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Monday, December 6, 2010

On Inquality and economic growth - relationship

Most mainstream econ texts try to draw clear lines between what it purports economics should be about - economic growth, and what economics should not be about - equality/inequality.  They pretend inequality should be and can be analyzed separately as if either it is not important (or as important as efficiency and growth), or not objective enough for a science so grounded in logic and mathematics to study.

Prof. Mankiw (and his lines of textbooks) claims no different.  
...All this except the fact that numerous recent studies show that while too much inequality can lead to low economic growth, too much economic growth can lead to unsustainable (or unpalatable inequality).

So long as mainstream economics continues down this path of trying to separate efficiency from equity; so long as economics refuses to see the inter-relationships between political and social economy and 'economics',  it will continue to leave mainstream economics in its present state -  a neutered science with limited applicability to reality.

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