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dekakashi asked:


As most your you know that the income gap is widening in USA, so do you guys think that the great differences in income is a sign of competitive free market economy?

Category: Economics by admin

2 Responses to “Is the great differences in income a sign of competitive free market economy?”

1. meg, on October 19th, 2008 at 9:56 am Said:

   Shows the history of the income share of the very rich for several industrialized countries vs the US. Currently the US is the only industrialized country that has a high degree of inequality, so something is happening here that is different than the rest of the world, and it is not a necessary byproduct of prosperity. High levels of inequality is most often seen in developing or underdeveloped countries. see map at
   Since during the period of growing inequality the US economy has not shown an unusually fast growth rate I do not think it is a product of a healthy free market. A lot of the high incomes are generated by money managers earning commissions from other rich people seeking abnormal high returns on investment which although is counted as GDP , adds nothing to productive activity, but is no loss to the rest of us either. Although their is much talk about CEO pay, they account for less than 10% of the high income earners.

2. janniel, on October 22nd, 2008 at 6:48 pm Said:

   No, not at all. It can be an indicator that the free market is not functioning properly because of structural rigidities hampering a free flow of resources between sectors. Also bear in mind that feudal and primitive economies were characterised by great inequalities of wealth and income. Looking at the state of the US economy as a whole, I would suggest the widening income gap is a symptom of a deepening malaise.

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