Monday, February 22, 2016

The Melting Away Of Social Democracy In The North Atlantic Nations

Thomas Piketty wrote a book that sold 2.2 million copies in which he argued that the period following WW ll until around 1980 was an anomaly.  That was a period of rising income an wealth  equality and the establishment of a social democracy.  We have entered a new period in which income and wealth inequality are increasing rapidly and putting an end to the social democracy that was created during the anomaly.  Brad DeLong does a nice job of explaining Piketty's argument and some of the good and bad critiques of his book.  Piketty argued that steps could be taken to reverse the inequality trend that he described, but that it would take a major effort by governments to restore the period of social democracy that arose following the destruction of capital during the Great Depression and the second world war.  DeLong reached a pessimistic conclusion that is quoted below.  It would be hard for anyone observing the presidential primary campaigns to be positive about the ability of our political system to reverse the trends that are underway.  Unfortunately, very bad politicians get a lot of help from very bad economists who assist them in developing economic and social policies.

But right now money talks very loudly indeed. And I leave the Piketty debate more depressed about our ability to keep it from talking so loudly. What makes me more depressed? The Piketty debate itself does: The eagerness of so-many economists to aggressively make so many shoddy arguments that Piketty does not know what he is talking about--that makes me think that Piketty does indeed know what he is talking about.

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