Summary of Crunch

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Rating

9

Qualities

  • Well Structured
  • Concrete Examples

Recommendation

At last someone has written a lucid explanation of the American middle class’s financial stagnation. Economist Jared Bernstein – chief economic adviser to Vice President Joseph Biden – provides a tremendous service to millions of Americans who wonder why so many two-income households remain financially insecure. Bernstein understands that most economics writing is impenetrable. He explains in lively prose why financial inequality is alive and well in 21st-century America. It’s an issue the mainstream media rarely covers. The book is structured around the gimmick of answering American’s most common questions about economics, and some of the miniessays don’t connect, but getAbstract recommends it to working people who want to know why they are entrenched in the proverbial rat race despite political promises that they are on the verge of financial security – a state, Bernstein emphasizes, that will remain elusive for most Americans.

About the Author

Jared Bernstein is senior economist and director of the Living Standards Program at the Economic Policy Institute in Washington, D.C. He wrote All Together Now: Common Sense for a Fair Economy and is the co-author of eight editions of The State of Working America.

 

Summary

The Income Gap Widens

The greatest challenge the U.S. faces today is finding a way to organize the economy so that it provides the goods and services that people both want and need. That noble goal is also political, since governments determine the distribution of wealth, power, opportunity, social mobility and health care coverage, as well as rectifying environmental problems. Analysts use three principles to understand how governments allocate power and resources:

  1. While market forces generally determine resource allocations based on merit, people with political power can shape these allocations.
  2. Economic relationships often take unexpected turns and may not be logical.
  3. Economics often requires trade-offs among scarce resources. Policy makers all have their own interests, and their decisions are rarely unbiased.

Even when households include two wage-earners, many cannot save enough money for their health care premiums or their children’s college tuitions. One reason is that inflation-adjusted incomes have declined in recent years. Financial pundits who talk about gains in the overall economy often ignore...


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