Wednesday, June 15, 2011

Robert Reich: The Truth About The Economy

My wife pointed this out to me today:

Scribbling Sharpie Illustrates The Truth

You’re not going to be able to explain something as complex as an economy in 6 bullet points, but Prof Reich (he served as Labour Secretary under the Clinton Administration) does a fair job of showing the “Big Picture”.

I agree with almost every point, except the last one – there’s a lot more to the weakness of the US economy than a “divided middle class”. Strengthening the balance of power between the rich and the poor might solve some problems, but not all. There’s little here about the impact of globalisation for instance. The very obvious political slant of the video undermines some of the force of its arguments, but then Reich is a political economist after all.

I think there’s lessons here for Malaysia as the trends noted above aren’t confined to the US. Note that we don’t have any capital gains tax at all, except for the time limited RPGT, which makes the wealth generation discrepancy between labour and capital all the more acute.

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