Tags: Blinder | inequality | supply | side

Blinder: Rising Income Inequality Hurts Supply Side of Economy Too

Monday, 18 Aug 2014 10:42 AM

By Dan Weil

Most of the focus on income inequality, in terms of how it damages the economy, has focused on the demand side: people without money can't spend.

But, "in thinking about the effects of inequality on growth, we should look more at the supply side than the demand side," Princeton economist Alan Blinder writes in The Wall Street Journal.

"The best supply-side policies may be those aimed at reducing income inequality."

Editor’s Note:
New Warning - Stocks on Verge of Major Collapse

For example, children who grew up poor receive substandard education in their public schools and probably don't make it to college, the former vice chairman of the Federal Reserve explains.

Children who don't get enough to eat are deprived both physically and mentally. And children who don't receive adequate healthcare obviously suffer.

"Inequalities have grown so extreme that we have such phenomena in America," Blinder notes. That justifies programs such as Medicaid and Obamacare, he adds.

"Still, the U.S. is not doing nearly enough. Inequality is rising, and so is poverty — which takes a toll on the productivity of the American workforce. Anti-inequality policies can be pro-growth."

Meanwhile, financial author Erik Sherman writes in an article Forbes that while the ultra-wealthy are culpable for much of the rise in income inequality, "it is hypocritical for most people wringing their hands to point at the rich as the sole source of wage inequality."

The middle class "has a big role in the problem," he says. For example, by purchasing the cheapest goods and services at the lowest prices possible, the middle class helps put a ceiling on wages because to keep prices down, a business must keep expenses down, "and labor is one of the easiest areas in which to do this."

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

Related Stories:

© 2015 Moneynews. All rights reserved.

Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

CEI's Carrie Sheffield: Govt Suit Against S&P a 'Chilling Precedent'

Friday, 30 Jan 2015 21:27 PM

The government's case against Standard & Poor's over its rating of home mortgage bonds prior to the 2008 financial crisi . . .

FBT's Tom Hutchinson: Recession to Put Us in 'Deeper Hole'

Friday, 30 Jan 2015 20:44 PM

The U.S. economy is in great shape now, but the next recession won't be pretty, Tom Hutchinson, the senior editor of the . . .

Kudlow: After Romney, a GOP Message of Incentives and Growth

Friday, 30 Jan 2015 20:20 PM

If there’s anything the GOP needs , besides a winner , it’s a confident, incentive-based, pro-growth message. The party  . . .

Most Commented
Top Stories

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved