An Article That Explains Neither Boom Nor Bust
Anyone who’s interested in failings of empiricism should read the article “Bad Distribution of Income Led to Great Depression: History Repeats in 2008“. It refers to John Kenneth Galbraith’s claims that maldistribution of incomes led to the Great Depression, and was a contributing factor to the Great Recession.
Simply becuase the income share of the rich increases during a boom doesn’t mean that it is a trigger for the economic collapse. In fact, they are more likely to be a consequence of the manic boom than anything else. Without a sound economic theory to underpin discussion of real events, we’re simply going to be stabbing in the dark for cause and consequence.