In September 2010, Noah wrote an excellent series of articles for Slate, also titled The Great Divergence, discussing the rise in inequality since the 1970s. This book is a tightly-written and clearly argued full-length extension of those articles, and the extra room permits him to go into a bit more detail about the various factors behind the dramatic changes in the distribution of both wealth and income we've seen, though the book focuses on income. For many years the debate followed a similar trajectory to the debate over global warming/climate change: first, a denial that inequality existed; second, a denial that it was deliberately caused by policy; third a denial that it could be reduced by counter-policies; fourth, a denial that it should be reduced at all. This pattern of reaction was made easier by the fact that most economists talk about inequality in mathematical terms, as a dry relationship of numerical ratios. However, in this post-Occupy Wall Street era, inequality is discussed much more openly in the human terms - debt burdens, homes foreclosed, pensions cut, college plans abandoned, dreams deferred - and I think a constituency is building that will be more willing to tackle this issue.

A lot of these books describe the age of minimum inequality - the roughly 3 decades after the end of World War 2 - as a sort of Golden Age; for example, Noah's chapter describing it is called Paradise Lost. It's almost inarguable that if you're a heterosexual white male (if not, condolences), then in relative terms that time and place was about as swell for us as it was possible to be. There were plenty of jobs, cheap housing, low crime, robust social institutions, and a constantly improving American way of life that delivered a miraculous increase in the standard of living that handily beat anything since. A change in income inequality isn't the same thing as a drop in the quality of life, but since much of life is positional, changes in the amount of income each quartile has can tell us something about how people's lives are going. Noah discusses a few of the factors that economists think have contributed towards inequality:
- Marriage patterns. There's a comparison of two families, the Kerleys and Blentlingers, who are separated by a generation. Whereas the first family was able to get by with a single (male) breadwinner, thanks to high manufacturing wages at a job that didn't require a college education, the latter family required two incomes to maintain about the same lifestyle. The rise in dual incomes is not itself responsible for inequality.
- Single parenthood. Somewhat counterintuitively, two incomes are not necessarily more stable than one, as that doubles the chances that one parent will lose or change jobs. Still, the drop in marriage rates isn't responsible either.
- Immigration. Unskilled labor is definitely pressured by increased immigration, but most professions aren't unskilled. More immigration of skilled immigrants might actually decrease inequality, as many professions are somewhat protectionist, in that there are occupational licensing barriers. Interestingly, cities, which have the most immigrants, are the richest parts of any country (e.g. New York City), but also very unequal.
- Rising educational attainment. This is a big one, as despite soaring college costs there is still a large college wage premium. The jobs of the future will require more and more college; a bachelor's is the new high school diploma.
- Offshoring. This is somewhat inconclusive; the effect on inequality is probably large with respect to manufacturing jobs (just see Ohio), but ambiguous when it comes to service sector jobs, since many of them cannot be outsourced well.
- Trade with low-wage nations. Noah gives a number here and says that changing trade patterns is responsible for "12 to 13%" of the rise in inequality. The effects have probably increased over time, as trade with low-wage nations like China has become more important relative to trade with high-wage countries like Germany and Japan. It's hard to measure though, as deciding what proportion of the value of something like an iPhone stays in the US is tricky.
- De-unionization. This is huge, and possibly the one thing more crucial to inequality's rise than any single other factor, given labor unions' tendency to affect all those other things (e.g. by resisting offshoring, opposing tuition hikes, promoting more stable families due to job security, etc).
- Rise of the Stinking Rich. That's Noah's phrase, and he's referring to the "fractal" aspect of inequality, as the very rich pull away from the sort-of rich, the extremely rich pull away from the very rich, etc. Institutions are set up to reward rich people to a much greater degree than before via phenomena like soaring executive compensation; it's getting harder to get rich, but once you are rich, it's easy to stay that way.
- Financialization. The increasing extent to which the US economy is based on finance is part of that last factor. Cosma Shalizi once made an interesting point on his blog about how finance types claim they're central to a prosperous economy since they know how to efficiently allocate capital, yet somehow as finance has become more important growth has only slowed, over all. There a great graph on p. 169 of the inverse relationship between total US debt vs the income share of the bottom 99% that makes you wonder if the economy has become nothing more than an engine for the prosperity of rich people.

It's not in this book, but in October 2010 Barry Ritholtz linked to a notable poll showing that when you ask people about wealth distribution, they not only underestimate how concentrated it is, but also express a preference for a much more egalitarian distribution than anyone is proposing. Noah, in his What Is To Be Done section, proposes a mix of backwards-looking policies that essentially reverse the changes of the last few decades, and a few forward-looking proposals that recognize that it's neither possible nor desirable to simply roll back the US economy to 1965.

Backwards-looking proposals:
- Soak the rich. His phrase, again. Taxes on the rich get lower and lower, yet mysteriously we don't see any more growth. The Republican Party talks about Job Creators a lot, yet the evidence suggests that taxes could be a lot higher before those geese stopped laying golden eggs. However, I personally would be open to at least looking at conservative proposals to restructure the tax system, e.g. by taxing consumption more heavily than income.
- Reregulate Wall Street. Keynes put it best: "When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done."
- More Democrats. The Republican Party is basically openly committed to increasing inequality, and there's only one way to stop them. However, I myself am a pretty solid Democrat, yet I'm wary of proposals that rely simply on entrenching one specific political party; my preference would be a parliamentary system that would broaden the range of acceptable opinions in Washington and make parties more accountable.
- More unions. For all their flaws, unions are an essential counterweight to the power of corporations, and in addition are also what Tocqueville calls "secondary institutions" that encourage citizen participation in various spheres of civic life. No other rich country has seen the dramatic drop in income equality that the US has, and likewise no other rich country has de-unionized to the same degree. It's more than correlation.

Forwards-looking proposals:
- More government employees/new WPA. It's very disappointing that the stimulus did not do more to directly employ more workers, and its provisions to retain government employees could have been greater. Greater public employment, beyond its immediate benefits in improving suffering public services and reducing inequality, might make people less angry at what they see as far-off, lazy, unaccountable government.
- More high-skill immigration. America is perfectly happy to train clever foreigners in our universities, but for some reason we're even happier to then force them to go back home so that we lose out on the businesses they start. We could reduce things like doctor shortages at the same time as we bolster the middle class.
- Universal preschool. The earlier in life we start educating children, the better their lives will be. It's the ultimate return on investment.
- Fix college costs. Rising tuition costs are a crippling burden on graduates, and reducing them will allow graduates to spend more time on building careers in rather than taking the first low-wage job that comes along so they can start making payments. Student loans are a trillion-dollar leech on younger generations.

Many of the leading economists who have studied inequality are discussed extensively - David Autor, George Borjas, Jacob Hacker, Paul Krugman, Emmanuel Saez, and Scott Winship all show up. I would recommend this book in concert with two broader works, Hacker's Winner-Take-All Politics and Krugman's The Conscience of a Liberal, both mentioned here, and both of which tie the specific issue of income inequality to both our current political dysfunction and the question of what kind of country we want to leave to our descendants. ( )

This book began life as a series of articles for Slate, the online magazine. The author carefully explains the “Great Convergence”, a period when income inequality was declining in the US, then goes on to explore the causes, the implications, and the possible cures of the “Great Divergence”, which is our current era of growing income inequality.

Mr. Noah is a balanced reporter, careful to give all relevant sides to a debatable question. Nonetheless, he clearly states that he believes that excessive income inequality ultimately is bad for any society, especially a democratic one. Particularly useful is the section where he discusses theories about why inequality might be useful or the Great Divergence a temporary phenomenon. His list of proposed fixes (soak the rich, help unions, etc.) are mostly not feasible given our current political state. I would also like to have seen more effort or originality in proposing solutions that better address globalization and technology. Nonetheless, this is an important and valuable book. ( )

another is the litany of books about where we are now as a country that is not particularly comforting! ( )

I found this book most interesting for Noah's discussions of economic history to put contemporary issues in context. Most impressive is the argument he presents about the direct correlation between the rise of strong labor unions and the growth of the middle class, and the obvious relationship between the decline of labor unions and the shrinking of the middle class. ( )

This is a great overview of income disparity in the United States. Noah covers the subject well, including talking about income in the context of racial minorities' and women's rights. The chapters are all relatively short, conversational but never superficial or argumentative in tone, and highly critical of a system that is undeniably rigged to help those that need it the least. I especially liked that he included the counterarguments that conservatives often put forth, followed by a summary of how to debate those points, very useful.

However, when I read books like this (and I think this must happen on the right as well), I can't help shake that "preaching to the choir" feeling. I plan to, but I have not read Nickel and Dimed, and I don't really need to read it to agree with Noah that this is a serious issue that we ignore at our own peril. (And, we can read all the books we want about this, but actual action ultimately is up to the reader, of course.) I'd like to see a book about how to convince conservatives about this.

I guess this is not really a fault of Noah or his book, but I suppose I am addressing the left as a whole. My question is: how do we get people to actually listen. OWS has done this to a degree, but I've yet to see any actual change in government as of yet. Well, I won't go off on this tangent here for now, but I'd be happy to do so in any comments people have. Great book overall. Read it and leave it somewhere for someone else to read when you're done. ( )