Thursday, January 12, 2012

My Economix Comment On Krueger's Income Inequality Policies

My comment posted on The New York Times, Economix, "Obama Adviser’s View of Unequal Opportunity" by John H Cushman Jr:
Alan Krueger is totally debunked when you look at the consumption side versus the income side of US households.

A producer has two choices. Give generous raises and keep prices high to support those higher wages of a few, or lower prices to sell more, make the product more affordable to the masses and not give as generous raises.

Over the last 40 years, more and more households in the US have been able to afford LCD TVs, air conditioning, cell phones, microwaves, buy affordable clothing at Kohl's, Wal-Mart, Target, dine out at the Applebee's and Red Lobsters, etc.

Plus, the US has the lowest food prices in the world as measured by the number of work hours needed to afford food.

It is not what goes into your pocket that counts. It is what that money can buy that counts.

The government's own computation of inequality, GINI coefficients, show that there has been no change in inequality over last 30+ years.

Economists who push an inequality agenda like to use the 1970s as a starting point because that is the low point for some inequality measures. However, those same measures today, which purportedly show high inequality, are no higher than they were around 1920.

WW I, 1920s recession, the Great Depression, WW II, and the high inflation rates of the 1970s made many of the rich poor, lowering inequality measures.

Obama's and Krueger's policies will only make the rich poor without any benefit. Their policies to undo inequality will not allow the poor to buy more.

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