Mark Buchanan, in Bloomberg View, argues that chance alone can’t explain the dramatic increase in wealth inequality.
“In a recent paper … a group of U.S. and French economists and mathematicians finds that the experience of the U.S. doesn’t fit into such a simple model. Over the past four decades, inequality has increased much too quickly. If tax levels or investment income were the only drivers, the change should have taken a few centuries. Mathematically, there must be another driver, something that empowers the wealthy to take an increasingly large share of the pie.”
“The economists offer a couple candidates, such as the emergence of ‘superstar entrepreneurs or managers’ who possess special skills or hold key positions, or ‘superstar shocks,’ such as better information or investment advice that give the rich an edge in getting richer. These factors, they calculate, would be enough to account for the rapid change in inequality witnessed in recent years.”
“Their research provides compelling evidence that recent trends in inequality really do reflect something new and different in the workings of capitalism. It suggests that the wealthy have, solely by virtue of their status, gained the ability to steer even more money their way.”