This paper argues that the bulk of this upward redistribution comes from the growth of rents in the
economy in four major areas: patent and copyright protection, the financial sector, the pay of CEOs and other top executives, and protectionist measures that have boosted the pay of doctors and other highly educated professionals.
Pointer from Mark Thoma. Baker backs up this opinion with evidence. he then concludes
The implication of this argument is that progressives need not think of themselves as using government against the market. Rather they should seek to find ways to use market mechanisms to bring down the incomes of the wealthy in the same way that wealthy have sought to structure markets to lower the income of everyone else.
If progressives want to look at ways that financial policy, patent policy, and occupational licensing create artificial rents rather than create “public goods,” that works for me.
This argument almost never works with progressives. Most view government as necessary to “regulate” the market. They don’t seem to realize that the regulation can cause inequality in the first place (anti trust law protecting incumbent producers, etc).
I missed the part where he attributed a lot of the income gains for credentialed professionals in health care and education to government subsidies.
On the flipside, licensing regimes boost the wages of modestly paid nurses too, and I doubt progressives are eager to abolish those anytime soon.
But does it really boost them? Or does the aggressiveness on the part of physicians in limiting the nurses’ scope of practice keep them lower than they would be otherwise?
I’ll take the Left’s piously professed concern about “income inequality” in America seriously as soon as they stop trying to get the country to import more and more immigrants.
Until then, I take their blather about “income inequality” about as seriously as I would have taken the Soviet’s explanation that they invaded Czechoslovakia in 1968 out of “fraternal concern” for the citizens of that country.
The Left is about nothing except the creation of artificial rents. They just want the rents to go their billionaires, their mascot groups, and themselves.
America’s cultural elite is defined by education. America’s economic elite is only correlated to it.
The central cause of progressivism is the cultural elite’s resentment that capitalism only rewards some of the educated. In their mind, as they have tried as hard and have had the same credentials, they should have the same economic rewards as their parents and their classmates that went into engineering and banking.
Thus progressives see the government as a tool by which those with PhDs can regulate those with MBAs.
Crony capitalists see the government as a tool populated by gullible PhDs who can be manipulated into passing laws that benefit those with MBAs.
The cycle thus continues. The progressives call for ever more “regulation”, believing that this time they’ll finally bring those hated frat boy bankers under control. The crony capitalists call for ever more regulation, knowing that innumerate regulators can be swayed into making regulations that benefit the crony capitalists.
I think Dean Baker should have included rent from real estate. Restrictive zoning rules and environmental protection prohibitions generate tremendous unearned profits for those benefiting from them.
I find it paradoxical that an increasingly totalitarian system (definition: where the state recognizes no limits to its authority and strives to regulate every aspect of public and private life wherever feasible), ruled by an egalitarian government, creates such abysmal economic differences.