Paul Krugman: 'It's Not Fair That Some People Are Rich'

Source:Paul Krugman Blog- New York Times columnist Paul Krugman, talking about wealth inequality.

"The anecdotes in Paul Krugman's book Conscience of a Liberal destroy many of the myths about the Canadian system. It is mystifying that people talk about how long people must wait for hip replacements in Canada, but 2/3 of the hip replacements in the United States are already provided by Medicare. The United States healthcare system will be much better funded, so our system will be much better. 

There is not a hiring market for CEOs. They are paid based on the recommendations of a committee that is appointed by the CEO. In the 40s and 50s, this lead to incomes that was 30 or 40 times higher than the average worker. Now it is more like 350 times higher. There was a lower threshold for outrage back then. They didn't like that people were getting laid off when the CEOs were paying themselves so much. 

But now the political climate has changed. Now, if times are good, then they get a huge cut of the profits. If times are bad, then they are let go and they get a multi-million dollar severance package. This type of thing pervades the economy. Just look at people's expectations for equality in the workplace. It just isn't there, and that is because the climate has changed. 

In most rich countries, income is fairly equal. In poor countries, there is a wide distribution in income. If you look at America, they are somewhere in between. They are moving away from the Scandinavian countries and looking more and more like Latin American countries like Brazil. In Brazil, traffic is terrible, but the rich don't care because they always travel by helicopter. 

The problem isn't just that the rich have siphoned off all of the wealth of the past few decades, it is that there is a disintegration of society." 

From the Paul Krugman Blog 

When it comes to deciding what type of economic system a country should have, there are some things that have to be decided first. 

What's the best economic system for your particular country and you can look at other countries for ideas as well. But that doesn't mean what works in another country will automatically work in your country. What works in Canada, or America or Sweden might not work in France, Brazil or Mexico. 

You need to figure out how much freedom and ability if any, you're willing to give your population to deicide what type of life they are going to have and how much quality of life they'll be able to achieve. And how much taxes they are going to pay if any, how much assistance from government will be provided if any, for people who at the time can't quite make it on their own. 

How much regulation if any you're going to have, the rules of the road that individuals and business's will have. Will you have a private sector or not or a combination of a private-public sector economy, that Europe has.

Personally I believe in the economic system that America had up until ten years ago where people were able to make as much money as their skills and production would allow legally. Where people paid taxes based on their income, the more you made the more you paid essentially. And where government regulated how individuals and business's interacted with each other to prevent and punish abuses. And where we made things in America instead of shipping jobs oversees. 

To now where we have a system where the more you make, the more taxes you can escape from paying and get the biggest benefits in tax cuts. And where we have now a free and unfettered market thats not regulated very well, take Wall Street for example: a big reason for the Great Recession of 2008 that we are still struggling from. 

But I'm also not in favor of a socialist state whether it's Marxist Socialism, where the State owns the means of production in society and there's very little if any economic freedom for the people and there isn't any private sector. Take North Korea more of a 4th World country than a 3rd World country and easily one of the poorest countries in the World. 

I'm also not in favor of a social democratic economy, where even though there is a private sector, but where it's highly taxed (by American standards) and highly regulated (again, by American standards) and where the Central Government essentially collects all of the revenue in the economy and passes out its benefits to the people it feels needs its the most to finance an expansive welfare state, where you can essentially make a good living collecting Unemployment Insurance. (Take Sweden, for example) But even Sweden is rethinking their welfare system.

The best economic system for America is and why we did have the strongest economy in the world not just the largest ten years ago, is where everyone has a shot at a good education and can go out in the private sector and make as much money as their skills and production will allow. And pay taxes based on how much you make, where the economy is well regulated but not over regulated. Where the people are expected to be able to take care of themselves but where there's a safety net for people who fall down to help them get up. 

Thats what we had from 1981-2001, except for a couple of recessions and it resulted in the best economy the world has ever seen. Which is why so many former socialist economies have moved in our direction instead of the former Soviet Union.