Note that this unequal distribution of income is not necessarily a bad thing for the economy—in fact, the U. government openly supports new innovation by offering patents through the Patent and Trademark Office, thereby granting a (time-limited) legal monopoly (and the monopoly profits that follow). While the number of manufacturing jobs has decreased from 1990 to 2013, the number of food and restaurant service workers has increased from 6545.3 to 10487.1 (in thousands) during that same time period.
But once an inventor earns these large incomes, the wealth inequality over others is unlikely to dissolve easily. “Manufacturing Globalization: The Real Sources of U. Inequality and Unemployment.” Council on Foreign Relations. foreignaffairs.org/articles/north-america/2011-11-01/manufacturing-globalization 16 See Rotman.
Inventors of new technology are the first to benefit from that new technology.
In a free market, individuals are compensated based on the economic output of their factors of production.
The first-place winner, Solomon Polansky of the Blake School in Minneapolis, received an additional $400 and was offered a paid summer internship at the Minneapolis Fed. productive output has soared while the number of labor hours has remained constant.
The Luddites’ concerns are not without merit and remain relevant today in the United States. Ongoing technological advances enable these productive strides, but also drive increasing income inequality by spawning two very distinct groups of winners and losers: those who benefit from technology, such as inventors of technology and workers whose productivity is enhanced by technological advance, and those who are negatively impacted through substitution of labor by technology.
Thus, their marginal revenue has increased, and the price the firm will be willing to pay, in salary, will also increase.
These traders’ incomes therefore increase with the addition of technology.
There is a “snowballing effect on wealth distribution: top incomes are being saved at high rates, pushing wealth concentration [further] up,” perpetuating the cycle of inequality.
While by no means will every inventor “strike gold” with his/her invention (in fact, most do not succeed), a skilled and lucky few will reap tremendous income; thus, propelling them into the highest echelon of income.