Kenneth Rogoff argues that rising inequality is likely to be a self-limiting trend since the bigger the skill premium gets, the stronger the economic incentive to find ways to conserve purchases of high-skill labor.
As an abstract model, that makes sense. But it seems to me that Rogoff ends up implicitly discounting the extent to which inequality is being driven by rent-seeking factors. Most notably, of course, you’ve got the financial system, which in various complicated ways is very much a creature of the state rather than a competitive labor market. But you’ve also got the fabulous world of intellectual property and the health care system. The Rogoff model would seem to make sense if inequality was, say, primarily a model of architects earning a growing wage premium over carpenters. Then would-be builders would start finding ways to economize on the need for architect-labor, and wages would return to equilibrium. This may even apply to China, where in-country inequality is skyrocketing in the context of rapidly rising overall prosperity. But that doesn’t really describe much of the inequality trends we’re seeing in the developed world, where growing inequality is paired with very sluggish growth and a seeming decline in overall productivity.
Sen. Orrin Hatch (R-UT) dusted off one of his favorite talking points on the Senate floor today, calling on the poor and the middle class to shoulder more of the pain of deficit reduction because they don’t pay enough in taxes. After the Senate considered a Sense of the Senate stating that “any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort,” Hatch took to the floor to 
Bachmannia descended upon South Carolina last week as GOP presidential candidate Michele Bachmann stomped for votes at events across the state. Wearing a yellow dress to honor the yellow Tea Party flag, Bachmann roused a rally of supporters in Greenville on Wednesday before heading to Rock Hill for a town hall event at Winthrop University. Bachmann answered many audience questions with personal anecdotes from her past. When one woman asked her how we can “move people from dependence to independence” in this country, Bachmann responded by recounting how her own family made it through tough times when she was young by relying on God and forsaking government assistance:
Next November, Missouri voters 
In the banquet of spending cuts laid out as part of the debt negotiations, everyone seems to want a piece of Medicaid. Congress and the Administration are hungry for $4 trillion in savings, and while a powerful voting bloc of seniors helps protect Medicare, Medicaid serves people whose voices at the ballot box aren’t typically feared by those in Washington: the majority of Medicaid beneficiaries are women, children, and people with disabilities, many of them people of color, and all of them familiar with how poverty can cut off access to lifesaving medical care. 
