…it is notable that in a time of deeply depressed labor markets, our biggest thing is long-run inequality.
Or closer to home, I do of course track how my columns do on the most-emailed list; and there’s no question that inequality gets a bigger response than demand-side macro.
This doesn’t mean that we should (or that I will) stop trying to get the truth about depression economics across. But it’s an interesting observation, and I think it has implications for how politicians should go about doing the right thing.
This is a very interesting point (link here), but it differs from my view. I see the inequality issue as having high salience for NYT readers, for Democratic Party donors, and for progressive activists. It has very little salience for the American public, especially with say swing voters in southern Ohio or soccer moms. Unlike in Singapore or South Korea, where the major concentrations of wealth are pretty hard to avoid for most people, American income inequalities are well hidden for the most part.
McLean is one of the wealthiest towns in Virginia, but if you drive through the downtown frankly it still feels a bit like a dump. I’ve never wanted to live there, not even at lower real estate prices. You don’t stumble upon the nicest homes unless you know where to look. Middleburg is wealthier yet, but it has few homes, feels unreal, and most people don’t go there anyway. If they do, they more likely admire well-groomed horses and still read Princess Diana biographies. They are not choking with envy over the privileges of old money rentiers, and there is no Walmart in town to bring in the masses (who probably would not care anyway).
Perhaps ironically, to the extent that inequality as a phenomenon consists of the top 0.01% pulling away from the pack (not my prediction, by the way), general public resentment against the very wealthy will be especially hard to generate. Out of sight, out of mind.
What swing voters really hate is inflation, probably irrationally so. That does mean the aggregate demand argument won’t have much political salience, but as a result I see the Left as not quite knowing what to do next. We’ll get pre-school in more cities, a $15 minimum wage in Seattle, and lots of action targeted at high cable bills, which for the intelligentsia will be tied to net neutrality and various mergers. As the de Blasio reign indicates, blue cities may be the new laboratories for trying out bad ideas. The states which won’t expand Medicaid may yet budge, but most of them are firmly in the “red” category. The political influence of the local hospitals will matter more than intellectual discourse.
In short, you can expect a series of totally unsatisfying political debates, and they will further distort the discussions of economists, on both sides of the political ledger.