Inequality and Economic Policies: Just Tax the Rich? (Velocity of Money: Up!)
Persistent inequality and recurrent job insecurity
The lower middle class is right to complain: its wages have been stagnating for the last 50 years. Worse, bouts of unemployment have afflicted many – and scared others – during the economic crisis of 1974, 1982, 1991, 2001, 2008 and 2020. Moreover, the housing market is out of reach for people moving to a city with jobs, while their houses may have lost value in their depressed area of origin.
In the meantime, the rich got richer, while widening inequalities are inflaming social unrest.
No solution in sight?
Inequality doesn’t seem to have a unanimous solution in the coming years, no more than in the past 50 years. Worse, the prospects of technology with robotics and Artificial Intelligence could increase the pressure on low-skill jobs.
Is there a solution in sight? What naive solutions would fail? What can the government realistically do? Is politics an epiphenomenon of macroeconomics? Could a new economic strategy succeed Reaganomics and its mix of Keynesian and monetarist policies? Could a new parallel market solve it? Are carrots and sticks the only ways to accelerate the velocity of money?