Barry Z. Cynamon, currently Visiting Scholar at the Federal Reserve Bank of St. Louis, and Steven M. Fazzari, Professor of Economics at Washington University in St. Louis, are researchers on consumer behavior and how it affects the economy. They wrote an op-ed for the St. Louis Post Dispatch in October 2007 in which they predicted that an end to the relentless trend of rising household debt and a subsequent crash in household spending could lead to a killer U.S. recession. Soon after, their prediction came true. Their current work, which examines how high and rising inequality is holding back the American economy, is part of the Institute for New Economic Thinking’s project on the Political Economy of Distribution. They explore how the massive debt which led to the Great Recession, the spending collapse that followed, and the stagnation that persists are all linked to income inequality. In the following interview, they discuss what their findings mean for America.Salon
Thomas Piketty is right: Income inequality is holding us back
Lynn Stuart Parramore interviews Barry Z. Cynamon and Steven M. Fazzari
This is similar to the MMT position that "the deficit is too small" in that it implies an ignorance of or at least denigrates the source function...
ReplyDeleteSo both looking at income "inequality" and the govt balance "inequality" are RESULTS of arithmetic subtractions and NOT CAUSES of anything...
So this is at least sloppy here to say "inequality is causing blah blah...." just as it is sloppy to say "the too small deficit is causing blah blah...."
Subtraction results are not causal they are comparative.
You have minuends and subtrahends in subtraction which when examined individually are more revealing than the subtraction result.
Seem like people are finally being rational about Piketty and getting at the limits and implications without all the defensiveness and anger. Finance and debt, coincided with inequality but could be a symptom of low incomes, and lack of demand for labor. If private sector borrows to invest because of a lack of other "productive" opportunities....
ReplyDeleteI prefer the avenue that Noah Smith and Syll have taken, which is that rather than finance being the only critical flaw, another Econ measurement error may be at the center of the disaster in labor and trade policy: Productivity measures and flawed analysis by economists, again. Rather than being at odds with Piketty, it takes Piketty a step further and gets at what went wrong and why.
"Could be a symptom of low incomes"
ReplyDeleteRight in subtraction arithmetic comparing one person's income to another person's income the result of the arithmetic cannot be causal... rsp