Economy Talk: Income Inequality and the Recession

My guest this week on Economy Talk is Martha Paas  (Ph.D. Bryn Mawr) is a macroeconomist who teaches courses in economic history, the history of economic thought, and the economics of the arts. She has lectured and written widely on demography and economic change in early modern Europe , and has a new book forthcoming with Yale University Press on the Kipper und Wipper inflation of 1619-23. Martha has held several grants and fellowships, most recently a Senior Research Fulbright Fellowship at the University of Jena. She is the architect of the annual Carleton Seminar in Economics at Cambridge University, England , which she started in 1983.

Tune in this Wed. at 6pm for another interesting conversation about the current economic struggles we face and what we should know about them.  That’s 6pm Wed. on 1080 AM KYMN Radio. Or listen on line at  The program will be archived and you can listen at later date here.

Dr. Paas has been doing a number of presentations for local groups (Rotary, Senior Citizens, Nerstrand community group) on what is happening to the economy.

Here’s the economic landscape, according to Martha as summarized by a Rotary editor:

—- The U.S. is not going broke. It’s not a problem as long as the federal debt, now at $14 trillion, doesn’t grow faster than our Gross Domestic Product (GDP). Our debt to GDP ratio is currently 37th in the world.

— Causes of our recent deficit spending are: 1) Defense spending that has doubled in the last 10 years largely due to wars in Iraq and Afghanistan; 2) Bush tax cuts; 3) The recession.

— Shrinking government will not solve the problem. By 2015, half of all government spending will be dedicated to Medicare, Medicaid and Social Security. Social Security is solvent for now, and there is time to make fiscally responsible reforms. Containing health care costs is the real issue.

— Trickle down economics has not worked. The income inequality gap is wider than at any time in our nation’s history.  This is not simply a social justice issue. There are sound economic reasons to reverse this trend.

— Inflation is not a real danger. The recovery is more important at this point in time than guarding against inflationary forces.

— We need to be investing in infrastructure and clean energy.

— Policy decision must be based on hard evidence. “We can’t do it as long as ideology passes for truth and slogans for facts,” Martha said.

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