Paul Krugman has been primarily concerned about the depressed state of the economy and the failure of government to adopt countercyclical fiscal policies to reduce unemployment. In this article, and in a second article, he argues that rising inequality has become the defining problem in economics. He looked at the impact of rising inequality and determined that rising inequality has been more damaging to most Americans than the depressed economy. For example, in 1979 the bottom 90% received 66% of the income. Today the bottom 90% receives only 50% of the income. That represents a bigger loss of income to the middle class than the effect of a depressed economy. He has joined Joe Stiglitz and other progressive economists who have decided that the focus on inequality is not a diversion. It is the right direction in which to move the economic discussion. Moreover, he now believes that rising inequality has contributed to slow economic growth, and that it has increased the political power of those who favor government policies that contribute to rising inequality.
Krugman understands that any efforts to alter the trend towards rising inequality will be met by a rising refrain from those who led the class warfare against the middle class. They will call any effort to reduce that trend class warfare. There is only one kind of class warfare in the vocabulary of most plutocrats. It is when the middle class attempts to reverse the trend that they engineered for the last three decades.
The plutocracy has a similar response when government attempts to use monetary and fiscal policy to end recessions. They tell us that fiscal policy will turn the US into Greece, and that monetary policy will create the kind of inflation that exists in Zimbabwe. The good news is that progressives have dealt with the same counterclaims for years. The bad news is that right wing media are supportive of right wing counterclaims and nobody likes fiscal irresponsibility or inflation.
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