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ECONOMY: Samuelson ignores inequality’s effect

Letter by Paul S. Harvey, Black Diamond on Feb. 13, 2014 at 12:27 pm | No Comments »
February 13, 2014 12:29 pm

Robert J. Samuelson’s column (TNT, 2-13) suggesting we’re having the wrong debate on income inequality is a combination of mixing metaphors and building a straw man. He may be the only columnist I have read who references a theory that overborrowing by the low- to middle-income led to the “credit bubble and Great Recession.”

He is correct in stating that, “Lenders relaxed credit standards, and borrowers took advantage of the easier access to loans.” But that occurred when people who had (artificially inflated) equity in their homes chose to borrow against that asset or conventional down payments were waived to attract more borrowers at every income level.

The concern I have over Samuelson dismissing income/wealth inequity from the current economic situation, because it was not the cause of the “Great Recession,” is that he ignores the fact that income inequality is a stagnating element to a vibrant healthy, growing economy.

Whether government policies are corrected or banker’s greed eradicated (highly doubtful), the fact that too many Americans have too little disposable income to generate a growth in consumer demand still remains.

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