CommonDreams.Economists Agree: US Inequality Is Killing the Economy

Publié par siel sur 20 Décembre 2013, 17:25pm

Published on Wednesday, December 18, 2013 by Common Dreams

'The economic populists are right'

- Jon Queally, staff writer

In this Wednesday, Nov. 20, 2013, file photo, a destitute man sleeps on the sidewalk under a holiday window at Blanc de Chine, in New York The growing gap between the richest Americans and everyone else isn’t bad just for individuals it’s hurting the U.S. economy says a majority of more than three dozen economists surveyed in December 2013 by The Associated Press. (AP Photo/Mark Lennihan, File)

A majority of "private, corporate and academic economists" agree: economic inequality in the U.S. is not just hurting individuals and families who struggle to make ends meet; the growing gap in both wages and wealth is harming the economy as a whole.

That's according to a new survey by the Associated Press which confirms what progressive-minded economists and policy-makers have been saying since... always.

After asking more than three dozen economists a host of questions about trends in the current economy, the survey discovered that one of the chief concerns shared by most is the stagnation of the middle class as the rich get richer. Why? According to what AP gleaned from economists:

Higher pay and outsize stock market gains are flowing mainly to affluent Americans. Yet these households spend less of their money than do low- and middle-income consumers who make up most of the population but whose pay is barely rising.

"What you want is a broader spending base," says Scott Brown, chief economist at Raymond James, a financial advisory firm. "You want more people spending money."

Spending by wealthier Americans, given the weight of their dollars, does help drive the economy. But analysts say the economy would be better able to sustain its growth if the riches were more evenly dispersed.

As the debate in Washington and across the country about economic inequality receives fuel from a populist surge that has included growing demonstrations by low-wage workers and calls for a large federal increase of the minimum wage, the consensus by this diverse group of economic minds should bolster those calling for real policy changes in the wake of the financial collapse of 2008.

As Paul Krugman, noted Kenyesian and columnist for the New York Times, wrote this week: "The economic populists have it right."

Citing the numbers, Krugman explains:

On average, Americans remain a lot poorer today than they were before the economic crisis. For the bottom 90 percent of families, this impoverishment reflects both a shrinking economic pie and a declining share of that pie. Which mattered more? The answer, amazingly, is that they’re more or less comparable — that is, inequality is rising so fast that over the past six years it has been as big a drag on ordinary American incomes as poor economic performance, even though those years include the worst economic slump since the 1930s.

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