Dear Jim:
This, as I understand it is one of the main thesis's of the book. That a
major redistribution of income has occurred since 1970 towards those who
recieve income from interest rather than from labour. He also identifies
the "transfer state" as the other area of change in income redistribution.
I don't have the book in front of me know, but one of his most insightful
graphs to me was the one that showed 16% of income is recieved from interest
by the very rich and 16% of income is redistributed to the poor, the
elderly, the handicapped for a total of 32%. In the 1960's, only 3% of
income was earned through interest and 3% redistributed through transfers.
This growth in "interest" income comes from the pocketbooks of the middle
class, those who have credit. Following this logic is the angst of the
middle class who still earn their income through labour and wages and find
that interest and taxes which fund the transfer payments are both taken from
their earnings. This leaves them with less. The neo-cons, with their call
for tax relief are responding to only one half of the problem, high taxes
which fund transfer payments while keeping the middle class in the dark
about the other half of the problem, the amount of their income which is
going to pay interest.
His solution to the transfer payments problem is to go back to a full
employment policy that he claims was in effect from 1945 till 1970. More
people working means less transfers to those who are not working. His
solution to the interest problem is to raise wages, the logic being that we
cannot save or have disposable income when are wages are too low and we
compensate by using credit which increases the wealth of those who use
capital to gain interest rather than using capital for the investment in
capital goods production.
Rspectfully,
Thomas Lunde
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>From: Jim Dator <[EMAIL PROTECTED]>
>To: Thomas Lunde <[EMAIL PROTECTED]>
>Subject: Re: Created Unequal by James Galbraith
>Date: Mon, May 31, 1999, 5:23 AM
>
> Does Galbraith discuss the role of the rapid expansion of easy consumer
> credit during the time frame of his analysis?
>
>
>
