A New York Times article by Louise Story asks, “Do widening gaps between rich and poor necessarily lead to financial crises?” (Aug. 21) The answer is yes, for a reason observed over 100 years ago by American economist and reformer Henry George: Economic growth enhances the value of titles to real estate and other natural resources (like broadcast spectrum). This widens the wealth gap between individual or corporate title-holders and the rest of the population. As growth progresses, overoptimistic projections of future growth widen the gap even further. Come the inevitable collapse, imaginary wealth evaporates, and the gap shrinks. Only, as pointed out by Gretchen Morgenson (“Debt’s Deadly Grip” Aug 22), this time is different. By holding short-term interest rates near zero for the big banks, the Fed is supporting the value of their toxic assets at the expense of everyone else.
- New Issue! May 17, 2015
- Monday Links: Rihanna, Baltimore, Jean Tirole, Private Equity May 5, 2015
- Thursday Links: Buffett, Chicago/Illinois, Atlanta Teachers April 9, 2015
- Siding with Wall Street’s “Winners” March 27, 2015
- Macroeconomics in the Age of Climate Change March 23, 2015
at a 30% discount.
TagsAbby Scher Adidas Alejandro Reuss austerity Bill Barclay Bill Black Cambridge Controversy climate change co-ops CPEG Darwin BondGraham David Brooks David Cay Johnston Doug Henwood eurozone Fiscal Cliff Gaza Greece homelessness inequality interest rate swaps Israel James K. Galbraith Jason Stanley libor Lynn Parramore May Day Michael Hudson Mike-Frank Epitropoulos neoclassical economics Paul Krugman Phil Gasper recovery Robert Solow Ron Baiman Sarah Blaskey Steven Pressman sweatshops Syriza taxes Thomas Piketty ultra-right William K. Black Yanis Varoufakis Yves Smith