inequality and Democrats; Strange Defeat

Inequality: Don't Blame the Market by Dean Baker

Goldfarb:

Jason Furman, the chairman of the Council of Economic Advisers, has estimated that overall, the health care programs and Obama's tax policies should undo years of growing inequality. 

"Just the tax changes we made in this administration undid about half a decade of the increase in inequality," he said in a press briefing last week on an unrelated topic. "If you add in the Affordable Care Act, it’s more than a decade of inequality that was undone. " 

He said future work must tackle the pre-tax inequality, by doing things like raising the minimum wage, which would immediately increase the income of the poor, and improving educational attainment, which could reduce inequality over the long run.

First off: defeat the Republicans. Secondly, purge the Democrats of the Rubinites. We need the Democrats to not bother talking about supply side policies to fix pre-tax inequality like improving education. They need to focus on full employment and rising real wages. They need to take to heart Kalecki's point that the economy should not depend upon the whims of investors and business managers. The base line should be set by the government and government spending. Then who cares when an asset bubble pops.

The "strange defeat" of the Democratic Party - to take the title of J.W. Mason's blog post - happened when Bill Clinton dropped his campaign pledge for a middle class spending bill in the face of Greenspan's threats to raise interest rates. As James Carville quipped "I want to be reincarnated as the bond market. Everyone's afraid of you." Greenspan did deliver 4 percent unemployment, but it was unsustainable and led to increasing inequality as the tech boom busted and morphed into the housing bubble. Clinton's deficit reduction was squandered by Bush's tax cuts for the rich which Greenspan endorsed.

Mason's post a response to his article where the conservative writer mentions India. They wish America, Japan and Europe were more like developing nations and were more vulnerable to bond vigiliantes. But they have their own printing presses.