On Saturday, December 15, 2001 at 07:46:56 (-0800) Devine, James writes:
>from the Arts section [!] of the NY TIMES:
>
>December 15, 2001
>
>Grounded by an Income Gap
>
>By ALEXANDER STILLE
>
>For 30 years the gap between the richest Americans and everyone else has
>been growing so much that the level of inequality is higher than in any
>other industrialized nation.
>
>What no one can quite figure out, though, is why, or even whether anything
>should be done about it.
One of the reasons, unmentioned in the article, for increasing
inequality is rather transparent: the assault by organized capital
upon workers, both directly and via the political system.
>"Why there has been increasing inequality in this country has been one of
>the big puzzles in our field and has absorbed a lot of intellectual effort,"
>said Martin Feldstein, a professor of economics at Harvard University and
>the chairman of President Ronald Reagan's Council of Economic Advisers. "But
>if you ask me whether we should worry about the fact that some people on
>Wall Street and basketball players are making a lot of money, I say no."
As a representative of an administration that supported the illegal
destruction of unions, among other nefarious doings, it is hardly
surprising that Feldstein doesn't much care about the issue. Stille
could have asked James Galbraith his opinion, or could have read his
book, *Created Unequal: The Crisis in American Pay*, published in
1998. Inequality, writes Galbraith, is transforming the United States
"into something that more closely resembles an authoritarian quasi
democracy, with an overclass, an underclass, and a hidden politics
driven by money" (4). Though this has essentially been true from the
beginning of this country, the distillation of vengeance on behalf of
the wealthy has quickened over the past 30 years, particularly as the
darker shades of the "underclass" have been targeted for social
"removal" through a phony drug "war", and particularly as politics ---
and crucially political discourse --- has increasingly become an arena
in which only the ultra-elite of the country can participate.
>With inequality growing through- out the industrialized world, Mr.
>Feldstein, like many economists, has come to see inequality as a basic
>feature of the new high-tech economic scene, the natural consequence of an
>economy that has begun to reward talent, skills, education and
>entrepreneurial risk with increasing efficiency.
What a load: inequality has been a basic feature of state-administered
and protected "free" markets for centuries. The "new" economy is
nothing new at all, and rewards typically go to those with the social
power that they inherit.
>"There is no doubt that market forces have spoken in favor of more
>inequality," said Richard Freeman, a professor of economics at Harvard. Just
>look at the figures. Most of the incredible wealth generated during the
>1990's boom went to the richest of the rich. "Forty-seven percent of the
>total real income gain between 1983 and 1998 accrued to the top 1 percent of
>income recipients, 42 percent went to the next 19 percent, and 12 percent
>accrued to the bottom 80 percent," writes Edward Wolff, an economics
>professor at New York University in a new edition of his book "Top Heavy"
>(New Press), about growing economic inequality.
It might be too much to add that the wealthy "have spoken in favor of
more inequality", whereas the American public for the most part
recognizes the unfairness of government policies which reward the rich
and punish the poor, and generally favors policies which lessen
inequality. One might also point out tax law changes, lax enforcement
of SEC rules, huge government giveaways and bailouts to the wealthy,
etc. One glaring omission here: income for the wealthy is typically
reward for gambling/investing, called "capital gains", not wage labor.
Wage labor --- "labor gains" --- is taxed far more heavily at both the
state and federal level than are capital gains.
>In the 90's only the people at the very top and very bottom made any real
>improvement. Wages for full- time male workers, for example, have grown only
>1.3 percent since 1989. The richest 10 percent of American households,
>economists point out, have 34.5 percent more financial wealth than the
>average family. These changes have persisted through Democratic and
>Republican administrations and began at the same time in Britain, even
>before Margaret Thatcher's market-oriented policies, Mr. Wolff said,
>indicating that they are not simply the product of economic policy but
>reflect deep structural changes in the economy. The leading hypotheses are
>technological advances, increases in trade and imports, growing immigration
>and declining union membership.
Galbraith points out:
The idea that rising inequality serves a deeper purpose emerges
from the economics profession, which has produced a kind of instant
wisdom on the subject --- a set of views, usually presented as
orthodox, but in fact established in great haste and in considerable
disorder in recent years. To a predominant faction within the
economics profession, the "why" of rising inequality has been answered
by a single, all-encompassing phrase: *skill-biased technological
change*. (5)
Galbraith goes on to argue:
... that rising inequality in the wage structure is neither
inevitable nor mysterious nor necessary nor the dark side of a good
thing: rather, it was brought on mainly by bad economic performance.
Its principal causes lie in the hard blows of recession, unemployment,
and slow economic growth, combined with the effects of inflation and
political resistance to raising the real value of the minimum
wage. (8)
>The only way you can achieve total equality is through coercion, he said,
>which makes people feel they have no control over their lives and no way to
>benefit from their labor. But highly unequal, extremely stratified
>societies, where people feel crushed by the economic power of others, breed
>similar dissatisfaction.
Any society, by definition, is based upon coercion. As is pointed out
in the article, there is a difference between "total equality" --- a
pointless, destructive, and impossible goal --- and broad equity,
which is a reasonable, moral, and (perhaps) ultimately achievable goal.
>Conservative economists insist that the problem with the new economy is not
>that some people make a lot of money but a series of noneconomic factors
>that are holding others back. "The problem is not inequality but poverty,"
>Mr. Feldstein said. Poor education, the breakdown of the family and what he
>terms "low cognitive ability," together, may be responsible for holding back
>many of those mired in persistent poverty. He added that some poor people
>may choose not to work as hard as investment bankers working 70 hours a
>week, or to skip school, and so earn less.
In other words, inherently stupid and lazy blacks just can't cut it in
today's "new" economy. In fact, while education rates among blacks
have increased dramatically over the past 30 years, their economic
gains have not.
One might also like to learn from this article that higher education
has been priced out of reach of more and more people, by policy
decision, not market forces. Access to education is still grossly
unequal in this country.
>Curiously, this is a point on which the views of conservatives like Mr.
>Heckman converge with those of liberal economists.
>
>"Never has the accident of birth mattered more," Mr. Heckman said. "If I am
>born to educated, supportive parents, my chances of doing well are totally
>different than if I were born to a single parent or abusive parents. I am a
>University of Chicago libertarian, but this is a case of market failure:
>children don't get to `buy' their parents, and so there has to be some kind
>of intervention to make up for these environmental differences."
>
>Even Adam Smith, the prophet of laissez-faire economics, had a strong
>concern for equity if not equality. "No society can surely be flourishing
>and happy, of which the far greater part of the members are poor and
>miserable," he wrote. "It is but equity, besides, that they who feed, clothe
>and lodge the whole body of the people should have such a share of the
>produce of their own labor as to be themselves tolerably well fed, clothed
>and lodged."
Well said. One might point out that this notion far precedes Smith.
Aristotle voiced similar concerns:
... for where people have equal shares, they are more content,
but those who have the advantage of riches, if they enjoy a
preponderance in the constitution, seek to ill-treat others and
enhance their own future. (*Politics*, 1307a5)
Bill
