{"id":2044,"date":"2011-10-14T15:12:11","date_gmt":"2011-10-14T19:12:11","guid":{"rendered":"http:\/\/www.multiplier-effect.org\/?p=2044"},"modified":"2011-10-18T12:22:28","modified_gmt":"2011-10-18T16:22:28","slug":"inequality-and-crisis","status":"publish","type":"post","link":"https:\/\/blogs.bard.edu\/multiplier-effect\/inequality-and-crisis\/","title":{"rendered":"Inequality and Crisis"},"content":{"rendered":"<p>Nouriel Roubini argues at <a href=\"http:\/\/www.project-syndicate.org\/commentary\/roubini43\/English\">Project Syndicate<\/a> that widening inequality lends itself to both economic and political instability.\u00a0 In his latest policy brief, &#8220;<a href=\"http:\/\/www.levyinstitute.org\/publications\/?docid=1421\">Waiting for the Next Crash<\/a>,&#8221; Randall Wray connects some of these same dots, tying the rise of &#8220;financialization&#8221; and soaring household debt levels to stagnating median incomes in the US:<\/p>\n<blockquote><p>&#8230;as finance metastasized, the \u201creal\u201d economy was withering\u2014with the latter phenomenon feeding into the former. High inequality and stagnant wage growth tends to promote \u201cliving beyond one\u2019s means,\u201d as consumers try to keep up with the lifestyles of the rich and famous. Combine this with lax regulation and supervision of banking, and you have a debt-fueled consumption boom. Add a fraud-fueled real estate boom, and you have the fragile financial environment that made the [global financial crisis] possible.<\/p><\/blockquote>\n<p>Partly inspired by the work of Hyman Minsky (the <a href=\"http:\/\/www.bard.edu\/library\/archive\/minsky\/index.html\">Minsky Archives<\/a> here at the Levy Institute, incidentally, are in the process of being <a href=\"http:\/\/digitalcommons.bard.edu\/hm_archive\/\">digitized<\/a>), Wray recommends a set of policy changes that are aimed at righting this imbalance between finance and the &#8220;real&#8221; economy.\u00a0 These include restructuring (shrinking) and re-regulating (with strict limits on securitization) the financial sector, and an &#8220;employer of last resort&#8221; policy that would offer a guaranteed job to everyone willing and able to work (federally funded, with decentralized administration).\u00a0 The ELR would not just be aimed at addressing the catastrophic unemployment problems associated with a cyclical downturn like the one we&#8217;re in now, but at creating a force pushing toward full employment at all phases of the business cycle.\u00a0 (You can read the brief <a href=\"http:\/\/www.levyinstitute.org\/publications\/?docid=1421\">here<\/a>.)<\/p>\n<p><em>Update<\/em>:\u00a0 Read the IMF&#8217;s recent contribution to the inequality debate <a href=\"http:\/\/www.imf.org\/external\/pubs\/ft\/fandd\/2011\/09\/berg.htm\">here<\/a> and <a href=\"http:\/\/www.imf.org\/external\/pubs\/ft\/sdn\/2011\/sdn1108.pdf\">here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Nouriel Roubini argues at Project Syndicate that widening inequality lends itself to both economic and political instability.\u00a0 In his latest policy brief, &#8220;Waiting for the Next Crash,&#8221; Randall Wray connects some of these same dots, tying the rise of &#8220;financialization&#8221; and soaring household debt levels to stagnating median incomes in the US: &#8230;as finance metastasized, [&hellip;]<\/p>\n","protected":false},"author":202,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[89,4,3,8,111],"tags":[],"class_list":["post-2044","post","type-post","status-publish","format-standard","hentry","category-distribution","category-economic-policy","category-employment","category-financial-crisis","category-financial-reform"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/2044","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/users\/202"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/comments?post=2044"}],"version-history":[{"count":11,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/2044\/revisions"}],"predecessor-version":[{"id":2049,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/posts\/2044\/revisions\/2049"}],"wp:attachment":[{"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/media?parent=2044"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/categories?post=2044"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.bard.edu\/multiplier-effect\/wp-json\/wp\/v2\/tags?post=2044"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}