Piketty provides a mainstream neoclassical explanation of worsening inequality. That creates a gattopardo opportunity whereby inequality is folded back into mainstream economic theory which remains unchanged.
Larry Summers and Paul Krugman have put stagnation on the table, but there is a grave danger that policymakers only focus on financial market reform and ignore reform of America’s flawed economic paradigm.
A higher inflation rate of three to five percent produces better outcomes by lowering the unemployment rate and creating labor market bargaining conditions that help connect wages to productivity growth.
Neoliberalism aims to diminish the role of the state and enhance the power of the market, and this goal is reflected in neoliberal monetary theory which guided the euro’s design.
