A recent column by David Brooks on the issue of inequality and economy, which you can read for free here, has excited considerable interest in the blogosphere from economists like Brad DeLong, Tyler Cowen , Mark Thoma, and Dean Baker, and wonky bloggers like Ezra Klein, among many others.
Here's my take on the inequality issue:
In the decade since the passage of NAFTA, labor productivity in the U.S. manufacturing sector rose between 70 percent and 80 percent, while real wages rose only 6 percent. In Mexico, productivity rose 68 percent, while real wages rose 2 percent. In Canada, the numbers are 34 percent and 3 percent, respectively.[i] The question for any democratic society is how to address this. Alas, we in the United States have done so by conducting what one conservative writer terms "a massive social experiment" in economic inequality. Over the last quarter-century, the portion of the national income accruing to the richest 1 percent of Americans has doubled. The share going to the richest one-tenth of 1 percent has tripled, and the share going to the richest one-hundredth of 1 percent has quadrupled.[ii] For working people, wages and salaries now make up the lowest share of the nation's gross domestic product since the process of collecting this data began more than 60 years ago.[iii] For the poor, just in the years since 2000, the number of Americans living below the poverty line has increased by nearly a third.[iv] Meanwhile, the average CEO of a Standard & Poor's 500 company took home $13.51 million in total compensation in 2005, a year in which the top 1 percent of Americans earned nearly 22 percent of all income.[v] Believe it or not, by 11:02 a.m. of the first workday of work on the first day of 2007, one of these average CEOs "earned" more money than the minimum-wage workers in his company will make for the entire year.[vi] The media tend to treat these trends as merely "the way the world works," but this is actually the essence of conservative ideology. As the political philosopher Michael Walzer pointed out in 1973:
At the very center of conservative thought lies this idea: that the present division of wealth and power corresponds to some deeper reality of human life. Conservatives don't want to say merely that the present division is what it ought to be, for that would invite a search for some distributive principle -- as if it were possible to make a distribution. They want to say that whatever the division of wealth and power is, it naturally is, and that all efforts to change it, temporarily successful in proportion to their bloodiness, must be futile in the end."[vii]
And yet, one cannot help but ask, why is this not the case in Europe or Japan?[viii] In fact, among major world economies, the United States in recent years has had the third-greatest disparity in incomes between the very top and everyone else; only Mexico and Russia are worse.[ix]
Only in the United States are the super-wealthy so powerful and their ideological interests so well tended and defended that their interests have come to stand as "principles" in our political discourse. As the historian Eric Foner notes in his history of "freedom," Franklin Roosevelt explained that "individual freedom" could not be said to "exist without economic security and independence ... for the average man which will give his political freedom reality." And his successor, Harry Truman, would use the phrase "economic freedom" in his 1950 State of the Union address to mean "a fundamental economic freedom for labor." But by the time of Ronald Reagan's second inaugural, the same phrase had come to imply not the right to organize or achieve economic security and independence, but deregulation, tax cuts, and an attack on unions on behalf of powerful corporations and their wealthy owners and investors.[x] By the second Bush presidency, following more than 20 more years of conservative agitation, the ideological demands of the super-rich had grown ever more extreme. For instance, Kenneth C. Griffin, who received more than a billion dollars in 2006 as chairman of a hedge fund, the Citadel Investment Group, could explain to a New York Times reporter in the summer of 2007, "The income distribution has to stand," adding, "I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard."[xi] Just what "principle" Mr. Griffin had in mind, he did not say. Meanwhile, this period in American history witnessed a pitched battle between members of the Democratic Congress and a Republican-supported group of private-equity billionaires fighting to retain their tax privileges. These included, as Warren Buffett explained, the right to "pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter." They insisted on this right, because to force billionaires to pay what bartenders must, would, according to wealthy Bush administration "pioneer" Wayne Berman, "disrupt thousands of partnerships around the country that provide the economic engine," and "punish innovators."[xii] In no other democracy in the world are the wealthiest members of society so generously indulged. This argument, so patently absurd from the standpoint of basic fairness, was nevertheless sufficiently respectable for its adoption by New York Sen. Charles Schumer, the third-ranking Democrat in the Senate leadership, one of the key architects of the 2006 electoral victory, and a self-described "progressive" politician (though not, in his own estimation, a "liberal"). Of course, Schumer had good political reasons to go to bat for one of his most important sources of campaign funds, and one that happens to be located in the state he represents, but the mere spectacle of a prominent center-left politician fighting against a tax increase for plutocrats without shame or apology demonstrates just how influential the power of money has become in 21st century America.
The Times piece on Schumer is here.
On the July 29 edition of NBC's Meet the Press, CNBC chief Washington correspondent John Harwood declared his intent to "defend" Robin Givhan's July 20 Washington Post Style section article which referred to the "cleavage on display" during Sen. Hillary Rodham Clinton's (D-NY) July 18 speech on the Senate floor. Harwood then asserted: "When you look at the calculation that goes into everything that Hillary Clinton does, for her to argue that she was not aware of what she was communicating by her dress is like Barry Bonds saying he thought he was rubbing down with flaxseed oil." As Media Matters for America has documented, media figures frequently portray Clinton as "calculating" or overly ambitious, while rarely offering actual examples or support. Read more
On July 26, Democratic presidential candidate John Edwards unveiled part of his economic plan, which involves cutting taxes for low- and middle-income Americans by, in part, raising capital gains taxes for those making over $250,000 per year and repealing the Bush tax cuts for those earning over $200,000 per year. However, in their reports on Edwards' plan, the Los Angeles Times and the Associated Press asserted that his proposal represents a political risk because it would allow Republicans to portray him as an "incorrigible tax raiser" or a "tax-and-spender in the mold of Walter Mondale." Neither article explained how offering a plan to provide tax cuts and incentives for a majority of Americans would leave him open to such criticism. Read more
On the July 29 edition of the NBC-syndicated Chris Matthews Show, U.S. News & World Report columnist Gloria Borger falsely suggested that Democratic proposals for troop withdrawal from Iraq involve "withdraw[ing] overnight. "While discussing what NBC News White House correspondent Kelly O'Donnell described as the "enormous costs of getting out" of Iraq, Borger asserted that "this is such a problem right now for the Democrats ... [b]ecause privately, many of them will say ... that you can't withdraw overnight ... that it would be dangerous for us to do that." O'Donnell agreed, saying, "Mechanically, you can't do it." But Borger offered no examples of a leading Democrat who wants to immediately withdraw all troops from Iraq. To the contrary, the withdrawal proposal recently supported by Senate Democrats would have reduced troop levels in Iraq over the next nine months and would have retained residual forces in Iraq to conduct limited operations.
As Media Matters for America has noted, the recently debated amendment to the fiscal year 2008 defense authorization bill -- offered by Sens. Carl Levin (D-MI) and Jack Reed (D-RI) -- calls for a "reduction" of U.S. forces in Iraq but also stipulates that the United States maintain a "limited" troop presence there to protect U.S. and coalition infrastructure, train Iraqi security forces, and conduct counterterrorism operations. Under the amendment, the reduction in U.S. forces would "be implemented as part of a comprehensive diplomatic, political, and economic strategy that includes sustained engagement with Iraq's neighbors and the international community for the purpose of working collectively to bring stability to Iraq." The Levin-Reed amendment further stipulates that "[t]he Secretary of Defense shall complete the transition of United States forces to a limited presence and missions as described" in the legislation by April 30, 2008. Republicans ultimately blocked an up-or-down vote on the amendment. Read more
On the July 29 edition of MSNBC Live, during a report on the "tensions" between Gen. David Petraeus, commander of U.S.-led forces in Iraq, and Iraqi Prime Minister Nuri Kamal al-Maliki, an on-screen graphic read: "Iraq: Fighting Al Qaeda." During the segment, NBC News correspondent Jane Arraf further reported that Petraeus "is saying that the U.S. has made significant gains against Al Qaeda," adding: "[H]e says that in key areas where they have declared the states -- capitols of their Islamic state, they have managed to get rid of key leaders, but he warns that there is still a significant threat, and they are able to carry out significant attacks." However, in asserting that the U.S. military in Iraq is fighting Al Qaeda and uncritically quoting Petraeus making the same claim, MSNBC conflated the Sunni insurgent group "Al Qaeda in Iraq" with the group responsible for the 9-11 attacks, as the Bush administration has repeatedly done. Moreover, Arraf's paraphrasing of Petraeus' comments left the impression that he said "the U.S. has made significant gains against Al Qaeda" worldwide -- an assertion contradicted by the most recent National Intelligence Estimate (NIE), which assessed that "the group has protected or regenerated key elements of its Homeland attack capability" and established a "safehaven" in Pakistan. Read more
Unlike possibly climate-change-driven floods in England or droughts and wildfires in the Western United States, bees in crisis don't normally make headlines. But that doesn't make their crisis any less important for us. Think of Chip Ward's essay, "Diesel-Driven Bee Slums and Impotent Turkeys, The Case for Resilience," which focuses on the collapse of commercial bee colonies across the United States, as a challenge to normal thinking about how to deal with nature, especially as climate chaos pushes already stressed ecosystems in new and unpredictable directions.
It seems indisputable that, if we are going to weather (literally) the punches Mother Nature throws our way in the coming years, we will need to do more than improve evacuation routes when storms hit or put more firefighters on the line when parched lands ignite. We will also have to reconsider our thinking about the natural world as largely a collection of commodities to be endlessly manipulated for profit and convenience or as a set of touring destinations. This essay might as easily have been titled, "Why the Organizing Principle of Industrial Civilization Is Just a Big Misunderstanding." Taking up a recent, startling development in the commercialized world of nature -- the collapse of those bee colonies -- it explores ways in which our cult-like devotion to the notion of making all things "efficient" has become dysfunctional, even dangerous.
Ward, whose early writing, especially his book Canaries on the Rim, focused on how to make polluters accountable, recently moved to the remote wilds of southern Utah where he has had to cope with some of nature's inevitable disturbances -- wildfires and flash floods -- that have made him think about how recovery from such disturbance happens and how we might help recovery along (and so help ourselves as well).
Hence the bees -- without whose pollinating abilities our whole food system would be thrown into chaos. Hence, those "impotent turkeys." (I'll leave it to you to read the piece and find out what their story is.)
Ward concludes: "How resilient are we? Crisis is also an opportunity for change. As the bees die, we are getting an unmistakable warning. Without pollination, life as we know it is not possible. Think 'tiny canaries in the coal mine.' Then think 'resilience.'"
Hello, Chicago? Do I have no friends at all in the Windy City to give me a heads-up about this?
(And where, oh where is Stupid? Anybody know?)
[i] Jeff Faux, "Crashing the Party of Davos," Democracy, No. 3, Winter 2007
[ii] Jonathan Chait, "Freakoutonomics," The New Republic, November 6, 2006
[iii] Clay Risen, "Trading Stories," TNR Online, September 19, 2006
[iv] Figure is based on U.S. Census statistics, "Harper's Index," Harper's Magazine, June 2007
[v] The Corporate Library's 2006 CEO Pay Survey, September 29, 2006
[vi] The CEOs of America's largest corporations (the Fortune 100) make an average of $17.6 million per year. That is $67,692 per day, or approximately $8,461 per hour. At the beginning of this year, the federal minimum wage was set at $5.15 per hour, or $10,712 per year (for a 40-hour workweek). It takes the average CEO 2 hours and 2 minutes to earn $10,712. The CEO of Fortune 100 companies earn $10,712 in 1 hour and 16 minutes. It takes the average minimum-wage worker 52 40-hour weeks (2,080 hours) to earn $10,712. See "Survey of CEO salaries at companies with $1 billion plus of revenue," CNN.com Money Line, June 21, 2006; "Survey of CEO salaries at Fortune 100 companies," USA Today, April 11, 2006. See also David Cay Johnston, "Income Gap Is Widening, Data Shows," New York Times, March 29.
[vii] Michael Walzer, "In Defense of Equality," Dissent, 1973, reprinted in The New York Intellectuals Reader, Neil Jumonville, editor, (Routledge, April 2007)
[viii] Kurt Andersen, "American Roulette," New York magazine, January 8
[ix] Jonathan Chait, "Freakoutonomics," The New Republic, November 6, 2006
[x] Quoted in Eric Foner, The Story of American Freedom, (W.W. Norton, 1999), Page 269
[xi] Quoted in Louis Uchitelle, "The Richest of the Rich, Proud of a New Gilded Age," The New York Times, July 15
[xii] Evan Thomas and Daniel Gross, "Taxing the Super Rich," Newsweek, July 23