Friday, May 4, 2012
The outcome of income inequality
Paul Krugman has an excellent editorial on this subject. Does income inequality cause a depression?
Rightardia thinks as Krugman that income inequality can be a factor. Income inequality does cause social instability. In fact,the Gini coefficient quantifies this and the US's is 46.8 in 2009.
Once the co-efficient reaches .5, social instability may follow. The US is almost there. If you think the Tea party and OWS protests are an aberration, think again!
Rightardia thinks supply side economics and the Bush tax cuts that followed are the cause of the income gap between the rich and poor. Has Obama done anything to fix income inequality?
Not much. His increases to the Food Stamp program (SNAP) helped. He also increased unemployment insurance payouts. But he also extended the Bush tax cuts after the GOP 112th Congress took power. His middle class tax cuts also helped.
Krugmans says this:
So how did that happen? For the past century, political polarization has closely tracked income inequality, and there’s every reason to believe that the relationship is causal. Specifically, money buys power, and the increasing wealth of a tiny minority has effectively bought the allegiance of one of our two major political parties, in the process destroying any prospect for cooperation.
No, the real structural problem is in our political system, which has been warped and paralyzed by the power of a small, wealthy minority. And the key to economic recovery lies in finding a way to get past that minority’s malign influence.
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