The Nobel prize-winning Keynesian economist, Joseph Stiglitz, claims in the January 20, 2013 New York Times, that “Inequality is holding back the recovery”. He says that the most important reason is because the middle class is too weak to support the consumer spending we need. And that the weakness of the middle class is holding back tax receipts. And that we are squandering our young who are increasingly unable to get an education without borrowing huge sums of money.
Many liberals deplore the slow rate of economic growth since the recession ended in June 2009 and all of the problems it creates and exacerbates such as high unemployment and lower tax revenue to support public services. What these liberals amazingly fail to understand is that there are tried and true methods to promote economic growth. What we need to do is to lower tax rates (offset by eliminating tax deductions and loopholes), remove or diminish the enormous new regulatory burdens which have recently been placed on the economy, boost domestic energy production and aggressively, rather than halfheartedly, pursue new trade agreements to lower the barriers to free trade.
Powerful trends such as globalization and computer technology are driving economic progress and causing the inequality which Stiglitz and many others deplore. We need to embrace these trends and use them to our advantage. The way to boost the middle class is to boost our stagnant economy in the tried and true ways which have worked in the past. The way to boost postsecondary education is to recognize that there are many high quality and low cost schools all over the country. And that it is not necessary to borrow lots of money to get a good education.
In short, the solution to the urgent and critical economic and fiscal problems we are now facing lies entirely under our control. All we need are national leaders who have the vision, capability and fortitude to lead the way.