Income Inequality And Secular Stagnation Revisited
I’ve written a lot about the evils of soaring inequality. But I have not gone that route. I’m not ruling out a connection between inequality and the mess we’re in, but for now I don’t see a clear mechanism, and I often annoy liberal audiences by saying that it’s probably possible to have a full-employment economy largely producing luxury goods for the richest 1 percent. More equality would be good, but not, as far as I can tell, because it would restore full employment.
I still think Krugman is utterly wrong here. Take for instance the issue of homeowner debt, which everyone seems to agree is the major drag on our economy now.. Certainly it is possible to ignore income inequality as a major reason for this problem, but it would be foolhardy in my opinion. I just don't understand Krugman on this issue. See my previous posts on this here and here.
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