The Oligarchy Fallacy

CAMBRIDGE – Income inequality has received a lot of attention lately, particularly in two arenas where it previously received little: American public debate and the International Monetary Fund. A major reason is concern in the United States that income inequality has returned to Gilded Age extremes; but inequality has increased in many other parts of the world as well, and remains high in Latin America.

What have we learned so far? Perhaps what is most interesting about the current discussion is that much of the focus has been on the consequences of inequality beyond its adverse effect on the welfare of the poor.