Monday, December 11, 2006

Still Learning Their Numbers

Tori made me forget to report the usual Sunday pondering of the country's declining economic majority. Here's Ben Stein, in his Everybody's Business column in the New York Times business section for December 10th:
In 2004, the top 130,500 taxpayers — roughly the wealthiest 0.1 percent of earners in this great nation, with added family members that brought their numbers to 300,000 — had more income than the 120 million Americans at the bottom. Put another way, that sliver of the population at the top of the heap was paid, as a group, more than the bottom 40 percent of all Americans combined.

To be sure, there has always been income inequality and there always will be income inequality, just as there will always be death and taxes. But to give you an idea of where we’re heading, in 1979, a scant 25 years earlier, the top 0.1 percent had aggregate income that was one-third that of the big group at the bottom.

To understand this change, you need know only that while the income of the bottom 60 percent of Americans has barely budged since 1979, the income of the top dogs has risen by more than a factor of three.

Thank you for noticing, Mr. Stein! Even if he is in my top 10 favorite Republican writers (Kevin Phillips being my perennial number 1), I have to say that he is very slow to observe the obvious. And by the way, why don't any of these guys quote Doug Henwood, whose Left Business Observer has been reporting such figures for about fifteen years, and who wrapped it all up in his classic work Wall Street in 1997? Why can't they even cite their fellow Republican Mr. Phillips, who put the early versions of all these numbers in The Politics of Rich and Poor during the Bush I administration and had done it two or three more times since?

Credit is important, because it involves the fate of ideas. If Tom Friedman gets to lead the charge against the war in Iraq in 2006, it means that he wasn't completely wrong to support it in 2003, and that the ideas that led him to support it weren't also wrong (forced democratization, US rule in the Middle East, American-style globalization as universal enlightenment). The same is true for middle-class decline. If the Ben Steins become the great crusaders for the economic majority, and the Doug Henwoods are kept to one side, it means that Republican tax and business policies are just fine, as long as they're trimmed back a little. It means that Republican tax and business policies don't SEEK middle-class decline, when in fact that's exactly what they do.

Mr. Stein's solution is perfectly dumb. The rich should leave the fairways, he says, and head for the schools of poor neighborhoods, where they will teach their money skills to the poor so they too can be rich. The end of his essay is a time machine straight back to the 1890s, when President Cal Coolidge was still in school. Stein is a very astute man who knows a huge con when he sees it - his shredding of the management of United Airlines in January 2006 was a classic of its kind. So why would he actually argue that if the rich do some volunteer teaching, the poor will be rich too? Gaaah!

Because if wealth is just a question of knowing how to save and invest, it means that the American business system doesn't create inequality, people do - that is, people without enough education. Here's where Stein, Larry Summers, Bill Clinton, even Robert Reich all agree: anyone who educates themselves for the New Economy can print themselves money for the world's greatest wealth-making machine. What this denies is that American industry took the "low road" a long time ago (in the much-missed economist David A. Gordon's phrase), meaning that its enormous profits of the last few years depend in large part on a persistent squeezing of wages. In other words, systematic corporate wage and benefits polices have produced the stuck middle-class we have right now, not the absence of free extension courses taught by the Forbes 400.

Ben Stein doesn't con people, but his bad ideas do.

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