Secular Stagnation And Income Inequality
Kevin Drum takes up an issue I discussed on Monday - "secular stagnation" (Paul Krugman's term) and income inequality. Drum, responds, as I did, to something Krugman wrote:
Bob argues that nothing will, unless the government does it. This is a modern version of the "secular stagnation" view popular in the 1940s (and visible in Keynes himself), which argued that there would be a persistent shortfall of private demand, and that we'd basically need a permanent WPA to support the economy. This view turned out to be wrong for the postwar decades . . .
As I argued in my piece, Drum points out that Krugman is ignoring the different situation we now face in terms of income inequality:
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