Krugman: Let’s talk first about the link between inequality and polarization.

[pampango]

So how did we end up in this state? How did America become a nation that could not rise to the biggest economic challenge in three generations, a nation in which scorched-earth politics and politicized economics created policy paralysis?

We suggest it was the inequality that did it. Soaring inequality is at the root of our polarized politics, which made us unable to act together in the face of crisis. And because rising incomes at the top have also brought rising power to the wealthiest, our nation’s intellectual life has been warped, with too many economists co-opted into defending economic doctrines that were convenient for the wealthy despite being indefensible on logical and empirical grounds.

Let’s talk first about the link between inequality and polarization.

What’s more surprising is the fact that the relatively nonpolarized politics of the post-war generation is a relatively recent phenomenon — before the war, and especially before the Great Depression, politics was almost as polarized as it is now. And the track of polarization closely follows the track of income inequality, with the degree of polarization closely correlated over time with the share of total income going to the top 1 percent.

The most likely explanation of the relationship between inequality and polarization is that the increased income and wealth of a small minority has, in effect, bought the allegiance of a major political party. Republicans are encouraged and empowered to take positions far to the right of where they were a generation ago, because the financial power of the beneficiaries of their positions both provides an electoral advantage in terms of campaign funding and provides a sort of safety net for individual politicians, who can count on being supported in various ways even if they lose an election.

In sum, extreme income inequality led to extreme political polarization, and this greatly hampered the policy response to the crisis. ... Leading politicians gave speeches that could have come straight out of the mouth of Herbert Hoover; famous economists reinvented fallacies that one thought had been refuted in the mid-1930s. Why?

The answer, we would suggest, also runs back to inequality. ...

http://politics.salon.com/2012/04/15/economy_killers_inequality_and_gop_ignorance/singleton/

[scarletwoman]

1. Excellent! K&R

[quaker bill]

2. Great read, K&R

[geckosfeet]

3. Interesting if not obvious observations.

Economy killers: Inequality and GOP ignorance

Why does higher inequality seem to produce greater political polarization? Crucially, the widening gap between the parties has reflected Republicans moving right, not Democrats moving left. This pops out of the Poole-Rosenthal-McCarty numbers, but it’s also obvious from the history of various policy proposals. The Obama health care plan, to take an obvious example, was originally a Republican plan, in fact a plan devised by the Heritage Foundation. Now the GOP denounces it as socialism.

The most likely explanation of the relationship between inequality and polarization is that the increased income and wealth of a small minority has, in effect, bought the allegiance of a major political party. Republicans are encouraged and empowered to take positions far to the right of where they were a generation ago, because the financial power of the beneficiaries of their positions both provides an electoral advantage in terms of campaign funding and provides a sort of safety net for individual politicians, who can count on being supported in various ways even if they lose an election.

Whatever the precise channels of influence, the result is a political environment in which Mitch McConnell, leading Republican in the Senate, felt it was perfectly okay to declare before the 2010 midterm elections that his main goal, if the GOP won control, would be to incapacitate the president of the United States: "The single most important thing we want to achieve is for President Obama to be a one-term president."

Needless to say, this is not an environment conducive to effective anti-depression policy, especially given the way Senate rules allow a cohesive minority to block much action. We know that the Obama administration expected to win strong bipartisan support for its stimulus plan, and that it also believed that it could go back for more if events proved this necessary. In fact, it took desperate maneuvering to get sixty votes even in the first round, and there was no question of getting more later.

Economy killers: Inequality and GOP ignorance

All bolding mine.


The conclusion, that we will not have good macroeconomic policy until the distorting affects of inequality are curbed - is chilling. Because I do not see anything being curbed. The fans are being fed with gasoline and hot air.

[xchrom]

4. Du rec. Nt

[freshwest]

5. ...

[Electric Monk]

6. K&R

&U&G&M&A&N