Wednesday, February 24, 2010

Keynes Attacked Income and Wealth Inequality

The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.

-- Keynes, Chapter 24 of the General Theory

Inequality in the developed world is as severe now as when Keynes wrote, if not more so. It's curious that modern Keynesians spend so much time justifying deficit spending; while Keynes supports it in many cases, in the above passage (an important one, as it opens the last chapter) it is not central. Inequality of income and wealth are.

Avoid talking about income redistribution, and one can avoid unpleasantness about increasing taxes on the wealthy. And bond market rentiers are not displeased with government deficit spending, as long as inflation is kept in check.

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