From Washington’s Blog –
Most mainstream economists dismiss the idea that wealth inequality causes economic crises.
Of course, some ideologues will argue that even discussing inequality is waging class warfare, and smacks of an attack on capitalism.
However, the father of modern economics – Adam Smith – disagreed.
And as Warren Buffet, one of America’s most successful capitalists and defenders of capitalism, points out:
There’s class warfare, all right, but it’s my class, the rich class, that’s making war ….
(And as I have previously noted, radical concentration of wealth actually destroys capitalism.)
More to the point, most mainstream economists do not believe there is a causal connection between inequality and severe downturns.
But recent studies by Emmanuel Saez and Thomas Piketty are waking up more and more economists to the possibility that there may be a connection.
Washington’s Blog is an interesting web site full of writing you will not see else where. Here’s the link.
I lean toward the argument that inequality is a factor in economic downturns.
Read their post. I can’t do it justice in a few paragraphs. It’s full of graphs, multiple references and good writing. I’ve got this on my favorites.
One thought on “Extreme Inequality Helped Cause Both The Great Depression And The Current Economic Crisis (via Washington’s Blog)”
Of course most mainstream economists do not think, or will not admit that they think, that inequality causes economic downturns. Its not the poor who sign their paychecks.
Comments are closed.