Sunday, December 23, 2007

In the Balance

A superb article in the Economist magazine, which can be found here, demolishes the argument that inequality is rising.

The article argues that although income inequality has risen, what we can buy with a dollar has increased. True, someone earning $1 million/year can afford to buy the upcoming $100,000 Mercedes S Class with a sushi bar but is the overall experience of owning an S-Class that much greater than owning a Fiat Punto? After all, driving a Fiat Punto is considerably better than walking or taking a bus.
[The point] is that, over time, the everyday experience of consumption among the less fortunate has become in many ways more similar to that of their wealthier compatriots. A widescreen plasma television is lovely, but you do not need one to laugh at “Shrek”.

The article goes on to remind us that:
today's Gilded Age income gaps do not imply Gilded Age lifestyle gaps. On the contrary, those intrepid souls who make vast fortunes turning out ever higher-quality goods at ever lower prices widen the income gap while reducing the differences that matter most.

Wise words indeed.

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