How to avoid a recession
Robert Reich, Clinton's Secretary of Labor, has a blog. It's extremely knowledgable (of course), and also very well written. Today's post is on how to avoid the coming recession:
"All we need do is recognize one simple fact: Lower-income people spend a larger portion of whatever extra income they get than those with higher incomes (in economic jargon, lower-income people have a higher marginal propensity to consume). So every dollar of a tax cut aimed at lower-income Americans packs a bigger stimulative punch than a dollar of tax cut aimed at those with higher incomes. By the same logic, every dollar of a tax increase on higher-income people has a smaller detrimental effect on their purchases than would a dollar tax hike on lower-income people. Get it? The best way to stimulate the economy without adding to the national debt is to cut the taxes of lower-income Americans and pay for that tax cut by raising taxes on those with higher incomes. Presto – a simple formula for being both fiscally responsible and also fiscally stimulative."
Nothing much to add to that except - if it's right for the USA, chances are it would be a good idea for us here in Britain too. Can we send away the rubbish American advisers to the Prime Minister like the man who has helped lose eight Presidential elections, and instead get this one to come and help us?