Inequality.org

A project of the
Institute for Policy Studies

Piketty’s Model of Inequality and Growth in Historical Context, Part 2

Many individuals helped construct neoclassical economics, often with financial support from the robber barons and their successors. I will focus on two: in the United States, John Bates Clark (1847-1938), and in Europe, Vilfredo Pareto (1848 to 1923).

Thomas Piketty’s Model of Inequality and Growth in Historical Context, Part I

In Thomas Piketty’s doomsday model, slowing of growth in the twenty-first century will cause an inexorable increase in inequality. Piketty is not the first to propose a grand model of inequality and growth. To get some perspective on his model, let’s see what the “classical” economists had to say (Part I), and how the “neoclassical” economists responded (Part II).

Increasing the Minimum Wage Can Actually Create Jobs—If It’s Enforced

Back when I studied economics, we “proved” in class that a minimum wage causes unemployment. But that proof depends on assuming a perfectly competitive market. Big low-wage employers like Wal-Mart have substantial market power; they can deliberately under-staff operations to force down wages. In that case, a minimum wage increase can actually create jobs–if it can be enforced.

The Affordable Care Act Will Raise Wages

The new Congressional Budget Office report projects that the Affordable Care Act will lead to a decline in full-time equivalent workers of 2.5 million. This is people voluntarily deciding to work less–like mothers with small children, or workers in poor health or close to retirement. That should mean higher wages for the remaining workers.

Taxing Carbon is Like Taxing Diamonds

In general, sales taxes are indeed regressive; moreover, as I recently argued, sales taxes are partly “passed back” onto suppliers, hitting small businesses hardest. But wait… Imagine that we impose a sales tax on diamonds. Would we worry about the burden on middle class purchasers of one-fourth-caret engagement rings? What about the part of the […]

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