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Taking ‘Middle-Out Economics’ Seriously in This Fall’s Fiscal Debates
Report

Taking ‘Middle-Out Economics’ Seriously in This Fall’s Fiscal Debates

EPI, 2013

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Editorial Rating

8

Qualities

  • Innovative

Recommendation

The “superstar” model of income distribution – in which the extremely talented (or the very lucky or well-connected) take most of the profits from increased productivity – garners a lot of discussion. But economists Josh Bivens and Hillary Wething explore an intriguing new perspective: income inequity as a private tax the rich impose on everyone else. Bivens and Wething consider how cutting this tax makes it possible to bolster the middle class, counteract austerity and reduce deficits. getAbstract recommends this concise and accessible paper for its alternative views on how to improve the lot of the ordinary many in competition with the extraordinary few.

Take-Aways

  • Spiking middle-class demand for goods and services can help eliminate the $900 billion “output gap” in the US economy.
  • The rising share of productivity growth captured by the richest acts as an effective “inequality tax” of 24% on the middle class.
  • Government programs such as Social Security and Medicare are responsible for half of middle-class income growth since 1979.

About the Authors

Josh Bivens is director of research and policy at the Economic Policy Institute, where Hilary Wething is a senior research assistant.


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