 he was able to start his own company and become a billionaire. But it wasn't changes in government policy that made this possible. It was the rise of microcomputers and networks that made this possible. And Larry Page's case is the rule, not the exception.

zdw 8y ago
The meteoric rise of Google is pretty much the definition of "the exception".
- hshehehjdjdjd 8y ago
  On the other hand, exceptions such as this have proven very important to the American economy over the past half century or so, especially within the last twenty years. When your exceptions are numerous enough, or large enough, they sort of start to form their own rule.
alex_young 8y ago
> In 1950 he would have become a professor or gone to work for Bell Labs. Why wouldn't he have started one of the numerous profitable companies of the 50s? It seems more likely that an entrepreneur would do that rather than work in another field. > In 1998 he was able to start his own company and become a billionaire. This appears to prove Stiglitz' point doesn't it? There was no deficit of innovation in the mid 20th century, all without massive economic inequality.
- aphextron 8y ago
  >This appears to prove Stiglitz' point doesn't it? There was no deficit of innovation in the mid 20th century, all without massive economic inequality. The main argument of Keynesianism always comes down to the baseline of wealth for all people though. The average person today is far wealthier than the average person in 1950, and that's the real goal. Not necessarily equality of outcomes for each individual.
  - lordnacho 8y ago
    > The average person today is far wealthier than the average person in 1950, and that's the real goal. I'm not sure human beings really think like that. I suspect many people would be happy to freeze the economy at its current size, so long as they stay near the top. How many people would swap places for a historical monarch, even when most such monarchs didn't have a flushing toilet? I think relative status looms large in many peoples minds. There needs to be a reckoning about what the goals of economic control are, because the current thought, "as long as it's going up for most people", doesn't seem to square with what people actually feel.
  - kevin_thibedeau 8y ago
    I make less today than my entry level junior engineer salary 20 years ago after adjusting for inflation and cost of living. All ships do not necessarily rise. Wage and salary suppression is a real thing and will eventually bring our society to the breaking point. We are just beginning to feel the first tremors.
    - wbl 8y ago
      Mostly due to increases in the cost of services and housing since we decided not to build more homes.
    - aphextron 8y ago
      >I make less today than my entry level junior engineer salary 20 years ago after adjusting for inflation and cost of living. All ships do not necessarily rise. Yet a person in the third world is now able to feed a whole family and live in relative comfort even on the cut rate salaries of outsourced programming work. The point is that as long as the total amount of wealth generated in the world increases, the ends justify the means.
  - deleted 8y ago
    [deleted]
  - dredmorbius 8y ago
    The averages have moved less than you might think, the median even less, and tthe gaps between richest and poorest have grown. The report below shows global wealth from 1960 - 2015. Per capita average ingome has increased, from $8.8/day to $17.7/day, or about $3100/yr to $6200/yr. (Fig 2.1, p. 19.) The ratio of income disparity between the US and the world's poorest country has increased, from 47:1 in 1950 (Tanzania) to 73:1 2000 (Sierra Leone). (Fig 22.3, p. 25.) https://piie.com/publications/chapters_preview/348/2iie3489.pdf https://piie.com/publications/chapters_preview/348/2iie3489.... Multiple authorities state that the state of the poorest people in the world is worse now than at the beginning of tyhee Industrial Revolution. E.g., Gregory Clark, A Farewell to Alms, Chapter 1. Available online. https://press.princeton.edu/titles/8461.html https://press.princeton.edu/titles/8461.html http://assets.press.princeton.edu/chapters/s8461.pdf http://assets.press.princeton.edu/chapters/s8461.pdf
- montrose 8y ago
  Because far fewer (eventually big) companies were started in 1950 than in 1998. In 1950 "the major sectors of the economy were either organized as government-backed cartels or dominated by a few oligopolistic corporations." (Michael Lind, Land of Promise) The innovation that happened in 1950 consisted of General Electric getting into a new line of business, not a grad student starting his own company.
sykh 8y ago
Larry Page is the rule not the exception? I think you vastly overestimate the number of possible professors who became Larry Pagesque in the U.S. and vastly underestimate the number of potential professors who work for very low wages in the hopes of becoming a professor.
blacksqr 8y ago
"Tech Slowdown Threatens the American Dream" "In a three-month period at the end of 1879, Thomas Edison tested the first practical electric lightbulb, Karl Benz invented a workable internal-combustion engine, and a British-American inventor named David Edward Hughes transmitted a wireless signal over a few hundred meters. These were just a few of the remarkable breakthroughs that Northwestern University economist Robert J. Gordon tells us led to a “special century” between 1870 and 1970, a period of unprecedented economic growth and improvements in health and standard of living for many Americans." https://www.technologyreview.com/s/601199/tech-slowdown-threatens-the-american-dream/ https://www.technologyreview.com/s/601199/tech-slowdown-thre...
scroot 8y ago
> But it wasn't changes in government policy that made this possible. It was the rise of microcomputers and networks that made this possible The history of computing is precisely one of government policy, namely the ARPA funding from the 60s and early 70s.
- nitrogen 8y ago
  Microcomputers came in part from the homebrew computer scene in the 70s.
  - scroot 8y ago
    That's true, but these were iterations on materials and systems that already existed — things that came from the research community. Much of what we call personal computing today wouldn't exist if it wasn't for the ARPA research community that was funded and established during the IPTO's existence. That includes the Internet and everything created at Xerox PARC.

zdw 8y ago

The meteoric rise of Google is pretty much the definition of "the exception".

hshehehjdjdjd 8y ago
On the other hand, exceptions such as this have proven very important to the American economy over the past half century or so, especially within the last twenty years. When your exceptions are numerous enough, or large enough, they sort of start to form their own rule.

alex_young 8y ago

> In 1950 he would have become a professor or gone to work for Bell Labs. Why wouldn't he have started one of the numerous profitable companies of the 50s? It seems more likely that an entrepreneur would do that rather than work in another field. > In 1998 he was able to start his own company and become a billionaire. This appears to prove Stiglitz' point doesn't it? There was no deficit of innovation in the mid 20th century, all without massive economic inequality.

aphextron 8y ago
>This appears to prove Stiglitz' point doesn't it? There was no deficit of innovation in the mid 20th century, all without massive economic inequality. The main argument of Keynesianism always comes down to the baseline of wealth for all people though. The average person today is far wealthier than the average person in 1950, and that's the real goal. Not necessarily equality of outcomes for each individual.
- lordnacho 8y ago
  > The average person today is far wealthier than the average person in 1950, and that's the real goal. I'm not sure human beings really think like that. I suspect many people would be happy to freeze the economy at its current size, so long as they stay near the top. How many people would swap places for a historical monarch, even when most such monarchs didn't have a flushing toilet? I think relative status looms large in many peoples minds. There needs to be a reckoning about what the goals of economic control are, because the current thought, "as long as it's going up for most people", doesn't seem to square with what people actually feel.
- kevin_thibedeau 8y ago
  I make less today than my entry level junior engineer salary 20 years ago after adjusting for inflation and cost of living. All ships do not necessarily rise. Wage and salary suppression is a real thing and will eventually bring our society to the breaking point. We are just beginning to feel the first tremors.
  - wbl 8y ago
    Mostly due to increases in the cost of services and housing since we decided not to build more homes.
  - aphextron 8y ago
    >I make less today than my entry level junior engineer salary 20 years ago after adjusting for inflation and cost of living. All ships do not necessarily rise. Yet a person in the third world is now able to feed a whole family and live in relative comfort even on the cut rate salaries of outsourced programming work. The point is that as long as the total amount of wealth generated in the world increases, the ends justify the means.
- deleted 8y ago
  [deleted]
- dredmorbius 8y ago
  The averages have moved less than you might think, the median even less, and tthe gaps between richest and poorest have grown. The report below shows global wealth from 1960 - 2015. Per capita average ingome has increased, from $8.8/day to $17.7/day, or about $3100/yr to $6200/yr. (Fig 2.1, p. 19.) The ratio of income disparity between the US and the world's poorest country has increased, from 47:1 in 1950 (Tanzania) to 73:1 2000 (Sierra Leone). (Fig 22.3, p. 25.) https://piie.com/publications/chapters_preview/348/2iie3489.pdf https://piie.com/publications/chapters_preview/348/2iie3489.... Multiple authorities state that the state of the poorest people in the world is worse now than at the beginning of tyhee Industrial Revolution. E.g., Gregory Clark, A Farewell to Alms, Chapter 1. Available online. https://press.princeton.edu/titles/8461.html https://press.princeton.edu/titles/8461.html http://assets.press.princeton.edu/chapters/s8461.pdf http://assets.press.princeton.edu/chapters/s8461.pdf
montrose 8y ago
Because far fewer (eventually big) companies were started in 1950 than in 1998. In 1950 "the major sectors of the economy were either organized as government-backed cartels or dominated by a few oligopolistic corporations." (Michael Lind, Land of Promise) The innovation that happened in 1950 consisted of General Electric getting into a new line of business, not a grad student starting his own company.

sykh 8y ago

Larry Page is the rule not the exception? I think you vastly overestimate the number of possible professors who became Larry Pagesque in the U.S. and vastly underestimate the number of potential professors who work for very low wages in the hopes of becoming a professor.

blacksqr 8y ago

"Tech Slowdown Threatens the American Dream" "In a three-month period at the end of 1879, Thomas Edison tested the first practical electric lightbulb, Karl Benz invented a workable internal-combustion engine, and a British-American inventor named David Edward Hughes transmitted a wireless signal over a few hundred meters. These were just a few of the remarkable breakthroughs that Northwestern University economist Robert J. Gordon tells us led to a “special century” between 1870 and 1970, a period of unprecedented economic growth and improvements in health and standard of living for many Americans." https://www.technologyreview.com/s/601199/tech-slowdown-threatens-the-american-dream/ https://www.technologyreview.com/s/601199/tech-slowdown-thre...

scroot 8y ago

> But it wasn't changes in government policy that made this possible. It was the rise of microcomputers and networks that made this possible The history of computing is precisely one of government policy, namely the ARPA funding from the 60s and early 70s.

nitrogen 8y ago
Microcomputers came in part from the homebrew computer scene in the 70s.
- scroot 8y ago
  That's true, but these were iterations on materials and systems that already existed — things that came from the research community. Much of what we call personal computing today wouldn't exist if it wasn't for the ARPA research community that was funded and established during the IPTO's existence. That includes the Internet and everything created at Xerox PARC.