Alex Tabbarok has a wonderfully titled post using J.K Rowling's reported billion dollars to illuminate the economics of superstars. And it's true, as he says, that "Homer...told great stories but could earn no more in a night than say 50 people might pay for an evening's entertainment. Shakespeare did a little better...The Globe theater could hold 3000 and unlike Homer, Shakespeare didn't have to be at the theater to earn...[but] Rowling has the leverage of the book but also the movie, the video game, and the toy. And globalization, both economic and cultural, means that Rowling's words, images, and products are translated, transmitted and transported everywhere."
So sure, folks can become global brands and make a lot of money these days. But that doesn't solve the mystery of inequality. After all, inequality is nearing its 1920s-era levels. And there was much less in the way of globalization and branded sippy-cups and McDonald's tie-ins back then. Great concentrations of wealth are always possible within capitalism. There's nothing unique about the current moment in that respect. But in the past, government policy has been leveraged to even out the distribution. For instance:
So yes, pre-tax income inequality has increased, and the reasons are a bit opaque. But even as pre-tax income inequality has increased, tax burdens on the rich have fallen. So it's not exactly a mystery why the country has grown far more unequal...
