The result: “If you’re very very smart and very very lucky, you can get very very rich very very quickly.” The latest poster child: 26-year-old David Karp of Tumblr, when Yahoo bought his company for $1.1 billion. These days, any entrepreneur can easily access more than a billion customers.
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Globalization and technological change are also powerful economic drivers of income inequality. But it’s notoriously hard to uproot consider how hard it has been to regulate banks in the wake of the financial crisis, or to get corporations to pay their fair share of tax. No one argues in favour of crony capitalism in principle - not the left or the right, and not even the plutocrats themselves. She calls this combination of factors “crony capitalism,” a set of political changes that benefit insiders but don’t do much good for the rest of us. So what’s driving this profound shift in income inequality, and what can be done? Freeland points to political forces - lower taxes, deregulation, privatization, weaker protection for unions - that allow money to move up to the top.
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We’d much rather frame it in terms of how to make the pie bigger than face the painful truth about how it’s divided - a conversation that’s especially threatening for those at the top. But talking about income inequality is also uncomfortable. So how’d this happen without our noticing? Freeland says it’s partly a boiled frog effect - we don’t notice when things creep up on us gradually. Meanwhile, middle-class incomes have stagnated or decreased. Or to take another perspective, the combined incomes of Bill Gates and Warren Buffet equals the wealth of the bottom 40% of the nation. Money isn’t being evenly distributed, and the problem is getting worse. Even more strikingly, the top 0.1% today accounts for more than 8% of natonal income. In the US in the 1970s, the top 1% accounted for 10% of national income. She offers some numbers to demonstrate how profound this shift has been.
The most important economic fact of our time, says Chrystia Freeland, author of Plutocrats, is that we are living in an age of surging income inequality, a global phenomenon that includes the US and UK, certainly, but also Communist China, India, and, she says, “we’re even seeing it cozy social democracies like Sweden, Finland and Germany.”
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