Paul Krugman: The Inequality Connection

In early December, I'm supposed to talk at a Columbia University conference on inequality and its consequences. One issue I'll have to address is the ongoing question of whether rising inequality makes countries more vulnerable to financial crises, makes it harder to recover from such crises, or in some other way degrades performance.

I've been wary of this line of argument, in part because it appeals so much to my general leanings: Inequality worries me a lot, and it would be great if it was bad on the macroeconomics side, too. So I bend over backward not to buy into that proposition too easily.