“[C]onservative wonks should care about massively disproportionate income gains. It’s (tautologically) true that putting money in the hands of job-creators create jobs. But is a 275-percent gain in income for the top one percent of households required to create that 40 percent gain in income for the middle classes? Is all that accumulated cash likely to be reinvested, or tucked away? Are there free-market-based policies that help channel gains to middle class investors and would-be entrepreneurs, e.g. to those who are most likely to put the marginal dollar to good economic use? … This paper from 2009 sticks with me.
It makes the plausible argument that investment banking was basically easy, and boring, in the heavily regulated period between 1930 and 1980; that subsequent deregulation and the rise of exotic financial products created great demand for high-skilled workers, thus increasing both wages and the opportunity for profit in the financial sector; but that, nevertheless, financial workers are overpaid. In part by comparing the compensation of financial workers and engineers with similar innate abilities and education levels, the paper concludes that as much as 30-50 percent of financial compensation is pure rent. That is, the financial sector as a whole could get away with paying workers up to 50 percent less without affecting demand for those jobs,” – Daniel Foster, NRO.
He has some thoughts for liberals as well.
The Dish 