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In reply to the discussion: Born on Third Base: What the Forbes 400 Really Says About Economic Equality & Opportunity in America [View all]Octafish
(55,745 posts)8. James Galbraith on Income Inequality
More and more of the young people in Michigan leave for work in Texas and the Sun Belt, including my nephew. Not that there aren't good people there, like Dr. Galbraith:
How economists have misunderstood inequality: An interview with James Galbraith
Posted by Brad Plumer at 11:37 AM ET, 05/03/2012
The Washington Post
Before 1980, few academics in the United States gave much thought to the idea of economic inequality. It just wasnt a glaring concern. But in the last 30 years, the incomes of the nations wealthiest 1 percent have surged, and more and more economists have been paying attention.
Occupy Wall Street protests in Los Angeles (LUCY NICHOLSON - REUTERS) Yet theres still plenty about economic inequality thats not well understood. Whats actually driving the gap between the richest and poorest? Does it hurt economic growth, or is it largely benign? Should it be reversed? Can it be reversed? Surprisingly, theres little consensus on how to answer these questions in part because good data on the topic is hard to come by.
In his fascinating new book, Inequality and Instability, James K. Galbraith, an economics professor at the University of Texas at Austin, takes a more detailed look at inequality by assembling a wealth of new data on the phenomenon. Among other things, he finds that economic inequality has been rising in roughly similar ways around the world since 1980. And this rise appears to be driven, in large part, by the financial sector and the changes that modern finance has forced in the global economy. We talked by phone recently about his book.
Brad Plumer: You bring together a lot of new data on inequality in the book across a variety of countries, from the United States to Europe to China to Latin America. Whats different about what your book discovers?
James Galbraith: One thing we found is that there are common global patterns in economic inequality across different countries that appear to be very strongly related to major events affecting the world economy as a whole. The most important have been changes in financial regimes and changes in systems of financial governance. It made a big difference when the Bretton Woods system ended in 1971. The debt crisis of the 1980s made a big difference. The debt crisis of the 1980s made a big difference. It made a big difference in 2000 when the NASDAQ crashed and interest rates were reduced These things all had global repercussions, and they affected inequality around the entire world in different ways.
BP: And this isnt how many economists have looked at inequality, correct?
JG: No. The most unconventional thing in this book is about how inequality relates to macroeconomic performance and financial factors. The discussion of inequality tends to be heavily dominated by a marketplace perspective that stresses individual-level characteristics like the demand for skill. Economists have always classified this as a microeconomic problem. ... But when somethings happening at the same time around the world, in different countries that are widely separated, thats a macro issue. There was a global movement toward higher inequality as a result of the financial stresses that the world is under.
CONTINUED...
http://www.washingtonpost.com/blogs/ezra-klein/post/how-economists-have-misunderstood-inequality/2012/05/03/gIQAOZf5yT_blog.html
More from Dr. Galbraith: University of Texas Inequality Project
Thanks, Initech, for staying in the fight.
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Born on Third Base: What the Forbes 400 Really Says About Economic Equality & Opportunity in America [View all]
Octafish
Sep 2012
OP
I got a taste of that this morning when I saw a nearly mile long line outside a new Goodwill store.
Initech
Sep 2012
#5
Saturday morning kick! I remember when we were more honest about economic justice
Overseas
Sep 2012
#6