Starting with technology the fact that people like Bill Gates can get

Starting with technology the fact that people like

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Starting with technology, the fact that people like Bill Gates can get incredibly rich is not only due to the fact that they may be smart and hardworking. People like Bill Gates can get incredibly rich because we have patent and copyright laws that give them monopolies over items like Windows. Without these government-granted monopo- lies, there would be far less money in software, pharma- ceuticals, medical equipment, and many other important sectors of the economy. Patent and copyright monopolies are explicitly policy levers to provide incentives for innovation and creative work. We can make them shorter and weaker if we choose, as opposed to longer and stronger, which has been the pat- tern over the last four decades. Pretending that the money going to the winners from these monopolies is natural is an absurdity that deserves nothing but ridicule. Instead, this is the accepted wisdom in intellectual circles. The comparable wisdom about globalization is that manufacturing workers in rich countries lose because hun- dreds of millions of people can do the same work in the developing world for a fraction of the pay. This is true, but it is also true that there are tens of millions smart and hardworking people in the developing world who would be prepared to work as doctors, dentists, and in other highly paid professions in the rich countries at a fraction of the pay of the people now in those positions. We structured our trade policy so manufacturing workers have to compete with workers in the developing world and doctors and dentists mostly do not. We have structured our financial system to allow a small number of people to get tremendously rich at the ex- pense of the economy as a whole. This was demonstrated most clearly in the wake of the collapse of the housing bubble when political elites raced to save the big banks from the consequences of their own actions, but there are many ways in which the rules have been structured to sup- port a bloated financial sector. And we have had macroeconomic policy that has needlessly kept millions of people from having jobs. It has also reduced the bargaining power of tens of millions who do have jobs. It is not surprising that policies designed to redistrib- ute income upward would lead to resentment, especially
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WINTER 2019 THE INTERNATIONAL ECONOMY 23 when our elites pretend they do not exist. Until these poli- cies are acknowledged and changed, populist anger is not likely to go away. U.S. and Western European policymakers have been systematically tearing up the post-World War II social contract. JEFF FAUX Distinguished Fellow, Economic Policy Institute D ebating whether populism is rooted in economic conditions or “values” conflict gets us nowhere. Cultural tensions (including racism and xenophobia) are always with us. But they are muted so long as the ma- jority of people feel secure and hopeful about their future.
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