Hindering Income Mobility A growing concern is that we live in a culture of cronyism that keeps people trapped in poverty. Well-connected companies who can afford to hire expensive lobbyists and attorneys are spending their time and money on K Street. These firms know market competition is tough, and any new company or innovation could steal their customers. To protect themselves they often seek the help of the government, through tariffs, price supports, entry barriers, and licensing regulations. This harms the poor in two ways: When well-connected, wealthy firms engage in cronyism, the small ventures run by folks who have little capital and no money for lobbyists are shut out of the market. Cronyism often results in less innovation, poor quality products, and increasing prices because it limits the market. Economists Robert Lawson believes we will see the first generation of people who don’t do as well as their parents as a result of this cronyist environment. Cronyism’s impact on decreasing income mobility is a serious concern because it threatens flourishing and impacts the poor and unconnected the most. - See more at: blog.tifwe.org/when-income-inequality-is-and-isnt-a-problem/#sthash.5yqiRsaa.dpuf
Posted on: Mon, 10 Mar 2014 14:30:10 +0000
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