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Friday, January 24, 2014

Paul Krugman: The Populist Imperative

Jobs and inequality are "closely linked":

The Populist Imperative, by Paul Krugman, Commentary, NY Times: “The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.”
John Maynard Keynes wrote that in 1936, but it applies to our own time, too. And, in a better world, our leaders would be doing all they could to address both faults.
Unfortunately,... we should count ourselves lucky when leaders confront even one of our two great economic failures. If ... President Obama devotes much of his State of the Union address to inequality, everyone should be cheering him on.
They won’t, of course. Instead, he will face two kinds of sniping. The usual suspects on the right will, as always when questions of income distribution comes up, shriek “Class warfare!” But there will also be seemingly more sober voices arguing that he has picked the wrong target, that jobs, not inequality, should be at the top of his agenda.
Here’s why they’re wrong.
First of all, jobs and inequality are closely linked if not identical issues. ...
Moreover, there’s an even stronger case to be made that high unemployment — by destroying workers’ bargaining power — has become a major source of rising inequality and stagnating incomes even for those lucky enough to have jobs.
Beyond that, as a political matter, inequality and macroeconomic policy are already inseparably linked. ... For example, two-thirds of the spending cuts proposed last year by Representative Paul Ryan, the chairman of the House Budget Committee, would have come at the expense of lower-income families.
The flip side of this attempt to use fiscal scare tactics to worsen inequality is that highlighting concerns about inequality can translate into pushback against job-destroying austerity, too.
But the most important reason for Mr. Obama to focus on inequality is political realism. Like it or not, the simple fact is that Americans “get” inequality; macroeconomics, not so much. ...
The point is that of the two great problems facing the U.S. economy, inequality is the one on which Mr. Obama is most likely to connect with voters. And he should seek that connection with a clear conscience: There’s no shame is acknowledging political reality, as long as you’re trying to do the right thing.
So I hope we’ll hear something about jobs Tuesday night, and some pushback against deficit hysteria. But if we mainly hear about inequality and social justice, that’s O.K.

    Posted by on Friday, January 24, 2014 at 02:56 AM in Economics, Income Distribution, Politics | Permalink  Comments (75)

          


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