Earlier quoted context omitted.
Correct, but he's at least a bit wrong in both directions. I was surprised to read people in Tupelo are three times wealthier than people in Hamburg; Tupelo might have a higher GDP, but certainly not three times. Maybe he was trying to be polemic? I still agree with the sentiment of the article. European societies sacrifice a bit of growth potential and individual freedom to get better living conditions for all. I th…
European societies sacrifice a bit of growth potential and individual freedom to get better living conditions for all. Economists can tell you that this can't scale up to the whole world. Paul Graham's article explains it very well. (The following is all quotation; I'm not italicizing, in the interest of readability) If you want to reduce economic inequality instead of just improving the overall standard of living, i…
I find that assertion illogical. If I raise the income niveau of low wage workers, income inequality does go down. I don't have to keep the top down to reduce inequality, that's just nonsense.
The interesting question is where that money will come from. Increasing lower wages take away from the income of the companies they work for (those people are usually not self employed). So what we will see is a little less income for large companies and their owners, who form the very top incomes anyway. Also, note that the incomes of the top 1% do not really affect the median (and also the average, to a lesser degree) income all that much.
I don't see how that is fundamentally keeping innovation from happening. Founding the next MS might be a little less profitable, but I don't think it'd have kept Bill Gates from doing what he did if he had a billion less by now. Also, Microsoft is quite the counter example: they pay their workers comparatively high wages.
As for the practical effects: I think we can see that Europe (and in particular the more egalitarian Northern Europe) does not necessarily fit his description of a poor country only offering raw materials and cheap labour. There is also lots of innovation happening, not necessarily in IT, but in other sectors (machine engineering, medical, the whole car industry, ...).
So, I think the theoretical point is illogical, and practice shows the effects it predicts do not happen. Colour me unconvinced.