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economics

We don’t think enough about the economic functions of social welfare policy, or about the relationship between the safety net and labor markets, and this hinders our ability to make sense of why some people fight so hard against programs that aid poor and low-income people: We mistake them for anti-welfare ideologues, and dismiss them as cruel or ignorant, but there’s an economic logic to their activism, one that’s revealed if we look at the relationship between welfare and work from both the employee’s and the employer’s perspective. Why Big Business Loves Desperate Workers

On the eve of the Great Recession, many conservative pundits and commentators — and quite a few economists — had a worldview that combined faith in free markets with disdain for government. Such people were briefly rocked back on their heels by the revelation that the “bubbleheads” who warned about housing were right, and the further revelation that unregulated financial markets are dangerously unstable. But they quickly rallied, declaring that the financial crisis was somehow the fault of liberals — and that the great danger now facing the economy came not from the crisis but from the efforts of policy makers to limit the damage. Conservative Delusions About Inflation

Indeed, an unwillingness to tax creates all kinds of evils. For starters, if a state can’t fund its core programs out of tax, it has to borrow. And when it borrows, it borrows from the rich. So instead of taxation — which weakens the fortunes and political influence of the wealthy — we get bonds, through which the wealthy are paid interest out of the funds extracted from those who lack the political clout to escape taxation. The wealthy get more wealthy, and exert more political pressure. Thomas Piketty’s Capital in the 21st Century

The main purpose of the health sector is not to provide other sectors with workers in good health. By the same token, the main purpose of the educational sector is not to prepare students to take up an occupation in some other sector of the economy. In all human societies, health and education have an intrinsic value: the ability to enjoy years of good health, like the ability to acquire knowledge and culture, is one of the fundamental purposes of civilization. Thomas Piketty

To sum up: modern growth, which is based on the growth of productivity and the diffusion of knowledge, has made it possible to avoid the apocalypse predicted by Marx and to balance the process of capital accumulation. But it has not altered the deep structures of capital — or at any rate has not truly reduced the macroeconomic importance of capital relative to labor. I must now examine whether the same is true for inequality in the distribution of income and wealth. How much has the structure of inequality with respect to both labor and capital actually changed since the nineteenth century? Thomas Piketty

Ultimately, Mankiw’s argument is just non-responsive. Piketty said: wealth is distributed really unevenly and inheritance helps perpetuate that dynamic. Then Mankiw responded: wealth is generally good for the overall economy. But these two claims are not in tension with one another at all. Saying that wealth is an overall good does not negate the claim that it being extremely unevenly distributed is bad. Wealth Helps The Economy, Not Inherited Wealth

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Taxes are not just a burden. They are also a benefit when used to create and maintain the commonwealth property and services that enable wealth creation and jobs. From educating children to making sure bridges are safe to operating the civil and criminal justice systems, taxes produce benefits that more than pay for themselves. David Cay Johnston

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