tag:blogger.com,1999:blog-5043138489010794057.post8556937601713762289..comments2024-03-27T15:57:09.192+05:30Comments on Urbanomics: John Taylor is wrong on the impact of federal transfersUrbanomicshttp://www.blogger.com/profile/16956198290294771298noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5043138489010794057.post-50542385278235829142010-12-14T16:01:25.638+05:302010-12-14T16:01:25.638+05:30Dear Gulzar,
I am sure that you are onto the arti...Dear Gulzar,<br /><br />I am sure that you are onto the article, "Block the Metaphors" in NYT by Krugman.<br /> <br />I am quoting from the article .."But what’s actually happening is that some people are spending much less while nobody is spending more — and this translates into a depressed economy and high unemployment."<br /><br />"Tax cuts for the wealthy will barely be spent at all; even middle-class tax cuts won’t add much to spending. And the business tax break will, I believe, do hardly anything to spur investment given the excess capacity businesses already have."<br /><br />My question is this - if the economy is set for lower growth, is a higher dstribution of income the only means to spur growth (Consumption)?<br /><br />Is a highly distributive/ welfare based / high tax economy a strategic necessity for a low growth economy? ( say like the European model)<br /><br />If there is no new innovation wave that will set the US back on a high growth path again...(and confound a lot of us)...is this downturn just a matter of the US paying for its past ...profligacy?<br /><br />Why can't the discourse be in terms of a new equilibrium, where new opportunities for reasonable growth ( and reasonable profits)are to be found in increasing the standard of living - with goods and services targeted at the less profitable but formidably large markets around the world?<br />(India / Africa/ the MDG)<br /><br />Is there a bias ....in the discourse of economists towards...growth that conveys glitz!!..? IT / Biotech /entertainment.../ ??<br /><br />If markets are about catering to needs...and if human resources are regularly "structurally adjusted" to adapt to new needs of the market...why can't this principle apply to countries and their manufacturing / service resources?<br /><br />( Is there a unsaid dismay in having to adjust "downward" ? )<br /><br />All that the debate seems to be centered around is the distribution anomaly in the US...its correction through taxes/ distribution... or spurring innovation...purely about reviving consumption in what was a high consumption economy ... that in some sense blew a hole through the worlds wealth( and resources)... by spending its non-existent (bubble fuelled) wealth????<br /><br />The distribution anomalies and disproportional rewards in the US, particularly in the banking / financial sector ( and in other economies that follow the same pattern) are real - and may need a thorough re-look.<br /><br />However, is the debate in the US too focused on consumption (demand)strategies alone? ( Like the focus of your post)<br /><br />Krugman seems to imply that the real problem lies elsewhere.<br /><br />regards,KP>KPhttps://www.blogger.com/profile/06553866275918658507noreply@blogger.com