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Lecture

W8 The Cause of Inequality by Joe Stieglitz.docx

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Department
Economics
Course
ECON 255
Professor
Ashok Kotwal
Semester
Winter

Description
W8: The Cause of Inequality by Joseph Stieglitz − Price Inequality, Poverty, Discrimination, Fighting for a decent income − How things have evolved in the last 30 years: Politics is affecting our economy and the people are paying in high price for this  politics is the reason for the inequality − How things have changed which only lead to more inequality  there’s no single way to measure inequality  the top 1% get over 20-25% of the national income  the trend for this inequality is persisting and increasing the top 1% person will do better and the rest will be worse off  Assets for most Americans is their home  crash of the housing price cause the price to be around the price level in the 1990s  The importance of politics and economy: important for us to know what is happening in our economy − Myth #1: Everyone benefits a.k.a Trickle-Down Economics  this is not true as most of the money is concentrated higher up  median income today in the US is lower than it did 15 years ago median income of a full-time male worker is lower than in 1968  ultimately, income has been stagnating − Myth #2: Those at the top deserve to get more as they contributed more  these people like to convince that the achievement was done by them alone which doesn’t make sense because the achievement is possible due to a collective effort  Rent seekers: describe a group of people who are successful in taking a large share of the pie rather than making the pie bigger i.e. people in the finance where they only take more money from the people without actually helping the people to grow the economy  ultimately, these rent seekers gain the most part of the pie − Myth #3: American Dream/America is the land of opportunity  in actuality, not many people are able to achieve the so-called American Dream. The probability for this to be possible is small  Poor vs. Rich people don’t have an equal chanc
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