Great piece on inequality

To change pace a little, a quick comment on a great article ("Confronting Inequality: Too Big to Ignore) in yesterday's New York Times by Professor Robert Frank of Cornell, talking about how economists should really speak out on the negative effects of increased inequality that we see in the US -- although the argument can be extended all over the world, including places like India, and between countries as well. He notes:

There is no persuasive evidence that greater inequality bolsters economic growth or enhances anyone’s well-being. Yes, the rich can now buy bigger mansions and host more expensive parties. But this appears to have made them no happier. And in our winner-take-all economy, one effect of the growing inequality has been to lure our most talented graduates to the largely unproductive chase for financial bonanzas on Wall Street.

In short, the economist’s cost-benefit approach — itself long an important arrow in the moral philosopher’s quiver — has much to say about the effects of rising inequality. We need not reach agreement on all philosophical principles of fairness to recognize that it has imposed considerable harm across the income scale without generating significant offsetting benefits.

No one dares to argue that rising inequality is required in the name of fairness. So maybe we should just agree that it’s a bad thing — and try to do something about it.

In the US, it's financial service; in India, IT services. In both cases, talented individuals with training in many fields get lured into financial services or IT services rather than apply their education in more needed fields -- civil engineering comes to mind in both cases -- because the financial rewards are so astronomical compared to the alternatives.