Thursday, June 21, 2012

Obligatory reading, y'all

This is one of the most interesting analyses I have seen in years. The key point that Prof. Acemoglu makes is that nations become successful only after they include everyone in the share of growth and prosperity. It is not a socialist manifesto; it is simply a political-economy argument that shows that rent-seeking elites are not sustainable. Countries need to have inclusive institutions and avoid income inequality by giving everyone an opportunity to succeed using personal incentives implicit in a free-market economy. The active promotion of a healthy middle class is what determines long term prosperity and growth. The old Republican argument that job "creators" like Donald Trump deserve a tax break becomes patently absurd.

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