Paul Krugman: Why Inequality Matters
“I got a Nobel Prize to support my theories. You have Fox News. I win.”
President Obama recently asserted that Income Inequality is the “defining challenge of our age”. As usual, this was met with the standard “down with the Socialist Obama” bullcrap, but there is no denying that most of our country’s wealth sits in the hands of the few and the shrinking pie of wealth available to 99% of the country is destroying the economy and hampering any hope of recovery.
Brilliant economist Paul Krugman wrote a great piece this week on the foolish (and expensively-purchased) political decisions that led to our current crap economy and why tackling inequality has to be goal #1 if we care about more than funding the lifestyles of the powerful elite. Here’s a taste:
In the years before the crisis, there was a remarkable bipartisan consensus in Washington in favor of financial deregulation — a consensus justified by neither theory nor history. When crisis struck, there was a rush to rescue the banks. But as soon as that was done, a new consensus emerged, one that involved turning away from job creation and focusing on the alleged threat from budget deficits.
What do the pre- and post crisis consensuses have in common? Both were economically destructive: Deregulation helped make the crisis possible, and the premature turn to fiscal austerity has done more than anything else to hobble recovery. Both consensuses, however, corresponded to the interests and prejudices of an economic elite whose political influence had surged along with its wealth.
This is especially clear if we try to understand why Washington, in the midst of a continuing jobs crisis, somehow became obsessed with the supposed need for cuts in Social Security and Medicare. This obsession never made economic sense: In a depressed economy with record low interest rates, the government should be spending more, not less, and an era of mass unemployment is no time to be focusing on potential fiscal problems decades in the future. Nor did the attack on these programs reflect public demands.
Surveys of the very wealthy have, however, shown that they — unlike the general public — consider budget deficits a crucial issue and favor big cuts in safety-net programs. And sure enough, those elite priorities took over our policy discourse.
Money begets money, which begets power, which begets more money. But our country is better when we take care of the rich and let profits trickle-down, right? Laughable that anyone ever sold this, and more laughable that the masses believed it.
Read: Why Inequality Matters – NYTimes.com.