You hear a lot these days about the rising income inequality, and the strains it causes in our society. People talk about curbing this trend, but I’m not sure it is possible.

As a rough approximation, let us assume that income is proportional to the amount of value a person produces in the market. Thus, we can talk about productivity as a proxy for income. The rising income inequality means that the most productive individuals in society are distancing themselves from the least productive individuals.

This makes intuitive sense. With each scientific discovery, and with each technological innovation, we enable the most knowledgeable and most productive individuals in our society to become even more productive. However, those without the knowledge, skills, and/or motivation will still exist. As innovation continues, the distance between the most productive and the least productive will increase. And if innovation accelerates, this gap will accelerate.

I can’t see how a innovative society can avoid a rising income inequality. There are two options that I see. The first is the stop innovation by changing policy, increasing taxes for businesses, etc. The second is to figure out how to raise the productivity of the least-productive individuals in society. IMHO, the first shouldn’t be an option. The second is a tough challenge, and I don’t think we can rely on the market/capitalism. Instead, we need government programs, improved education, etc. There must be a way, but with the growing income inequality, we obviously haven’t figured it out yet.

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(photo credit: slate.com)

P.S. This is post number #76 in a 100 day blogging challenge. See you tomorrow!

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