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April 23, 2014

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Latest Posts from Economist's View


'Thomas Piketty Is Right'

Posted: 23 Apr 2014 12:33 AM PDT

Solow on Piketty:

Thomas Piketty Is Right: Everything you need to know about 'Capital in the Twenty-First Century', by Robert Solow: Income inequality in the United States and elsewhere has been worsening since the 1970s. The most striking aspect has been the widening gap between the rich and the rest. This ominous anti-democratic trend has finally found its way into public consciousness and political rhetoric. A rational and effective policy for dealing with it—if there is to be one—will have to rest on an understanding of the causes of increasing inequality. The discussion so far has turned up a number of causal factors: the erosion of the real minimum wage; the decay of labor unions and collective bargaining; globalization and intensified competition from low-wage workers in poor countries; technological changes and shifts in demand that eliminate mid-level jobs and leave the labor market polarized between the highly educated and skilled at the top and the mass of poorly educated and unskilled at the bottom.
Each of these candidate causes seems to capture a bit of the truth. But even taken together they do not seem to provide a thoroughly satisfactory picture. They have at least two deficiencies. First, they do not speak to the really dramatic issue: the tendency for the very top incomes—the "1 percent"—to pull away from the rest of society. Second, they seem a little adventitious, accidental; whereas a forty-year trend common to the advanced economies of the United States, Europe, and Japan would be more likely to rest on some deeper forces within modern industrial capitalism. Now along comes Thomas Piketty, a forty-two-year-old French economist, to fill those gaps and then some. I had a friend, a distinguished algebraist, whose preferred adjective of praise was "serious." "Z is a serious mathematician," he would say, or "Now that is a serious painting." Well, this is a serious book. ...

Links for 4-23-14

Posted: 23 Apr 2014 12:03 AM PDT

Assessing Fed Policy During the Great Recession

Posted: 22 Apr 2014 10:33 AM PDT

On the road again, will blog as I can; For now, I have a new column:

Report Card on Fed Policy During the Great Recession, by Mark Thoma: If the economy evolves according to the Federal Reserve's forecast, quantitative easing is on track to come to a close by the end of this year. Increases in the federal funds rate are likely to follow. Thus, as the Fed's policies to combat the Great Recession are coming to an end, it's time to ask: Did these policies work? ...

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