Re: ReOrient global Keynesianism (5) - Galbraith

["Forstater, Mathew" <ForstaterM@xxxxxxxx>]

We know in general that there is probably some kind of Engel's law at
work--as Adam Smith said (paraphrasing) "the size of the stomach is
fixed"--people do not continue consuming more and more, of the same
stuff at least, as income grows.  It has been a common assumption that
as income grows beyond some point, savings will begin to increase--but
now some are arguing that the mpc's of higher and lower income groups
are not so different.  That is hard to reconcile with the relatively
less inequality of consumption? (yes, as one intervention noted, this is
about U.S. or industrialized countries, not 'developing' nations).  The
other factor could be debt.  If income inequality is severe and
consumption inequality less so, either higher income groups are saving
more or the lower income groups are debt-financing some consumption, no?


-----Original Message-----
From: Warren Mosler [mailto:mosler@xxxxxxxxxxxxxx]
Sent: Friday, March 07, 2003 12:22 PM
To: Forstater, Mathew
Subject: RE: ReOrient global Keynesianism (5) - Galbraith


--- "Forstater, Mathew" <ForstaterM@xxxxxxxx> wrote:
> Warren - What would you surmise from this about
> inequality in savings
> and/or inequality of indebtedness? Also about
> relative tax burden? Mat

Not sure.  I find it informative that there is little
or no existing research into distribution of
consumption of real goods and services, when
the essence of 'economics' is generally recognized as
consumption.  It's symptomatic of the 'out of
paradigm' thinking of economists in general.

warren

>
>  "Inequality of after tax labor income has increased
> by
> 25 percent in the 1972-98 period. Yet consumption
> inequality has risen less than 2 percent."
>
>


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