A lot of pessamistic economists are really complaining about how the rich are getting richer, and the poor and getting poorer. However, while dorks like krugman seem to blame the free market, doesn’t it seem that its the regulation that is the problem? Look at sarbanes-oxley, the big companies can pay the cost, but its the small guy that it hurts. Do you think there is a corellation between regulation and income inequality?
an obvious example is minimum wage regulation
Minimum wage discourages the employement of less experienced people, some of which could use the knowledge to start their own buisnesses. I know the case of a guy that was working below minimum wage for a coffee shop, where he made contacts with supliers and learned the quirks of the buisness, etc, and a year later, he opened his own coffee shop.
I’m not sure it plays that big role though, I think there are worse regulation, like bar associations. In my country, there are these kind of associations for medics, medic-dentists, nursing, lawers, security guards, etc. People must be part of those associations in order to enroll in that kind of work. The idea is that that kind of work is critical, so there needs to be some kind of organization for certification purposes. In practice, they operate like unions, people have been kicked out of them because they didn’t honor the wage controls they stipulated. Especially for immigrants, they make it very hard for them to join in. I also am skeptic to the need for a bar association for some type of work like nursing and security at all. Some lawyer work, like divorce or traffic cases, don’t really need 5 years of college.
Regulation is especially pervasive in the health markets. It shouldn’t be that hard to open a pharmacy or a physical theraphy clinic, but I know for a fact it is. People end up paying high medical costs (or rather, the tax payers do), while employees are paid rather lousy for their services, which obviously reflects in the quality of the service. (I know the case of a city where physical therapy is covered by a clinic owned by a guy who is an architect, paying minimal wage to the massagists and no benefits – they are not simply massagists, but I don’t know the English term for them --, while he is making a little fortune. My friend knows the details, so she made a conservative calculation of what the owner makes and it was quite a sum, for just being friends with a politicean!)
I personally think financial markets play a big role here (the fact that some of our prime ministers have got a position on banks, after their terms, and they were not economists, is kind of an indicator. :P) I very much dislike inflation, because I think its necessary for people’s savings to be safe, so they are less risk adverse to change jobs, invest in their education, start businesses, etc.