Economic Polarization and US Policy Activism

Abstract

Many economists view the increased inequality associated with globalization as the cause of the US ‘employment miracle’. This paper argues, to the contrary, that any such benefits are short-lived. Increased income inequality has heightened social—and especially racial and genderpolarization; and the reactions of globally mobile corporations to this polarization have reduced both access to capital and the size of the fiscal and monetary policy multipliers. Stimulative macroeconomic policy remains crucial in achieving a more prosperous, less unequal society, if it includes measures to enhance access to human and financial capital.