A reduction in global inequality has meant an increase in national inequalities.
The Asian middle class has experienced a heartwarming increase in income and purchasing power since the mid 1980s, while the wealthier (in absolute terms) American middle class has seriously stagnated. This article discusses the urge to draw causal influence.
We all know that the Scandinavian countries are famous for their social welfare programs.
Recently, there was a psychological study that sought to compare and contrast Norwegian and American values around fairness and luck (link below).
- Americans are more tolerant of inequality, even when it is due to pure bad luck.
- Both nationalities are more tolerant of inequality due to differences in merit.
- Both groups were willing to accept some societal costs in order to redistribute inequality-by-luck, but this is less true for Americans.
It has been shown empirically that most Americans believe wealth is possible for them to achieve, which could explain the tolerance of having it–even if it is by unfair means; an attitude of, “Good for you on your wealth, however it happened.”
At the same time, “Americans don’t believe that rich people are happier than they are,” which is why many choose to be happy with what they have.
As for government policies that work toward redistribution while costing money and reducing total wealth,“costs don’t seem to be Americans’ big hang-up with redistribution. Rather, their opposition seems to go to an underlying acceptance of fate and the fortunes it brings.”
As this wonderful Harvard Business Review article explains, the stratification of corporate wealth is a prime driver of individuals’ income inequality.
While better performing companies can afford to hire better talent, it’s not just the hard skills that count in the competition for labor. Employees value the soft skills, in both themselves and others, and seek out collaborative environments that compound their own labor value, which helps the firm’s performance, which helps the pay, which helps the recruitment…and the upward cycle continues.
Also, once a leading company reaches #1, they can often use their clout to “raise the drawbridge” to potential competitors via M & As, or by influencing political regulations.
This tension-balance of democracy and oligarchy within the US economy simultaneously both furthers and checks social inequality: things aren’t as good as they could be, but they aren’t as bad as they could be.
“Maybe competition creates corporate inequality. But maybe it’s lack of competition that preserves it.”