Sunday, August 21, 2011

Some Economic Queries

The Madville Times points to this Washington Post editorial that questions Republican economic theorySouth Dakota Politics counters by pointing to a New York Times article that indicates the green jobs initiatives fail.

Dr. Blanchard also takes issue with Cory's assertion that
Republican economics is wrong, intellectually, empirically, and morally. It’s really just class warfare, trying to convince the majority that government has no role in the economy so they can take the government’s hand off the tiller and let wealth naturally accumulate upward.
Blanchard responds,
The green jobs agenda is an intellectual and empirically verified farce. My friends on the left will still believe in it, and insist that we invest in it. What else could they do? But this kind of spending on useless things means that somebody isn't getting a raise and somebody else isn't getting a job. That might matter morally.
I have been thinking a lot about conflicting priorities and underlying problems lately. The fact that the country needs more jobs is indisputable.  Blanchard's rejoinder, however, seems to miss the point of Cory's question about economic policy and morality.

Politifacts rates as true the claim that he 400 richest people in the country control as much wealth as the bottom 50% of the population.  In other words 400 people control as much wealth as 150 million people.

The PBS NewsHour has developed this chart to show the how wealth is distributed in the United States.

 

Blanchard wants to leave morality out of the conversation, so I won't ask if this distribution is moral.  Instead I'll ask the following four questions.

First, is this distribution desirable?

Second, is this distribution sustainable?

Third, if the answer to either of the previous questions is "No," what's the best way to change the distribution?

Fourth, how does this distribution affect job creation?

Blanchard and many others are rightly concerned about avoiding Greece's fate.  Avoiding bankruptcy or default is a necessary goal.  However, it strikes me that one needs to work to achieve a more desirable distribution; one that looks like this chart that shows Sweden's distribution.



We may never achieve Sweden's breakdown.  As a country we may decide that this distribution has negative consequences that we want to avoid.  That being said, it seems blatantly obvious that the bottom 60% need more than 4.3% of the pie.

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