Daron Acemoglu is one of the world’s top economists.  In this August 2011 HBR blog post, he presents some good medium term ideas for helping the world economy to return to 3% growth  .  Recall “the law of 72”.  With compound growth, per-capita income doubles in 18 years in an economy that grows by 4% per year.  The same logic holds for weight gain so watch how much you eat today!   If the RBC can figure out how to increase economic growth, then Seniors can continue to enjoy good retirement benefits and health care and public pensions will be funded and there will even be some $ for K-12 education and university nerds!
To quote Robert E. Lucas; “ But of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.”  see the last paragraph of this article.
A 70% top bracket for the personal income tax and
a 50% corporate income tax (which actually had to be paid)
Receivership for the Big 6 banks, as part of a policy of shrinking the financial sector to less than 3% of GDP
Criminalization of for-profit health insurance
Cutting 70% from the Defense budget
Capital controls aimed at breaking the Chinese currency peg
Replacement of student loans with grants and subsidies to non-profit educational institutions
Aggressive anti-trust policy, aimed at breaking conglomeration and network-control in the finance, media, and energy sectors.
Aggressive regulation of externalities, including a comprehensive program of carbon taxes aimed at limiting climate change and ecological damage
Lucas, of course, is the damn fool, who thought reviving the thoroughly refuted classical model was a good idea, and that a macroeconomics, which knows nothing about money or finance would be insightful. In fact, the vast increase in the well-being of hundreds of millions that occurred in the 200-year course of the industrial revolution did involve massive redistribution. Lucas is trivializing and forgetting, not only European world conquest and such redistributive, but transitory(?) assaults on human welfare as the potato famine (in which 2 million Irish peasants starved to death to save the interests of English rentiers), but the end of slavery, the end of European feudalism and empire, the advent of industrial unions and the social welfare state.
Most of these ideas by Bruce Wilder are my thoughts as well. Having an ecological education, however, makes one turn sad when the ‘growth for growth’s sake’ paradigm is invoked. Coming from a nominal ‘green’ economist makes it worse. Anyway, I’d add:
o closing the loop on resource use and slashing waste by 70%
o Taxing bads and incentivizing goods [e.g. polluter taxes and cutting tax on labor]
o cutting energy waste everywhere, especially in buildings
and so on.
The increase in wealth in the United States over the last 30 years has gone entirely to the rich - wages have been stagnant, or worse, for that long. The only reason people thought their wealth was increasing is because of the housing bubble and now that is gone. The rising tide that raises all boats is a lie told from a world that doesn’t exist any more, and maybe never did, by men (like you) who have no idea how the world really works. I’m afraid that you are going to have to contend with reality before peddling your nonsense.
You don’t understand. It’s not symmetrical. In Kahn-land, both:
1. “The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.” and
2. The potential for improving the lives of rich people by increasing production is nothing compared to the apparently limitless potential of finding different ways of distributing current production.
I am amazed at the last paragraph of Lucas’s article. While it might be true that an “average” child born in America might have much more resources than an “average” child born in India, the resources available to each particular child greatly depend on the amount of redistribution. As the old saying goes, the average temperature in a hospital is normal, some patients have high fever and some are dead. What would be the welfare of millions of children in the US without various welfare programs? I shudder to think about that. Also, it is unclear what Lucas means by “direct redistribution.” I would think that the US would be much worse off now, even on average, if not for progressive income taxation. Is that part of direct redistribution? Also, it is well-known that one of the main reasons for the improvement of welfare of millions upon millions of the elderly in the US has been due to Social Security and Medicare, which are both redistributionary programs to a large extent. And if one thinks of the need to keep social peace, redustribution is paramount. Just recall the French Revolution. Again, it is amazing to see this kind of dumb statement made by such a smart person as Lucas.
Lucas is nuts. Education is the most important factor in economic growth, and public education is obviously a redistributional. It’s hard to imagine a high-tech society without massive redistribution, although the way things are going it looks like we’ll find out if it’s possible.
What is amusing is that other, perhaps not top, but up-and-coming, economists like Tyler Cowen want us to think that growth is over, we need austerity to make the proles realistic about their fate, that AD will inevitably drop (except, one presumes, in tax havens, yachts and economic speaker engagements).
Who are the capitalists, again? Who believes in the ability of the US to overcome adversity? Seems to me like the dirty f***ing hippies of the #OWS actually care more about true enterprise and growth than the apologists for oligarchy.
“virtually none of it can be attributed to the direct redistribution of resources from rich to poor”
There’s no evidence for this and much against it. The industrial revolution created a lot of wealth for the rich, but it was the Chartist Movement and labor activists who built the consumer society necessary for continuing growth. You can’t get wealthy by just increasing production, you have to create customers as well. (In the US, a lot of the wealth was created by the government seizing land from its owners and redistributing it to settlers. In England, it took raw redistribution.)
The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.
Alternatively, the potential for improving everybody’s lives by finding different ways of increasing production is nothing compared to the apparently limitless potential of increasing the efficiency with which rich people can extract rents.
Bigger harder government or bigger harder wealth differentials both offer opportunities this way to the discerning policy-maker, therefore I predict that both will be fostered by the presently rich and powerful, to the absolute elastic limit of the public tolerance.
This virtuous circle of positive feedback is inherently incapable of spontaneous failure, and the very laws of the market itself precludes it from leading anywhere ba-
Excuse me a moment. IP-cops appear to be knocking down my door. Apparently this line of argument is claimed as a proprietary business method of AcmeCorp. Who knew?
I have to add that quoting Robert Lucas is pretty rich. I guess that Chicagoists stick together, and have no shame.
I don’t have any objections to his list, but I’m always tickled by economists who argue things like “an improvement in a growth rate by 1% will make a huge difference over the long term, and isn’t 1% a really small number?” Also, it seems like each one of these posts should mention that we will need massive innovation and investment in energy just to stand still or avoid contraction, let alone continued growth.
Even a massive refraining from obstructing energy would be an improvement at this point, in this country, as oil rigs flee the Gulf, and Canada eyes China as a customer for it’s shall oil.
Quite an improvement, if you are living in the colder regions of Canada. Drill, baby, drill doesn’t work so well for the rest of us.
Hey Brett, maybe you can answer this question. When the conversation is about conservation, why are conservatives so quick to point out that oil is sold on a global market, but when the conversation is about developing new resources you guys completely forget this fact? While you’re at it, maybe you can tell me why you guys are so eager to burn all our oil as quickly as possible?
Oil is fungible to some degree, (Though forcing Canada to ship oil to China so that we can ship it from the middle East is no less stupid.) but oil industry jobs aren’t. These policies are putting people out of work here.
In fact, as the cost of energy is a critical factor in the economy, and administration policies seem aimed at raising that cost, it’s putting out of work a lot more people than would have been involved in directly providing the energy.
These policies are putting people out of work here.
I see an awful lot of excuse-making for many people needing to retrain into new careers to be competitive. Why is one sector exempt from our new real-i-teh?
Even a massive refraining from obstructing energy
Exactly so! We will go to any length to feed our addiction to about a couple day’s worth of crude!
But of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor.
It’s amazing what low-grade thinking can lead you to become a respected economist - as long as your low-grade thinking supports the concentration of wealth. Look at how much work the word “direct” does in that sentence. In fact, as others have pointed out, much of the wealth of the United States is a product of redistribution of resources from rich to poor, and our current economic malaise is a direct result of the political economy of concentrating wealth in a few hands.
kahn embarrasses himself again trying to slip by the difference between “per capita” growth and median growth. there is alas no particular evidence that you would necessarily get median growth without the support of redistribution.
Why are the legal and regulatory framework, infrastructure and public services that allow the concentration of wealth in the hands of some not considered redistributive as well? In other words why the assumption that there is something natural about the rich being rich, and all redistribution is from rich to poor?