Dean Baker is not very happy with David Ignatius:
David Ignatius Hides Upward Redistribution Policies as Market Outcomes, by Dean Baker: People are inclined to give much more legitimacy to market outcomes than policy outcomes engineered by governments. That is why there is a whole industry devoted to convincing people that the upward redistribution of income over the last three decades, which has given the bulk of economic gains to the One Percent, is really just the result of the natural workings of the market.
David Ignatius is one of the people who works in this industry. His Post column today urges readers to contemplate the awful thought that, quoting Francis Fukuyama:
"What if the further development of technology and globalization undermines the middle class and makes it impossible for more than a minority of citizens in an advanced society to achieve middle-class status?”
It is very useful to the One Percent to pretend that their wealth and the near stagnation in living standards for everyone else is just the result of "the further development of technology and globalization." However this has nothing to do with reality.
Globalization has hurt the living standards of the middle class... In the same vein it is not technology by itself that has made some people very rich. It is largely government granted patent and copyright monopolies that have made people rich. These polices are becoming increasingly inefficient mechanisms for supporting innovation and creative work. ...
The great fortunes that have been made on Wall Street come in part from implicit too big to fail insurance from the government, exemption from fraud laws, and being granted special tax treatment. Even the International Monetary Fund has noted that the financial sector in the U.S. and elsewhere faces a much lower tax burden than other sectors. ...
There is a much longer list of ways in which the government redistributes income upwards. It is cute how people like Fukuyama and Ignatius pretend that the upward redistribution was just the natural workings of the market and then wring their hands over the unfortunate implications, but this is kids' stuff. Serious people need not pay attention to such nonsense.
Jared Bernstein makes the point that mobility is harder when inequality increases (there's a larger distance to travel to change classes), and Jason DeParle discusses inequality in an article in the NY Times. Also, for comments from Greg Mankiw, Ezra Klein, Matthew Yglesias, Paul Krugman, and many others on the source of rising inequality, see Driving Forces Behind Rising Income Inequality: Tracking the Internet Debate, by Brad DeLong.