Our Broken Economy, in One Simple Chart
What do those charts look like for the rest of the world? I don&#x27;t have the stats handy but I&#x27;m fairly confident that the middle class in China, Indonesia, and Malaysia has dramatically expanded over that time period, so it&#x27;s arguable that the world is a (net) better place. If the author wants to make a nationalistic argument that US workers should have done better than their counterparts elsewhere, I guess that&#x27;s OK, but I suspect that&#x27;s not his intent. Either way, ignoring the fact of increased globalization over that time period undercuts the argument.<p>Rather, his supposition is that middle-income workers in the US have missed out on gains that have instead gone to upper-income workers in the US. That&#x27;s false, for the same reason that workers in a single company don&#x27;t &quot;miss out&quot; on the money given to its executives. As defined by skill sets, the labor pools for upper-income workers and lower-income workers don&#x27;t intersect, globally or otherwise.<p>This matters because it affects the solutions we choose. Income inequality is a symptom of the deeper problem of reduced American competitiveness 1) <i>relative to our peers</i>, 2) <i>in the middle- and lower-income labor markets</i>. Because so many more middle- and lower-income skill workers have come online, who are delighted to accept lower wages than US workers because it&#x27;s an order-of-magnitude improvement over what they had before, these US workers would lose ground merely by remaining as productive as they were 34 years ago.<p>So in order to maintain the globally-superior wages we have become accustomed to, we must maintain and even increase our productivity edge. How do we do that?<p><i>That</i> is the challenge, not income inequality itself. &quot;Fixing&quot; the problem by calling the situation &quot;unfair&quot; (and taxing upper-income US workers out of vengeance for their presumed unfairness and exploitation) isn&#x27;t a fix at all. It&#x27;s like prescribing painkillers when someone has a broken leg; the problem isn&#x27;t the pain, it&#x27;s the broken leg.