ParticleGrl said:
1. assume that deficits are always a drag on the economy
2. point the existence of a deficit
if this is true, the deficit should have been a huge drag starting under Reagan, all the way to today. Where is the evidence of that? What sectors of the economy correlate negatively with the deficit?
I know this was addressed to mheslep, but remember a deficit will usually not be a drag on an economy if the debt as a percentage of the GDP is below 90%, which it was during the Reagan years. It's when it gets above that number that the debt tends to be a problem, and the deficit as it is continually adding to the debt.
ParticleGrl said:
There is a great deal of evidence that social mobility in the US is significantly lower than in Europe. Google "great gatsby curve", for Krueger's preferred bit of evidence. Even Tyler Cowen admits we aren't socially mobile in the US- he just isn't sure if that's a bad thing or not.
What is the definition of mobility here? The ability of one person to move up economically, or whether one generation's children will advance themselves further economically than that generation itself reached? Remember that whether or not generational mobility occurs does not tell whether the opportunity for mobility exists or not. Opportunity can exist and yet there can still be reasons why generational mobility does not occur (ex. cultural impediments, a welfare state that fosters dependency, etc...).
Regarding the "Great Gatsby Curve," I'd say it's a nonsensical argument Krueger is making. Having read Krueger's speech at the Center for American Progress, I think he's completely missing the forest for the trees in his analysis and making a very partisan and hole-strewn argument. He unfortunately makes the assumption that income is something produced in some fixed supply in the economy and is normally divided up among society fairly equally, but now too much of it is accruing to the highest income quintiles, and that this is bad because it is leaving less income available to the lower quintiles. IMO, this is literally pseudo-scientific reasoning, but it passes for legitimate economic analysis (from actual economists!) in the public debate. Implicit in this also is the secondary assumption that the income quintiles represent fixed classes of people, which they don't.
Income inequality is a dubious statistic, as it refers to the uneven distribution of income in society. But there is no "distribution of income." Income is simply the result of one trading one's skills/goods/services on the market. "Income inequality" is just attaching a term to this unequal statistical income distribution that is the result of the vagaries of the market. That it's uneven shouldn't even matter. The way people like Krueger make it sound, the top quintiles represent fixed classes of wealthy people who are hogging more and more of a fixed supply of income that is supposed to be distributed equally out to society, and thus less is left available for the lower quintiles, hence hampering their economic mobility. But if the whole concept of "income inequality" is really nonsensical, then it means something like the Great Gatsby Curve, which compares income inequality levels of nations with economic mobility of nations, is rather meaningless.
Now, yes, people generally fewer people immigrate to France/Scandinavian/European nations, but that's entirely because they have much stricter immigration controls.
Many of them also have less economic opportunity. They on average have a harsher environment for business than countries such as the U.S., Canada, and the UK and a harsher environment for advancing oneself economically.
Europe doesn't lack for small business start ups. For smaller nations, Scandinavian countries are well represented in innovative companies (think Nokia/Ikea/H&M).
All European countries have some innovative companies and startups, and not all the European countries are the same either, some being more friendly to economic freedom than others, but quite a few of those nations make it much harder to succeed in growing a business (in particular France, Italy, Spain). The Scandinavian nations rank better, but not as high as the United States, Switzerland, Canada, Australia, and the UK:
Index of Economic Freedom The worse ones tend to have much more stringent laws regarding firing people, greater limits on the amount of hours one can work, businesses are not allowed to remain open 24/7 in certain countries, they have higher taxes and regulations, they have much more stringent bankruptcy laws, which defer entrepreneurship because if one fails, they can be financially ruined for life, etc...
People seeking economic advancement do not seek to immigrate into the countries with the least amounts of economic freedom.
