Krugman: US income inequality approaching alarming levels Income inequality in the United States has become much more than a political talking point. It is changing the fundamentals of the economy and is happening on such a massive scale, Nobel Prize-winning economist Paul Krugman believes it is reaching alarming levels. On Thursday, during a Bloomberg News interview with Tom Keene at CUNY in New York, Krugman said there was nothing good about setting historic records in the gap between rich and poor, and that the country as a whole could not sustain the economy as a poverty-ridden oligarchy. That the rich keep getting richer doesn’t mean the country or economy is better off. Krugman traced the problem back to the 1980s, when President Ronald Reagan turned the US tax system into a wealth-redistribution center for millionaires and billionaires. The Reagan policies, known as “trickle-down” or supply-side economics, achieved at least part of their intended purpose. They did indeed shift more money to the rich. But the “trickle-down” part never happened. “The fact of the matter is, since inequality began soaring, around 1980, the bottom half of America has pretty much been left behind. There has not been a rising tide that raised all boats,” Krugman said. While the income-inequality gap may have begun its growth under the Reagan administration, it accelerated after the Wall Street-induced Great Recession of 2008. Bankers, who knowingly bundled and sold high-risk mortgages as good investments, saw their plans to parlay billions in profits backfire. The resulting meltdown destroyed the US housing market and set off an unprecedented string of foreclosures that the country still hasn’t completely recovered from six years later. But rather than live by the rules of free-market capitalism, the bankers ran to Washington, crying all the way like babies who had their toys taken away. The American people flooded the Capitol with emails and phone calls demanding that Congress refuse to bail them out. Their voices were heard, but it only lasted two days. After a backroom deal was struck, Congress and President George W. Bush opened the vaults of the US Treasury and gave Wall Street all the taxpayer money they wanted. When the dust from the financial crisis settled, Wall Street CEO’s handed themselves multimillion dollar bonuses and their wealth was restored, and then some. However, that was not the case for the millions of homeowners who found themselves on the losing end of illegal foreclosures. The bankers took the bailout money and the homes. There was no way for them to lose because the game was rigged... Read more:
Posted on: Fri, 18 Apr 2014 22:00:01 +0000