For reasons that have yet to be explained liberal American thinkers—as opposed to radical French thinkers—glommed on to Thomas Piketty’s neo-Marxist analysis of increasing income inequality.
Piketty, you recall, explained that the internal contradictions of capitalism—a neo-Marxist notion if ever there was one—would necessarily cause inequality.
The problem was systemic and it required much higher tax rates, a universal tax on wealth and massive redistribution.
After all, the French Socialist president Francois Hollande had adopted exactly the same policies and they had failed miserably. So much so that the Socialist Party was thoroughly repudiated in the most recent French municipal elections.
Now, via Tyler Durden, we have a more cogent analysis of the rampant income inequality that has characterized the Obama recovery.
Cowen quotes famed doomster Marc Faber’s succinct statement:
“The more they [the Federal Reserve] print, the more inequality there is, the weaker the economy will become." Simply put, "it's a catastrophe," Faber told CNBC, "what the Fed has done is to lift asset prices, and the cost of living. In the meantime, the cost of living increases are higher than the wage increases. The typical American household income is going down in real terms."
If you prefer, here's the videotape:
Durden then quotes Paul Singer, making the same point:
Inequality in the U.S. today is near its historical highs, largely because the Federal Reserve’s policies have succeeded in achieving their aim: namely, higher asset prices (especially the prices of stocks, bonds and high-end real estate), which are generally owned by taxpayers in the upper-income brackets. The Fed is doing all the work, because the President’s policies are growth-suppressive. In the absence of the Fed’s moneyprinting and ZIRP, the economy would either be softer or actually in a new recession.
The greatest irony is that the President is railing against inequality as one of the most important problems of the day, despite the fact that his policies are squeezing the middle class and causing the Fed – with the President’s encouragement – to engage in the radical monetary policy, which is exacerbating inequality. This simple truth cannot be repeated often enough.
It’s not the internal contradictions of capitalism, but the combination of moneyprinting and “growth-suppressive" policies.
But, you knew that already….