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Module 2 Readings.docx

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McGill University
Economics (Arts)
ECON 227
Christopher Ragan

Module 2 Readings Stiglitz-The 1% October-28-12 8:03 PM -The highest earning 1% of the population control 40% of the total income -growing inequality=shrinking opportunity. When we diminish opportunity by allowing inequality, we stop using our most valuable asset...humans. -many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy. -perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. -Possible reasons for such inequalities: -technological advances reducing the need for good blue-collared workers (middle class) -Globalization (cheaper to hire employees overseas) -Social change (decline in unions) -In America, it is statistically more difficult to go from low-middle class to reaching the top 1%. More difficult than may European countries. -Alexis de Tocqueville : "self interest properly understood"...meaning we're all self interested, but that in order to achieve ultimate well being one must also consider the self-interest of others. Good for the soul and good for business. Yalnizyan October-28-12 8:03 PM -the higher up the income ladder you climb, the faster the rise of the rich. -In fact, the richest 0.01% rely on their jobs for almost three-quarters of their income (73.5%), just like the average Canadian. The difference is their work is muc
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