Ashoat

I want to ask about your perspective on increasing wealth and income disparities. There a couple camps on this issue, and it seems that mainstream economists haven't yet formed a consensus on the cause for this.

Greg Mankiw and others seem to believe that the main cause of increasing income and wealth inequality is a changing labor market that rewards and values high-skilled laborers more and more. Consequently, he argues that attempts at addressing income inequality issues should be heavily based on education reform.

On the other hand, you've made the point that a lot of the increases in income and wealth inequality come from shifting fiscal policies and government regulation. You seem to argue that decreased taxes on the rich and more lenient policies in regards to financial industry have resulted in an economy that unduly favors certain individuals. Sorry if I'm putting words in your mouth!

I have the following two questions:

• Do you think any of the increased disparity has resulted from the shifting labor market?
• Do you think it makes sense to focus efforts on improving higher education and increasing access to it?

I'm not Paul Krugman, but for point #2:

• Note that "cutting spending" doesn't mean "cutting taxes". Krugman does not advocate increasing taxes right now. At least, he doesn't advocate increasing taxes on spenders, which leads me to...
• People might spend money more efficiently, but people also tend to be less likely to spend money and more likely to save. If you want to give money to people and expect them to spend, you want to give it to the poor. That's who Krugman advocates giving tax breaks to.