Arnold Kling  

Kindred Spirit

PRINT
A Bet on PSST vs. AS-AD?... My Review of Jeff Friedman's W...

Kindred Winecoff writes,


I do not see a world economy that has stagnated overall. I don't even see a US economy (pre-2008) that has stagnated. I see a redistribution from a certain class of American workers to workers with similar skills in other countries, and to workers with very high skills in the US that can market those skills to a global economy. This doesn't have to be a bad thing, if the government can respond by encouraging innovation by high-skilled workers, and even encourage a lot of compensation for them, but provide for the rest with a fairly robust safety net. And, in fact, the major political cleavages of the present focus on precisely these issues. The political battles aren't about stagnation, but about distribution.

Read the whole thing. Pointer from Tyler Cowen.

One point I would add concerns the change in gender roles and marital patterns. Over the past several decades, women have moved into the market economy and up the income ladder. Marriage used to be an inequality reducer--as higher earning males married women who earned little or nothing in the market. Now, marriage is an inequality reinforcer, as higher earning males marry higher earning females. And more assortive mating means that we get increasing inequality of childhood endowments, also.


Comments and Sharing





COMMENTS (2 to date)
RPLong writes:

Do you really think the government should "encourage innovation by high-skilled workers" and "provide for the rest with a robust safety net?"

Isn't that precisely what the government is doing by bailing out large US corporations and expanding the scope of social services?

I have seen a number of economists trace out recent "stagnations" to about 1973. I think enough people have traced enough things about changes in growth rates and economic activity and demographics that we should all be fairly comfortable acknowledging the elephant in the room: In 1973 or so, a major economic event took place that changed things immediately.

Now, how many things can we think of that occurred at about that time, that would permanently effect GDP and all its derivative measurements? Kind of seems like a monetary event, doesn't it? Let's see here... what big monetary event occurred at about 1973...? Hmm....

stuhlmann writes:

"This doesn't have to be a bad thing, if the government can respond by encouraging innovation by high-skilled workers, and even encourage a lot of compensation for them, but provide for the rest with a fairly robust safety net."

While I enjoyed Mr. Winecoff's article a great deal, I have to wonder at his conclusions. Some of the loudest political battles of recent years have had to do with providing this "robust safety net" - Medicare/Medicaid reform, tax hikes for the wealthy, Wisconsin public employee unions, extending unemployment benefits, government debt ceiling, etc. The only way that the government can provide this safety net is if someone, those high-skilled and highly compensated workers, agrees to pay for it. So far they do not agree.

Comments for this entry have been closed
Return to top