Paul Krugman comments on the Alan Krueger speech (see the post below this one):
Is This (Still) The Age of the Superstar?: This will be a quick piece... Alan Krueger gave a fun talk at the Rock and Roll Hall of Fame, in which he used evidence of growing inequality among musical artists as a jumping off point for a discussion of broader inequality issues. As he notes, there is a widely known theory from Rosen actually called the superstar theory, which could explain the takeoff of the 1 percent, in rock and in life.
But I was struck by the fact that his chart of growing inequality in the music business cut off in 2003. A lot has happened in the decade since: basically, the music business has been hugely disrupted by the Internet. I’d be very curious to know whether that hasn’t changed the calculus...
And we also seem to be seeing a general shift in the sources of rising inequality, from inequality in compensation to good old-fashioned capital versus labor.
So I wonder if even Alan Krueger is now behind the curve here — and in any case I’d love to see how the trend for the music business looks since 2003.
A quick comment on this "quick piece". Inequality can arise for many reasons, e.g. differences in economic power that distort income shares, capture of the political system by the wealthy, skill-biased technical change, and so on, and the debate is often cast as one versus the other. But the causes are not mutually exclusive and may, in some cases, reinforce each other (e.g. economic inequality from skill-biased technical change leading to political inequality and a political bias against unions, or, changes in production techniques that make it harder to disrupt production with a strike can undermine union power). Endless debate on the one true cause of rising inequality is fruitless when there is, as I believe, evidence of multiple causes -- both sides can point to evidence favoring their position leading to a standoff that can forestall needed policy changes. Better to acknowledge that both sides have a point, and move on to the push for policies that are robust against the underlying cause (or separate policies to address each type of problem).