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Like any great idea, it all began in a pub. Mine didn’t.

It began during a long drive home from Arapiles, a Victorian climbing mega destination. A close friend of mine expressed her concern on the information accessibility for a layperson, so that he may make informed financial choices in his life. Her real concern, however, is the increasing income inequality. So do I…

In his work, Thomas Piketty challenges the conventional wisdom on the accumulation and distribution of capitals. In particular, he suggests that the current inequality is linked to an observation that the return on capital to tend to outperform the economic growth. The extent of inequality is beautifully illustrated by Catherine Mulbrandon at TBP conference.

Income distribution

But you may ask: Is the income inequality necessarily a bad thing?

No, if you are part of the 1 percent. But for the rest of us, yes.

According to Mother jones,

since 1980, the average real income of the 1 percent has shot up more than 175 percent while the bottom 90 percent’s real income didn’t budge.

Income growth.

It is also a bad news for an economy. To illustrate the problem, we will conduct a little thought experiment. Suppose that Bob has an income that he can live by. He will spend most of his money on purchasing the essential goods, for instance, clothes. As Nick Hanauer pointed out in a TED talk, a person with an income of thousand times of Bob’s cannot seriously spend thousand times as much as thousand Bobs can. And one person’s expenditure is another person’s income. So, in effect, high income disparity means removing money away from the economy, and therefore, it leads to lower economic activity.

So, you may ask: what is the objective of this blog?

I believe that moderate income inequality is beneficial to all, and that by equipping laypersons with knowledge on how the 1 percent create their wealth, we may reverse the current trend. In the end, if this blog, in any way, contributes toward rebalancing the income distribution, I would consider it a great achievement.

Personally, I am interested in exploring social phenomena from an economist’s viewpoint. This blog is my vehicle to express/crystallise ideas that I have observed or learnt.

I believe strongly in outsourcing your education: learn from other’s mistakes. To this end, I will draw ideas from diverse areas of studies. One thing that PhD has taught me.

Copy from one, it’s plagiarism. Copy from two, it’s research. –Wilson Mizner

I hope that you would have fun learning them too.

Disclaimer: I do not have a background in economics. My views are just my views. I do not take any responsibility for decisions that you make on the basis of my posts. I believe strongly in taking ownership of your decision, and I live by that decree.

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