The Kobe Bryant theory of inequality
As Tom Noah's series on inequality suggests, there are lots of questions when it comes to inequality. But what's confusing people here is one particular question: skills-biased technological change. That's where technology changes (we now have computers) and those who know how to use the new technology pull away from those who don't. In this case, the scenario would be that the computer-literate start making a lot of money, while those who aren't comfortable with laptops and Firefox lose out.
That explanation is intuitively appealing, but it doesn't fit the facts. For one thing, Europe had the same technological revolution, but without the attendant increase in inequality. For another, the startling changes in inequality was between those at the 99th percentile and those in the 90th percentile. It was the tippy-top pulling away from the top, or what I like to call "the conehead economy." If you imagine the economy as the person, it's grown eight inches, and most of that growth has been in its forehead.
Matt and Alex both double back on this and note that technology does play a major role here, and they're right: The Internet, television and other forms of mass media and communication make it much easier for one person or firm to serve a national or international audience. To use an easy example, Kobe Bryant can make more money because the Chinese watch his basketball games and pay him to endorse their products (that's not a random example, incidentally).
But saying that the rise in inequality is partly the result of technological change is not the same as saying it's the result of skills-biased technological change. It's not that satellite television has created a need for more basketball players and that need isn't being filled. If that were the case, the answer would be easy: Train more basketball players. It's that satellite television has made it much, much more lucrative to be one of the world's top basketball players. It's not about skills, but about the opportunity to make money. Training more basketball players won't really help reduce inequality or spread opportunity in that world. Higher tax brackets for the super-rich, however, might.
Graph credit: Slate.
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