I noted in February that John Kenneth Galbraith and Marriner Eccles explained 50 years ago that inequality causes crashes, and that many modern economists agree.
I just found a slighter older statement saying the same thing.
Specifically, the well-known Greek historian Plutarch - who died in 120 A.D. - said:
An imbalance between rich and poor is the oldest and most fatal ailment of all republics.Given that the level of inequality in America today is one of the greatest in history, it is not surprising that the republic is ailing so badly. See this, this, this, this and this.
As I noted in 2008:
This is not a question of big government versus small government, or republican versus democrat. It is not even a question of Keynes versus Friedman (two influential, competing economic thinkers).
It is a question of focusing any government funding which is made to the majority of poker players - instead of the titans of finance - so that the game can continue. If the hundreds of billions or trillions spent on bailouts had instead been given to ease the burden of consumers, we would have already recovered from the financial crisis.
"If the hundreds of billions or trillions spent on bailouts had instead been given to ease the burden of consumers, we would have already recovered from the financial crisis."
ReplyDeleteI believe you are spot on with this observation. I have heard the figure that if the trillions given to wall street and the banks was divided among the taxpaying population each one would receive about 350k. Imagine for a moment how that money would have been spent en-mas to make payments or pay off mortgages and credit cards and buy all sorts of stuff, and what that would have done to jump-start the economy's stopped heart. The banks and credit card companies would have still got their money.
Guess that's not how it was meant to work. Too much risk and insecurity on the investments, much safer to grab the money directly from the source.