I have been at the International Post-Keynesian conference in Kansas City last weekend – after a very pleasant vacation in Valencia, Spain – and the most impressive chart came from Pavlina Tcherneva:
Whatever economists think they are doing, we should state the obvious facts:
1) The economic system provides income to different groups and the distribution of income during expansions changes over time.
2) Whatever causality is, since the early 1980s we have seen an increase in the share of income going to the top 10% (and top 1%, which Pavlina showed at the conference)
3) Despite all the talk that economics is not having any fundamental flaws, the outcome of today’s economy shows us that there is a need to address the problem(s) of distribution
4) The economic system as it is can hardly be called sustainable. Negative income growth for the lower 90% cannot continue to fall forever. We will see serious demand shortages and low growth when credit growth is not the driver of the economy.
Personally, I think that it is more important than ever to talk about change in economics. Even though the growth rate for the US economy has just be revised upwards, the distributional consequences of the recent economic policies should not be ignored.