Oligarchy and challenges

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The essay Challenging the Oligarchy, written by Paul Krugman, is about Robert Reich's book The Work of the Nations, which was published in 1991. According to the author of the report, Reich's appointment to the Clinton administration was made possible by the publication of this influential book. The author of Challenging the Oligarchy believes that the book is fitting for the eras in which it was written, although conditions have changed drastically since then. He mentions in the article that one of the ways that clearly shows things have changed particularly in America is through saving capitalism whereby he considers it an indicator of pleasant ways that has greatly resulted to changes in this country.

Focusing on what Reich’s book entails, Krugman, states that the book greatly focused on the issue of raising inequality that was highly emphasized by the economists. The book perceives the problem of inequality as a technical one (Krugman). However, Krugman criticizes the author of the book by saying that in the present days, Reich offers a much darker vision in comparison to the old days whereby he believes that the impact will be calling for a class war.

The author of the article divides the work into four main sections. In the first one, Krugman aims at stating the difference between The Work of Nations and Saving Capitalism. To differentiate the two, he states that one requires understanding the increasingly ugly turn that the American politics have taken and secondly the rise and fall of the theory of skill-biased technological change. He further went ahead to address the reasons as to why around the year 1980, the wages of the college graduates started to rise in a far much higher rate in comparison to the wages of the Americans who only had a high school degree. Some of the reasons given in the article constitute of the growth of the international trade and rise in the level of skills in the industries. However, economist gave the reasons that the issue had to do with the revolution of the information technology.

In the second part, the article addresses the economists’ struggle towards making sense of economic polarization as there is great emphasize in regard to the issue of technology instead of power (Krugman). Moreover, in this part, the work addresses the issue of market power as well as the factors that greatly influence it, and its importance. Some of the factors mentioned here comprise of monopoly and oligopoly.

In the third part, the author of the article focuses on the Robert Reich’s big ambition which is to attempt and cast his new discussion regarding inequality as a significant rethinking of the market economies (Krugman). The point here is to call for policies that will help limit and soften the different functioning of the markets. In the same section, the article addresses the aspect of packing by stating that the idea of widening inequality greatly reflects political decisions that could be seen to go in very different directions.

In the last part, the article focuses on how to reverse the spiral on inequality. One of the ways to achieve this is by initiating new policies that would help change the allocation of the market income (Krugman). Some of the changes mentioned here comprise of fairly standard liberal ideas such as raising maximum wages and amending the contract law to empower workers.

As the author of the article, Paul Krugman is trying to communicate various things that Robert Reich greatly aims at addressing towards achieving a better economy not only in the United States of America but also in the entire world. The main thing Krugman aims at communication is the issue of inequality which is considered as a technological problem by Reich who is an economist (Krugman). A number of factors that are greatly believed would help in the process of reversing inequality are significantly addressed in the article. Considering inequality as an issue that highly requires rethinking when it comes to the market economies Paul Krugman puts it clear that Reich as an economist had a great ambition in addressing the issue of inequality.

The article relates to what I have learned in the class by illustrating a better understanding of oligopoly and monopoly as the main factors that greatly influence the market power up to date that greatly results to collusion and competition in the market.

Personally, I agree with the point the author of the article is trying to say. There are quite a number of reasons that have made me agree with the point the author is trying to put across. One of the major reasons I agree with the author is the focus he got towards the issues that affect economy whereby he chose Robert Reich’s book to bring out his point. The second reason is the great focus on the factors that significantly influence the market power taking for example of monopoly and oligopoly.

Work Cited

Krugman, Paul. "Challenging the Oligarchy: Review of Robert Reich, Saving Capitalism for the Many, Not the Few." (2015). Retrieved from: http://www.nybooks.com/articles/2015/12/17/robert-reich-challenging-oligarchy/

Part 7: “Market Structure: Beyond Perfect Competition”422-425.

November 09, 2022
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