Editore"s Note
Tilting at Windmills

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April 19, 2006
By: Kevin Drum

BEING SUPER-RICH IN AMERICA.....Harold Meyerson is unimpressed with the "Hamilton Project," a brainchild of Robert Rubin's that advocates a variety of familiar Rubinesque economic policies: balancing the budget, investing in education, increased scientific research, etc. Meyerson thinks something is missing:

Their list of national problems includes nothing about a corporate and financial culture that richly and reflexively rewards executives who offshore work to cheaper climes and deny their American employees the right to join unions.

....There's nothing in the statement about raising the minimum wage or mandating a living wage; the word "unions" is nowhere to be found, though unionizing our non-offshorable service sector jobs is the surest way to restore the broader prosperity for which Rubin and his co-authors pine.

I don't have anything against Rubin and his mainstream ideas, but Meyerson is right: it's depressing that mainstream liberalism is so economically timid these days.

I know I'm not the first or even the thousandth to make this point, but consider a few wonkish numbers from the past 20 years:

  • Per capita GDP in the United States has increased about 52% over the past two decades. This economic growth is due mostly to increased productivity, which in turn is largely due to technological progress. It's not due to any magical increase in the quality of CEOs, managers, or factory floor workers.

  • Median personal income 20 years ago was about $18,000. If everybody's income had grown 52% since then, median income would be about $27,000 today.

  • It's not. It's only $23,000. If you add in health benefits it changes the numbers only slightly.

The reason for this is obvious: our economy has grown 52%, but that doesn't mean everyone's income has grown 52%. It means that the incomes of the super-rich have grown 100% while the incomes of average schmoes have grown only 25%. And average schmoe incomes haven't risen a penny since George Bush took office.

In other words, the rich are taking most of the money and leaving little behind for anyone else. And then, to add insult to injury, they whine about having to pay taxes on that vastly increased income.

And you, my lovely little schmoes, have to listen to that whining every day on Fox News, Rush Limbaugh, and in the pages of National Review. Your income ought to be about $4,000 higher than it is, but instead of getting that income you get bought off with a $200 tax cut from the Republican Party. Meanwhile, the lucky duckies at the top get a 100% pay increase and a 30% tax cut. It's a good time to be super-rich in America.

Kevin Drum 2:20 PM Permalink | Trackbacks | Comments (117)

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Comments

Frequency nails it.

Posted by: lib on April 19, 2006 at 2:23 PM | PERMALINK

I had a hunch Frequency was gonna nail this one.

Posted by: shortstop on April 19, 2006 at 2:28 PM | PERMALINK

That'a really good point. Rich people didn't earn this money--it was technology gains. Bill Gates deserves his fair share, but frankly, I think he and the rest of the computer geeks got their fair share. The rest of it should be equally distributed among all of us.

We're all supposed to be making $4,000 more a year, but we have been bought off instead with a $200 tax cut--that our grandkids are going to end up paying for!

Such a good point. Such, such, SUCH a good point.

Posted by: theorajones on April 19, 2006 at 2:33 PM | PERMALINK

Robert Rubin is basically a Rockefeller Republican, a species that was driven out of the Republican party and found its home in the DLC and other "new Democrat" organizations. These types are socially liberal and have a sense of noblesse oblige, but they are either rich or hope to be, and they want a climate that is good for the rich, and humane enough for the rest so that their consciences don't suffer too much.

Income inequality is not a problem for these guys, because they worship at the altar of the free market.

Posted by: Joe Buck on April 19, 2006 at 2:36 PM | PERMALINK

The real numbers are worse then Kevin's back of the envelop calculation suggests. Economists Ian Dew-Becker and Robert Gordon describe the full change in their paper "Where Did the Productivity Growth Go? Inflation Dynamics and the Distribution of Income" (available here -- http://www.nber.org/papers/w11842)

A few teaser findings:

Between 1966-2001, "of the total increase in real labor income of over 2.8 trillion dollars, less than 12 percent went to the bottom half of the income distribution. More of the income change accrued to the top one percent than the entire lower 50 percent, and more accrued to the top1/100 percent than to the entire lower 20 percent. The small share going to the bottom half reflects not just growing inequality of real hourly wages, but a smaller number of hours worked at the bottom."

Over 35 years, inflation-adjusted annual wages for those at the middle of the income distribution increased by a total of only 11 percent (from $23,667 to $26,251 for an average of 0.3 percent a year), but the annual wages for the top .01 percent increased by 617 percent (from $442,626 to $3,172,691 for an average of 5.63 percent a year).

Posted by: Bryce on April 19, 2006 at 2:42 PM | PERMALINK

Cue the right-wingnuts crying about "class warfare."

Posted by: Gregory on April 19, 2006 at 2:45 PM | PERMALINK

In my first post of the thread (rolling eyes, but not too hard, because Frequency's post at 2:28 actually made me laugh), I'd like to point out that even bringing up this topic is engaging in class warfare. Where will your unbridled jealousy lead you, Kev?

Posted by: shortstop on April 19, 2006 at 2:46 PM | PERMALINK

Heh, Gregory--sarcastic minds.

Posted by: shortstop on April 19, 2006 at 2:47 PM | PERMALINK

Rubin is an elitist liberal on Wall Street where the financial and legal communities cooperate to run much of the country. Otherwise Joe Buck is mostly right.

The don't exactly worship the free market, their markets are fed and nutured by crony capitalism.

The Clinton/Rubin economic scheme, with the luck of good timing, was essentially more effective trickle down.

Posted by: save_the_rustbelt on April 19, 2006 at 2:47 PM | PERMALINK

I've had a long standing modest proposal which I think I'll modify here just slightly.

The original proposal:
Let's outsource CFOs and CEOs. You could get them from India, in which case they would speak better English than homegrown executives do. If you want to go really cheap, you could get them from Vietnam. It is not as a CFO or CEO actually has to know anything about the business they lead. They are all pretty generic. Note also that the performance of a CEO or CFO is only vaguely related to compensation.

New updated proposal:
Replace all CFOs and CEOs with robots -- something similar to Teddy Ruxpin. All they really need to do is respond with certain common phrases, e.g. "reorganization", "mission statement", etc., etc.

Posted by: Jim Ramsey on April 19, 2006 at 2:47 PM | PERMALINK

You will never get a culture that labels the poor "lucky duckies" but thinks hundreds of millions for CEOs who run their companies into the ground is cause for country club celebration to ever acknowledge that workers exist as anything more than a cost on the balance sheet.

Any minute now, we'll hear the words "class warfare" because the mere mention of the unbridled rapacity and exploitation of our overlords is a graver sin than their actually doing it.

Posted by: R.Porrofatto on April 19, 2006 at 2:47 PM | PERMALINK

Kevin, your final paragraph contains the kind of feisty clarity of which you're capable, and in which you should indulge more often. Huzzah!

Posted by: Alek Hidell on April 19, 2006 at 2:48 PM | PERMALINK

In other words, the rich are taking most of the money and leaving little behind for anyone else.

Shorter Kevin Drum: Support Class Warfare!

Posted by: Al on April 19, 2006 at 2:49 PM | PERMALINK

What, did the "class warfare" bell go off at 2:47?

Posted by: R.Porrofatto on April 19, 2006 at 2:49 PM | PERMALINK

Is it class warfare that there are no members of congress who make minimum wage or less than the national average?

Posted by: slanted tom on April 19, 2006 at 2:50 PM | PERMALINK

One of the oldest problems in the history of economics- let the rich take everything, and they don't invest it wisely, they spend it on luxuries or hoard it, and the society that lets this happen becomes impoverished of productive capacity.

Notice that the amount that the Chinese have allowed the 'leaders' to siphon off is trivial compared to the huge amounts they have invested in transportation, energy, manufacturing etc. Not exactly a miracle that they can outproduce us.

You get what you pay for. We're paying for Cheney and bush.

Posted by: serial catowner on April 19, 2006 at 2:51 PM | PERMALINK

Income inequality grew more under President Clinton than under any other President for at least the past 30 years.

When I pointed this out recently, I was told that liberals don't object to growing economic inequality as long as everyone's getting richer.

Now, apparently, growing economic inequality does matter.

You lefties need to get your story straight.

Posted by: GOP on April 19, 2006 at 2:53 PM | PERMALINK

Our current version of American Style Capitalism, 8.23 TM like all of its predecessors is not the result of Divine manifestation. It is a system impressed upon the masses by, and for the benefit of, the elites. If there are groups who are able to play the system to get super rich, thats how it was designed.

If there are competent caring people who work two jobs but still cant make ends meet, fuckem. They should have been born in a different zip code.

Normally, Id think that the poor would unit, rise up and demand some changes, but I guess we have successfully conditioned them to shut the fuck up and stay in their hovels and eat their scraps and be happy, after all, Jesus loves them.

Posted by: Keith G on April 19, 2006 at 2:56 PM | PERMALINK

Let's outsource CFOs and CEOs. You could get them from India...

May not be that far off.

I hear that graduates of Indian Instritutes of Management are commanding low six figure salaries, which is more than hundred times the per capita income. The employers are companies like EDS, Chase, Fidelity, etc.

Posted by: lib on April 19, 2006 at 2:56 PM | PERMALINK

R. Porrofatto: What, did the "class warfare" bell go off at 2:47?

Heh. 2:45 Eastern (Gregory), 2:46 Central (me), 2:47 mountain (that's you, baby, in this context at least) and 2:49 Pacific (moronic Al without his sarcasm filter).

Posted by: shortstop on April 19, 2006 at 2:58 PM | PERMALINK

In response to GOP, as anyone with at least a Econ 101 education knows, the President has little control over salaries. He does, however, have a great deal of control over take-home pay though taxing and redistributive policies. That's the pt.

But thanks for playing the boob. Someone had to.

Posted by: Disputo on April 19, 2006 at 2:59 PM | PERMALINK

What a load of ill-understood numbers and claptrap. Just because GDP rises by X% doesn't mean everyone's income should rise by that same number. In what I guess is an attempt at logical argument, Drum posits that the GDP increase has been brought on by increased productivity and better technology, not management or CEOS. Prove it. Just saying doesn't make it so.

And who is repsonsible for the better technology? Bill Gates and corporations have produced those products. And they should reap the rewards for having done so.

What about the fact that GDP has increased dramtically as unionization has fallen off the map? Could it be that the lack of powerful unions has made many sectors much more competitive globally? One can argue the industries that are in trouble (automotive and education) are those that are still hamstrung by the inefficiency and impediments to change created by unions.

I'll be happy to be convinced that unionization is more responsible for strong economies than wealthy individuals and corporations. But you have to prove it. Until then, it seems to me that the wealthy are indeed the ones in this country that create jobs and a vibrant economy. By all means, lets go ahead and raise their taxes and punish them for it.



Posted by: Tom on April 19, 2006 at 3:00 PM | PERMALINK

Speaking of Rush Limbaugh, can anyone tell us what is going on with the Florida investigation into his illegal drug usage? It's been three years and... nada...

Do a little research and you'll find others, much poorer and less connected, who have been sentenced in Florida to draconian time for similar offenses. I seem to remember some poor schmuck with MS in a wheelchair who got 25 years for possession of far less narcotics than the amounts Rush is alleged to have trafficked in.

Seriously, Kevin, any sources that can update the world on this?

Posted by: Paul on April 19, 2006 at 3:02 PM | PERMALINK

And average schmoe incomes haven't risen a penny since George Bush took office.

This is correct. However, since Bush took office, the incomes of the POOREST HAVE INCREASED, while at the same time, the incomes of the RICHEST HAVE DECREASED:

"The evidence is in a new Fed study of family finances, the latest in a triennial series. It shows modest but clear signs of incomes converging rather than diverging. Between 2001 and 2004 (the most recent year for which data are available), incomes of the poorest 20 percent of families increased while incomes of the richest 20 percent fell. Basically, the poorest families' share of total incomes grew, and the richest families' share shrank. Incomes became just a little less unequal."

http://money.cnn.com/magazines/fortune/fortune_archive/2006/03/20/8371806/index.htm?cnn=yes

Posted by: Al on April 19, 2006 at 3:09 PM | PERMALINK
Shorter Kevin Drum: Support Class Warfare!

I suppose, looked at one way, it is reasonable to say that, in that you could argue that Kevin's point is, indeed, to prefer "class warfare" to "uncontested class subjugation".

Posted by: cmdicely on April 19, 2006 at 3:10 PM | PERMALINK

Interesting way of looking at this Kevin.
In the industrial world only 2 countries, Iceland and Ireland have a lower tax base than the U.S. this was reported on cnn on monday concerning tax deadline.
In America top 50% pay 96.4% of all income tax and top 1% pay 34.27%.
It seems to me that the more millionaires there are the more that will be paid into the tax base.
Of course since there are litterally millions that do not pay any Income Tax then they would indeed have a 0% tax cut on any occassion that taxes are cut.
So I encourage the Bill Gates and the Waltons, the Kerrys, the Kennedys the Cheneys to earn just as much as possible as it will be additional income to the IRS.

Posted by: mycampaign on April 19, 2006 at 3:14 PM | PERMALINK

Heh. 2:45 Eastern (Gregory), 2:46 Central (me), 2:47 mountain (that's you, baby, in this context at least) and 2:49 Pacific (moronic Al without his sarcasm filter).

2:45. S'wad I meant. (But then I was always at least two minutes late for the recess bell back at Our Lady of the Immaculate Contraption, and I have the ruler scars to prove it!)

I guess their knees aren't jerking as fast as they used to.

Posted by: R.Porrofatto on April 19, 2006 at 3:14 PM | PERMALINK

GOP: Income inequality grew more under President Clinton than under any other President for at least the past 30 years.

"GOP", are you aware that you are flat-out lying?

1) In 1992, the way the Gini coefficient was calculated was recalibrated, resulting in an increase of roughly 0.02.

From the U.S. Census Bureau, 1998:
What has happened to the income distribution since 1993?

Data collected since 1993 indicate that the trend of increasing income inequality, which
characterized the 1980s, has slowed or disappeared. The share of aggregate money income received by households in the top quintile has not experienced a significant increase since 1993.
Households in each of the lower quintiles (i.e., those below the top quintile) had roughly the
same share of aggregate income in 1998 as in 1993.

Since 1993, the Gini coefficient has not experienced a single statistically significant
year-to-year increase. Nor was the change in the Gini coefficient over the entire 1993-1998
period statistically significant. As Figure 3C shows, there was no change in the aggregate
shares either. Only one measure, the MLD, suggests that household income inequality has increased
since 1993. The MLD indicates that income in-equality grew by 4.5 (+/- 2.2) percent from 1993 to 1998.

There is a good chart in this paper.

And, as I have observed before, what is truly frightening is that the Bush administration has simply forbidden the further release of any of these sort of statistics. We simply do not get data on these numbers past the Clinton administration.

Posted by: S Ra on April 19, 2006 at 3:15 PM | PERMALINK

>You could get them from India, in which case they would speak better English than homegrown executives do

Yeah and they wouldn't disgust us throwing raunchy parties in Europe (ala Tyco).

Tom - you will be really suprised if you bother to actually look up historical GDP growth rates. Because you are so wrong it isn't funny.

Finally, I dunno Al's last post might have some truth (although you always have to follow the wingnut's links, they have bad reading comprehension and a worse tendency to lie). Because if you hunt around the Internets, Rubin's "higher education" pablum has recently been, uh, tested and found to be badly lacking.

A college degree ain't helping so much no more.

The people who have done better have been high school grads in the construction industry (bubble away, Alan!!).

So it's not surprising that the top TWENTY percent, which is heavily college grads, fell, whilst the bottom 20%, carpenters, rose.

Compare the top 10 to the bottom 10, why don't you. Compare the very bottom's tumble into poverty to the top 1%'s income growth.

Sorry, Charlie -er, Al.

Posted by: doesn't matter on April 19, 2006 at 3:20 PM | PERMALINK

"I'll be happy to be convinced that unionization is more responsible for strong economies than wealthy individuals and corporations. But you have to prove it. Until then, it seems to me that the wealthy are indeed the ones in this country that create jobs and a vibrant economy. "

You are at best countering bullshit with bullshit, "it seems to me."

I don't give a damn about GDP growth except insofar as it relates to a rising standard of livings for Americans generally.

And I defy you to name two American industries that have performed significantly better in the twenty five years since the conservative greedheads took control of our economic policy.

Posted by: brewmn on April 19, 2006 at 3:24 PM | PERMALINK

>In America top 50% pay 96.4% of all income tax and top 1% pay 34.27%.

You didn't even pull a pony from the horseshit, you sculpted part of it into something you claimed was a horse and tried to pass it off.

Compare INCOME tax vs. TOTAL including payroll. Oops, your top 1% number just deflated badly.

And then look at the income distribution - our host himself did it about a year ago and found out that we virtually have a flat tax. So the rich ain't really chipping in more than their fair share, as badly as you want to believe that.

Posted by: doesn't matter on April 19, 2006 at 3:25 PM | PERMALINK

You know, if they stopped calling it "trickle-down" and started calling it "pissing-down", we'd get somewhere.

Posted by: craigie on April 19, 2006 at 3:26 PM | PERMALINK
Income inequality grew more under President Clinton than under any other President for at least the past 30 years.

By what measure? "Faster" how?

By, say, the 90th percentile/10th percentile ratio, it increased faster more under Reagan than under Clinton, also, by ratios between the starting and ending ratios between the income share of the top quintile vs. the bottom quintile, it increased faster under Reagan than Clinton (and is increasing, as of the 2004 data, faster year-to-year under Bush than under Clinton, though not as fast as under Reagan.)


Posted by: cmdicely on April 19, 2006 at 3:30 PM | PERMALINK

Income inequality grew more under President Clinton than under any other President for at least the past 30 years.

Yup. Clinton was a terrible president for those of us who want to see income inequality decreased. And George W Bush is actually making income inequality decrease - the evidence for which I gave above.

Just another measure of the effectiveness of George W Bush!

Posted by: Al on April 19, 2006 at 3:35 PM | PERMALINK
However, since Bush took office, the incomes of the POOREST HAVE INCREASED, while at the same time, the incomes of the RICHEST HAVE DECREASED

Strangely, the Census department disagrees, saying that, adjusted for inflation, the income of every quintile has declined under Bush (through 2004), and that every year through 2004 the bottom three quintiles declined, while in 2003 and 2004 the top quintile gained, and in 2003 the second quintile gained a little, but lost more in 2004.

See table A-3, here.


Posted by: cmdicely on April 19, 2006 at 3:36 PM | PERMALINK

Look at denmark for what happens if you get too "progressive".

You get a 50% tax on your income and then spend abither 25% tax on anything you buy. Anyone with any skills to make money leaves the country, and the government is a magnet for mediocraty.

"If you want to get rich leave denmark" is a common saying. Talk about brain drain.

Posted by: bago on April 19, 2006 at 4:24 PM | PERMALINK

Tom,

Your posting raises some interesting points, most of which I disagree with. Kevin is pointing out the extreme disparity in income between the rich and poor. While the percentage of income increase cannot remain exactly equal, why should it not remain relatively so? Of course CEO's and management play a significant part in the creation of new products and technology, nobody is denying that. But not 50-70-100x as significant. The disparity is what is so ridiculous.

The connection you make between GDP growth and the shrinking influence of unions is both valid and disturbing, Tom. Where do you draw the line as to what is humane versus what creates profits and jobs? Roll back child labor laws incrementally? Increase the work week every few months from 40 hours to 50, to 70, to...what? And then there's health care.

We're talking about people, Tom. People who die due to lack of access to medical care. Children. Your talking about "punishing" the rich by taxing them. Who do you think is being punished more?


Posted by: Shattered Mirror on April 19, 2006 at 4:28 PM | PERMALINK

If you want to get rich leave denmark" is a common saying. Talk about brain drain.

But if you look at this paper, going anywhere else will not make you much happier. Just goes to show that wealth cannot be an end in itself.

Posted by: lib on April 19, 2006 at 4:47 PM | PERMALINK

No talk of the elephant in the living room. The current account (trade) deficit was 6.4%/GDP in 2005, and is rising fast. 7% is about where a lot of currency crises occur.

All that stuff from China (India, Japan, Canada, Mexico, Europe, etc.) ain't just about jobs, important though they are. Eventually you've got to pay the bills. At this rate our creditors may lose confidence though, and the dollar could drop like a rock. Can you say Argentina?

Posted by: alex on April 19, 2006 at 4:48 PM | PERMALINK

someone above, "In America top 50% pay 96.4% of all income tax and top 1% pay 34.27%.


So think what society could do if those exceptional people paid a share proportionate to the power and privilege they enjoy.

Posted by: cld on April 19, 2006 at 4:49 PM | PERMALINK

Shattered Mirror,

I'm sure there are conservatives who believe people get what they deserve. If they want health care, for themselves or their children, they should get jobs and work harder.

I'm not a conservative. I think the US should have a single payer health care system (with the option for personally purchased private insurance). We should remove the burden of insurance from employers. I think most major corporations would support that. No one should have healthcare tied their ability to get a job. I'll write no more, rather than risk a thread hijacking. But you asked, and I've given an honest answer.

Posted by: Tom on April 19, 2006 at 4:50 PM | PERMALINK

Since 1975, practically all the gains in household income have gone to the top 20% of households.
the $ 64,000 question: what anti-american institution had the audacity to publish such an incendiary piece of information?

http://www.cia.gov/cia/publications/factbook/geos/us.html#Econ

Posted by: Cabaret Voltaire on April 19, 2006 at 4:52 PM | PERMALINK

The richest 20 percent, Al? Why would Bush care about such riffraff? Some of them only make 5 figures!

The current powers that be are focused on helping the top 0.1% or less. People who vote Republican because they make $100,000 a year and think they're rich are nearly as misguided as those who make $20,000 and vote Republican because they hope to be rich one day.

Posted by: KCinDC on April 19, 2006 at 4:52 PM | PERMALINK

I don't know much about this, but it seems like all this "during Clinton" "during W" talk doesn't make sense.

Does anyone know how long it takes something like income disparity to respond to changes in government policies?

Posted by: es on April 19, 2006 at 4:52 PM | PERMALINK

Bago, you are speaking ill of a Coalition partner. Please report to your local Lil' Gitmo for reeducation.

Posted by: Kimmitt on April 19, 2006 at 4:54 PM | PERMALINK

Even if the CEOs somehow were responsible for GDP growth, why should average people care whether the GDP increases if they don't see any benefit from it?

Posted by: KCinDC on April 19, 2006 at 4:56 PM | PERMALINK

es: Does anyone know how long it takes something like income disparity to respond to changes in government policies?

It takes exactly eight years. Therefore all economic problems in the W administration are due to Clinton. Similarly, we'll enter an economic paradise of W's creation as soon as he leaves office.

Posted by: alex on April 19, 2006 at 4:56 PM | PERMALINK

Bago critisizes Denmark, however according to the OECD Denmark has a higher standard of living that the United States.

Posted by: veganpete2 on April 19, 2006 at 4:59 PM | PERMALINK

veganpete2: according to the OECD Denmark has a higher standard of living that the United States

Mostly the OECD counts butter cookies and bare breasted buxom blondes. Come to think of it, who needs money?

Posted by: alex on April 19, 2006 at 5:14 PM | PERMALINK

Bill Gates and corporations have produced those products. And they should reap the rewards for having done so.

And the amazing thing is that Bill and the other CEOs do this single-handedly.

Why, walk into the factory floor at Microsoft any workday and there's Bill, all alone, doing all the work. He works the assembly line, does the marketing, the sales, the programming, the janitorial work, repairs the plumbing, and even mows the lawn there!

No wonder he receives the lionshare of the wealth, he does all the work!

Posted by: Dr. Morpheus on April 19, 2006 at 5:19 PM | PERMALINK

Mostly the OECD counts butter cookies and bare breasted buxom blondes.

Mmmmmm...butter cookies...sweet savory buxom butter cookies...*gurgle gurgle gurgle*....

Posted by: Stefan on April 19, 2006 at 5:22 PM | PERMALINK

Bring the word "unions" into the debate, and you automatically turn off those backward Southerners.

Posted by: Vincent on April 19, 2006 at 5:29 PM | PERMALINK

Ever been to Denmark? Ever driven a car across the US? In comparision the US looks like a third world country. The American Society of Civil Engineers gives the infrastructure a D+ every year now. What happened in New Orleans is usual. Not to mention the health and well-being statistics of the people, nearly all of them are dead last for developed nations. The gini is becoming more like Brazil and less like Japan or Europe. Shameful, just shameful.

If the Mexicans would just stop taking the fruit-picking jobs and gays would stop trying to marry things would be better.

Posted by: bellumregio on April 19, 2006 at 5:29 PM | PERMALINK

Al,

The top 1% may pay 34% of the income tax (kinda disingenuous to leave out payroll taxes, sales taxes, etc.) but they control almost 40% of the total wealth. Not a bad deal when you look at it that way.

Posted by: orogeny on April 19, 2006 at 5:31 PM | PERMALINK

Stefan: Mmmmmm...butter cookies...

You drive a hard bargain, but I'll agree to the terms of your proposed split on Danish goods. You get the butter cookies.

Posted by: alex on April 19, 2006 at 5:32 PM | PERMALINK

Mr. Drum,

1. Youre comparing apples and oranges. Many of todays working poor are immigrants who werent in this country 20 years ago. Immigrants, as you know, often enter the country with scant resources. Your argument, however, holds our generous immigration policy against us. That is, even if gains in personal income were shared equally between poor and rich citizens alike, the figure for median income would still fall -- if we admitted a slew of immigrants. And thats something weve done. (Correctly, in my view.)

2. Whats so magical about 20 years ago? It may be true that, when measured against the baseline of 1986, today we have a steeper income distribution. So what? Is there any reason to think that the distribution of 20 years ago was optimal? Was the year 1986 some kind of left-ish Shangri-la to which its obvious we should now aspire? As you point out, we were poorer 20 years ago. Maybe its a good trade-off to live today in a richer, albeit slightly more stratified society.

3. Speaking of stratification, is there any? You talk about the super-rich of 20 years ago and the super-rich of today as if theyre the same people. They arent. At least, theres been a fair amount of churning. A non-negligible number of todays rich were, 20 years ago, middle- and working-class people -- or, if you can believe it, people with even lower incomes: students. Anyway, so long as theres churning at the top (and the bottom), maybe its OK if todays rich have a greater share of the pie than the rich of yesteryear.

4. Hey, whats with the us vs. them rhetoric? I dont mind the so-called class warfare analysis. Its important to think about how were divvying up resources -- if not on an economic level, then surely on a social one. But whats with your assumption that your readership comprises schmoes? Maybe some of us are, you know, high income earners who are also left-leaning (and who dont whine about our high taxes).

Thanks.

~Elias

Posted by: Elias on April 19, 2006 at 5:36 PM | PERMALINK

Elias: Was the year 1986 some kind of left-ish Shangri-la to which its obvious we should now aspire?

That's the most interesting characterization of the Reagan Era I've ever heard.

Posted by: alex on April 19, 2006 at 5:46 PM | PERMALINK

"Until then, it seems to me that the wealthy are indeed the ones in this country that create jobs and a vibrant economy. By all means, lets go ahead and raise their taxes and punish them for it."

You don't have any clue what you're talking about. Perhaps you're psychologically predisposed to admire and apologize for authority and athoritarian structures and so when people attack the system (I'd guess you'd call it "whining" or "complaining") your knee-jerk reaction is to internalize the system's propaganda and make it your own set of values/beliefs. So someone provides evidence that the laws of the land serve the wealthy, your reaction is to turn the argument into one about societal value- essentially a moral argument.

So while it's abundantly clear to the, let's say, reality-based community that the laws of this nation are written for the benefit of a very few and not the whole, you're busy blowin' rich people because your first instinct is subservience and your first move, droppin' to your knees.

But I could be wrong about all that. What is clear is you don't know what you're talking about, and the question is, why do you have such a strong opinion? How about reading up on political/economic history, like The Politics of Rich and Poor or something like that?

Posted by: The Tim on April 19, 2006 at 5:50 PM | PERMALINK

I don't think it's unreasonable for Kevin to assume that the proportion of his readers who have annual incomes in the millions is negligible.

Posted by: KCinDC on April 19, 2006 at 5:53 PM | PERMALINK

Kevin:

While I agree with your conclusion, Ive noticed you dont always take a poke at the conservativisms misguided economic underbelly where it is most exposed. I dont think Mr. Meyerson goes far enough either. For example, conservatives crow about increased productivity, but the only reason productivity has increased during the Bush Administration is because the total number of hours worked in the United States has gone down! Its simple math: PRODUCTIVITY=TOTAL GDP/NUMBER OF HOURS WORKED. If the denominator gets smaller, productivity goes up. However, this is not a good thing. Paul Craig Roberts, a former Reaganite, points this out very eloquently here. It means that in five years, even with a growing population, the amount of work available for Americans to do has diminished! This is the first five year period in American history where this has taken place.

Also, the root cause of the obscene growth in executive compensation that you allude to is the cronyism that is rampant in Corporate America, just as it is out of control in the Bush Administration. The reason CEOs get massive bonuses and stock option grants, even when their company is failing, is because they play golf with or belong to the same country club as the Chairman of the Compensation Committee of the Board of Directors, not because of their outstanding business acumen! The supposed independence of corporate Board of Directors is illusory, even in post-Sarbanes-Oxley America. Crystal Graef has written extensively about this. That is why I always call this administration fascist, because one of the hallmarks of fascism is the coming together of corporate and state power. Check this out, for a primer on the characteristics of fascism and you decide whether we are living under a fascist regime or not.

Finally, Mr. Meyerson mentions NAFTA, but doesnt dig deep enough, and point out that all of these so-called free trade agreements, like NAFTA, GATT, etc. have been
massive failures and have resulted in declining standards of living for most Americans. It benefits the top executives, because they can leverage lower labor costs (read, exploit foreign workers) and show reduced expenses, while the American worker gets reamed in the ass. If we would simply enforce existing minimum labor laws, we could reduce illegal immigration and reduce the trade deficit.

In short, Kevin, you need to be better informed (try reading Paul Craig Roberts more) about economics or go after these conservative economic myths more vigorously. They are an extremely target-rich environment, to use a Rumsfeldian phrase.

Stephen Kriz

Posted by: Stephen Kriz on April 19, 2006 at 6:00 PM | PERMALINK

"Anyway, so long as theres churning at the top (and the bottom)"

Economic mobility is aparrantly decreasing in this country as well, and isn't clearly any better than vaguely similar nations (eg europe).

http://www.economist.com/world/na/displayStory.cfm?story_id=3518560

But really who could be surprised at this? It is pretty ridiculous to expect slashing taxes on investment income, inheritance, and corporations while flattening the overall tax code, shifting to longer educations (for higher skill requirement jobs), extending life span, etc, etc could have any effect other than further entrenching wealth.

Posted by: jefff on April 19, 2006 at 6:45 PM | PERMALINK

When will the wealthy get some morals? and honesty? Why do we still let the free market run with without regaurd to morals and honisty? Is making a billion dollars so dam important?
I personaly have asked over 20 caretakers of some very wealthy people if they can tell if their bosses and family are happy with life. The majority of responses I got back were "No".
Does wealth make well adjusted happy children? No, the children of the rich have no work ethic, they party too much, drink and do drugs to much, drive and crash their cars with abandon leaving them half brain dead, get into trouble with the law and sometimes even go to prison. {even thou most do not because as we all know "money buys justice". They get big collage degrees by cheating on exams, never learning much besides the big con, sale and trade of business. In fact the definenion of a business degree is just that. Ways to make big money without any effort. Making us lower peions pay. Over all, children of wealth are lazy back stabbing theifs. How better to someday, when their inheirance comes in, can become just like their parents. Everyone is just too dam greedy for excess money at the expence of honest good people, who believe what is spoken as the truth. I still tend to believe "X" if you tell me it's a X, because your not lieing. Are you??

Posted by: artemis ccc on April 19, 2006 at 6:47 PM | PERMALINK

"But really who could be surprised at this? It is pretty ridiculous..."

And btw this didn't start 5 years ago, it really got going in the 60's. It is just getting ridiculously obvious nowdays.

Posted by: jefff on April 19, 2006 at 7:00 PM | PERMALINK

'Joe Buck' posted:

"Robert Rubin is basically a Rockefeller Republican, a species that was driven out of the Republican party and found its home in the DLC and other 'new Democrat' organizations"

Wrong.

Rubin was behind the expansion of the EITC, raising the top income tax bracket on the wealthy, raising the corporate income tax rate, and was always in favor of raising the Federal Minimum Wage.
.

Posted by: VJ on April 19, 2006 at 7:05 PM | PERMALINK

'GOP' posted:

"Income inequality grew more under President Clinton than under any other President for at least the past 30 years."

A LIE.
.

Posted by: VJ on April 19, 2006 at 7:07 PM | PERMALINK

'Stephen' posted:

"agreements, like NAFTA, GATT, etc. have been massive failures and have resulted in declining standards of living for most Americans."

How silly.

* GATT was enacted in the 1950s. Americans 'Standard of Living' has not been declining for 56 years.

* From 1994 through 2000, NAFTA was in full effect, yet 23 million NET new jobs were created, the majority of which paid wages higher than the average wage in the national economy.

Additionally, during the Clinton administration, American's 'Standard of Living' rose, as Average Hourly Earnings increased by the fastest and longest rate since the 1960s.

Then we had the illegal installation of the Boy Emperor Clown Criminal. The rest is history.
.

Posted by: VJ on April 19, 2006 at 7:10 PM | PERMALINK

WaPo does not have anyone capable of writing seriously about economics. Meyerson is a turd. For better economics writing go here:

http://www.realcities.com/mld/krwashington/news/columnists/kevin_g_hall/

Posted by: bakho on April 19, 2006 at 7:25 PM | PERMALINK

The 1990s were unquestionably a good time for Americans in the penthouses. Yet the boom of the Clinton years was defined not only by its length but also by its breadth and depth; it reached even workers on the margins of the economy, minorities, single mothers, and people with limited education.

Consider the median income. Overall, in real terms, the median income--the income level achieved by half of American families--increased by almost 15 percent from 1993 to 2000. But it rose much faster for blacks (33 percent) and Hispanics (24 percent) than it did for whites (14 percent). It rose faster in central cities (18.5 percent) than it did in suburbs (12 percent). Despite all the warnings about welfare reform impoverishing single mothers, the median income for female householders jumped nearly 29 percent from 1993 to 2001, significantly more than the 17 percent increase for married couples.

In percentage terms, families on the lowest rung of the income ladder scored the biggest income gains from 1993 through 1999. According to Economic Policy Institute calculations, families in the bottom fifth of the income distribution saw their average income increase nearly 19 percent from 1993 through 1999--while families in the top 5 percent enjoyed an average increase of about 15 percent. By comparison, in the expansion of the 1980s, the average income of the top 5 percent grew more than five times faster than the incomes of the bottom 20 percent.

Those broadly shared income gains refute another common liberal complaint about the Clinton years: that the expansion of the 1990s widened the gap between rich and poor. Actually, according to Census Bureau figures, the gap between rich and poor remained virtually unchanged through the decade. In 1993, the top fifth of households received 48.9 percent of all income; in 2000, the number had increased only slightly, to 49.6 percent. (The top fifth increased their share of total income much more rapidly in the 1980s.) The share of total income received by the bottom three-fifths of families declined during Clinton's tenure, but only slightly (from 27.7 percent to 27.3 percent). It's perhaps a legitimate complaint that the Clinton years didn't see more progress at narrowing income inequality. But given the enormous gains of families at the top during the 1990s, even holding inequality essentially stable has to be seen as a kind of triumph, for it required significant advances for workers on the economy's lower rungs as well.

And those gains generated dramatic and almost entirely overlooked advances in reducing poverty. From 1993 through 2000, the poverty rate in America fell from 15.1 percent to 11.3 percent--a reduction of 25 percent, the biggest eight-year decline since the 1960s. As with income, the most vulnerable groups recorded the biggest gains. The poverty rate among blacks dropped by fully a third under Clinton; among Hispanics, the drop was just over 30 percent. For both groups, the poverty rate is now the lowest ever recorded. Poverty dropped faster for female-headed households than it did for married couples and is now, by far, at the lowest level ever recorded. Children registered the greatest gains of all. Under Clinton, poverty among children fell by nearly 30 percent, to the lowest level since 1978. During Clinton's tenure, the number of children in poverty fell by 4.1 million--compared with just 50,000 during the expansion under Ronald Reagan. Meanwhile, home ownership among African-Americans and Latinos rose to the highest levels ever recorded.

Obviously, the long boom itself (in particular, the low unemployment rates) deserves the most credit for these advances. But even leaving aside the question of how much Clinton's success in deficit reduction contributed to the expansion, his administration pursued a coherent series of initiatives that reinforced these trends by demanding and honoring work. The stick was welfare reform, which pushed welfare recipients into the job market, where they could benefit from the rising tide. The carrot was a steady stream of policies to reward work, beginning with a major increase in the Earned Income Tax Credit (EITC) and then continuing with a hike in the minimum wage, the creation of the children's health-insurance program (to provide coverage for the children of working poor families), extended access to Medicaid for former welfare recipients, an increase in day-care subsidies and funding for after-school programs (which provide another source of child care for working families), and a children's tax credit that significantly reduced the tax burden on many working-class families. On a separate track, much tougher enforcement of fair-lending laws and federal subsidies for community lending institutions contributed to a staggering 97 percent increase in home mortgage loans to low-income borrowers from 1993 to 1999.

Taken together, these efforts tangibly improved millions of lives and took a significant further bite out of poverty. Under Clinton, the federal tax burden on families at the median income and below fell markedly. (At the same time, the 47 percent share of total federal taxes paid by families earning $100,000 or more jumped to 57 percent--a statistic that doesn't exactly confirm portrayals of the Clinton administration as a DLC-inspired surrender to the wealthy.) Harvard professor David T. Ellwood, a former Clinton welfare official, recently calculated that a single mother who left welfare for full-time minimum-wage work would have come out ahead by only $2,005 in 1986; by 1997, largely because of the expansion of the EITC, work was some $7,100 more valuable than welfare. That support for work lifted millions of additional families out of poverty under Clinton. Once the EITC and other government income supports (such as food stamps) are added in and state and federal taxes paid are subtracted, the poverty rate in 2000 stood at just 8.7 percent overall and only 11.1 percent among children, the Census Bureau found.

It's possible to argue that those numbers are still too high in an affluent society. Or that even those who have escaped poverty still haven't progressed far enough toward the middle class. Or that Clinton did not increase assistance to the working poor enough. (The failure to improve health-care security for adults may stand as his greatest policy failure.) But to ignore the real gains of the 1990s is to miss the most important political and policy achievements of the Clinton years.

During his two terms, Clinton demonstrated that it was possible for Democrats to deliver for families struggling on the lowest rungs of the economic ladder without alienating those above them. He did that by grounding his domestic policies not in class warfare for but in values that share broad support across society: fiscal discipline, expanding opportunity, and demanding personal responsibility.

Posted by: bakho on April 19, 2006 at 7:32 PM | PERMALINK

We have to put the blame for lowest wages squarely on the Republicans and their failure to increase the minimum wage in almost 10 years. Republicans are trying to shift the blame to immigrants, but that is just scapegoating.

Posted by: bakho on April 19, 2006 at 7:36 PM | PERMALINK

VJ: GATT was enacted in the 1950s.

Actually the original GATT was in enacted in 1947, based on the Bretton Woods conference in 1944. But why quibble? Presumably he meant the 1993 (Uruguay) round that created the WTO.

From 1994 through 2000, NAFTA was in full effect

No, NAFTA is being phased in over a 14 year period. It still isn't in full effect.

yet 23 million NET new jobs were created

Were they created because of, or in spite of, NAFTA? Read the paper he linked to. It makes a straightforward calculation that there has been a net loss of US jobs due to NAFTA (hardly the same thing as an overall net loss of US jobs during the a period where NAFTA was being phased in).

On a related note, our trade deficit with Mexico and Canada has skyrocketed since NAFTA started.

More generally, our trade (current account) deficit was 6.4%/GDP last year. While the Boy Emperor Clown Criminal has played a large part in this (and certainly hasn't done anything to stop it), let us not forget the Clinton/Rubin contributions.

NAFTA (passed before Rubin) was a start. Rubin's vaunted strong dollar policy didn't help either. PNTR/WTO for China was the biggest mistake though.

Clinton/Rubin economics had many good points, but trade wasn't amongst them.

BTW, that 6.4%/GDP (and growing fast) trade (current account) deficit? Some numbers to think about:

Mexico just before the peso crisis: about 7%.
Thailand just before it started the Asian crisis: about 7%.

Will we hit 7% in 2006?

Posted by: alex on April 19, 2006 at 7:47 PM | PERMALINK

"" a brainchild of Robert Rubin's that advocates a variety of familiar Rubinesque economic policies: balancing the budget, investing in education, increased scientific research, etc."

Which are good things, but they're all shiny clean high-status elite stuff. None of that gritty uncomfortable non-sexy low-class stuff, like unions . . .

I mean, certainly this is a very unsophisticated analysis that ignores all kinds of structural factors, but still . . .

Posted by: Dan S. on April 19, 2006 at 8:12 PM | PERMALINK

Believe it or not, even Bill O'Reilly is starting to see the light. He complained recently about the 100's mills going to the triple-jowled Exxon head. Bill correctly IDd that exec. pay isn't from the free market: it is picked by compensation boards that owe their jobs to the exec. In a real free market, you have to pay for what you get out of your own pocket. That way, you have an incentive to be frugal.

Posted by: Neil' on April 19, 2006 at 8:49 PM | PERMALINK

"Income inequality grew more under President Clinton than under any other President for at least the past 30 years."

VJ:

A LIE.

Maybe. Maybe not. There is the chart on this page, and the quote:

At present, those in the top income brackets are already getting a bigger share of total income than at any time since World War II, says Robert Greenstein, director of the CBPP.

Posted by: tbrosz on April 19, 2006 at 8:53 PM | PERMALINK

S Ra:

""GOP", are you aware that you are flat-out lying?"

I'm aware that you are flat-out lying.

From the U.S. Census Bureau, 1998: ...

Your link doesn't work. I get "page cannot be displayed."

From the lefty Center on Budget and Policy Priorities: Analysis of Census Bureau's Income and Poverty Report for 1998. This is six years into Clinton's presidency:

Income Inequality Continues at Record Levels

"The most affluent fifth of households (that is, the top 20 percent of households) received a significantly larger share of the national income in 1998 than in 1989, the peak year of the recovery of the 1980s (and the last year before the recession that began in 1990). Each of the other four fifths of the population received a smaller share of the national income last year than in 1989. Income disparities have widened over the current business cycle.

In 1998, the richest fifth of households received nearly half 49.2 percent of all national before-tax income. The remaining four-fifths shared the other half. Since 1993, the share of the national income before taxes that goes to the richest fifth of households has been larger than at any time since the Census Bureau began collecting these data in the late 1960s.

Furthermore, from 1989 to 1998, the income of the poorest fifth of households failed to increase despite the tremendous growth of the economy. The average income of these households was $9,200 in 1989 and $9,223 in 1998, a virtually identical figure. Among the next-to-the poorest fifth of households, average income before taxes rose only two percent between 1989 and 1998, while among the middle fifth of households, income climbed three percent, or about $1,000. By contrast, among the top fifth of households and especially among the top five percent the income gains were much greater in both percentage terms and dollar terms, with the average income of the top five percent of households climbing 23 percent, or some tens of thousands of dollars. (All figures are adjusted for inflation and expressed in 1998 dollars.(5))

These income trends are similar to those found in after-tax income data that the Congressional Budget Office has issued. A recent analysis of the CBO data by the Center on Budget and Policy Priorities found that between 1989 and 1999, the average income of the top fifth of households is projected to grow faster than the average incomes of the middle fifth or the poorest fifth.(6) This analysis also shows that income disparities are now at their widest point on record;"

The raw data clearly support the CBPP's finding.


Under Clinton, the gap between rich and poor in America increased more than under any other president in the past 30 years, and possibly more than under any other president ever.

Posted by: GOP on April 19, 2006 at 10:30 PM | PERMALINK

damn right it is!

Posted by: f u on April 19, 2006 at 10:36 PM | PERMALINK

cmdicely,

"By what measure? "Faster" how?"

I love it when you ask nonsensical questions. The word "faster" appears in the statement of mine you quoted, where?

Posted by: GOP on April 19, 2006 at 10:37 PM | PERMALINK

Al said: "This is correct. However, since Bush took office, the incomes of the POOREST HAVE INCREASED, while at the same time, the incomes of the RICHEST HAVE DECREASED"

cmdicely responded: "Strangely, the Census department disagrees, ... See table A-3, here."

Er, cmdicely, perhaps the Census Bureau does disagree with Al, but nothing in your post supports that claim, and certainly not table A-3. The last year for which it reports income data is 2004. This may come as a shock to you, but we're currently a third of the way through 2006.

Posted by: GOP on April 19, 2006 at 10:44 PM | PERMALINK

In other words, the rich are taking most of the money and leaving little behind for anyone else. And then, to add insult to injury, they whine about having to pay taxes on that vastly increased income. - Kevin Drum

Well, unless you tear up your constitution - once its theirs its theirs. The best you can do is harass their investment income a little by raising their income taxes.

If you increased income tax, it wouldn't affect Bill Gates. His new worth is in shares, which are capital gains and aren't taxed until he sells the share.

Which people dodge using trusts anyway (Heinz-Kerry, remember).

Unless you are prepared to rewrite the trust system..which neither party is proposing, income taxes hit the upper middle class or new rich.

Posted by: McA on April 19, 2006 at 10:51 PM | PERMALINK

Kevin,

Perhaps one of these days, you'll notice that immigration increases economic inequality.

Posted by: Steve Sailer on April 19, 2006 at 10:51 PM | PERMALINK

GATT was enacted in the 1950s. Americans 'Standard of Living' has not been declining for 56 years.
--VJ


VJ:

My bad. I meant to say NAFTA and the proposed CAFTA, and typed GATT. I was apparently trying to multi-task and typed the wrong acronym. Also, my link didnt work, which I blame on an errant CTRL+V stroke. However, I stand by my contention that NAFTA is a failure and offer this study as proof.

Until we refuse to trade with countries that dont pay their workers a living wage and abide by reasonable environmental and workplace safety standards, we are going to see a degradation of the American way of life. It is inevitable. Economic blackmail, tariffs and trade sanctions are going to win over a lot more hearts and minds than "bunker-busting nukes and shock and awe ever will.

Peace is the only answer.

Stephen Kriz

Posted by: Stephen Kriz on April 19, 2006 at 11:00 PM | PERMALINK

Does anyone here make 27k a year. I don't mean used to. I mean now. Does anyone with the time or incliniation to read and comment on this site currently make 27k total. Tips etc. included. If so, how old are you? I know those people are out there. I just don't think they're reading this.

Posted by: garble on April 19, 2006 at 11:09 PM | PERMALINK

'alex' posted:

"No, NAFTA is being phased in over a 14 year period. It still isn't in full effect."

The tariffs came down immediately. I remember Chrysler moved a Jeep assembly plant that was in Mexico across the border to the U.S. because the tariffs were gone.

.

"Were they created because of, or in spite of, NAFTA?"

I never purported that NAFTA was responsible for the 23 million net new jobs, rather that it did not hurt the economy. NAFTA was in effect for about six years during the Clinton administration, and about six years during this administration.

Clearly, the difference is not NAFTA.

.

"Read the paper he linked to. It makes a straightforward calculation that there has been a net loss of US jobs due to NAFTA (hardly the same thing as an overall net loss of US jobs during the a period where NAFTA was being phased in)."

I believe that references manufacturing jobs, but is misleading. During the eight years of Reagan, manufacturing jobs were lost every quarter he was in office, and manufacturing, as a percentage of the national economy, shrank as well. Conversely, during the eight years of Clinton, manufacturing jobs were lost every quarter early on, while manufacturing, as a percentage of the national economy, increased. That is an indicator that those jobs losses were from robotization, not NAFTA. Additionally, towards the end of President Clinton's terms, there was actually a net GAIN in manufacturing jobs,

Again, it was a change in policies, not NAFTA or GATT that is the root of the problem.

.

"Clinton/Rubin economics had many good points, but trade wasn't amongst them."

Actually, at least one third of the additional GDP growth during President Clinton's two terms was due to increased export sales, and the jobs created by those exports paid higher than the average wage in the national economy.
.

Posted by: VJ on April 19, 2006 at 11:21 PM | PERMALINK

'McA' posted:

"Unless you are prepared to rewrite the trust system..which neither party is proposing, income taxes hit the upper middle class or new rich."

Gibberish.

Why did income tax revenues from the very wealthy increase to historic record high levels in the '90s, when the top income tax bracket was increased ?
.

Posted by: VJ on April 19, 2006 at 11:26 PM | PERMALINK

Does anyone here make 27k a year. I don't mean used to. I mean now. Does anyone with the time or incliniation to read and comment on this site currently make 27k total. Tips etc. included. If so, how old are you? I know those people are out there. I just don't think they're reading this.

Posted by: garble on April 19, 2006 at 11:09 PM

I'm making $29,000 a year at age 50, with a bachelor's degree and two years' graduate study. I've never made more than $35,000 a year.

Posted by: Vincent on April 19, 2006 at 11:46 PM | PERMALINK

Steve Sailer--

Perhaps someday you will notice that native-born Americans are not lining up in droves to pick lettuce or pursue careers in the janitorial services, and you might notice that the foreigners who are actually driving down middle class American wages haven't left their homes in India and China.

Posted by: ajl on April 19, 2006 at 11:55 PM | PERMALINK

ajl:

I don't understand your point. The conclusion that immigration has exerted a downward pressure on wages at the low end of the labor market (basically, on wages for unskilled manual labor) isn't terribly controversial.

Posted by: GOP on April 20, 2006 at 12:05 AM | PERMALINK

Now, why would Rubin not worry that the super rich are sucking up all the money in the country? Maybe it's his job at Citibank.

Posted by: Red on April 20, 2006 at 12:22 AM | PERMALINK

Perhaps one of these days, you'll notice that immigration increases economic inequality.
Posted by: Steve Sailer

Listen, Satanaut, I already made that point: Youre comparing apples and oranges. Many of todays working poor are immigrants who werent in this country 20 years ago. Immigrants, as you know, often enter the country with scant resources. Your argument, however, holds our generous immigration policy against us. . . .

Posted by: Elias on April 20, 2006 at 1:43 AM | PERMALINK

Count your blessings. If America had continued with the socialist, trickle-away economic policies of the 60's and 70's, GDP would have been stagnent and Joe Schmoe - if he could find a job - would be earning LESS in inflation adjusted terms then he was back then.

In other words, we would be France.

Posted by: HA on April 20, 2006 at 6:51 AM | PERMALINK

ajl,

and you might notice that the foreigners who are actually driving down middle class American wages haven't left their homes in India and China.

Bullshit. I'm a computer programmer. If there is one sector where Lou Dobbs types have created the most hysteria about low-cost labor in knowledge based industries, it is computer programming.

I work on a team of about 40 people. Half of those on my team are Indian, about a quarter are Russian, there are a few native-born Americans, and a couple from China and Korea.

I - the white, native-born American - am in the distinct minority. And you know what? My salary has risen over 50% since 1999. Not bad considering the bogeyman horde of over-educated, under-paid third-world peasants I'm supposed to be competing against.

So let me give you the dirty little-secret. All those Indians and Russians didn't work their asses off to get educated and leave their native culture to compete against the best minds in the world in order to be poor. They worked their asses off to get rich. And the ones who stay in India want to get rich too.

Greed, in that sense, is good.

So let's call all you whiners about the peril of second and third-world knowledge workers what you really are - A bunch of lazy, thumb-sucking, envious, scared, undisciplined candy-asses afraid of open and fair competition with the best minds in the world.

Posted by: HA on April 20, 2006 at 7:49 AM | PERMALINK

Dick and Lynne Cheney paid $500k tax on $9m income. They're getting a $2m refund, thanks to a Katrina-related change in tax law, and in spite of none of Dick's charitable 'donations' from the exercise of Halliburton options going to Katrina-related charities.

Enjoy that while waiting for your meagre refunds, conservative suckers.

Posted by: ahem on April 20, 2006 at 7:58 AM | PERMALINK


sober stat..

the top-1 percent earn the same as the bottom 40-million...

according to the i.r.s.

Posted by: thisspacevailable on April 20, 2006 at 11:41 AM | PERMALINK
Er, cmdicely, perhaps the Census Bureau does disagree with Al, but nothing in your post supports that claim, and certainly not table A-3. The last year for which it reports income data is 2004. This may come as a shock to you, but we're currently a third of the way through 2006.

Since the source Al cites also refers to 2004 as the "last year for which data is available", I don't see what your beef is. You do realize that final distributional economic data needed to support the type of claim being discussed is not gathered and published in realtime, right?

Posted by: cmdicely on April 20, 2006 at 11:43 AM | PERMALINK

HA,

Let's hear details. What are you making now? How many years experience do you have?

If you graduated in 1999 your 50% pay increase is not remarkable, especially if you started at a lowball rate.

But if you won't post real numbers then your anectdote is meaningless.

Posted by: Tripp on April 20, 2006 at 11:45 AM | PERMALINK

HA,

Okay, I checked my SS records. (OT - the SS reports are a GREAT way to track previous salary.) When I graduated in 78 with a computer degree the rule of thumb was that your starting salary would double in 5 years.

Mine took between 5 and 6 years to double. After 6 years I was making more than double what I started at.

After about 10 years on the job I plateuaed.

So crow all you want but my guess is that now that the computer industry is 'mature' and workers are facing global competition the early rise in salary is slower and the eventual plateau will be lower.

Still, executive competition is MUCH better than in '78, and the future prospects are excellent.

Too bad that door is locked to most of us.

Posted by: Tripp on April 20, 2006 at 11:57 AM | PERMALINK

Kevin,

You used to make sense, but lately you've been taking the kool aid. What's with all this class warfare BS?

Riddle me this: Why do star baseball players get paid $10-20 million per year (not counting endorsements)? Why do movie stars make $10-120 million per movie? When you can answer those questions, you can then turn to to why star managers and star lawyers and star investment bankers get their big bucks. Hint: It's the same answer.

Posted by: DBL on April 20, 2006 at 12:02 PM | PERMALINK

DBL,

That's fine. What is the answer for Paris Hilton?

What is the answer for a CEO who's pay is determined by a payroll commitee made up of his crony pals?

What is the answer for Ken Lay?

Why can't we all set our own pay, hmmm? I want to be born to the Hilton clan - can you arrange that? I promise to work real hard.

Posted by: Tripp on April 20, 2006 at 12:14 PM | PERMALINK

ahem,

The Cheney's donated $6.8 million dollars to charity last year - 77% of their income - and still had to pay $500k in federal taxes. And you're criticizing them for doing that??? Should the Cheney's have donated less???

Posted by: c on April 20, 2006 at 12:28 PM | PERMALINK

cmdicely,

"Since the source Al cites also refers to 2004 as the "last year for which data is available", I don't see what your beef is."

My "beef" is that you cannot use 2004 data to challenge a claim about income status in 2006.

Posted by: GOP on April 20, 2006 at 1:05 PM | PERMALINK

'Ha' posted:

"If America had continued with the socialist, trickle-away economic policies of the 60's and 70's, GDP would have been stagnent and Joe Schmoe - if he could find a job - would be earning LESS in inflation adjusted terms then he was back then."

Nonsense.

The two periods of greatest prosperity during the 20th Century were the late 1950s/early 1960s and the latter 1990s, when income tax rates on the wealthy were at their highest. Of course, the 1970s suffered from the external oil shock of the price of a barrel of crude tripling in price. Nevertheless, Unemployment was still lower during Carter's term than during Reagan's term.
.

Posted by: VJ on April 20, 2006 at 1:49 PM | PERMALINK
My "beef" is that you cannot use 2004 data to challenge a claim about income status in 2006.

I think I can use data which runs only through 2004 to cast doubt on a claim about 2006 income status which is supported only by a reference to other data which also runs only through 2004.

Posted by: cmdicely on April 20, 2006 at 1:59 PM | PERMALINK

cmdicely,

"I think I can use data which runs only through 2004 to cast doubt on a claim about 2006 income status which is supported only by a reference to other data which also runs only through 2004."

No you can't. A claim about 2006 income status can be neither supported nor refuted using 2004 income data.

Posted by: GOP on April 20, 2006 at 2:10 PM | PERMALINK

GOP,

Maybe you should look up the word "quibble."

And c, you seem to have some data here, how did the Cheney's earn nearly 10 million last year and what are the names of the 'charities' they donated millions to? It wouldn't be that "charity" the other Republican millionaire started - the one that claimed to be for misfortunate children and was actually a front for campaign money?

I mean I suppose I could get all high and money taking some 10 million from my rich backers, funnelling 7.5 million to Republican campaign funds and then skimming off the rest, but personally I have a conscience.

Maybe that is how Cheney afforded his slaughter of 75 pheasants in one hour. Didn't the place charge 12 bucks a pheasant? Why that's not even 1000 bucks!

Posted by: Tripp on April 20, 2006 at 2:27 PM | PERMALINK

I believe that Alexander Hamilton was a protectionist. Oh the Horror! The English wouldn't let any of the colonies manufacture much. Therefore, the colonists couldn't make uniforms, weapons, etc. for themselves. This turned old Alex into a make it here sort of guy. Does this mean that the DLC is going to start favoring tariffs?

Posted by: la on April 20, 2006 at 2:32 PM | PERMALINK

VJ

"The two periods of greatest prosperity during the 20th Century were the late 1950s/early 1960s and the latter 1990s, when income tax rates on the wealthy were at their highest."

Nonsense. Income tax rates on the wealthy were dramatically lower in the latter 1990s than in virtually all prior years going back to the 1930s. In 1950, for example, the top marginal rate was 84%. In 1960, it was 91%. In 1970 and 1980, it was about 70%.

The historically low income tax rates of the 1990s are one reason why the gap between rich and poor in America grew wider under Clinton than under any other president for at least the past 30 years.

Posted by: GOP on April 20, 2006 at 2:39 PM | PERMALINK

"The Cheney's donated $6.8 million dollars to charity last year - 77% of their income - and still had to pay $500k in federal taxes. And you're criticizing them for doing that???"

What's wrong with this picture is not how much they donated but how much they made. Unless it was all royalties on Lynne's lesbians western novels, whatever wasn't federal salary probably came from Unka Dick's compensation as a corporate executive.

Other than the $$ Shrub got from his many failed businesses that were propped up by Poppy's friends, you'd be hard pressed to find a less qualified CEO than Cheney. Never had a private job worth mentioning before being hired as Haliburton's CEO. Why? Cuz he had the contacts to get the Defense Department contracts. Which he did. Otherwise, he did nada for all the bucks he is stll raking in.

Posted by: Cal Gal on April 20, 2006 at 3:33 PM | PERMALINK

The point is that the greedy evil bastard doesn't seem to care about all the money he's raking in - because he gives most of it away.

Tripp, if you had any facts to back up your contention that Cheney's charitable donations are fraudulant, please present them. I won't hold my breath.

Posted by: c on April 20, 2006 at 3:57 PM | PERMALINK

Lucky duckies at the top? an oxymoron. The venerated WSJ some years ago created the phrase "lucky duckies." It means those lucky enough to earn so little that they pay no income tax.

Posted by: lee on April 20, 2006 at 5:33 PM | PERMALINK

Tripp,

So crow all you want

I'm not crowing. I'm pointing out that Indians and others are not driving down my salary in spite of the hysteria from Lou Dobbs types. On the contrary, my salary has grown 50% since 1999 which is when I took my current position. That works out to 6% annual increase over a little less than 7 years. I graduated from college in 1989 (engineering, not computer science) and my salary has a little more than doubled between 1989 and 1999.

I work in technology development for securities trading. So not only did my salary increase at a solid annual rate in spite of the bogeyman Indian/Russian horde, it also did so in spite of a major bear market. And let's not forget that 9/11, a recession and two wars have also occured during this period.

We can argue forever about whether foreign born competition has depressed salaries in my field. But you might also ask if the Indian/Russian horde did not depress salaries, what effect did they have? Well my anecdotal experience is they helped save my job. Back in the mid to late 90's, the organization I worked for was uncompetititve because our technology was dismal. It was widely regarded in our industry that we would not survive.

Most of our competitors hired outside software vendors to develop their technology while we had our own development group. There was simply not enough American software engineers with adequate skills to perform the development required to make our systems competitive. And we did not have enough revenue to afford outside developers. Without the brain-power of the Indian/Russian horde, in all probabiltiy my organization would no longer exist, and neither would my job.

Posted by: HA on April 20, 2006 at 9:56 PM | PERMALINK

The point is that the greedy evil bastard doesn't seem to care about all the money he's raking in - because he gives most of it away.

Tripp, if you had any facts to back up your contention that Cheney's charitable donations are fraudulant, please present them. I won't hold my breath. - c

But c, Tripp had asked you first to show where the supposed charitable donations wound up, to now turn the tables on him without even attempting to back up your assertions is dishonest and lazy. If Cheney is such a philanthropist then it should be easy for you to find the information you need. Wild claims are easy to make, watch: Rush Limbaugh is in reality a chupacabra! See? Now I can give you evidence of how much he sucks but does that make him cryptozoological?

Posted by: Eric Paulsen on April 21, 2006 at 12:55 AM | PERMALINK

Eric Paulsen,

Tripp is the accuser not "c". If Tripp says Cheney's contributions were fraudulent, the burden is on him to provide the evidence. It is pure McArthyism to put the burden on the defender for an unspecified charge.

Of course if you like this game it can be used against you. Your comments are fraudulent. Now prove that they aren't. And it would be dishonest and lazy if you don't.

Posted by: HA on April 21, 2006 at 6:57 AM | PERMALINK

'GOP' posted:

"Nonsense"

We're in agreement, your posts are "nonsense".

.

"Income tax rates on the wealthy were dramatically lower in the latter 1990s than in virtually all prior years going back to the 1930s."

But the top rate was increased with a 10% surcharge, and the RightWing was screaming bloody murder, predicting the following:

* Stephen Moore, who was then the director of fiscal policy studies at the Cato Institute, and is now a contributing editor of National Review, predicted that "Clinton's plan will torpedo the economy".

* "The tax increase will kill jobs and lead to a recession" said Newt Gingrich, "and the recession will force people off of work and onto unemployment and will actually increase the deficit".

* Then Sen. Phil 'MY MAMMA' Gramm (R-TX), a claimed economist, said "I want to predict here tonight, that if we adopt this bill the American economy is going to get weaker and not stronger, the deficit four years from today will be higher than it is today and not lower ... When all is said and done, people will pay more taxes, the economy will create fewer jobs, the government will spend more money, and the American people will be worse off".

* Then Rep. Dick Armey (R-TX), another claimed economist, labeled the Clinton economic plan "a job killer".

* Another strident opponent of the President Clinton's economic proposals was then Rep. John Kasich (R-OH), who said "This plan will not work". "If it was to work, then I'd have to become a Democrat..." (still waiting for that conversion).

ALL OF THE RIGHTWING WAS DEAD WRONG.

.

"In 1950, for example, the top marginal rate was 84%. In 1960, it was 91%."

And we experienced one of the two periods of greatest prosperity in the 20th Century. Exactly the opposite of the claimed effects of tax cuts.

.

“The historically low income tax rates of the 1990s are one reason why the gap between rich and poor in America grew wider under Clinton than under any other president for at least the past 30 years.”

A LIE.
.

Posted by: VJ on April 21, 2006 at 9:56 AM | PERMALINK

"And we experienced one of the two periods of greatest prosperity in the 20th Century. Exactly the opposite of the claimed effects of tax cuts."

Huh? The huge growth in prosperity of the latter 1990s occurred when top income tax rates on the rich were close to their historical lows--less than 40%. This also helped to dramatically increase the gap between rich and poor in America. And it happened during Bill Clinton's presidency.

"A LIE."

Brilliant rebuttal, that.

Posted by: GOP on April 21, 2006 at 6:25 PM | PERMALINK

'GOP' posted:

"Huh?"

Huh hell.

.

"The huge growth in prosperity of the latter 1990s occurred when top income tax rates on the rich were close to their historical lows--less than 40%."

Yet up by a large 10% surcharge.

Exactly the opposite of the failed RightWing theory that tax rate cuts stimulate the American economy, which has never happened.

You also have not addressed the fact that the other period of greatest prosperity in the 20th Century occurred when the top income tax rates were 84% and 91%, which also flies in the face of failed RightWing theory that high tax rates stifle economic growth.

.

"This also helped to dramatically increase the gap between rich and poor in America. And it happened during Bill Clinton's presidency."

False.

.

“Brilliant rebuttal, that.”

Thank You.
.

Posted by: VJ on April 21, 2006 at 7:22 PM | PERMALINK

VJ,

Yet up by a large 10% surcharge.

I don't know what this means. The 40% top income tax rate in effect during the huge economic boom of the 1990s is obviously much lower than the top rate of 84% in 1950, 91% in 1960, and 70% in 1970 and 1980. In fact, as I said, it's lower than the top rate for almost all years since at least the 1930s.

You also have not addressed the fact that ...

I was addressing your obviously false assertion that "income tax rates on the wealthy were at their highest" during the latter 1990s. That assertion is completely false.

False.

It's not false. See my link to the Census Bureau income data and the CBPP analysis. This is what it found in 1998, six years into the Clinton presidency:

"This analysis also shows that income disparities are now at their widest point on record."

One of Bill Clinton's clearest legacies was a gap between rich and poor in America wider than it had been for at least the previous 30 years, and possibly wider than it has ever been in the nation's history.

Posted by: GOP on April 21, 2006 at 7:51 PM | PERMALINK

'GOP' posted:

"I don't know what this means."

That's rather obvious.

.

"The 40% top income tax rate in effect during the huge economic boom of the 1990s is obviously much lower than the top rate of 84% in 1950, 91% in 1960, and 70% in 1970 and 1980."

A) It's obviously also the highest rate since 1980.

B) It also flies in the face of failed RightWing theory that raising income tax rates, particularly raising income tax rates on the wealthy, is a negative for the national economy.

.

"I was addressing..."

A 'Straw Man' argument, because you cannot defend your position.

.

"One of Bill Clinton's clearest legacies was a gap between rich and poor in America wider than it had been for at least the previous 30 years, and possibly wider than it has ever been in the nation's history"

False.
.

Posted by: VJ on April 22, 2006 at 4:37 AM | PERMALINK




 

 

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