When I originally wrote this post I predicted that the debate on income inequality would switch to consumption (see the end of that post). As it turns out those Little Ideological Beavers (LIBs *tm) over at Chicago were already constructing the damn. See this paper. And the debate is now taking its predictable turn with even moderate lefties suckering for the line. See this blog post over at economists view for a rundown.
I do so tire of this debate. Neoliberals lost, it was predictable at the time; the left was right; the right and right moderates were wrong: now go back to defending inequality as an economic good in and of itself or if you are Clintonite/Blarite liberal prattle on about individual responsibility.
You simply can’t argue that the path of relative price differentials between luxury and mundane, cheap and quasi perishable consumer goods makes up for income inequality. First, income and consumption inequality are two separate issues. Second, if I have to buy the same good twice in a year because it is of dubious quality then my actual price is double. Third there are these uncomfortable facts: Fourth, even if we disregard the latter three points it seems absurd to argue that cheap-shit bought on credit somehow vindicates the neoliberal policy paradigm especially when we are in the middle of a consumer credit crisis.
But crisis or no crisis in the credit markets “Cheap Shit Bought on Credit” was not the political slogan of neoliberals although it is perhaps a fitting epitaph for the policy paradigm.