Jim Hickey’s American Politics

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MIT Graduate Student Says Income Equality Is About Housing

26-year-old MIT Graduate Student, Matthew Rognlie Has An Alternate Theory Of Inequality And It Has To Do With Housing

The rich get richer around the world. They get richer because they have the capital to invest. The rich invest in land and machines rather than paying people a decent wage. Capital has more value than wages in a capitalistic society. That theory has been around the economic think tank ever since Thomas Piketty claimed that wealth is concentrated in the upper 1% of any capitalistic country.

But young Rognlie’s has another theory, and some economists are taking his ideas seriously. Rognlie claims that capital wealth and income are fueled by housing. Matthew says modern investments all depreciate in price quickly. Jaime Garcia Dias (wordpress.com) knows that technology doesn’t hold the same value as it did decades ago, so investments now may not make the rich, richer as they did in the past. The grad student believes housing and land are the only investments that will give the rich more riches. If Rognlie is correct, our economic strategy concerning income equality show be reexamined.

Rognlie’s theory could mean a switch in how the government taxes wealthy individuals and businesses. The government should rethink its housing policy along with its taxation policy if it wants to address the income equality issue.

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