ECON561 Discussion 1&2 - President Roosevelt's New Deal

ECON561 DQ'S

QUESTION 1

President Roosevelt's NEW DEAL that got him re-elected 3 times (an exception in US politics) was the only period of exception to this general framework. The reason is that OWNERS are organized while workers are prevented in various ways by law from organizing and speaking with one voice. This is true in Capitalism, Socialism, or Communism if we just look at the rapid increase in income inequality in countries that are capitalist as well as those that are supposedly socialist or communist. (Piketty, Yang and Zucman, 2019)

Question: Could the PAY GAP between rich and poor decrease if governments decided to support organized labor in every form?

QUESTION 2

According to Teles (2020), “Economists call [upward flowing government benefits from the poor to the wealthy] "rents," which we can define for simplicity's sake as legal barriers to entry or other market distortions created by the state that create excess profits for market incumbents. These rents can sometimes include an absence of government action, such as a failure to properly regulate externalities or enforce market rules.” (para. 8) 

Question: Given the results of this empirical or real life research, could one of the reasons for a “self-interested reasons that a top earner might favor policies to redistribute income” be that they wish to prevent people from discovering that the real problem is that too much wealth flows from poor to wealthy people? In other words, such a policy position by a top earner would indeed be self-interested!