Sunday, January 19, 2014

It's The 1%

On Thursday, David Brooks was exorcised about emphasis on socio-economic inequality rather than "mobility (and) individual and family aspiration."  He hasn't noticed that it's primarily those who address the issue of inequality who propose policies and programs pertaining to mobility and individual and family aspiration.  He claims

Fourth, the income inequality frame needlessly polarizes the debate. There is a growing consensus that government should be doing more to help increase social mobility for the less affluent. Even conservative Republicans are signing on to this. The income inequality language introduces a class conflict element to this discussion...

Some on the left have always tried to introduce a more class-conscious style of politics. These efforts never pan out. America has always done better, liberals have always done better, when we are all focused on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness.

Paul Krugman responded by noting that Brooks was misleading readers by focusing on the top 5%, rather than the top 1%, of the income distribution and offered the table below from economists Piketty and Saez:

The Nobel Prize-winning economist explains

If you look at the bottom 4 percent of the top 5, you see good but not spectacular income gains. These are the kinds of gains that you might be able to explain in terms of skills, assortative mating, and so on. But the top 1 percent is in a different universe altogether. And in fact the gains within the top 1 percent are concentrated in an even smaller group: this is a Pareto distribution thing, in which the higher the income the greater the percentage gains. 

Without directly pointing his finger at his New York Times' colleague, Krugman recognized that Brooks was fronting for the Masters of the Universe in the commercial and business capital of the world.   He remarks "using wider definitions than the one percent is, in effect, diluting the wolves of Wall Street by lumping them in with the upper middle class. Not the same story at all."  Ironically, Brooks himself was waging class warfare.

Brooks also engages in a sort of class warfare when he accurately cites "no jobs for young men" as a serious problem while neglecting low wages.   As of August (according to the Social Security Administration), fully 40% of all U.S. workers were earning less than $10.74, what the 1968 minimum wage of $1.60 per hour would be in today's dollars.  If the federal minimum wage had kept up with inflation since the late 1960s, it would have been $10.52 per hour in 2012; if it had kept pace with productivity since 1960, it would have been $21.72 in 2012.

But Brooks' most entertaining, if completely subjective, claim is that the U.S.A. and liberals always have done better when eschewing class-based politics.  This was put to the test, however, several decades ago, when a fellow maintained "These economic royalists complain that we seek to overthrow the institutions of America. What they really complain of is that we seek to take away their power."   He stated additionally

For too many of us the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor — other people's lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.

The previous year he had noted

Great accumulations of wealth cannot be justified on the basis of personal and family security.  In the last analysis such accumulations amount to the perpetuation of great and undesirable concentration of control in a relatively few individuals over the employment and welfare of many, many others.

Franklin Delano Roosevelt won four terms aided by such rhetoric of "class consciousness," which exceeds what even socialist/Independent Bernie Sanders could say today.  And America did fine, too.

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