Growing cooperation and inequality

Didn’t everyone used to wish for more and better cooperation?  The 1960s left in particular, but pretty much everyone.  And isn’t that what we got?  And didn’t that — in fact — lead to rather spectacular rises in income inequality?

Consider one implication of the Garett Jones model, which is that more talented people gain more, in percentage terms, from cooperating and working with each other than do less talented people.  The mere existence of a (non-universal) export sector is enough to establish this conclusion, but you can see why it is true using other arguments as well.  If there are non-linear synergies from bringing together talent, those synergies with be stronger with greater amounts of talent by the very nature of the initial assumptions.

Organizing a high school band brings a modest boost in quality entertainment, but forming the Beatles or Rolling Stones a much much larger gain, again in both absolute and percentage terms.  So if it is easier to organize bands of all sorts, income inequality likely will rise.

You are probably aware of the results that the higher wages in super-firms — clusters of lots of talent — relative to normal firms, account for a major share of income inequality.  In other words, additional cooperation boosted income inequality.

Or maybe you saw the recent stories “90 percent of growth in high-tech jobs happened in just 5 metro areas.”  That too is an instance of greater cooperation, and it has led to more income inequality, with the biggest gains coming in New York City and the Bay Area and a few other places.

More cooperation  → → greater income inequality.  Think about it.

Be careful what you wish for!  Though I very much appreciate the virtues of additional cooperation.


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