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Can Economic Growth Alone Fix Income inequality
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2017 May 20, 9:06am 3,134 views 6 comments
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FNWGMOBDVZXDNW
2017 May 20, 9:19am
Growth alone will not fix anything. The past 25 years has seen growth concentrated at the top with stagnation everywhere else. This exacerbates inequality. A dramatic increase in the value of unskilled labor or making everybody skilled improve things. Increasing the value of unskilled labor is quite a challenge (automation and globalization). Making everybody skilled is akin to making everybody in our country above the world average. However, we are not really getting any smarter, and the rest of the world is. In other words, we are losing ground.
Trump has convinced everybody that he can protect American labor from a global market while selling American products into a global market. The only way that this makes sense is to spin a fairy tale that Americans are still the greatest, but that we are handicapped by our incompetent and corrupt leaders who sold us out. Lots of people want to believe this, because it absolves them of blame and gives them hope that Trump will fix their problems. The hangover is going to be a bitch.
FuckTheMainstreamMedia
2017 May 20, 10:15am
Check again. The middle class stagnation has only been since around 2007.
anotheraccount
2017 May 20, 7:28pm
Why compare interest on all debt to just new potential income?
The reason is that every that's the new delta. Also I am even saying that interest rates will stay low as growth accelerates. Most likely interest rates go up and the only way to do a transfer is through taxation.
anotheraccount
2017 May 20, 11:15pm
This is what makes sense, the cost of servicing US national debt has been nearly static for 10 years while GDP rose 4 Trillion (28%).
I am talking about total debt (government, mortgage, auto, credit card, etc). Not just government debt.
The cost of financing debt has gone done because interest rates wend down. That does transfer from creditors to debtors a bit and at the same time brings asset prices which is not good for income inequality. That's why taxing interest income would allow higher rates without increasing income inequality.
Can Economic Growth Alone Fix Income inequality
Of course not. You can have rising GDP and a decreasing standard of living.
US GDP 18T - growing 3.5% nominally generates about 630B a year in new possible income. Interest on all debt (government, auto, mortgage, et) is around 3T. Creditors get more every year than debtors can possibly earn. Even if economy grows 5.5% nominally, that's not enough to even come close the amount of interest going to creditors.
We have to tax interest more to transfer back to debtors via government spending or tax incentives of some sort I don't see another way to slow down our path toward feudalism.
Does the argument make sense?