I do not see a world economy that has stagnated overall. I don’t even see a US economy (pre-2008) that has stagnated. I see a redistribution from a certain class of American workers to workers with similar skills in other countries, and to workers with very high skills in the US that can market those skills to a global economy. This doesn’t have to be a bad thing, if the government can respond by encouraging innovation by high-skilled workers, and even encourage a lot of compensation for them, but provide for the rest with a fairly robust safety net. And, in fact, the major political cleavages of the present focus on precisely these issues. The political battles aren’t about stagnation, but about distribution.
Read the whole thing. Pointer from Tyler Cowen.
One point I would add concerns the change in gender roles and marital patterns. Over the past several decades, women have moved into the market economy and up the income ladder. Marriage used to be an inequality reducer–as higher earning males married women who earned little or nothing in the market. Now, marriage is an inequality reinforcer, as higher earning males marry higher earning females. And more assortive mating means that we get increasing inequality of childhood endowments, also.