KEYNESIAN GOVERNMENT INTERVENTION AND INCOME INEQUALITY.

KEYNESIAN economics; ECONOMIC models; ECONOMIC development; ECONOMIC policy; ECONOMIC indicators

The article presents information on some comments based on a paper submitted by economist Steven Stack on a neo-Keynesian model of income inequality, which makes predictions like the greater the direct government involvement in the economy (DGI) the less the unemployment and the less the income inequality, the greater the DGI, the greater the economic growth and the less the degree of income inequality and that government spending will have an effect on income inequality independent of the level of development. The statement that the original association between growth and inequality is spurious and that growth affects inequality indirectly through its association with DGI is a non sequitur and reflects ignorance about what a spurious association really is. If the original association is spurious, then the second part of his statement is false. The distinction between Keynesian economic manipulation and central planning involves fundamental, qualitative differences in both the nature and form of government intervention, so that the planners of East Europe and of the Soviet Union are not simply Keynesian's writ large.