Institutions and inequality

Posted: 7 November 2016 in Uncategorized
Tags: , , , , , , ,

Inequality

Mainstream economists have finally discovered the importance of institutions. But they get it all wrong.

Take Daron Acemoglu (of MIT) and Jim Robinson (of the University of Chicago). In their view (according to Adam Davidson), Donald Trump threatens to disrupt the institutions that serve as the basis of “American Exceptionalism.”

The problem is, the United States does not represent an exception to the rule that “Over most of history, a small élite confiscated wealth from the poor.”

wealth

As I showed the other day, the distribution of wealth in the United States is obscenely unequal (with the top 1 percent owning more than 40 percent of the nation’s wealth), and has been getting more unequal over the course of the past three decades. And it’s the existing set of institutions—economic, political, and cultural—that has made it possible for a small élite to confiscate wealth from the vast majority, including the poor.

Trump is thus a consequence, not a cause, of the institutions that have come to represent the unexceptionally unequal “American way of life.”

Comments
  1. monikaullmann says:

    You’re absolutely correct on all counts. Trump is a signal that the economic ship of state is sinking. He won’t win, but the inequalities that spawned him won’t disappear with him. Another, much smarter and infinitely more dangerous version of Trump is already waiting in the wings. And when he/she appears, the gloves will finally come off for good.

  2. […] monikaullmann on Institutions and inequality […]

  3. […] is not just globalization, as it includes a wide range of economic and social strategies and institutions that have boosted the bargaining power of employers vis-à-vis workers—from the adoption of […]

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