Inequality: Capitalism’s ‘squeaky wheel’

Kai Ryssdal Jan 29, 2014
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Inequality: Capitalism’s ‘squeaky wheel’

Kai Ryssdal Jan 29, 2014
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Minimum wage has been in the news, of course, most recently thanks to a hike in the lowest rate for federal workers

But really, it’s kind of a proxy for a bigger discussion about rising inequality in this country: the rich getting richer and the poor…not.

So what does that mean for corporate America? Harvard business school historian Nancy Koehn says:

“The average person in that top 1 percent [of the population] makes about $717,000 a year, versus $53,000 for everyone else. So even these very, very rough ballpark numbers: That’s a lot of people with a lot less money to buy things, and very little hope, in some sense… of getting more purchasing power… “

That lack of what Koehn calls “hope” can have a multiplier effect on other parts of the country:

 “We know large amounts of social and economic mobility produce more GDP, more social order, more kind of national prosperity and political stability. You can reason inversely that lots and lots of inequality is not a good thing.”

And speaking of multiplier effects? The wiggle room afforded by a larger paycheck not only increases the top 1 percent’s purchasing power, it also allows them to reinvest:

You want to put money directly in the hands of the bottom 90 percent so it will get spent, so it will generate jobs, and so it will oil the wheel of capitalism.” 

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