Sorry, neoliberals: Inequality is driven by greed, not technology

http://salon.com.feedsportal.com/c/35105/f/648624/s/34461ba7/sc/7/l/0L0Ssalon0N0C20A130C110C30A0Csorry0Ineoliberals0Iinequality0Iis0Idriven0Iby0Igreed0Inot0Itechnology0C/story01.htm

Inequality may be the greatest economic challenge of our generation. Yet despite extensive academic debate, there is still no consensus as to its causes. Earlier this year, Tyler Cowen sparked a debate on the subject with his book "Average is Over," in which he argues that inequality is driven by new developments in technology that give some workers who can capably use the technology a wage premium over those who can’t. Future innovations in technology, he argues, will contribute to hyper-meritocracy and further inequality.His argument echoes the conventional wisdom in economics, formulated by Lawrence Katz and Claudia Goldin, that skill-biased technological change can explain most of the increase in inequality. The premise is that technological developments have favored college-educated workers over unskilled labor, thereby increasing inequality. Since it was formulated, SBTC has drawn criticism. A 2002 paper by David Card first drew attention to potential holes in the explanation: a short period of stabilization in wage inequality in the 1990s during a technological boom and the failure to explain wage gaps between men and women as well as blacks and whites. A 2012 paper by Daron Acemoglu and David Autor noted other failures in the theory, namely that it could not explain the divergence in incomes that had occurred among skilled workers and why the real median wages could decline during a period of increasing productivity.Continue Reading…

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