Author Question: How has the distribution of money income changed over time? What will be an ideal ... (Read 108 times)

jeatrice · **on:** Jun 29, 2018

How has the distribution of money income changed over time?

What will be an ideal response?

Question 2

The railroad companies of Pacific Union and Central Pacific were both built with massive government subsidies often on a per-mile basic in the late 19th century, which created railroad monopolies. Both failed soon after completion of their lines.

The Great Northern railroad took much longer to build since it was completed without government subsidies. It turned out to be much more successful than either Pacific Union or Central Pacific. What could account for this apparent disparity?

lkanara2 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The distribution of money income has remained fairly stable for a long time. Between 1947 and 1980, the share of income going to the top 20 percent declined, while the share going to the bottom 20 percent increased. However, since 1980, the share of income going to the top 20 percent has increased, while the share going to the bottom 20 percent has declined.

Answer to Question 2

Subsidies often bread inefficiency. In this particular case subsidizing a railroad based on a per-mile basis probably led Pacific Union and Central Union to build more circuitous routes. The Great Northern railroad had every incentive to keep costs down as much as possible and probably laid fewer miles of track since it was not receiving subsidies. Shorter routes probably made their shipments arrive at their destinations much faster and improved efficiency.