Against inequality

The great issue of our time is the growing inequality of wealth and income.

Here’s the key passage from Barack Obama’s Osawatomie speech today:

In the last few decades, the average income of the top 1 percent has gone up by more than 250 percent to $1.2 million per year. I’m not talking about millionaires, people who have a million dollars. I’m saying people who make a million dollars every single year. For the top one hundredth of 1 percent, the average income is now $27 million per year. The typical CEO who used to earn about 30 times more than his or her worker now earns 110 times more. And yet, over the last decade the incomes of most Americans have actually fallen by about 6 percent.

Now, this kind of inequality — a level that we haven’t seen since the Great Depression — hurts us all. When middle-class families can no longer afford to buy the goods and services that businesses are selling, when people are slipping out of the middle class, it drags down the entire economy from top to bottom. America was built on the idea of broad-based prosperity, of strong consumers all across the country. That’s why a CEO like Henry Ford made it his mission to pay his workers enough so that they could buy the cars he made. It’s also why a recent study showed that countries with less inequality tend to have stronger and steadier economic growth over the long run.

Inequality also distorts our democracy. It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and it runs the risk of selling out our democracy to the highest bidder. (Applause.) It leaves everyone else rightly suspicious that the system in Washington is rigged against them, that our elected representatives aren’t looking out for the interests of most Americans.

I wish that Obama had spoken out more clearly about inequality before now. (His actions are a different matter: not just on tax policy, but in building a huge downward income transfer into health care reform.) But you can’t imagine any current Republican candidate saying what he said. And therefore you shouldn’t be able to imagine that keeping the White House in the hands of an opponent of the plutocracy rather installing one of its friends is anything but a central task over the next eleven months.

The other side knows all too clearly what the stakes are. Here’s hoping that the big-and-small-D democrats will find a way to come together in this moment of crisis.

Comments

  1. Dennis says

    What the President left out: the income of that top fraction of one percent is generally taxed at rates much more favorable than the taxes on earned income. Those with annual incomes measured in the tens of millions of dollars are either earning it over a short period (superstar entertainers, like Alex Rodriguez or Harrison Ford) or the income is coming from stock dividends, bond interest and capital gains. Why is it “only fair” that A-Rod or Harrison Ford should pay the top marginal rate on most of their earnings, while some anonymous hedge fund manager should pay 15%. Why should Bill and Melinda Gates pay most of their income taxes at the dividend rate, while professors of whatever pay at the earned income rates?

    Let’s start by saying that a dollar is a dollar, whether it is the result of having labored to clip that bond coupon while sipping a daiquiri at poolside or digging a ditch by hand in an Arizona summer. Let’s start by imposing a transaction tax on the exchanges. We can put that into Social Security and/or Medicare. As things currently stand, investment activities are invisible to those taxes.

    Let’s also remember that Henry Ford didn’t start out with enlightened view that Ford plant workers ought to be able to buy a Model T. The UAW had to fight with him over that point: it was only later that he came to see the wisdom of the view.

    And finally, Obama’s speech in Osawatomie calls back to Theodore Roosevelt’s speech in that venue. Obama is generally to the right of TR. If that isn’t a sign of how far the GOP has moved in a century, I don’t know what is.

      • Dennis says

        I was giving a final exam, and didn’t see the speech. I watched MSNBC’s evening panoply to see how they reported on it. I was grading exams, but my recollection is that while all four programs (and Olbermann on Current) covered the speech, only Ed Schultz covered any of the tax stuff.

        I need to read the transcript, clearly.

  2. Cranky Observer says

    > I wish that Obama had spoken out more clearly about inequality before now.
    > (His actions are a different matter: not just on tax policy, but in
    > building a huge downward income transfer into health care reform.) But you
    > can’t imagine any current Republican candidate saying what he said. And
    > therefore you shouldn’t be able to imagine that keeping the White House
    > in the hands of an opponent of the plutocracy rather installing one of
    > its friends is anything but a central task over the next eleven months.

    So what do you expect (not imagine; expect) Barack Obama will _do_ about this inequality following his Inaugural Address in January of 2013? Hard tangible action? Reappoint Timothy Geithner and find some additional hundred billions in Wall Street fraud to avert his eyes from?

    Cranky

  3. FuzzyFace says

    Deploring something is easy, especially when there is so much popular opprobrium associated with it. As the Cranky One asks, though, what is he supposed to do about it? I’d be impressed if he came up with a coherent explanation of why we have this inequality that didn’t just declare that people his likely supporters would love to hate.

  4. NCG says

    Our campaigns are way too long. I still like the guy and I can barely stomach this. What took him so long?

    • Potifar says

      Amen! I fear that it’s also too late. I can just see the republican commercial now talking about how Geitner et al loaned all that money to the big banks and no one knew about it. That kind of crap just totally takes the wind out of your sails if you’re trying to attack Wall Street and defend middle america and all that stuff.

  5. Ed Whitney says

    Other writers have pointed out that during the time when income inequality was much less, America prospered as it had never done before. During the quarter century between the end of the Second World War and 1970, the US economy was a powerhouse unmatched in the world; it was during that time that banks were closely regulated, labor unions were well-represented in the workforce, there was a true graduated income tax which led to the control of capital assets by business enterprises rather than by wealthy individuals. This, and not the current arrangement, was a system that led to job creation.

    Some of this is hinted at in the second paragraph of this excerpt, but Pres. Obama needs to take the “job creators” meme out of the hands of the Republicans and point out that John Boehner’s favorite period in history, the 1950s, was marked by an economic system whose restoration he has been fighting against with all his available energy since becoming Speaker. True, middle class purchasing power is indispensable to keeping the economy growing, but saying “a recent study showed that countries with less inequality tend to have stronger and steadier economic growth over the long run” only plays into the hands of Romney, Gingrich, et al, who will say, “See, he thinks other countries are better than America; why does he hate our country so much?”

    The comparison needs to be with an earlier America, which grew more steadily than it has in the recent past. Obama needs to take the nostalgia card out of the hands of the panderers to the Tea Party, and needs to do it aggressively. The speech he gave today will not do that. If he adjusts his message just a bit, by making the post World War II United States the paradigm of economic virtue, he could even bring some Tea Partiers along with him.

  6. sd says

    Dennis said:

    “What the President left out: the income of that top fraction of one percent is generally taxed at rates much more favorable than the taxes on earned income. Those with annual incomes measured in the tens of millions of dollars are either earning it over a short period (superstar entertainers, like Alex Rodriguez or Harrison Ford) or the income is coming from stock dividends, bond interest and capital gains. Why is it “only fair” that A-Rod or Harrison Ford should pay the top marginal rate on most of their earnings, while some anonymous hedge fund manager should pay 15%. Why should Bill and Melinda Gates pay most of their income taxes at the dividend rate, while professors of whatever pay at the earned income rates?”

    Because wages and salaries (whether the modest wages and salaries earned by middle class folk or the astronomical wages and salaries earned by entertainers) are treated as a business expense by the IRS and thus paid out before corporate income taxes are levied. Whereas dividends are paid out after corporate income taxes are levied and capital gains represent the market’s valuation of the future value of the post-tax cash flows of the business.

    There are several Western democracies that tax dividends and capital gains at the rates of normal income – but most of them have zero corporate income tax or a very low corporate income tax. There are lots of Western democracies that have high corporate income tax rates but that do not tax dividends and capital gains at all (look it up – not at all an uncommon model in Western Europe, for example).

    In the US we have a statutory corporate income tax rate of 35% (one of the highest in the world) and an average effective corporate income tax rate of about 25%. So the average company pays 25% in corporate taxes. If dividends are paid out after corporate taxes (which they are) and then taxed at 15%, then the holder of the share of stock faces a true tax rate of 40% (25% + 15%), higher than the top marginal personal income tax rate. And this is indeed the proper way to loook at it, since the “taxable income” of the shareholder is the pre-tax profits of the business in which shares are owned.

    Look around the world and you will not find many examples at all of first world economies that have high corporate taxes and that also tax dividends and capital gains as ordinary income.

      • sd says

        The average effective corporate tax rate is 25% – lower by a wide margin than the 35% statutory rate but well above zero and higher than the statutory rates of most countries.

        There are probably some companies that, through creative use of corporate tax loopholes are able to pay little or no corporate tax and still pay out large dividends. But that’s rare.

        I for one would be perfectly happy to treat dividiends and capital gains as ordinary income in exchange for abolishing the corporate income tax. The latter is arcane, inefficient and introduces numerous distortions into the conomic life of the country.

    • CharlesWT says

      “So the average company pays 25% in corporate taxes. If dividends are paid out after corporate taxes (which they are) and then taxed at 15%, then the holder of the share of stock faces a true tax rate of 40% (25% + 15%),…”

      If the 15% tax is on what’s left over after the 25% tax, the true tax rate would be about 36.25%.

    • J. Michael Neal says

      If you don’t want to pay corporate income taxes, there’s an extremely easy solution: don’t incorporate. What, you say? It would be impossible to run firms the size of modern publicly traded firms as partnerships? Well, that means that you are getting a benefit. A number of them, in fact, such as limited liability and perpetual corporate life. Legally, these things are achieved by making a corporation its own independent entity. Income taxes are paid on economic transaction between entities. If you want the benefits of incorporation, that taxation is the price you pay. TANSTAAFL applies here.

      I have zero time for conservatives who complain about “double taxation” as a matter of inherent fairness. Like sd, they are a bunch of whiners who want the government to hand them something for free. It’s as if they believe that the state of nature came with limited liability built in. They’re run. The entire concept of incorporation is a government invention, and it is entirely fair for it to impose a tax on those collecting the benefits.

      If you don’t like it, there are a gazillion ways to invest your money that don’t involve equity stakes in corporations.

      (None of this is to say that fairness *demands* that we tax corporations. That’s entirely a normative decision, and I can easily various policy options I would support that include an elimination of the corporate income tax as a part. It would also eliminate certain distortions in financing, such as the pernicious tax preferences for debt over equity financing. However, I would categorically *not* support repeal of the corporate income tax as a standalone policy. It’s only a part of the package, and its beneficiaries should expect to have to give something up to get it.)

      • sd says

        The “benefits” of incorporation are only benefits in so far as the law requires incorporation in order to achieve them. Incorporation doesn’t provide the business entity with any “real” benefits apart from legal treatments. If the state passes a law sating that businesses are not allowed to use the color yellow in their marketing materials, and then allows some businesses to use the color yellow if they obtain a permit, then in a certain limited sense the use of the color yellow is a “benefit” that the permit-obtaining firms get for becoming permitted yellow-users.

        I agree that the decision on the taxation of corporate profits, like ALL decisions on what to tax, are fundamentally normative.

        I would also agree that we should eliminate the tax preference for debt over equity financing, though since financing costs are real costs the way to do that would be to make payments to equity holders (dividends and share re-purchases) tax deductible business expenses in the same way that interest payments are.

        • says

          Way to use a circular argument. “We get benefits because we incorporate, but to get the benefits we must incorporate. How unfair! We should get those benefits without incorporating!”
          Why? Do those benefits exist independently? Should every business have persistence and limited liability because you say so?

        • Dan says

          sd, you clearly have not thought this one through. The color yellow exists; limited liability is a creation of the government.

          • sd says

            The liability of business owners (as opposed to managers) is also a creation of government. Its not a “state of nature” condition that if the CEO of a company breaks the law or harms a third party that the non-ececutive owners of said company should be held responsible. The western legal tradition says they should be, which is fine as far as normative lkegal principles goes. Buts its not a forgine conclusion that the world must be set up in this way. Thus the limited liability feature of LLCs is simply the state’s approval to circumvent a burden that the state, by the very design of its legal system, imposes.

            Nor is it natural or inevitable, even if the state were “due” compensation for the “benefits” of incorporation that the mechanism thereof needs to be a % tax on profits. After all, the owners of an unprofitable corporation “benefit” from limited liability just as much as do the owners of a profitable corporation (a crappy business can be sued just as easily as a great business). If the state is due compensation for exempting business owners from liability then it could just as easily collect a flat annual filing feee from each business. But of course, that wouldn;t be as revenue-attractive to the state, so there we go.

            In any event without the advent of the LLC it is highly unlikely that we’d be living in a a society that we would recognize as more modern than medieval, but that’s neither here nor there.

          • J. Michael Neal says

            The liability of business owners (as opposed to managers) is also a creation of government.

            Who hired the managers?

        • J. Michael Neal says

          Thank you for confirming my claim that those who oppose corporate taxation as a matter of fairness believe that limited liability is a part of the natural order. It’s a completely nonsensical position, of course, but it does explain your stance.

          Please explain to me why, in an unregulated setting, the owners of an entity should not be held responsible for the torts of that entity. I presume that you believe that they should have total control over the entity and that they are entitled to the full share of the profits of that entity. Why do they get the rewards without responsibility?

  7. Don says

    I don’t object to the President’s newfound concern for the working class, I just know better than to imagine that the Democratic Party is going to save me from the predatory rich.

    If the Democrats gave a rat’s ass about people like us, there would be bankers in jail right now, lots of them. The Justice Dept wouldn’t be full of Hollywood copyright lawyers, and the SOPA Internet censorship bill wouldn’t stand a chance in the Senate. The administration would have spoken out against the Republican austerity plan instead of giving it full-throated support. The Bush tax cuts would be receding in the rear-view mirrow. A Constitutional amendment ending corporate personhood would be before Congress and a balanced budget amendment would not.

    Is Obama even suggesting any of that? No, not even with the election at his throat.

  8. sd says

    Edhitney wrote:

    “Other writers have pointed out that during the time when income inequality was much less, America prospered as it had never done before. During the quarter century between the end of the Second World War and 1970, the US economy was a powerhouse unmatched in the world; it was during that time that banks were closely regulated, labor unions were well-represented in the workforce, there was a true graduated income tax which led to the control of capital assets by business enterprises rather than by wealthy individuals. This, and not the current arrangement, was a system that led to job creation.”

    Well, that and the fact that the industrial base of almost every other industrialized country in the world was bombed to ruins in WWII. Turns out you get a bit of an economic leg up when the whole world goes to war but ends up fighting in someone else’s back yard. The highly profitable, highly unionized American manufacturing firm that could grow at robust rates every year, pay attractive returns to shareholders, pay attractive wages to production workers and maintain lax productivity disciplines was threatened as much by the fact that Japan and Germany finally re-built their factories, railroads, ports, roads, and R&D infrastructures as by the fact that Ronald Reagan won the election in 1980.

    • Lewis Carroll says

      Except the other industrialized countries of the world were also broke, so there would have been no way for the US to necessarily get an economic leg up on them without the aid of the Marshall Plan.

      And as is indicated by the level of European growth in the 50s and 60s, it is obvious that our exceptional growth did not come at their expense, or as a result of lackluster industry there. From the Wikipedia on the Marshall Plan:

      “The years 1948 to 1952 saw the fastest period of growth in European history. Industrial production increased by 35%. Agricultural production substantially surpassed pre-war levels.[53] The poverty and starvation of the immediate postwar years disappeared, and Western Europe embarked upon an unprecedented two decades of growth that saw standards of living increase dramatically. There is some debate among historians over how much this should be credited to the Marshall Plan. Most reject the idea that it alone miraculously revived Europe, as evidence shows that a general recovery was already underway. Most believe that the Marshall Plan sped this recovery, but did not initiate it. The United States worked to direct the Marshall Plan towards children and an increase of nutritional material for all citizens within western Europe so as to shed a positive light on its goals as it worked to effectively defeat communist threats. One effect of the plan was that it subtly “Americanized” countries, especially Austria, who embraced United States’ assistance, through popular culture, such as Hollywood movies and rock n’ roll (Bischof, Pelinka and Stiefel 174-175).”

      You can look here and see that the idea that Europe was left in the dust by the US after WW II is simply a myth:

      http://www.j-bradford-delong.net/econ_articles/ucla/ucla_marshall2.html

      “Nobody disputes that post-World War II western European economic growth was miraculous. The magnitude of the miracle is clear in the graphs of the broadest of macroeconomic aggregates. In West Germany, France, Italy, and even in Great Britain the level of economic product–GDP–per capita exceeded the best performance of the interwar period by the early 1950s. By 1960 all countries’ economic product was higher than not just the best interwar performance, but was well above levels that would have been predicted by extrapolating pre-1939 or pre-1914 trends into the indefinite future.”

      And it’s also worth noting that Japan and Germany’s auto industries, for example, have been, and continue to be highly profitable AND highly unionized. And last I checked, they have historically also paid attractive returns to shareholders. So maybe it is possible to grow and be competitive in mixed economies with empowered labor?

      • sd says

        “And it’s also worth noting that Japan and Germany’s auto industries, for example, have been, and continue to be highly profitable AND highly unionized. And last I checked, they have historically also paid attractive returns to shareholders. So maybe it is possible to grow and be competitive in mixed economies with empowered labor?”

        And highly mechanized, which means they need fewer workers to produce any given car than did car makers of the 1950s-1980s.

        Look, there are two ways a company can pay its workers well and be highly profitable: 1) It can earn a significant price premium in the market because it has little competition or some sort of product advantage over its competitors (better technology, sexier brand, etc.), or 2) It can have really productive workers. But really productive workers means you need fewer workers.

        This comes up frequnetly in discussions of Wal-Mart vs. CostCo. Liberals love to point out that CostCo is profitable even though it pays its workers much more than does Wal-Mart. But what this leaves out is that CostCo’s business model is inherently highly productive (i.e. fewer employees are needed to generate each dollar of sales – which is what you get when you drop pallets of cereal on a warehouse floor rather than manually stocking shelves with boxes of cereal and when your average ticket at the cahs register is $200 instead of $40).

        If Wal-Mart paid its workers what CostCo pays its workers, but Wal-Mart workers did not become more productive, Wal-Mart would go out of business (do the math). Wal-Mart could easily match CostCo’s productivity edge, which would allow it to pay its workers as much as CostCo does. But it would need far fewer workers, meaning most of its employees would be out of a job (I did the math once and if memory serves for Wal-Mart to match CostCo’s labor productivity and wage structure would take it from something like 2-3M US employees to about 500K).

        • Brett Bellmore says

          “2) It can have really productive workers. But really productive workers means you need fewer workers.”

          And if the really productive workers are going to actually GET that premium, it’s going to be because they’re really “productive workers”, not mediocre workers provided with really productive machines by the company. Otherwise they’re not going to have any competitive leverage to get that share of the output, because anybody could stand in front of the machine.

          My theory for why wages have stagnated: Shop class being dropped. There’s a whole range of skilled trades like welder or machinist which pay well even now, (I’m an engineer, some of these guys working here are better paid than I am.) without college, but the education system largely despises the skilled trades, and has dropped the ball in providing an educational route to that career. The result is that we’ve got a shortage of skilled tradesmen, and a glut of people going to college.

          I work for a German company, and have talked with some of the employees rotated through this US branch, and that appears to be the biggest relevant difference between here and Germany: The skilled trades are treated by the educational system there as a respectable choice, and supported.

          • NCG says

            I agree on the education points. We should never have abandoned manufacturing the way we did. And we need to reverse this. Could it be there is an area of right-left overlap here???

            So, how do they do the trade education in Germany? Is it really all in schools, or is it via apprenticeship?

          • Betsy says

            Brooks was deploring, like you, the abominable choice of workers to go into lucrative but uncontributory fields and avoid the productive shop-class type of work that used to be the bread and butter. I agree with you that the educational system has stupidly dropped the ball on that score, but the failure of the safety net, the reduced wages, and the decline in job benefits are more responsible than anything else for people not wanting to go into trades for a living. Because you can’t save enough as a tradesman to self-insure, and increasingly in our no-safety-net society you have to be able to self-insure to be middle class.

            German tradesmen, at least don’t have to fund their own retirement and their own higher education and their own health insurance and their own … That’s why being a welder in Germany is still a reasonable person’s choice.

      • Barry says

        In addition, the screeching on the right is that miniscule tax increases on the rich would be disastrous – not bad, but catastrophic. By that standard, other factors shouldn’t have mattered, any more than breathing oxygen-enriched air would help a person who has ten lethal doses of cyanide in their blood.

        But it didn’t work out that way. The right is simply wrong.

    • Ed Whitney says

      While world economic dominance after the war was attributable to the rest of the developed world lying in rubble, much of the growth of the economy and the sparing from great bubbles for decades after the Great Depression can be attributed to regulations enacted during the 1930s. The main thing is that political use of the nostalgia card is currently being monopolized by people who have appropriated it, not by people who have earned it. The speech in Kansas today has some promising elements–invoking Teddy Roosevelt and Dwight Eisenhower to this administration’s goals and values–but needs to be more explicit. For example, regulation of the financial sector, decried by the Republicans, needs to be linked explicitly to the Good Old Days, and deregulation needs to be portrayed as a newfangled intrusion into the economy which has brought us to the brink of ruin. Linking Ike’s public sector to the interstate highway system is a good start; the role of the public sector, freed from the need for short-term profits, to develop things like the jet engine and the internet, also should be emphasized. In the Good Old Days, cynicism about the public sector of the economy was a rare phenomenon; Fox News is an innovation which violates the ethos of an earlier era.

      Take away the nostalgia card–that is essential to a winning message for 2012.

  9. Bruce Wilder says

    “the fact that the industrial base of almost every other industrialized country in the world was bombed to ruins in WWII”

    I really have difficulty making sense of this argument. The most basic proposition in economics posits specialization and trade as the source of the wealth of nations. How does the availability of German cars or Japanese electronics or French wine undermine the prosperity of Americans? How do vibrant markets in those rich countries for McDonald’s hamburgers or Coca-Cola or Boeing planes undermine American business?

    If you want a hypothesis for how things went wrong, look first to oil. Once the U.S. was committed, not to conservation and independence, or simply trading goods for oil, but to paying for oil with financial paper, financialization and asset inflation was the chosen path to hell. Our rich folks had to become as rich as we were making the oil sheiks, or the whole country would soon be owned by said oil sheiks. The alternative — to tax oil imports — would ruin the ambitions of a precious suburbia built on cheap gas. Step-by-step, we’ve borrowed more than we’ve invested, and our rich are richer than our country can afford and our bloated financial sector is choking the remaining life out a debt-ridden populace, foreclosing on suburbia, on health care and on higher education.

    • sd says

      Well French wines are largely irrelevant but the availability or unavailability of imported manufactureed goods obviously has a huge impact on the viability of the domestic manufacturing sector and thus the abaility of that sector to generate lots of high wage jobs. The post-war US industrial corporation manufacturing high value-added goods (autommobiles, electronics, machinery, etc.) was growing and profitable, and paid very generous wages to its employees. But it faced relatively little competition, either in the US domestic market or in foreign markets. This allowed it to charge high prices which in turn supported both high wages and high profits.

      As the capital stock of the former industrial powers was slowly rebuilt after WWII (and as countries like Mexico, Taiwan, South Korea and China industrialized for the first time) manufactured goods from those countries began competing with US goods in a serious way (again, both in the US and overseas). This exposed the fact that US manufacturing had become exteremly bloated at all levels of the cost bar. US workers were paid very well and were not productive enough to justify the wage premium they earned, creating enormous distress in US manufacturers. US workers were not as productive as Japanese and German workers, and were not as cheap as Korean workers. It was impossible for US wages to come down enough to be competitive, and so US manufacturers had to become more productive. And that’s exactly what they did. But the path to enhanced productivity was typically to substitute capital and R&D for labor in generating value-add.

      Today the US manufacturing sector is enormously healthy. But US manufacturing employment is not. In the 1950s the US economy generated ample job opportunities at living wages. It no longer does. Not because “the wealthy” are “greedy,” but because in a globalized market there isn’t enough demand for workers whose productvity/wage profile fits that of US workers. Manufacturing wages haven’t stagnated at all. But there are a lot fewer manufacturing jobs and a lot more low-skill service jobs taking their place.

      As I sideline, I’ve come to immediately dismiss the comments of anyone who claims to care about the plight of middle and lower middle class US households who does not also support the aggressive development of US oil and gas resources. Oilfield jobs cannot, by definition, be shipped overseas, and current US reserves are likely to be productive enough to generate massive numbers of high wage jobs for decades to come. Yes, there is likely to be some environmental cost to doing so. But by any reasonable measure it will be much lower than the environmental cost associated with the unionized manufacturing sector of the 1950s.

      • says

        You use words like “reasonable” as if we all agree on your definition.

        Please feel free to dismiss the arguments to those who do not wish to live in Bejing (cough, cough).

      • NCG says

        Well, maybe you’re the person to ask about this: why do we want to build a(nother) pipeline to Texas so more oil can be exported? I don’t understand that. Also, I don’t understand why they can’t just build the pipeline next to or on top of the other one. Why ruin more land? (Really, I think I’m against it entirely, but, I’d like to understand it better too.)

        Also, why can’t we put our money and focus into renewable energy? Aren’t those likely to be good jobs, and less harmful to, you know, our HOME? The only one we have?

        • sd says

          Renewable energy sources are not feasible or competitive on a mass scale today. They may be some day, but they’re not today. Natural gas is – and its abundant in the United States. The economics of gas support massive development projects (and thus massive numbers of new jobs) today. North Dakota, which has been very open to new gas development, is importing blue collar workers by the truckloads at very attractive wages. Similar development could occur in NY, PA, OH etc. if there was a will to prioritize the creation of good jobs over environmental concerns. And while natural gas is not as “clean” as solar or wind power, it is MUCH cleaner than coal and oil, which it would displace.

          • NCG says

            Okay, maybe, but on the other hand, why not put resources into making renewables competitive today? I very much doubt the oil business got where it is now without massive subsidies, roads and so forth, so why not try to create good jobs AND not fry ourselves? What good is a job on a dead planet? Natural gas might be better in the meanwhile, it’s true.

          • sd says

            “Okay, maybe, but on the other hand, why not put resources into making renewables competitive today?”

            I’m all for pouring government money into R&D aimed at driving down the cost and driving up the energy yield of renewables. But realistically, this will create few jobs today and will only make renewables econoimically viable 20, 30, 50 years from now. There’s a lot of blue collar pain (as well as a lot of US dependence on foreign oil and a lot of dirty coal being burned) that can be mitigated in the near term.

  10. Lewis Carroll says

    I should have added to my first point that implicit in sd’s comment is the idea that the US had such strong growth in the post-war period due to the trade advantage of its intact infrastructure. That necessarily implies that those other nations had the financial wherewithal to provide the demand for our production that would give us a positive balance of trade. But the fact of the matter is that they were fiscally tapped out by the war.

    • sd says

      It was not at all implicit in my comment. Take US car manufacturers. From the end of WWII through at least the mid 1970s US makers could sell into the high volume US domestic market with little competition. That changed in the late 1970s and 1980s.

      The resurgence of foreign manufacturing didn;t just challenge US manufacturing in overseas markets, it challenged US manufacturing in the domestic market as well

      • Anonymous says

        Well if it’s not implicit in ["Well, that and the fact that the industrial base of almost every other industrialized country in the world was bombed to ruins in WWII. Turns out you get a bit of an economic leg up when the whole world goes to war but ends up fighting in someone else’s back yard."], then what exactly were you implying by that? I don’t follow the logic if you weren’t implying that WW II’s destruction gave the US artificial protection in manufacturing.

        And you’re forgetting what really damaged the US auto industry in the 70s and 80s – oil shocks, and the idiotic idea of ‘planned obselesence’.

        You can compare to the durability of other manufacturing sectors like aerospace/aviation, where despite a highly-skilled, highly paid workforce, the US maintains if not superiority, at least a highly competitive position, even with a globalized marketplace.

        • sd says

          Allow me to clarify – the post above (Lewis Carroll, Dec 6 7:42 PM) suggests that my argument that the US manufacturing sector benefitted from the destruction of industrial infrastructure in other countries can only be true if the US had an overly positive balance of trade during this period. Which he suggests cannot be true of the economies of the rest of the world were so devastated by the war that they could not generate demand for US goods.

          I simply pointed out that this is not the case. Even if the economies of much of the rest of the world were severely depressed following WWII and thus that these countries could not provide a source of demand for US manufactured goods, the US domestic market, which grew rapidly after WWII, provided sufficient demand for US manufactured goods.

          In other words, from WWII until the 1970s/1980s, US manufacturers could serve the growing US market profitably without significant competition from overseas manufacturers. When those overseas manufacturers finally developed the R&D and manufacturing muscle to compete effectively for large segments of US domestic demand, the resulting shock to US manufacturers left them needing to either cut costs or become more productive to remain competitive themselves. The former leads to wage pressure, the latter to the substitution of capital (industrial mechanization) for labor (The third alternative being of course to relocate production to lower wage countries).

          In any event, the rise of serious overseas competiton to the US manufacturing sector, not the policies of this or that administration, has been the primary cause of the depletion of high wage manufacturing employment opportunities.

          You are certainly correct that the US maintains an advantage in many manufacturing sectors even today. But these are precisely those sectors where workers are highly productive (as measured by the dollars of revenue per worker and the capital cost of developing machinery to replace the workers themselves), and thus where the economics of firms can support payments of high wages. It takes many more workers to produce $1B worth of cars than it does to produce $1B worth of aircraft. Thus workers in aircraft manufacturing will inherently be more protected from wage pressure than workers in auto manufacturing.

          • NCG says

            I am not so sure your story about the auto industry is correct. I am no expert though. But I thought one could make a case that it was the executives who made mistakes, not so much the workers. They made ugly cars that didn’t run well.

            And are you saying that Japanese companies in Japan make cars with fewer workers? That would be interesting. But even if it’s true, why can’t we get in on making the machines they are replacing the workers with?

          • sd says

            “I am no expert though. But I thought one could make a case that it was the executives who made mistakes, not so much the workers. They made ugly cars that didn’t run well.”

            It doesn’t matter who made mistakes. Life isn’t a 3rd grade classroom where the good kids get stickers and the bad kids lose recess. The reality is that when foreign competitors began entering the US auto market in a scale fashion they had a massive cost advantage over US firms, at least in certain classes of vehicles. Either because their workers were cheaper than US workers (Japan) or more productive (Germany). Of course, today Japanese workers aren’t cheaper than US workers – but they are more productive. And for what its worth, in the 1970s and 1980s the UAW consistently blocked efforts to improve the quality of US auto manufacturing, as such efforts invariably require the implementation of process controls and standards that are a pain in the a$$ for production workers.

            “why can’t we get in on making the machines they are replacing the workers with?”

            For all I know we do. But by the very nature of the issue fewer workers will be required to build a machine that makes widgets than are required to make the widgets themselves. Otherwise there would be no labor cost savings in mechanization. An assembling line robot is not THAT much more complicated than a car. But once its built it can help assemble thousands of cars.

  11. says

    The economic inequality grew worse under Democratic policies, in Congress from 2007 to 2011, and as you pointed out, it has grown rapidly worse under a Democrat President from 2009 to today. And in other nations when those policies are implemented more consistently and strongly, economic inequality is even worse.

    The sad fact of the matter is you are the problem- the very problems you are pushing for are leading to the very thing which you dislike. Oh, I know you were raised on stories of capitalist robber barrons and all the garbage- but those ‘robber barrons’ were not capitalist, but rather insider politicians gaming the system much like they are doing increasingly today under Democrats who subvert the free market.

    When elites control society, elites control wealth. Elites gain more power when they are empowered to do so, through increased taxes, regulations, rule-making, and scope of authority. Figure it out and stop empowering elites and creating economic inequality.

    • sd says

      It is indeed true that the most dramatic rise in inequality in recent memeory came during the Clinton administration, but the current recession has seen a decrease in inequality. It is naive to attribute the rising inequality of the 1990s to “Democratic policies.”

      What this fact does illustrate is the relative uselessness of “inequality” as a way of talking about the health of society. Liberals have been frustrated by the fact that the general public has historically been uninterested in listening to their messages about inequality per se. Liberals have been encouraged by the fact that such messages have recently started to get some traction.

      But what liberals fail to see is that what average voters care about is whether or not life is getting better for average voters – irrespective of whether its getting better or worse and how quickly it is doing so for the wealthiest members of society.

      If incomes for average Americans are growing at 3% per year, and incomes for wealthy Americans are growing at 10% per year (not unlike the late 1990s), then inequality is rising. But in these conditions, most voters couldn’t care less.

      If incomes for average Americans are falling at 3% per year, and incomes for wealthy Americans are falling at 10% per year (not unlike the last few years), then inequality is decreasing. But in these conditions, voters are mad as hell.

      • says

        So, if you make $150/day and lose $4.50, or you make $150,000 and lose $15,000, you have the same problem? What planet do you people LIVE on?

    • Rob in CT says

      This is really ahistorical. There was vast wealth disparity in the past, with far lower overall taxation, regulation, rule-making and scope of authority. Regulatory capture and the like can be real problems and, at the same time, not be the underlying root cause of our problems.

      The claim that “when elites control society, elites control wealth” ignores that wealth gains you power. It’s not power —> wealth. It’s power wealth. They reinforce one another. Gaining wealth gains you power. Having power can help you gain/maintain wealth. You appear to be blind to half of the equation here.

    • eli says

      “Elites control everything” is silly and conspiratorial. You think taxes and regulation are the only things keeping elites in power and supporting inequality?

  12. Ebenezer Scrooge says

    I can’t agree with Mark that Obama is an opponent of the plutocracy. He’s acting in the enlightened self-interest of the plutocrats, much like Roosevelt, but perhaps without Roosevelt’s explicit consciousness of this. (To explain “enlightened self-interest”: Obama will make plutocrats richer. But he won’t make them feudal lords, which is the desire of some of them, even though it ultimately makes them less wealthy. Think Southern economic development: preserving a quasi-feudal structure at the expense of economic dynamism.)

    But I do agree with Mark’s conclusion. Whether you think that Obama is an enemy of the plutocracy or an intelligent friend, he is far better than whatever alternative the Rs come up with. However, if you think he is an friend of the plutocrats, there is plenty of room to pressure him from the left, without destroying his electoral chances.

    • J. Michael Neal says

      I’m not sure I understand the distinction between being an opponent of the plutocracy and just being against what it wants. You say that Obama supports the enlightened self-interest of the plutocrats, but it’s clear that the plutocrats disagree with you, so you are clearly relying upon “enlightened” to do all of the heavy lifting. The plutocrats think that they would prefer to have less absolute wealth in exchange for more relative wealth and thus more power. Based upon human nature, I suspect that they have much better picture of what would make them happiest than you do. Human beings are often pretty ugly that way.

      What Obama is telling the plutocrats is that he does not intend to let them have what is most in their interest, but that he’ll try to make sure that the difference between what they get and what they want won’t be as large as their whining indicates that they think it will be.

  13. Finn says

    I don’t know if I count as a small-d democrat but I’ll get with the big-D Democrats when they have better candidates and not “marginally better than X.”

    • says

      The choice, at least since 1980, has generally been “marginally attractive centerist with some leftish leanings” vs. “unrepentant oligarch”, with various levels of religious mania sprinkled to taste. Maybe Dole vs. Clinton wasn’t that clear-cut, but otherwise, for the last 30 years, the difference hasn’t been “marginal”.