Who’s Who of Prominent Economists Say that Too Much Inequality Causes Economic Downturns

A who’s-who’s of prominent economists in government and academia have all said that runaway inequality can cause financial crises:

Indeed, extreme inequality helped cause the Great Depression, the current financial crisis … and the fall of the Roman Empire.

It’s not just liberal economists who say this … many conservatives say the same thing.

 

 

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

40 Responses to “Inequality Is Bad For the Economy”

  1. Miguel Palacios says:

    Its almost surprising to me that this is a controversial topic given the amount of historical evidence that supports it, then again, there are still efficient-market economists of the Chicago school that refute the existence of bubbles…

  2. VennData says:

    Will “Conservatives” listen to their economists?

    Well, in this article the WSJ opinion page argues Obama is “wimpifyiung” America because of his comments about football and these decision should not be left to politicians.

    http://live.wsj.com/video/opinion-the-wimpification-of-america/03024963-359B-4883-B029-5451E03AC22F.html

    So Rupert Murdock and the GOP Media Machine’s comments would be to not let economist be the ones to solve our economic problems? Scientists solve our science problems? Educators solve our education problems?

    I guess only when it suits the argument at the moment.

    Would you cancel the WSJ please? I have.

  3. Bridget says:

    “In other words, while many conservatives are against raising taxes on the wealthy, they are overwhelmingly for stopping the use of the power of the state to increase inequality. See this, this and this.”

    It’s all about the difference between those who become wealthy through productive and honest effort, and those who become wealthy by using the power of government to reward all manner of perverse and destructive behavior. Including, I might add, the rewarding of perverse and destructive behavior that makes nobody wealthy.

  4. Simon says:

    It’s true.

    Think about a king who hordes all his nations gold. Rich people are like this because they are great savers.

    A good economy is one in which a lot of people can afford a wide range of high quality goods and services and are sufficiently confident about the future to avail themselves of them.

    Money travels upwards towards the rich. This should be obvious by now. And there a good reasons for this being true. It is the role of government to tax and spend. This is basically the main way for wealth to be redirected towards the bottom of the pyramid.

    Back to the king. If he has approximately one year of GDP in his hoard and he spends 25% of it on useful things for the poorest of his people (infrastructure, health, education, welfare for example) the money released this way is likely to get re-spent as many as 4x before it stops moving (ends up with savers).

    If the King taxes at 25% he can keep spending the same amount every year without it ever being diminished. He may in fact be tempted to put even more into circulation since the investment returned so much in tax revenue and good will.

    Inequality is when there is too much of a nations wealth held by too few. A bit like the king who never spends the vast majority of his hoard. This is economically not a good thing.

  5. algernon says:

    Bridget has it right. It isn’t concentration of wealth per se. It is whether you have a free society or not.

    Most extreme concentration probably derives from such collectivist actions as our fascist banking system and similar regulations that give a competitive advantage to big entrenched corporations. Maybe I should use the word ‘corporatist’ instead of economically fascist, but they are one and the same.

  6. KickedintheCapital says:

    Most striking about what happened in Ancient Rome are the steps that the emperors took to try to save the empire. What is known as the third-century crisis, when the rising cost of the maintaining the empire, in particular the military, took a severe toll on the economy, the emperors repeatedly debased the coinage, raised taxes and raised the salaries of the soldiers. As the crisis continued to spiral out of control, Diocletian, emperor around AD 300, exerted himself as an even more absolute power (calling himself ‘dominus’ – lord) and raising taxes, fixing prices, and restricting employment.

    Attempts to bring about equality seem inevitably to restrict the potential for growth, so what do we do? Accept less upside individually or find a way to develop equality of opportunity. Even a relative equality of wealth seems virtually impossible, though many developed nations have a better Gini rating that America today, perhaps the best we can hope for is equality of opportunity.

  7. eliz says:

    Too much inequality is certainly bad for Capitalism – as it undermines one of the necessary ingredients: authentic competition (as opposed to monopolistic and collusive competition); competition is essential to create value: the best and widest range of goods and services at the best prices.

    More importantly, too much inequality is bad for the collective whole of society. Of course, the truth of this statement is dependent upon ones values. Those who embrace totalitarianism, or a survival-of-the-fittest mentality, or racial superiority, or . . . might think differently. I just happen to come from the perspective we are on the spaceship earth together, and it would be far better to get along than not get along, to respect the earth rather than abuse her, to share resources cooperatively rather than fight over them, and to teach tolerance and be intolerant to intolerance (paradoxical as that is), to expose our children to kindness rather than violence, etc.

  8. Frilton Miedman says:

    “It’s not just liberal economists who say this …”

    Not at all, Reagan era Republicans (Paleo-Cons) like Bruce Bartlett, Dave Stockman, and especially Reaganomics founder Paul Craig Roberts oppose current corporatist NeoCon extremism.

    Marriner Eccles was a wealthy Conservative banker who’s final conclusion after the Great Depression was that concentrated wealth caused the Great Depression.

    The current GOP is purely the result of whoredom to the Koch bros, corporations and a small list of other 70 yr old billionaires who want to “restore” America to a by-gone era.

  9. MayorQuimby says:

    Inflation = inequality.

  10. ilsm says:

    Bruce Bartlett, I would change the title to “How Excessive War………” A good read.

    @MayorQuimby

    Rather: Inequality = Slavery

  11. farmera1 says:

    So if you are a productive member of society and produce billions in profit in a legal way, then more power to you. You helped create wealth in most cases for the good of the country. I just wonder what the Walton kids did to earn their $100 billion plus. The six Walton kids are consistantly in the top ten list of billionaires at Forbes. They own more wealth than the bottom 40% (30% to 48% depending on timing and who you read) of the family s in the US. Oh that’s right they were the lucky ones that had Sam as a Father.

    Dynastic wealth isn’t earned and it isn’t healthy. Dynastic wealth is given to you. It isn’t healthy for the country. You did not do anything to earn it and often it is used in entirely destructive ways by those inheriting the money. Those that argue that there isn’t a wealth distribution issue in this country or it is the fault of the government are the ones that argue that there should be no limits in how this money is passed on to the next generation. In the mean time the rich get richer and the poor get poorer. And the rich often get their money given to them. They don’t deserve it and they did nothing to earn it, other than being on the winning end of a random event that allowed them to have a father named Sam in this case.

  12. farmera1 says:

    Here is one reference that puts the wealth of the Walton’s at more than the bottom 40% of the familys in the US combined:

    http://www.politifact.com/truth-o-meter/statements/2012/jul/31/bernie-s/sanders-says-walmart-heirs-own-more-wealth-bottom-/

  13. baillebeag says:

    How much inequality is too much? What would “total equality” look like, and how would that be achieved?

  14. DeDude says:

    The facts are so clear that the deniers can be sorted into 3 groups:
    1. Ignorant people who simply do not have the intellectual capability to look at and understand the evidence (and instead follow their gut feeling).
    2. Small minds, so scared at looking “silly” if they change their previous position, that they instead end up looking silly in their desperate attempts to defend the indefensible.
    3. People who’s personal wealth is linked to the lie and who more or less concisely put fighting for themselves ahead of fighting for the truth.

  15. DeDude says:

    @baillebeag;

    The economic problem of inequality (leaving aside moral issues), is that too much money ends up in the pockets of the investor class (people who use most of their money to invest) and not enough ends up in the pockets of the consumer class (people who spend most of the money they get. The result is bad for both. There is not enough consumption to keep the economy growing (70% of GDP is consumption) and to provide productive investment opportunities for those who want to save and invest. When the amount of investment money exceeds the opportunities for productive investments, then you instead get bobbles. Whereas some individuals can get very rich from bobbles they generally leave most investors with losses, and they are disruptive to society. So from an economic point of view inequality is “too much” when the economy is growing slowly (below long term averages) and it is also moving from one bobble to the next.

    I don’t think “total equality” can be achieved nor that it is desirable. There has to be rewards and incentives, the question is how big they can be before they move from being productive to being destructive.

  16. Bridget says:

    Farmera1, I did a little quick research on Sam Walton’s estate. He was very farsighted indeed, having given interests in his company to his children way back when he first got started. All of the subsequent appreciation took place in his children’s estates, not his. His widow is in her eighties. Her estate will be taxed on her death, as will the estates of the Walton children. Unless, of course, they do a Gates or a Buffet and leave it all to charity. Either way, a bit of patience might be in order.

  17. hammerandtong2001 says:

    A closer-in perspective can show the real, tangibile effects of increasing “inequality.”

    In “Coming Apart, The New American Divide,” Charles Murray highlights how, after years of income inequality and economic favoritism, that the nation has actually become a single country containing primarily two very unequal societies.

    http://online.wsj.com/article/SB10001424052970204301404577170733817181646.html

    The cultural, behavioral and economic differences between the “two Americas” he sees are brutally evident in everyday life – I see these differences daily in the NYC metro area where I reside. This research has likely been previously posted here, as well.

    As the nation further drifts apart, it can be quite easy to see the increasing costs associated with the divide. Rules and laws favoring more priveleged classes, unequal opportunity, concentration of authority and power, capture of legal and political systems, etc. We are in fact, living this today.

    Today, “inequality” is bad, real bad for the overall economy and society, because it has required the government to fill need gaps: with food stamps, with assistance, with medical care, with all kinds of things.

    But there is a point where the need gap becomes to great to fill, and then what?

    .

  18. gkm says:

    Since so many folks are on the inequality is bad side, I think the only recourse is to recognize that some inequality is good and ultimately necessary. It is dependent on the way that inequality is arrived at. Acquiring inequality via a rigged game is ultimately going to have its consequences.

    To draw on someone’s anecdote above: who cares if the King has all the gold if all his subjects are happy. Gold has no value in such a world. If, on the other hand, the King has acquired his gold through the oppression of the people such that it holds extreme value, my bet is the King’s reign is near an end. Inequality will naturally stand or won’t stand based on the greater good, and I believe history will continue to show this.

  19. Robert M says:

    Is this a reality test?

  20. S Brennan says:

    Some one asked: “so what do we do?”

    Unlike the Roman Emperors we have template of what works…

    The FDR policies that had bipartisan support 1932-1978 would be a good start.

    The problem of course is political, using the guise of “the science of economics” [hat tip to Milton Friedman & the Ayn Rand school of greed] the disastrous policies of the 19th century were reinstated…sans mercantilism…at least so far as the US borders* are concerned.

    This has been a slow process, it did not “happen” on Reagan’s watch alone, it’s been 3 decades of “bipartisan” effort with the Repu’s playing bad cop while the Demo’s played good cop for the international financial interests that are the playground of the moneyed elite. This artificial nobility now steers to the point of complete domination all political discussion. As their power has grown, the need to act surreptitiously has declined to the point where their actions are fairly obvious to the casual observer.

    I believe, only a simple message devoid of external nuance can prevail in the orchestrated media cacophony, that is why I use the statement “a return to FDR policies 1932-1978″.

    *It’s notable that China’s tariffs are about 10x what the US tariffs are on high value items. An example of this policy has been China’s government use of tariffs to make foreign auto’s and ALL auto parts produced abroad unaffordable. This government imposed policy on the “free market” has been wildly successful and has gotten auto makers across the globe to build plants and engineering centers across China. Unlike Milton Friedman, China reads history and understands that any empire that does not engage in mercantilism will soon be on history’s ash heap.

  21. lo574 says:

    I once had hopes that when I left this world, it would be with a better future for my children and my childrens children. Sadly it’s becoming more evident that shall not be the case. The rich become richer and the poor work to hold up the empire in perpetual debt slavery. We may as well never left England.

  22. rd says:

    I have believed for a number of years that income and wealth inequality have been at the heart of many of economic and financial problems over the past decade or so.

    However, this post indicates that there is a consensus among economists that this is the case, so I must revisit my thesis and look for another reason why the economy sucks…..

  23. Joe Friday says:

    MayorQuimby,

    Inflation = inequality

    I suppose it’s a good thing we’re in a deflationary spiral then, eh ?

  24. A.Friend says:

    Concentration of power creates inequality. The United States was formed with the belief that separation of powers and federalism would diffuse government power. Clearly, for a variety of reason, that is no longer the case. The federal government has claimed supreme power throughout the nation and made a beggar out of everyone else. Some are better beggars than others and large corporations are so good at it one may argue that the politicians are at their mercy.

    What is indisputable is that the politicians and government bureaucrats are the ones doing the bidding of the large corporations. They are the ones bailing corporations out of their losses. They are the ones passing laws that give them market preference. This is bipartisan behavior. Nothing creates a more unified government than the urgency to bail out Wall Street and save the largest investors from a bad turn of economic events.

    Diffusing corporate power is necessary but it cannot be done without diffusing government power. The two are fully enmeshed.

  25. Mark A. Sadowski says:

    @MayorQuimby,

    You said:
    “Inflation = inequality.”

    That’s very hard to believe given the 1970s had both the highest inflation and the lowest inequality in American history, and the Gilded Age had both the most persistent deflation and the greatest inequality in American history.

    Obviously the correlation is in the opposite direction. Even the Populists of the 19th century understood this.

  26. Frilton Miedman says:

    MayorQuimby Says:
    February 24th, 2013 at 12:37 am
    Inflation = inequality.
    ~~~
    “Fire burns = stoves are bad” – Completely ignoring that Fed policy is reactive to the consequences of piss poor “trickle down” tax/fiscal policy

    farmera1 Says:
    February 24th, 2013 at 9:23 am
    “So if you are a productive member of society and produce billions in profit in a legal way,”
    ~~~
    5 years after lobbying against Chuck Grassely(R) to tax carried interest/cap gains as income
    Mitt Romney said -”I only pay what the law requires”

    gkm Says:
    February 24th, 2013 at 10:59 am
    “… some inequality is good and ultimately necessary…”
    ~~~
    Absolutely, some, but when the Walton family has more net worth than 40% of the population ….

    S Brennan Says:
    February 24th, 2013 at 1:33 pm
    “Unlike the Roman Emperors we have template of what works…”
    ~~~

    The founding fathers specifically used the Roman model as a frame for what not to do in creating the bill of rights against the wishes of Federalists, the same Federalism that Judge Antonin Scalia professes belief in.

    Scalia, who feels “money = speech”, and “cruel and unusual” doesn’t count if it’s not called “punishment” by the perpetrator.

  27. wally says:

    If you plan to make money in business, you pretty much have to make it off the middle class. If they can’t buy your stuff, you’re not going to do very well.

  28. S Brennan says:

    To:

    Frilton Miedman Says:
    February 24th, 2013 at 5:26 pm

    “The founding fathers specifically used the Roman model as a frame for…”

    FM, The founding fathers were influenced by the Roman Republic, historians have argued, but either Julius Caesar rise as dictator for life in 44 BC, or the Roman Senate’s declaring Augustus emperor in 27 BC marked the end of the Republic. Conversely, fall of the Roman empire, the subject of the original post and my comment, fell some 500* years later.

    So your point, whatever was, is moot. Neither the founding fathers, nor Imperial Rome, nor FDR had an historical example on how to stop concentration of wealth through economic policy, in fact, FDR was trying to solve another problem when he came up with the solution to wealth concentration.

    *Edward Gibbon

  29. victor says:

    1) Inherited wealth has not been the driver of wealth creation in the US, per BR in prior posts, max 10%. For example, most wealth has been created in the last 2 generations (approx. 50 years). And Bridget’s comment about the Walton’s is right on.

    2) When inequality is debated a sensible approach is to look at the CAUSES before conclusions are drawn as how to reduce/eliminate it.

    a) Discrimination: race, sex, religion, age, nationality, language. They all played a role in the past but going forward not serious inputs, just look around us now.

    b) Illegal activities: Madoff is behind bars

    c) Illegal, legal activities: CEO/Board of Directors cozy deals, Corporations/Government cozy deals. Here we have a long way to go, corruption at high levels. Crony capitalism, golden parachutes, too big to fail mega banks, out of control health care costs, zombie tax codes: GE pays zero taxes, a self employed kid making $12,000/yr shown on his 1090-MISC pays 15% in payroll taxes

    d) Not all of us can be Steve Jobs: talent, luck, hard work, great genes?

    e) Irresponsible behavior: drugs, addictions, compulsive actions, laziness

    f) Education gap: some is reinforced by the vicious circle of poverty

    Comment to those who insist on politicizing the issue: did you know that a majority of the super rich vote D?

  30. bonzo says:

    Depends what you mean by words like “bad” and “economy” and “downtown” and “crisis”. I’m a lot less worried about the “economy”, which is a vague abstraction, than about myself. “It’s all about me” is the only sane way to look at the world. When selfishness is enlightened and far-seeing, it results in rational concern for the fate of other people. Inequality is bad for me because it is the path to the slave state via fascism. It’s also likely bad for every other reader of this blog, even the billionaries among us, if any. A slave state is bad for the slaves, obviously, but it is also very insecure for the masters. American politicians and billionaires can expect, as a matter of course, to live out their lives in peace and quiet, with no risk of kidnapped, assasinated, convicted on trumped-up charges in a kangeroo court, etc. Their peers in more egalitarian cultures like Scandinavia or Japan are even safer. Compare with slaves states like Russia or China or any place in Africa, where the elite lack such basic security and no amount of power or riches can guarantee protection from palace intrigues.

    Everyone reading this blog is almost certainly enormously privileged compared to the average human who has ever lived on this planet now or in the past. We have a really good system going. Sanity for people is our position is to be conservative in the true sense of the word. That is, we should be doing everything in our power to keep this system going. Allowing increased inequality at the top of the pyramid, as the radical right wants, is a great way to destroy the current system, and is most definitely NOT conservative in the true sense of that term.

  31. Frilton Miedman says:

    Brennan, “Whatever you meant” was n agreement with you, I said “…Rome… as a frame for what not to do”

    The lessons of the Roman empire played a role, my point was not moot

    I referenced the Federalists and how the final conclusion was that Federalism too closely resembled a Monarchy or minority rule, they sought to eliminate the bill of rights and yet Antonin Scalia professes Federalism.

  32. Mattw says:

    Apparently, this topic has touched a nerve. Anyway, inequality is a symptom not a disease. The disease is stability. Long periods of stability bring us inequality and a whole lot of other nasty things. Stop trying to constantly stabilize the economy and the runaway inequality will go away.

    You can’t make an inherently unstable process (growing societies) stable. If you don’t understand that a growing society is inherently unstable then you have some research to do. Anyway, stabilization efforts are equivalent to pressing on the lid of a boiling pot.

    I do agree with the economists on this point, but there is a problem. Economists have pretty much lost all credibility since the financial crisis of 2008. Most didn’t see it coming. They haven’t found a solution to get us out. We are now stuck in the mud just like Japan. If economists are so smart they why is this happening? And why haven’t they helped Japan get out of the mud after 20 years?

    Why should anybody listen to an economist anymore?

    The problem with economists is that there appears to be little penalty for getting it wrong. This allows the mediocre to rise to the top. Why not put in charge the economists who saw the financial crisis coming. There were a few.

    As a side comment, the same process that drives mediocre economists to the top also drives mediocre generals to the top in the military. That process is little (or no) penalty for getting it wrong, and insufficient reward for getting it right. That process drives out the best leaving the mediocre and bad behind.

  33. Francois says:

    Cue in the trolls in 3…2…1…

  34. DeDude says:

    @A.Friend;

    The corporations want you to think that government is part of the problem, when the real problem is right wing politicians (and yes that includes half the democratic party) not a democratic structure like government. If you “diffuse” corporate power (presuming that it was possible) and “diffuse” government power, the vacuum left will be filled by the plutocrats. That is why they are so eager to sell that Cool Aid of “bad gobinment” to the sheeple. The only power structure that could be big enough to control the plutocrats is the government. If they can weaken the government then they have reduced our ability to first take back our government, and then use our government to take back our country.

  35. AHodge says:

    i think this is a little off base. I think
    1 our policy and tax system artificially favors high income and the wealthy
    2 unequal incomes are not much incentive for growth and all the other R fantasies.
    3 the system would function better for long term growth if much more equal

    this is different than caused the last 2008 crisis
    while the crisis centered in finance and credit and there are a lot of rich bankers gaming it
    that is different IMO
    the long term stagnation argument is that rich people dont spend their income
    but this has not happened the last 15 years
    in the early 90s rich people used to do practically ” all” the savings
    that dissappeared and their savings rate–not capital gains but income foregone not spent went to near zero by 2005 along with the total savings rate
    capital cains fueled spending drove the consumption part of the boom
    but the capital gains came from bad valuations unsustainable valuations implied and actual govt guarantees and all the other items that made FINANCE, not consumer spending, collapse
    inequality huge problem that should be fixed, for growth, fairness and political long termstability
    NOT the key driver of last collapse

  36. 873450 says:

    Too Much Inequality Causes Economic Downturns

    Government Supporting Too Much Inequality Causes Revolution

    —–

    @ S Brennan Says:
    “The FDR policies that had bipartisan support 1932-1978 would be a good start.”

    Unfortunately, the man provided that opportunity was too smart. He knew FDR’s results could be accomplished without making enemies via political bipartisanship and Wall Street cooperation. And in that endeavor he failed miserably.

    “My administration is the only thing standing between you and the pitchforks.”
    - Recently inaugurated, overly confident, vastly inexperienced President Obama to 13 TBTF bailed out bank CEO’s summoned to the White House 03/27/09.

    Did he realize the bankers intended to keep him standing there protecting them from the angry pitchfork holders electing him POTUS to protect them from the bankers? The bailed out CEO’s pledged cooperation voluntarily reforming the corrupted financial system unjustly enriching them for decades? Did he honestly believe them? Is he that incredibly naïve?

    Did they realize he intended to remain standing there protecting them from his pitchfork-wielding constituents who correctly blamed them for crashing the global economy and elected him to prosecute their malfeasance? He appointed Tim Geithner to replace Hank Paulson. Were they already certain he was incapable of standing up against them or making them do anything they did not really want to do?

    Whatever … Notwithstanding Obama’s historic election and some real accomplishments – killing Osama bin Laden (earned re-election for that alone), ending a horrendous war mongering American misadventure into imperialism (at least until neocons inhabit the White House again), weak healthcare legislation that will take decades to develop into anything resembling affordable near-universal coverage – Obama’s legacy will be his tragic failure to reform a deregulated, unmonitored, out of control banking system bent on devouring and destroying the nation until it inevitably commits suicide again.

    In his wildest dreams, Paulson could never foresee the extent to which Obama would adhere to his strategy deploying TARP to rescue and reward Wall Street, disregard the legislation’s mandate to rehabilitate devastated Main Street and impose austerity on tens of millions of financially wiped out Amercian citizens.

    President Obama inherited a brain dead, faux capitalist banking system on socialist life support and a nearly destroyed economy. He stabilized them and then did almost nothing to prevent a repeat catastrophe. In fact, his socialism for plutocrats policies are perversely growing TBTF, rewarding moral hazard on Wall Street and accelerating inequality, destined to make a repeat catastrophe much, much worse.

    —–

    @ lo574 Says:
    ”I once had hopes that when I left this world, it would be with a better future for my children and my childrens children. Sadly it’s becoming more evident that shall not be the case.”

    Obama failed, but don’t give up on the next American generations. They are not “lost” and Occupy Wall Street did not go away. Although more difficult, they will find a hopefully peaceful way to take back the future Obama failed to deliver.

  37. Frilton Miedman says:

    I guess it’s a given, this topic was going to get over-complicated with a plethora of rabbit holes.

    Regardless who you blame or what side of the fence you’re on, there is absolutely NO denying what the crisis of ’08 did to the balance of wealth, it was an accelerated version of what has been happening for 30+ years.

    I’m getting sick of hearing “Obama failed” on this topic, when in fact, the filibuster or Fox network’s propaganda machine has been there to stop him at every attempt to reverse it.

    Obama has failed in other ways, yes, but not when it comes to trying to re-regulate financials or reverse the Bush nightmare, this one falls on the Tea Party ridiculousness, spoon-feeding the public on the idea that austerity is the solution to a disparity/demand crisis.

  38. A.Friend says:

    @DeDude

    What are your thoughts on what 873450 has written? Is not his diagnosis correct? Paulson, the former Goldman Sachs CEO crafted a genius plan to save his Wall Street friends from insolvency. Bush, “the worst president ever” signed off on it and then Obama, despite all his rhetoric, has given Wall Street everything they have asked for.

    The plutocrats already own the federal government. It is not just the median wealth of Congress that is ten times that of the average American. It is the revolving door where insiders switch employment between the public and private sector but they never change where they go to work!

    Angelo Mozilo pocketed hundreds of millions in stock sales, all while selling junk mortgages and running his company into insolvency. Everything he did was open for all to see. The stock sales and the sub-prime loans. But he had nothing to fear as his friends and family included many politicians and regulators, many of them from the Democratic party.

    Again, the problem is not that corporations have influence. It is that our politicians embrace the influence. How many fundraisers has Obama had with bankers? Why is Chuck Todd reporting on Obama selling access to big donors? Who on Capital Hill is actually working for the American citizen?

    Alexander Hamilton envisioned a government entrusted to the elite. Thomas Jefferson romanticized that a vigorous citizenry could secure the blessings of liberty. Hamilton was right and everything Jefferson warned against has come to pass.

  39. DeDude says:

    @A.Friend;

    A lot of people on the left are unhappy that Obama didn’t do this or didn’t do that. Most of them don’t seem to know their constitution – he cannot pass legislation – he is an administrator of laws passed by congress. Most of the laws that people (including me) are dissatisfied with, were barely passed, and under strong obstruction and objections from the GOP. To fight the Banksters Obama would have been fighting all the GOP and about half of his own party – not a fight that had any chance of success. Personally I would have enjoyed to see him take that fight and go down fighting – but it is almost certain that it would have been a childish mistake because it would have weakened him and reduced his ability to get thorough the good things that he did get past the GOP blockade. Unfortunately we are now all left to speculate whether his lack of fighting the wind-mill fights is because he is being tactically smart, or he is just ideologically center right and in the pockets of the plutocrats. No doubt that the current government is controlled by plutocrats. However, the way to reverse that is not to weaken the government but to weaken the plutocrats iron grip on it. Elect a super majority of liberal democrats and progressive members to both chambers of the congress – then we can get back our society.

  40. [...] Ritholtz collects a list of prominent economists who believe in the association of economic inequality and financial crises [...]