Former Reagan Adviser David Malpass: Big Government Makes Income Inequality Worse

Friday, 17 Jan 2014 09:26 AM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
While progressives favor a bigger government to solve the income inequality problem, that would just add to it, says David Malpass, president of Encima Global research firm and former adviser to Ronald Reagan.

"Washington's increased size and power has concentrated income and wealth in fewer hands," he writes in The Wall Street Journal.

"Making government bigger will exacerbate this problem. It is already too big, intrusive and expensive to allow a robust economy that benefits everyone," wrote Malpass, deputy assistant Treasury secretary in the Reagan administration and deputy assistant secretary of state in the George H.W. Bush administration.

Editor’s Note:
These 38 Investments Have a 96% Win Rate

Malpass says moves by the government to expand its control of the economy over the past few years have helped the rich and hurt the poor.

He cites the federal government's "takeover" of the mortgage industry and the Federal Reserve's decisions to keep short-term interest rates near zero and buy more than $3 trillion of bonds as examples.

"Both of these expansions channel credit to the government and the well-connected at the expense of savers and new businesses," writes Malpass.

Government expansion has been a boon to the financial industry, he notes. "Wall Street's upper crust is the epicenter for financing the contractors, lobbyists and lawyers that help the government spend money."

Nonetheless, Jim O'Neill, former chairman of Goldman Sachs Asset Management, believes governments are ready to act against income inequality.

"I wonder if we could be in the very early stages of a redistribution of wealth from capital back to mass income through government policies, whether it be from taxes or things being done to boost minimum wages," he tells CNBC.

Editor’s Note: These 38 Investments Have a 96% Win Rate

Related Stories:

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink

 
Email:
Retype Email:
Country
Zip Code:
 
Follow Newsmax
Facebook
Google Plus
You May Also Like

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved