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Not to burst any bubbles, but the causes are a lot more complicated than rich people taking money from everyone else. And as NYT bureau chief Dave Leonhardt points out, the problem cannot be easily remedied - regardless of who wins the election. Frankly, the problem is barely getting any notice. Here's Leonhardt's basic thesis:
At the top of the list are the digital revolution, which has allowed machines to replace many forms of human labor, and the modern wave of globalization, which has allowed millions of low-wage workers around the world to begin competing with Americans. Not much further down the list is education, probably the country's most diffuse, localized area of government policy. As skill levels have become even more important for prosperity, the United States has lost its once-large global lead in educational attainment. Some of the disconnect between the economy's problems and the solutions offered by Washington stem from the nature of the current political debate. The presidential campaign has been more focused on Bain Capital and an "apology tour" than on the challenges created by globalization and automation.
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One of the more striking recent developments in economics has been economists' growing acceptance of the idea that globalization has held down pay for a large swath of workers. The public has long accepted the idea, but economists resisted it, pointing to the long-term benefits of trade. "That is starting to change only in the face of very strong evidence over the past decade," said Edward Alden of the Council on Foreign Relations. In particular, job growth and wage growth have been weaker in sectors exposed to global competition -- especially from China -- than in sectors that are more insulated. Automation creates similar patterns. Workers whose labor can be replaced by computers, be they in factories or stores, have paid a particularly steep price. The American manufacturing sector produces much more than it did in 1979, despite employing almost 40 percent fewer workers.
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Maybe the biggest reason for optimism is that there is still a strong argument that both globalization and automation help the economy in the long run. This argument remains popular with economists: Trade allows countries to specialize in what they do best, while technology creates opportunities to extend and improve life that never before existed. Previous periods of rapid economic change also created problems that seemed to be permanent but were not. Neither the cotton gin nor the steam engine nor the automobile created mass unemployment. "When technology reduces the need for certain kinds of labor, we know that some inventive people will one day come along and find a way to use that freed-up labor making things that other people want to buy," said Mr. Friedman, the economic historian. "That's what in the long run made the Luddites wrong."
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.