Kevin Hassett: Mitt’s dumbest economist

Romney adviser Kevin Hassett doesn't think income inequality matters. His ideas are why this election is crucial

BY ANDREW LEONARD

Income inequality? Don’t get worked up about it, wrote two American Enterprise Institute scholars in the Wall Street Journal this week. The gap between the rich and everybody else in the United States is not getting bigger, they argue, and those who are telling you that it is (like President Obama) are “seeking political gain by inflaming class hatreds with misleading statistics.”

One of the Op-Ed’s co-authors is Kevin Hassett, a man who has been much mocked for making the worst economic prediction since Irving Fisher declared stocks to be at a “permanently high plateau” … in 1929. A Hassett-bylined column on the WSJ opinion page is not where most economists tend to look for solid, peer-reviewed analysis, so we’ll leave the painstakingly researched disembowelment of his argument to others. But the mere appearance of such an argument with less than two weeks to go before Election Day is still worth appraising. Kevin Hassett is an adviser to Mitt Romney — he’s someone who will have real influence on economic policy if Romney wins. So the real question here is not how wrong his argument might be, but why he is making the argument at all. Why does Kevin Hassett want us to believe that income inequality is not getting worse?

Could it be because there’s increasing evidence that widening income inequality isn’t good for economic growth? Could it be that the entire cathedral of supply-side dogma, entrenched in U.S. economic policy for three decades, crumbles into rubble when you realize that it’s not good for the economy when the rich get richer at the expense of everyone else? Could it be that the data on income inequality refutes everything Mitt Romney stands for?

The current issue of the quarterly magazine of the International Monetary fund, Finance & Development, highlights the research of two IMF economists who argue that there is a clear connection between inequality and the health of an economy: “Countries with high inequality are far more likely to fall into financial crisis and far less likely to sustain economic growth.”

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http://www.salon.com/2012/10/26/income_inequality_not_what_the_doctor_ordered/