Inequality in History

Catherine the Great, Empress of Russia, had a personal allowance of one thirteenth of national income, per p. 292 of Robert K. Massie’s Catherine the Great: Portrait of a Woman.

By way of context, this would be equivalent to about $2.7 trillion per year in the modern United States. This annual income is more than the combined lifetime fortunes of Silicon Valley’s wealthiest entrepreneurs. While that mathematical ratio isn’t particularly interesting, from an ethical standpoint it is crucial that Catherine did not earn this income by creating value for others. She took it away from them in a zero-sum game.

Today’s entrepreneurs gain wealth by creating value for others in exchange–about 50-fold more than their own earnings, by William Nordhaus’ estimate. Rent-seeking remains a significant problem, but fortunately is less severe than in Catherine the Great’s time.

Today’s economy has much room for improvement, but reformers on all sides would benefit from taking stock of how much things have improved over the last few centuries, and why.

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