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Friday, May 4, 2012

Inequality good or bad?

Moneybox:
One very interesting point that James Galbraith makes in his newish book Inequality and Instability is that if instead of looking at Finland then Spain then Germany then Greece all as separate countries but instead look at "Europe" as an integrated marketplace with perfect capital mobility and legal labor mobility then it's even more unequal than the United States:
...European inequality, taking into account the differences that exist between, let’s say, Germany and Poland or between Norway and Portugal, is actually larger in wages than it is in the United States.
...Europe the collection of separate low-inequality places has generally high taxes and generally high levels of income redistribution. But Europe the collective has extremely low taxes and almost no income redistribution. Greg Mankiw suggested in a recent New York Times column that radically decentralizing tax and redistribution policy in the United States would spur huge economic benefits. He might have cited the prevailing dynamic in the European Union as an example of his ideas being put into practice, but I think doing so would have tended to undermine the conclusion.
Edward Conard agrees with Mankiw that inequality in America is too low because of too much tax on corporations and the wealthy, but Conard is much more explicit about cheering for greater inequality and more wealth for the top 1% richest Americans.  He even wrote an entire book about it.