Jamie Galbraith on inequality and macroeconomics
Via Naked Capitalism comes this youtube video from Jamie Galbraith on inequality and macroeconomics, a speech delivered at the INET talks in Berlin:
Galbraith has marshaled a great
deal of cross country data over time, and shows how changes in equality happened in a very large number of economies in parallel. He explains, persuasively, that the most plausible culprit is changes in the financial regime.
The inequality he’s talking about is the natural state of affairs. We could temporarily afford greater equality for a short period caused by the conversion of agrarian labor to industrial labor when the rest of the world lagged behind. We no longer live in that circumstance. And Galbraith like Krugman and the rest of the left economists always approach the exceptional data set as the norm from which to draw conclusions instead of an extreme privilege of circumstance which is not sustainable. Equality is rent seeking. Nothing more. It is a luxury good. It is a luxury good that is possible in a homogenous polity. It is not tolerable, even if it is affordable, in a heterogeneous polity with conflicting interests and conflicting goals desires, and concepts for man.
“remove these shackles” is rent seeking? who knew?
Living in caves is also a “natural state of affairs.” WTF does that mean to justify a solvable problem? And make no mistake, letting people die from treatable diseases or go hungry amidst the great waelth and natural patrimony of this country is a moral and ethical problem.
Every time I hear Galbraith speak it makes me proud he works at UT Austin my adopted home town. Well done.
Every time I hear Galbraith speak it makes me proud he works at UT Austin my adopted home town. Well done.
Every time I hear Galbraith speak it makes me proud he works at UT Austin my adopted home town. Well done.
And thanks to the fine work of Dr. Galbraith and his students we now understand it’s a macroeconomic one also.
The inequality he’s talking about is the natural state of affairs.
Wow, so buying influence, capturing regulators and bribing public officials to pass favorable laws and award tax breaks & subsidies targeted at your industry is perfectly “natural” then. And so is colluding to defraud retail investors and customers alike, selling toxic waste as AAA rated “safe” securities, etc. And because such behavior is so “natural”, that makes it ok.
In that case let’s redefine some other perfectly “natural” activities as perfectly ok too – how about rape and murder for starters? Y’know, making murder into a virtue might actually alleviate some of that inequality –as long as it also applies to the 99% that is.
Harm:
I am “which you” (Vinne from “My Blue Heaven”) and I am with you. The issue is the deliberate skewing of producitivity to Capital at the expense of Labor resulting from changes in tax law. 40% of profits resulted from Financial Services (go ahead Curt take a swipe at this).
Your heart is in the right place.
“and shows how changes in equality happened in a very large number of economies in parallel. He explains, persuasively, that the most plausible culprit is changes in the financial regime.”
Something of a violation of Ocaam’s Razor that one.
We have a global effect: sure, that means we should be looking for a global cause. That’s just fine. But we should be looking for the simplest and most obvious global effect which explains our evidence.
Which is globalisation itself.
We would expect globalisation to increase within country inequality as it reduces global inequality. What are we seeing? Increased withoin country inequality and falling global inequality. Occam would say that our starting hypothesis therefore should be globalisation as the cause…..
I would go further, of course, being the right wing neoliberal that I am. If we are to be concerned about inequality which inequality should we be concerned about? Global or within country? And entirely reasonable argument can be made that global is the more important of the two, the one we should be trying to solve….
Yes, Tim, you have it right.
The treatment for high-GDP-per-person countries that follows from your diagnosis is a long-term one: An education revolution that mkaes a larger part of th population globally competitive. See, e.g., http://seekingalpha.com/article/590021-prognosis-economic-stagnation-stimulus-is-not-the-answer
Tim:
If you are calling for an equalization amongst the global countries, then you and I both are in for a rude awakening as we sink to the same levels as China, the Philippines, Indonesia, or Thailand. I am not into benzene laced water coming down the Yellow river either. That is not globalization as it is not an apples to aples comparison of resource and capacity.
Martin:
I am going to disagree.
You can make us all doctorates and this will not increase the amount of work we have to do nor will it make us globally competitive which we are already in direct labor content in the product. It is not education and it is not the direct labor cost in the product. You will have to find another cause for the US’s lack of competitveness with China, etc.
I’m pretty sure the bad old soviets already tried that one. Everybody was some kind of engineer or other, remember?