The Real Mandate Is to Bridge the Wealth Gap
Author Robert J. Shiller touched the resent financial crisis that should be corrected by just elected president. Author says president “needs to seize the opportunity and do something really effective to prevent inequality from getting much worse.”
There were mentioned the reasons of financial crisis, unfavorable outcomes and possible ways to solve it. “The financial crisis that afflicts the country is largely a result of speculative bubbles, built on false hopes, in the housing and stock markets. …the gap between the wealthiest and those struggling to provide basic items for their families will become more evident and more painful. … Financial theory is all about incentives for people to work effectively, and diversifying against random shocks by sharing them among many investors. ”
Author presents us his new book “The Subprime Solution: How Today’s Global Financial Crisis Happened and What to Do About It,” where he gives “three areas of action that would democratize finance — make it work better for the people — and help prevent future crises. We must improve the information infrastructure, encourage broader and more robust risk markets, and develop better retail financial products. Robert Shiller gives us steps to achieve those goals:
1. We need some permanent subsidies to get the full scope of financial advice out to the people.
2. The government could lead the way to a historic development of financial infrastructure to improve risk management.
3. Change retail financial institutions, notably those that grant and service mortgages.
4. Index the tax system to income inequality.
The best thing that new elected president can do and get support in is both to maintain incentives central to our capitalistic economy, and to ensure fundamental fairness