I've had no time to blog today, but this is simply too good not to pass along.
In two paragraphs, Ezra Klein provides the single best explanation I've ever seen of the fatal flaw in the theory of "trickle down" economic growth:
Think of the income distribution as a long staircase. Income inequality lengthens it, not only by adding more steps, but by increasing the horizontal plane between steps. And in this case, the implicit imagery of trickle down economics -- money as water -- is helpful. Economic growth starts at the top, and the longer it has to travel, the more likely it runs out of momentum fairly high up. That's why you see gains pooling in the top few percent, while the bottom four quintiles get next to nothing, and in fact have seen some losses.
Recessions (particularly those not based in stock market bubbles) start at the bottom and travel upwards. And inequality does its magic again, this time concentrating their effects at the base and making it harder and slower for them to travel all the way up to the top. This is very good for the rich, but very bad for the poor, who'll not only suffer more, but will have to wait longer for any national action, as those who control the agenda won't feel the effects for quite some time.
Talk about breaking a complex concept down into an easy to understand explanation. It's Malcolm Gladwell-esque in its elegance. Wow. Well done Ezra!
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