Inequality and Globalization

The US strives to provide equal opportunity for all individuals, but does not guarantee equal economic outcomes, explained US Federal Reserve Chairman Ben Bernanke in a recent speech. Still, new competition or inventions like the computer can make some workers’ skills obsolete, warns Benanke, and if the nation does not provide a support system for such workers, thus limiting some of the risks, then the public would fear a dynamic economy and innovations that result. The US has improved its standard of living in recent decades; incomes have increased, but more so for the top income earners than the poorest. In the speech, Bernanke reviews how globalization, technological change, trade, immigration, high wages for chief executive offices of corporations and union practices influence the wage gap. He notes that policymakers must seek the appropriate tradeoff between “allowing strong market-based incentives and providing social insurance against economic risks.” Policies that promote education, retraining and job search by displaced workers, along with those that reduce costs to workers of changing jobs, can do more to reduce inequality than policies that restrict innovation. – YaleGlobal