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Political-economic stability

If we invest 25%of the GNP to expand the production of goods and services, the total output will grow. Everyone is potentially better off. The problem is maintaining an income distribution which promotes political stability. Empirically, the political stability of industrial democracies is based on two factors. First, most groups in society must have rising real incomes; and second, the society has considerable social mobility. When real incomes are rising the majority will support the pro business party. Japan is a classic example of the workforce supporting the business party. With social mobility, the ambitious from poor parents will concentrate on achieving personal success rather than revolution. The issue remains: Will real incomes keep rising for most people?


norman@eco.utexas.edu
Thu Jun 8 16:37:44 CDT 1995