Quotes of the day: Paul Krugman is on hand to tell us that it's really only the superrich who're getting seriously richer. Is anyone listening?
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There's nothing surer:
The rich get rich, and the poor get poorer.
—from "Ain't We Got Fun?" (1921), words by Gus Kahn and Raymond B. Egan, music by Richard Whiting
In short, it’s a great economy if you’re a high-level corporate executive or someone who owns a lot of stock. For most other Americans, economic growth is a spectator sport.
—Paul Krugman, in his NYT column yesterday, "Left Behind Economics"
At the morning Quote of the Day Selection Panel meetings, it's not hard to tell when it's Monday or Friday. Just about everybody's got something from Paul Krugman's column at the top of their list of ten items to suggest. (Except, of course, when the slug is on vacation. Man, does he work on a George W. Bush vacation schedule or what?) There aren't many days when what PK has to say couldn't provide the QOTD. Yesterday's column was too important to let pass, though. Who else is writing regularly on the subject of the incredibly rapid growth in income inequality that has occurred under, and clearly been promoted by, the Bush administration?The one thing we always wonder about with Professor Krugman is how frustrating it must be to be able to explain these things so patiently and lucidly, and to do so on a regular basis, and then look around and see that it appears to make no difference.
It makes me, for one, crazy anytime those mushmouthed pundits of the mainstream media tell us how the economy is humming. I'm sure I'm not the only one who knows full well that my economy is not humming. I'm hardly at the bottom of the economic ladder, but I haven't had a raise in I-don't-know-how-many years, with none in prospect, and all of my expenses continue to increase dramatically. Of course I realized some time ago that we now have two economies: one of the people who matter, and one of the rest of us. There's hardly even any pretense anymore about trickle-down effect—you know, the rising tide lifting all boats. Now if you wonder, "Where's my share?," even if you ask real, real polite, the answer is likely to be, "Fuck off!"
There's a tiny bit of payback in Krugman's latest report. It appears that people are getting left out of the rising tide way higher up on the economic ocean than they realize. The latest numbers suggest that Bushonomics has advanced well beyond the folk wisdom of "Ain't We Got Fun?" In 2004, he says (explaining that "the full story of what happened in 2004 [with regard to income distribution] has only just become available):
[T]he real income of the richest 1 percent of Americans surged by almost 12.5 percent. Meanwhile, the average real income of the bottom 99 percent of the population rose only 1.5 percent. In other words, a relative handful of people received most of the benefits of growth.
That's right. It turns out that you can be upper middle class in the U.S. and still not get much benefit from Bushoomics. "Even people at the 95th percentile of the income distribution—that is, people richer than 19 out of 20 Americans—gained only modestly. The big increases went only to people who were already in the economic stratosphere."
Again, this is hardly a new theme for Krugman. But as patiently and cogently as he explains it, it never seems to matter. Of course Karl Rove and his kind learned long ago that if you want an idea to penetrate the American public's consciousness, you have to (a) be able to reduce it to 10-20 words (and not big ones, please) and (b) have it blasted incessantly by a team of propagandizing automatic weapons like the Fox News team.
Here's how Krugman began yesterday's column:
I’d like to say that there’s a real dialogue taking place about the state of the U.S. economy, but the discussion leaves a lot to be desired. In general, the conversation sounds like this:
Bush supporter: “Why doesn’t President Bush get credit for a great economy? I blame liberal media bias.”
Informed economist: “But it’s not a great economy for most Americans. Many families are actually losing ground, and only a very few affluent people are doing really well.”
Bush supporter: “Why doesn’t President Bush get credit for a great economy? I blame liberal media bias.”
And he showed liberal's classical soft heart in his conclusion:
[D]on’t expect this administration or this Congress to do anything to limit the growing concentration of income. Sometimes I even feel sorry for these people and their apologists, who are prevented from acknowledging that inequality is a problem by both their political philosophy and their dependence on financial support from the wealthy. That leaves them no choice but to keep insisting that ordinary Americans—who have, in fact, been bypassed by economic growth—just don’t understand how well they’re doing.
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*You mean you're not paying the Times those Times Select megabucks so you can read every precious word blown out of the asses of David Brooks and John Tierney? Fear not. If the Krugman link doesn't take you there, the full text of the column is appended in a note.
ALSO TALKING—Apparently, being chairman of Chimpy's Council of Economic Advisers means being able to fit both feet in your mouth
A recurring theme in recent Krugman columns, including yesterday's, has been the sudden economic illiteracy of the once fairly credible Edward Lazear, since he became chairman of the Bush Council of Economic Advisers in February. After Howie and I decided that i would write something about yesterday's Krugman column, he sent along this item:Arithmetic Problems for Bush's Council of Economic Advisors
Dean Baker, Beat the Press, July 13, 2006
Economists are supposed to be good at math. It is a great honor for an economist to be appointed as head of the President's Council of Economic Advisors. For these reasons, it should be big news that the person currently holding this position apparently has problems with simple arithmetic.
According to an article carried by Dow Jones Newswire, Ed Lazear, the current chief of the Council of Economic Advisors, claimed that wage growth "seems to be taking off right now." The article reports Mr. Lazear's view that workers now seem poised to get substantial real wage gains.
If the article presented Mr. Lazear's comments accurately, then it missed the real news. Nominal wages are at best just keeping pace with inflation, leaving no room for real wage growth. From June 2005 to June 2006, the average hourly wage increased by 3.9 percent in nominal terms.
From May 2005 to May 2006 (the June data is not yet available) the consumer price index increased by 4.1 percent. This means that the real wage fell by roughly 0.2 percent over the last year.
If we focus on just the last three months, real wages rose at a 4.5 percent annual rate over the three months April, May, and June compared with the prior three months. This is equal to the annual rate of growth of the CPI in the three months of March, April, and May compared with December, January, and February. In other words, the most recent data indicate that wages may now be just keeping even with inflation.
If wages have slightly trailed inflation over the last year and are just now roughly breaking even, how can President Bush's chief economist say that wage growth "seems to be taking off?" Mr. Lazear either does not know arithmetic or is not being honest. The fact that he is making a claim so completely at odds with reality should have been big news.
posted by KenInNY @ 11:40 AM
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Here is the text of the Krugman column:
July 14, 2006
Op-Ed Columnist
Left Behind Economics
By PAUL KRUGMAN
I’d like to say that there’s a real dialogue taking place about the state of the U.S. economy, but the discussion leaves a lot to be desired. In general, the conversation sounds like this:
Bush supporter: “Why doesn’t President Bush get credit for a great economy? I blame liberal media bias.”
Informed economist: “But it’s not a great economy for most Americans. Many families are actually losing ground, and only a very few affluent people are doing really well.”
Bush supporter: “Why doesn’t President Bush get credit for a great economy? I blame liberal media bias.”
To a large extent, this dialogue of the deaf reflects Upton Sinclair’s principle: it’s difficult to get a man to understand something when his salary depends on his not understanding it. But there’s also an element of genuine incredulity. Many observers, even if they acknowledge the growing concentration of income in the hands of the few, find it hard to believe that this concentration could be proceeding so rapidly as to deny most Americans any gains from economic growth.
Yet newly available data show that that’s exactly what happened in 2004.
Why talk about 2004, rather than more recent experience? Unfortunately, data on the distribution of income arrive with a substantial lag; the full story of what happened in 2004 has only just become available, and we won’t be able to tell the full story of what’s happening right now until the last year of the Bush administration. But it’s reasonably clear that what’s happening now is the same as what happened then: growth in the economy as a whole is mainly benefiting a small elite, while bypassing most families.
Here’s what happened in 2004. The U.S. economy grew 4.2 percent, a very good number. Yet last August the Census Bureau reported that real median family incom—the purchasing power of the typical family—actually fell. Meanwhile, poverty increased, as did the number of Americans without health insurance. So where did the growth go?
The answer comes from the economists Thomas Piketty and Emmanuel Saez, whose long-term estimates of income equality have become the gold standard for research on this topic, and who have recently updated their estimates to include 2004. They show that even if you exclude capital gains from a rising stock market, in 2004 the real income of the richest 1 percent of Americans surged by almost 12.5 percent. Meanwhile, the average real income of the bottom 99 percent of the population rose only 1.5 percent. In other words, a relative handful of people received most of the benefits of growth.
There are a couple of additional revelations in the 2004 data. One is that growth didn’t just bypass the poor and the lower middle class, it bypassed the upper middle class too. Even people at the 95th percentile of the income distribution — that is, people richer than 19 out of 20 Americans — gained only modestly. The big increases went only to people who were already in the economic stratosphere.
The other revelation is that being highly educated was no guarantee of sharing in the benefits of economic growth. There’s a persistent myth, perpetuated by economists who should know better—like Edward Lazear, the chairman of the president’s Council of Economic Advisers—that rising inequality in the United States is mainly a matter of a rising gap between those with a lot of education and those without. But census data show that the real earnings of the typical college graduate actually fell in 2004.
In short, it’s a great economy if you’re a high-level corporate executive or someone who owns a lot of stock. For most other Americans, economic growth is a spectator sport.
Can anything be done to spread the benefits of a growing economy more widely? Of course. A good start would be to increase the minimum wage, which in real terms is at its lowest level in half a century.
But don’t expect this administration or this Congress to do anything to limit the growing concentration of income. Sometimes I even feel sorry for these people and their apologists, who are prevented from acknowledging that inequality is a problem by both their political philosophy and their dependence on financial support from the wealthy. That leaves them no choice but to keep insisting that ordinary Americans — who have, in fact, been bypassed by economic growth — just don’t understand how well they’re doing.
Copyright 2006 The New York Times Company
I was going to compare Chimpys net worth now to what it was when he took office. I think it has drastically increased on paper, and my guess is that there is a lot hidden.
Thanks for printing Krugman I miss reading his column. I wish this guy was on mainstream tv every day to talk about this stuff.
Teach, you make a terrific point. One of the themes Kitty Kelley came back to in her book on the Bush family is that ALL Bushes make out like bandits when there's a Bush in power. When George H.W. was only vice president, his brothers were fairly shameless in cashing in anywhere in the world they could. And of course the cronies and friends-of-Bushes got their share. And by the time the senior George and his Barbara retired to private life, I think they were able to pay the bills.
And Scott, I know how I would feel if I couldn't read every Krugman column, so I think perhaps we will have to do something about making sure the columns are, shall we say, accessible.
I wonder if TimesSelect is missing a marketing opportunity by failing to offer a package that with only a slight extra charge would come WITHOUT people like Tierney and Brooks.
K
I am having trouble finding the stated net worth of Bush/Cheney right after the election. I can find what they stated this year.
I think Bush is up at about $20 million now (yeah sure) and it was really low like 5 or 6 million bucks right after the election. Maybe less than that.
But, I cannot find any news articles about that without spending a lot more time on it, and I do not have that now.
I think they would much rather the country focus on the war than on how much money they are raking in, don't you?
Oh, I think you've got that right, Teach!
Even if you could find numbers for GWB's and our Dick's current net worth, I wonder whether the numbers would mean anything. Our Dick in particular doesn't think we have the right to any information about anything, and certainly not something that private.
In any case, I think one of the differences between George W. and his dad is that George H.W. understood that you have to WORK those connections to keep those bags o' cash coming in regularly, whereas our Chimpy has been so sheltered that he assumes they just keep coming on their own. Or—and I shudder to think that this may actually be the case—he thinks the bags o' cash keep coming in because of his stellar performance in the business world!
K
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