Monday, March 10, 2014
I hate the NYTimes paywall, because I can no longer read the Professor.
But in this piece, he notes the compelling research from the IMF that shows redistributive fiscal policy actually enhances economic growth. What's more it creates the sort of sustained, gentle growth we saw in the '90s. When you have income inequality, you tend to see bubbles and crashes like in the '00s.
I've always felt that insufficient taxes on the wealthy create speculative bubbles simply because they have extra money lying around. And out of cupidity, they desire more lucre. So they pursue various means - stock or real estate speculation, increasingly byzantine derivatives - that create the bubbles that eventually the middle class gets sucked into. And when it crashes, it is those with marginal assets that get crushed.
Nice to see that notoriously leftist IMF come to the same conclusion.