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Saturday, July 21, 2012

Inequality is bad economics


Inequality is bad economics. When prosperity is not widely shared there is less prosperity. Trickle-up economics work trickle-down economics doesn’t work. As the very rich take larger pieces of the pie, the pie gets smaller. Investing in human capital improves life for all, human capital is the pie. Access to good education helps my children it even helps those without children. If economic growth was 5% there would be no national deficit. While the short-term greed of the financial sector started our current deficit problems the financial deficit is rooted in the human capital deficit. We put Willy Coyote in charge and he keeps dropping the two ton safe on his own foot.
So Willy Coyote is thinking about having the Road Runner for dinner. Well cooked with condiments. The story never allows poor Mr. Coyote a win while in the real world Mr. Coyote has got a couple of my fingers and big chunk out of my backside. Maybe the Willy Coyote metaphor isn’t that good. I need a metaphor were the bad guy wins. I need a fable that ends with “And the evil Queen lived happily ever after”. Disney Company hasn’t produced one of these stories; even their Caribbean pirate has a jolly heart.
Many answer that in the long run good will prevail. To quote John Maynard Keynes “In the long run we are all dead”. Some of us are worried about next month’s bills. I worked hard for 50 years and a little less inequality, just a small share of the great productivity gains I engineered for corporations would make a difference.
In this story the stuff Willy Coyote gets from Acme Corp does work and he eats very well.

1 comment:

Anonymous said...

The rich seem to go by the therory of "survival of the fittist"...and they mean "economic" fitness.