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Long term solutions to disruptive income inequality

A disruptive level of income inequality is the driving force underlying the 2008 financial collapse and the Great Depression. Click here for the argument.

There are two factors driving income inequality that we cannot reverse but must manage. The first includes the productivity gains and human obsolescence created by an exponentially expanding technology. This can be the gift that keeps on giving or the curse that keeps on damning. (See the book The Lights in the Tunnel by Martin Ford.) It is an increasingly difficult problem as an expanding fraction of the population lacks the skills and training to justify an income that would support a family. Some think we may be about 20 years away from when machines begin to match and then rapidly exceed all human capabilities. (See the video "Surviving the Singularity".)

The second factor is the increasing impact of globalization as communications cost plummet to near zero for many purposes and a larger fraction of the developing world acquires the skills and education to compete at the highest levels of our economy and are happy to do so for much less than prevailing wages in the United States. Both accelerating productivity gains and a highly educated and competitive planet are potentially great things if they are properly managed.

By classical economics both of these factors will drive down wages and combined they can create an expanding unemployable class of those that lack the necessary education and the ability to acquire it. This is a dynamic problem that will keep expanding. I do not know what the solutions are and no solution will be adequate for long. We need multiple pragmatic solutions and we need to keep trying until we find a combination of policies that work and then to keep trying to make sure they continue to work as the situation evolves. Following is a list of things to try. None of these suggestions are new and some of them are painfully obvious and would have been tried long ago if special interests did not have the power to put their welfare above the welfare of the nation.

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