Income and Wealth Inequality: Crash Course Economics #17
TLDRThe video examines economic inequality, distinguishing between wealth inequality (unequal distribution of assets like property and stocks) and income inequality (unequal distribution of earnings). It explores reasons for growing global inequality, including technological changes that complement skilled workers but replace unskilled ones. The hosts analyze US income inequality data since 1970, showing the poorest 20% of households earning smaller shares while the richest 20% take more. They discuss perspectives on whether inequality matters and potential solutions like education, higher minimum wage, and tax changes. The goal is understanding extreme inequality and considering ways to address it.
Takeaways
- 😀 There are two main types of economic inequality - wealth inequality and income inequality
- 😮💨 Globalization has helped the world's poorest people, but benefited the rich more
- 🤔 Skill-biased technological change contributes to income inequality
- 😟 Income inequality can exacerbate other forms of inequality like race and gender
- 📉 The gap between rich and poor households in the US has widened over the past 40 years
- 🌎 The US has the highest income inequality among Western industrialized nations
- 🤨 Extreme income inequality needs to be addressed to prevent social upheaval
- 😡 Some economists believe current US income inequality is doing more harm than good
- 📚 Education is key to reducing income inequality by providing skills that lead to higher incomes
- 😠 Fixing tax loopholes could help reduce income inequality by increasing taxes on the rich
Q & A
What are the two main types of economic inequality discussed?
-The two main types of economic inequality discussed are wealth inequality, which refers to the distribution of assets, and income inequality, which refers to the distribution of earnings.
What percentage of the world's wealth is held by North America and Europe despite having less than 20% of the global population?
-North America and Europe hold 67% of the world's wealth despite having less than 20% of the global population.
How does the video explain the growing gap between the richest and poorest nations?
-The video explains that the Industrial Revolution initially created economic inequality between countries, and today globalization and international trade are accelerating this gap.
How has technological change contributed to inequality?
-Technological change has led to more technology-based jobs that require new skills. This complements skilled workers but replaces many unskilled workers, widening income inequality.
What does the Lorenz curve demonstrate regarding income inequality in the US?
-The Lorenz curve shows that income inequality in the US has steadily grown over the past 40 years, with the poorest households earning smaller shares of total income over time.
What arguments does the video present in favor of addressing income inequality?
-The video argues that greater income inequality is associated with more violence, drug abuse, incarcerations, and disproportionate political influence among the wealthy to benefit themselves.
What possible solutions to income inequality are suggested?
-Suggested solutions include more progressive taxes on the rich, reducing bureaucratic red tape for businesses, increasing the minimum wage, improving education and job skills, and providing better childcare and social safety nets.
What warning does the video raise about extreme income inequality?
-The video warns that extreme income inequality, if left unaddressed, could lead to dangerous social upheaval as depicted in scenarios like The Hunger Games.
What does Adam Smith say about societies with extreme inequality?
-Adam Smith says that no society can be flourishing and happy if the far greater part of its members are poor and miserable.
Who funds the production of Crash Course Economics?
-The show is funded by user support through Patreon, a voluntary subscription service that allows monthly contributions from viewers.
Outlines
😊 Introducing Economic Inequality
Jacob and Adriene introduce the concept of economic inequality, explaining the differences between wealth inequality and income inequality. They state that globalization has helped the world's poorest people but benefited the rich more. Technological changes have also contributed by rewarding skilled workers over unskilled workers.
😮 Global Income Inequality
Adriene uses graphics to illustrate global income inequality - the poorest 20% of the world's population earns about 1% of global income, while the richest 20% earns about 83%. She explains how the Industrial Revolution greatly increased inequality between countries. Globalization and trade have accelerated this inequality further.
Mindmap
Keywords
💡Economic inequality
💡Wealth inequality
💡Income inequality
💡Gini index
💡Globalization
💡Social safety net
💡Progressive taxation
💡Technological change
💡Public policy
💡Political inequality
Highlights
There are two main types of economic inequality: wealth inequality and income inequality
Global wealth today is estimated at about 260 trillion dollars, and is not distributed equally
If we distributed a hundred dollars based on current income trends, the poorest 20% of humans would get one dollar
At first, countries' incomes were all bunched together, but with the Industrial Revolution the differences exploded
Today, the gap between the richest and poorest nations is like 100:1
The very poor are doing a little better, but the very rich are now a lot richer than everybody else
Technology's become a complement for skilled workers but a replacement for many unskilled workers
Over the last fifty years, the salary of college graduates has continued to grow while, after adjusting for inflation, high school graduates' incomes have actually dropped
The debate over income equality isn't about whether it exists. It obviously does
There's a growing group of economists who believe income inequality in the US today is doing more harm
Income inequality also dilutes political equality, since the rich have a disproportionate say in what policies move forward
Some economists call for the government to increase income taxes and capital gains taxes on the rich
It's unclear which path we're going to take but extreme income inequality at the national and global level needs to be addressed
Motivation to improve income inequality may come from a genuine desire to help people and level the playing field
Even Adam Smith said, "No society can surely be flourishing and happy of which the far greater part of the members are poor, and miserable"
Transcripts
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