UC Davis Econ in the News

2007-11-23 · Original WordPress address

The US, as the richest society in history, is therefore potentially the most unequal in history. The US population could be kept alive for the cost of about $100bn a year. If the elites had total control, that would leave another $13,800bn (the rest of US GDP) a year to distribute among friends of the president – almost enough to give a sum equal to Bill Gates’s lifetime wealth to a new crony each working day. But the US is not remotely this exploitative, no matter what you may feel the next time you buy a copy of Windows. In the newly coined jargon, it has a low “inequality extraction ratio”, meaning that the poor have much more than it would take to keep them alive. That is faint praise for the US, perhaps. But it is interesting to observe that while modern societies are rich enough to be much more unequal than their predecessors, they show similar patterns of income inequality. Perhaps – I am speculating wildly – human societies have some hard-wired tolerance for inequality?