Paul Krugman: Inequality A 'Major Reason' The Economy Is Still Depressed

The New York Times:

Before the Great Recession, I would sometimes give public lectures in which I would talk about rising inequality, making the point that the concentration of income at the top had reached levels not seen since 1929. Often, someone in the audience would ask whether this meant that another depression was imminent.

Read the whole story at The New York Times

Comments

[sidecarman]

12:14 PM on 05/11/2012

that is why we need to eliminate the rich by taxing their wealth not just the income.
100% tax on wealth over $1mil.

[janmB]

07:19 AM on 05/06/2012

Of course it's public spending that creates DEMAND and then JOBs for the supply.
Raising TARIFFS on goods coming in would level the field so companies would start up here again to make & sell here.
Office of Management and Budget for U.S. President Ronald Reagan as David Stockman quoted as referring to the "trickle-down" Reagan's tax act as: the Kemp-Roth [Reagan's 1981 tax cut] was always a Trojan horse to bring down the top rate.... Stockman became aware of the trend towards increasingly large federal deficits and the rapidly expanding national debt what we are experiencing now as history repeats.

[Timma]

09:17 PM on 05/05/2012

Thanks Paul Krugman for calling our economic morass what it is - a depression caused in no minor way by the purchase of near half the political establishment.

[Basselope]

06:53 PM on 05/05/2012

The reality is because their base (the religious right) are far too feeble minded to understand the policy issues, so they become very easy to control and vote against their financial interests.

[shp]

08:45 PM on 05/05/2012

Yes, it couldn't be anything like the religious right isn't all that into chasing the almighty dollar.

All you have to do is follow the money.

To a blue state.

[Basselope]

08:49 PM on 05/05/2012

The religious right THINKS they are chasing the all mighty dollar, which is why they buy into the disproven economic theories of the right, which only benefit the tippy top of the economic scale.

[MightyYowp]

08:46 PM on 05/05/2012

What does that have to do with the article?

[Basselope]

08:53 PM on 05/05/2012

Really?

The article is about how the income inequality has furthered the economic problems.

This is caused b/c the mega rich have seized control of the GOP and allow disproven economic policies (such as top income tax cuts creating job growth) to be part of the national debate.

The base of the GOP is the religious right. So, these same people pay lip service to their issues and those people are so feeble minded that they believe everything else said must be true.

Thus, they parrot the disproven economic theories and further the economic troubles.

[Stewart Goss]

02:42 PM on 05/05/2012

Yeah. Would have nothing to do with more regulations, higher taxes, and Obamacare.

After Reagan the economy boomed for 20 years.

[Basselope]

06:49 PM on 05/05/2012

False,

You seem to forget the 2 recessions under the Reagan bush presidencies.

[akoop]

08:04 PM on 05/05/2012

One can't forget what one never knew.

[MightyYowp]

08:48 PM on 05/05/2012

He was basically agreeing with your standard position. Please read more carefully.

[akoop]

08:01 PM on 05/05/2012

You're correct. Federal income tax rates for individuals and corporations have not been lower since prior to WWII. Regulatory agencies are being 'starved' out of corrective and enforcement measures and 'Obamacare' hasn't been in effect long enough to make any difference. So, yeah, it doesn't have anything to do with higher taxes, more regulations or 'Obamacare,.

[LeftCoastEng]

02:21 PM on 05/05/2012

Because of our insane, one-sided "free trade" policies, fiscal stimulation helps the Chinese economy more than our. There is a new normal because of the destruction of our failed experiment with economic theories without checking along the way to see if they were working. They were not!

[Stewart Goss]

02:43 PM on 05/05/2012

Yes but if you start a trade war it hurts everyone.

[rdk70816]

09:44 AM on 05/05/2012

Rick Santelli says:
"...about 41.3% of unemployed have been unemployed for 39.1 weeks. That is huge and pretty much says it all. This is the weakest recovery since the Great Depression. A whole 4/5ths of the drop of the unemployment rate is due to a drop in the labor force participation. It is the lowest since 1981. Many of regional news shows were reporting on just the unemployment rate. That’s “ostrich economics.” "

And Paul Krugman says its because the man is trying to keep us down.

[procrustes13]

10:14 PM on 05/06/2012

Krugman has been very clear about the fact that this situation is different from say 1981-83 or 1991-93, that this was not a recession induced by the Fed in a bid to kill inflation, that this is a depression caused by a crash and deleveraging as happened in the 1930s. People like Santelli have promoted the notion that all recessions are the same and the reason this one is worse is because Evil Socialism was used and this always fails, they say. All recessions are not the same. Those other ones were solved just by dropping interest rates. Right now the interest rates are practically at zero. So much for that.

[rdk70816]

07:59 AM on 05/07/2012

Time to try a new trick.
Start promoting business and also energy production.

[Infiniti]

11:45 PM on 05/04/2012

Where is America’s Exceptionalism?

• A strong middle class that has the ability and income to afford health care, education and a house. – No longer true

• Impartial media that used to be called the Fourth Estate. The media amplifies Right wing rhetoric without filter while allowing them to spout their failed ideologies, incite fear, and spew vitriol/hatred towards anyone that disagrees with them. – Fail

• A Congress that serves the needs of the people. With lobbyists/ special interests/ Citizens United, Congress just rubber stamps the status quo. They only serve the highest bidder. – Almost hopeless

• Corporations give back to society through charities/educational/research programs. Bottom line mentality and short-term profits drive most decisions. – A lost cause until the incentives are changed which aren’t likely.

• Education is the fountain of youth/ engines of tomorrow. Out of control tuition costs compounded with curriculums not suited for the job drivers of tomorrow means students are falling behind the rest of the world. – Dire, in need of reform.

• Safety Nets: SS/ Medicare/ Medicaid are the last defense for millions of Americans. Certainly they have to be reformed, not gutted or privatized. Solutions exist: mean testing/curtailing expensive procedures. Skyrocketing healthcare costs have to be addressed. - The prognosis is bleak as top Democrats are caving without a fight.

For the top 1%, these issues don’t bother them. But in the long run, all their wealth is meaningless in a society full of decay.

[Hopalongpoppyseed]

04:49 AM on 05/05/2012

'For the top 1%, these issues don’t bother them. But in the long run, all their wealth is meaningless in a society full of decay.' After World War II, scholars asked what had caused the war. There were many reasons, such as the Treaty of Versailles, but one reason added to the list was the creation of a German society in which a ruling elite (a 1%), had gathered all the wealth unto themselves and failed to bring their fellows along. The folly of the 1% is that they choose not to see that they cannot remain safe in their gated communities, while the majority of their fellow citizens experience less and less economic and social security.

[Infiniti]

12:04 PM on 05/05/2012

Thanks for the info!

[Stewart Goss]

02:43 PM on 05/05/2012

The reason was simple:

National socialism.

[rwthewayIseeit]

10:53 PM on 05/04/2012

Look at this sound advice from Mr know it all... http://www.zerohedge.com/news/paul-vs-paul-round-2?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

[darkmark]

12:26 PM on 05/05/2012

opinion, nothing more.

[blurredmolly]

01:21 PM on 05/05/2012

what's your Nobel Prize in?

[rwthewayIseeit]

02:49 PM on 05/05/2012

The Nobel prize is a political award given out by academics who support centralized large government control. That Obama received Nobel prize before he actually became president kind of makes a mockery of the entire process. Also economics is a social science (big stress on the word social, very little proven science). In the end your team will win because promising the rewards of other people's work and talents to the masses is easier than telling people they have to make their own way with their own talents. Your side favors violence to procure other peoples money. Your side thinks they know best how to centrally plan peoples lives, but I see it as a simple power grab. History has seen this play out many times. We will blow up the currency, we will destroy innovation through oppressive tax and we will eventually start over when the people realize that the centrally planned model provides no rewards for the masses only for those in the ruling party. Since you to attacked my lack of economics knowledge: My resume. A degree in economics. Two successful businesses started and sold. I am a veteran (I actually have only given and not taken from society). I hope one day you open your mind to other narratives and see Obama for what he really is... A war mongerer, central and investment bank lover and of course his terrible record on civil rights (drone strikes, NSA wire tapping every form of communication, etc).

[FOXYROSE]

05:01 PM on 05/04/2012

This problem has been coming for over 30 years - can't blame it on just one party - all those old career hacks that are in Gov are to blame - they sold us down the river for money and favors. The manufacturing jobs are gone for good, the population is aging, our schools don't work, our healthcare is too expensive and wages are stagnant. No one has come up with any kind of viable vison for the future. We no longer have a democracy and that isn't going to change either.

[Isaac Montgomery]

06:22 PM on 05/04/2012

we probably never had a true democracy. this is no accident, from the beginning our founding fathers implemented our present form of capitalism. we have been conditioned (indoctrinated) to believe in the American Dream which is almost impossible for most people to achieve, regardless of how hard we work. if 5% has over half the pie, then the other 95% of us has to fight for the rest (less than half), the results will always be as it is today

[Stewart Goss]

02:49 PM on 05/05/2012

Really? When we had more of a free economy in the 1800's we created the first middle class.

[nowThenzen]

03:47 PM on 05/04/2012

Krugman Speaks!
and the Trolls wail and gnash their Teeth!
The more on target the K-man is the louder the wailing!

[scorpio48swm]

02:58 PM on 05/04/2012

Why is anyone paying any mind to this man and his verbal diahrea being thrown at a wall to see if any of it sticks. Its like iceburg lettuce in a salad ..lots of fluff &stuff without any nutritional value.

[TruelyFedUp]

03:27 PM on 05/04/2012

Oh thanks, your comment has been exceptionally helpful in leading us to a soltution. NOT.

[Dosadi]

08:52 PM on 05/04/2012

Because he makes sense.

Try it.

[Stewart Goss]

02:52 PM on 05/05/2012

Spending money creates wealth? That makes sense?

[Bizmark]

02:25 PM on 05/04/2012

Krugman's Keynsian-Nixon-back-in-71 assumption doesn't work for me. '71 bears no relationship to 2012. Money buys power, yes but the problem is deeper/wider.

Wealth/power by the powerful wealthy is easier to accrue but globalization promoted in the 90's has made the jobs the issue. Our economy depends on the circulation of money thru the system. No income means no contribution to circulation. As inflationary tendencies push prices up and globalization+reduction in public sector jobs pushes unemployment up there are fewer consumers w/ the power to consume. Job creator buys Bentley, vacation homes because no can afford to provide them w/ profits on job investment.

The right promotes further deregulation, destruction of unions and collective bargaining, removal of benefits (unemployment insurance, food stamps, a reduction in SS payments, Medicare, as everything else that looks like 'welfare'). How does spending/tax cuts provide jobs and increase buying, the heart of the problem? Is it even conceivable that a Ryan Budget w/ its further reductions in government services, putting more people out of work makes sense to anyone but Ryan? He lost the support of the guy that invented it!

Globalization has altered the way products are produced. The plant, the labor, the assembly and the design of components are now purchased rather than made by the prime lead. China's economy depends on that. Ours has been ruined by it and no amount of cuts and tax breaks can change that.

[Dosadi]

08:54 PM on 05/04/2012

I could kiss you for this.

Fanned and faved.

[Stewart Goss]

02:44 PM on 05/05/2012

So according to you govt. hiring = better economy and more jobs?

And just who exactly is going to pay for all these govt. workers?

[Bizmark]

03:52 PM on 05/05/2012

Working people in the increased taxes they will pay, small business in taxation thanks to profitable sales over time, reduced costs thanks to an improved and more efficient infrastructure, corporations thru development of such items as the Solyndra Solar Panel and other spin offs from government support of new technology just as China, Germany, France and the UK do (or did before our introduction of the brilliant economic plus called default swaps, sub prime mortgages, globalization and NAFTA -- all designed to further the investor class at the expense of the rest of us). You on the right need to more thinking, less promotion of partisan platitudes.

[procrustes13]

10:16 PM on 05/06/2012

Actually they are paid with money created out of thin air in return for producing real goods and services that boost the economy.

[nothing2fear]

02:24 PM on 05/04/2012

To most of us this is really obvious, the dogmatic Republican Party has lost sight of the best interests for all Americans and is pushing a narrow agenda which serves few. In almost all respects the nation has been conquered buy wealthy self interested forces which have had a totalizing effect on the nation and devastated the economy.

[sanfran55]

12:54 PM on 05/06/2012

We need to see jail time for the big players who created fraud (via financial markets and loans) against the American public. Not one big player is in jail - this is outrageous.

[nothing2fear]

08:36 AM on 05/07/2012

It truly shakes one's confidence.

[KarmaPatrol]

02:18 PM on 05/04/2012

Inequality plus an aging population in America, Europe, Japan, and even (by 2050) in China will probably present a toxic brew for the macroeconomy. Boomer retirees will spend but probably on health and recreation (i.e. square-dancing). Kids, get that nursing certification, in addition to that Tribal Welding Art degree (they do have double-majors, you know) ,.. and invest in anti-aging supplements.