Skip to content
November 21, 2012 / needhamgrassroots

The Social Contract: It’s affordable

from Dean Baker — For much of the last three decades, policy debates in the United States have been dominated by a quixotic concern about deficits, debt, and demographics. This concern has distracted policy from fundamental economic issues that have much more direct bearing on economic well-being, most notably the growth (and bursting) of the housing bubble in the last decade. While large deficits can have a negative impact on economic growth, this impact has been hugely misrepresented in public debates.

In fact, contrary to what political figures often assert, it is almost impossible to envision a scenario in which deficits and debt prevent future generations from on average enjoying higher standards of living than we do today. Many households have seen a decline in living standards in recent years, but this has been due to increasing inequality, not a decline in the nation’s productive capacities. The trend towards increasing inequality poses a far greater threat to the living standards of future generations than the potential negative impact of deficits. Unfortunately, discussions of the debt and deficit often distract from discussions of the factors affecting the distribution of income.

Read the report: Debt, Deficits, and Demographics: Why We Can Afford the Social Contract, New America Foundation, http://nsc.newamerica.net/publications/policy/debt_deficits_and_demographics (Nov 2012)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: