Author: Tyler Cowen is professor of economics at George Mason University.
I found this intriguing. I am just going to post mostly quotes from the article.
...Income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough.Observation not noted in article: cheap imports disproportionately benefit poorer Americans. While the top 1% may benefit, so does the rest of the country.
The economic surges of China, India and some other nations have been among the most egalitarian developments in history.
International trade has drastically reduced poverty within developing nations, as evidenced by the export-led growth of China and other countries. Yet contrary to what many economists had promised, there is now good evidence that the rise of Chinese exports has held down the wages of some parts of the American middle class.
At the same time, Chinese economic growth has probably raised incomes of the top 1 percent in the United States, through exports that have increased the value of companies whose shares are often held by wealthy Americans. So while Chinese growth has added to income inequality in the United States, it has also increased prosperity and income equality globally.
From a narrowly nationalist point of view, these developments may not be auspicious for the United States. But that narrow viewpoint is the main problem. We have evolved a political debate where essentially nationalistic concerns have been hiding behind the gentler cloak of egalitarianism. To clear up this confusion, one recommendation would be to preface all discussions of inequality with a reminder that global inequality has been falling and that, in this regard, the world is headed in a fundamentally better direction. [emphasis added]
The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth.
Still, to the extent that political worry about rising domestic inequality is justified, it suggests yet another reframing. If our domestic politics can’t handle changes in income distribution, maybe the problem isn’t that capitalism is fundamentally flawed but rather that our political institutions are inflexible. Our politics need not collapse under the pressure of a world that, over all, is becoming wealthier and fairer. [emphasis added]