Inequality has emerged as a major issue in the US and beyond. A generation ago it could reasonably have been asserted that the overall growth rate of the economy was the main influence on the growth in middle-class incomes and progress in reducing poverty. This is no longer a plausible claim. The share of income going to the top 1 per cent of earners has increased sharply. A rising share of output is going to profits. Real wages are stagnant. Family incomes have not risen as fast as productivity. The cumulative effect of all these developments is that the US may well be on the way to becoming a Downton Abbey economy. It is very likely that these issues will be with us long after the cyclical conditions have normalized and budget deficits have at last been addressed.
We think the problem is a skew in democracy making it nearly impossilbe to deliver truth to the middle class. Party oligarchs have masked information from the middle class who are increasingly buried in these increasing large sunbelt states. You, Larry Summers, are part of the problem. You fail to study fair voting and its consequences, which are mainly good.
In Larry's entire career as a bureaucrat, he has never really discovered the necessity of fair voting and the agglomeration problem of large states. A sad work history indeed, almost criminal. Arnold Kling's version of PSST tells us that we are in disequilibrium, so these crashes are just random? No, the probability that this periodic sequence is random is about 1/400.
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