Inequality Rules

Eduardo Porter in the NY Times business section, always interesting to read, reminds us that inequality is not simply a minimum wage issue.  Citing Joseph Stiglitz’s latest book, “The Great Divide” (W.W. Norton & Company), he writes:

It includes the steady tightening of intellectual property rights and the rise of finance, with its lavish rewards for activities of dubious social value. It includes the furious consolidation of industry, which has reduced competition across the economy.

Professor Stiglitz is particularly incensed by the Obama administration’s attempt to include investment pacts in trade agreements it is negotiating with Asia and Europe, which would allow multinationals to sue governments for compensation if regulation hurts their profits.

Another commentator, Shi-Ling Hsu at the Florida State University College of Law, that that a huge piece of the inequality puzzle is being missed:

 the role of law in distributing wealth.” Subsidies, tax treatment, legal protection and other mechanisms conspire to aid the wealthy while often serving to damp economic gains.

Grandfathering existing businesses to protect them from new regulation is a classic way to protect profits, shielding incumbent businesses and deterring new entrants that would face costlier regulations. Granting water rights to whoever first uses the water amounts to another gift to business that can entail large social costs. (In California, for example.)

Read it all.  Good thought points

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