Sometimes I refer to another article. You can read this post without reading the background article, but it is much clearer if you u take a look at Robert Reich's article in The Nation. The essence of Reich's argument is that income inequality is bad, and he then proposes 10 steps to decrease it. The article is a mixture of terrible argument and some interesting ideas. I am going to address each point by point.
-He claims we are at or near a tipping point. Really? Based on what? A facile, seductive and false form of argument is to claim an undocumented emergency and then state your policies are the way to fix the problem. A variant of straw man arguments.
-The income data is good, and real. Income increases are markedly skewed.
-He claims the income gap has widened markedly during 'the recovery'. He quotes data from a colleague named Saez. This person's qualifications are unclear. For the purposes of discussion let us assume he is right.
-He notes that wealth is even less distributed than income. He cites data from 2009-2011. That is a completely meaningless datum. Since most wealth lost in 2007 was in homes and stocks, and since the lowest 20% of income have little of either, it is hardly surprising, nor a sign of worsening income or wealth disparity, that during recovery those with homes and securities would see their wealth rebound, while those without either would at best stagnate. Another false argument.
-The heart of his argument is the second part, which begins by claiming income inequality is a threat to our ideas of equal opportunity, democracy and our economy. The essence of the argument is that since high income homes spend less of their money on consumer goods, and since consumer spending is 'about 70%' of our economy, then there will be less spending on consumer goods. Concomitantly, for the middle class to keep buying consumer goods they have to borrow, setting up a debt bubble. Finally and worst, this income inequality prevents equal opportunity.
All of these points are highly debatable assertions, not data. Without knowing how much of consumer spending is done by the highest and lowest income homes we have no possible comparison. For all we know high earners account for more spending than all low earners. He continues with a series of assertions about the effects of middle class income changes. Not only are the assertions unsupported but the very use of an undefined term like 'middle class' sounds like a politician, not an economist.
Reich claims lack of mobility is the same as unequal opportunity. Nonsense, as noted by me elsewhere on this blog. having greater income means better health care, fewer days missed to illness, better schools, more money for college, etc, etc. Are we to simply give everyone a college education? Equal opportunity is not equal outcome. No one in the US is a priori prevented from attending college and getting a better job. They also are not prevented from destroying themselves with video games, alcohol, drugs and sloth.
Reach makes some further sweeping claims of a longstanding recognition of this problem, and a correlation between income disparity and congressional polarization, a post hoc argument without any support at all. But let's get past the flaws in the argument to his proposals. He makes 10 of them, which I will address individually.
1)Raise the minimum wage- Reich argues that since most job growth ahs been in lowpaying areas of the economy the best way to increase prosperity is to raise the minimum wage. I agree with this. Pay for many full-time jobs approaches Central American levels. As a culture we should require that workers be paid a wage that allows them to live without fear.
2)Unionize low wage workers- Difficult. Reich claims this will give them greater bargaining power. There is some truth to this. Of course, the record of union abuses is bad enough to make many employers and states leery about unionization. The pressure for unions comes from the workers themselves. So many of the low-paying positions are occupied by teens and undocumented aliens that I think there will be little pressure to unionize.
3)Invest in education- Reich calls for free education through 4 years of college for all. Really? Exactly how do you expect to pay for this? What makes anyone think that simply having college education available will mean there are more qualified candidates? We already have free schools available for everyone, and look at the variation in what they produce! This is a collectivist's fantasy.
4)Invest in infrastructure- A completely unsupportable assertion, that improved infrastructure (a conveniently undefined term) will make it easier for workers by lessening their commutes. Free txis for New Yorkers!
5)Higher taxes on the wealthy- Ah, so that's how we're going to pay for it all! Of course there should be higher taxes on those drattable high earners. Reich argues from the Kennedy years, as most do who favor his policies. He states that marginal rates were never less than 70%, unionization was high, income disparity lower, and US workers doing well. Yes, all that is true. This is another stunning post hoc assertion that assumes one result is related to another. Missing from his argument are the marked social changes from 1960 through 1986, when marginal rates were cut. These social changes have harmed child and family outcomes terribly. Further, Kennedy CUT marginal rates, with an attendant spurt in economic growth. Churchill got it right- a society cannot tax itself into prosperity.
6)Apply Social Security taxes to all income- This argument has been whispered for years. Here Reich argues it as a matter of tax fairness. While this flies completely in the whole concept of how Social Security was to be funded I believe the change to be inevitable.
7)Tax inheritance- Just another way to tax the wealthy. Wrong. Inherited money was taxed during its accumulation. Double jeopardy does not apply to money any more than it does to crime.
8)Constrain Wall Street- Very appealing, very vague. Somehow Wall Street Big Banks added to the burden of the poor through 'their excesses'. Wow, another polemic rather than data. Aside from the argument, he calls for restoration of Glass-Steagall, which mandated separation of banking from stock and investment functions. I agree with him on this. Banking should be mores table than stock speculation. Those who keep their money in banks should not be at risk from the actions of stock speculators.
9)Give all Americans stocks at birth- WHAT?? From whom and where do you get 'stock' to just give to people at birth? 'Give me a Pepsi free.' 'You want a Pepsi kid you have to pay for it!' This is not democracy, or even socialism. It is just plain communism. Let's share all that wealth that you earned so someone else can benefit from it. Because you don't need it all and they need some. From each according to his abilities, to each according to his needs is the same but sounds sooo much worse.
10)get money out of politics- I'm sorry, what? Like saying let's get human secretions out of sex, or fuel out of engines, or....oh, wait, all that is already a part of at least some policy agenda. His specific complaint is the Citizens United decision allowing corporations unlimited contributions. I don't like our campaign funding system, but other attempts to far have failed. Interestingly, when offered the chance to adhere to such limits, Obama declined even after stating he would do so. Everyone says they want money out of politics. Unless of course it helps them and their side win. Somehow money means The Little Guy is not represented. Secret here, Mr. Reich- the little guy is never represented.
I am sure Robert Reich is well intentioned. His arguments are facile and unsupported. And his solutions range from the reasonable and achievable to the perfectly ridiculous. I hope that all sides of discussions like this can lose the fantasy ideas and get to work on worthwhile and achievable improvement.
Ted
-He claims we are at or near a tipping point. Really? Based on what? A facile, seductive and false form of argument is to claim an undocumented emergency and then state your policies are the way to fix the problem. A variant of straw man arguments.
-The income data is good, and real. Income increases are markedly skewed.
-He claims the income gap has widened markedly during 'the recovery'. He quotes data from a colleague named Saez. This person's qualifications are unclear. For the purposes of discussion let us assume he is right.
-He notes that wealth is even less distributed than income. He cites data from 2009-2011. That is a completely meaningless datum. Since most wealth lost in 2007 was in homes and stocks, and since the lowest 20% of income have little of either, it is hardly surprising, nor a sign of worsening income or wealth disparity, that during recovery those with homes and securities would see their wealth rebound, while those without either would at best stagnate. Another false argument.
-The heart of his argument is the second part, which begins by claiming income inequality is a threat to our ideas of equal opportunity, democracy and our economy. The essence of the argument is that since high income homes spend less of their money on consumer goods, and since consumer spending is 'about 70%' of our economy, then there will be less spending on consumer goods. Concomitantly, for the middle class to keep buying consumer goods they have to borrow, setting up a debt bubble. Finally and worst, this income inequality prevents equal opportunity.
All of these points are highly debatable assertions, not data. Without knowing how much of consumer spending is done by the highest and lowest income homes we have no possible comparison. For all we know high earners account for more spending than all low earners. He continues with a series of assertions about the effects of middle class income changes. Not only are the assertions unsupported but the very use of an undefined term like 'middle class' sounds like a politician, not an economist.
Reich claims lack of mobility is the same as unequal opportunity. Nonsense, as noted by me elsewhere on this blog. having greater income means better health care, fewer days missed to illness, better schools, more money for college, etc, etc. Are we to simply give everyone a college education? Equal opportunity is not equal outcome. No one in the US is a priori prevented from attending college and getting a better job. They also are not prevented from destroying themselves with video games, alcohol, drugs and sloth.
Reach makes some further sweeping claims of a longstanding recognition of this problem, and a correlation between income disparity and congressional polarization, a post hoc argument without any support at all. But let's get past the flaws in the argument to his proposals. He makes 10 of them, which I will address individually.
1)Raise the minimum wage- Reich argues that since most job growth ahs been in lowpaying areas of the economy the best way to increase prosperity is to raise the minimum wage. I agree with this. Pay for many full-time jobs approaches Central American levels. As a culture we should require that workers be paid a wage that allows them to live without fear.
2)Unionize low wage workers- Difficult. Reich claims this will give them greater bargaining power. There is some truth to this. Of course, the record of union abuses is bad enough to make many employers and states leery about unionization. The pressure for unions comes from the workers themselves. So many of the low-paying positions are occupied by teens and undocumented aliens that I think there will be little pressure to unionize.
3)Invest in education- Reich calls for free education through 4 years of college for all. Really? Exactly how do you expect to pay for this? What makes anyone think that simply having college education available will mean there are more qualified candidates? We already have free schools available for everyone, and look at the variation in what they produce! This is a collectivist's fantasy.
4)Invest in infrastructure- A completely unsupportable assertion, that improved infrastructure (a conveniently undefined term) will make it easier for workers by lessening their commutes. Free txis for New Yorkers!
5)Higher taxes on the wealthy- Ah, so that's how we're going to pay for it all! Of course there should be higher taxes on those drattable high earners. Reich argues from the Kennedy years, as most do who favor his policies. He states that marginal rates were never less than 70%, unionization was high, income disparity lower, and US workers doing well. Yes, all that is true. This is another stunning post hoc assertion that assumes one result is related to another. Missing from his argument are the marked social changes from 1960 through 1986, when marginal rates were cut. These social changes have harmed child and family outcomes terribly. Further, Kennedy CUT marginal rates, with an attendant spurt in economic growth. Churchill got it right- a society cannot tax itself into prosperity.
6)Apply Social Security taxes to all income- This argument has been whispered for years. Here Reich argues it as a matter of tax fairness. While this flies completely in the whole concept of how Social Security was to be funded I believe the change to be inevitable.
7)Tax inheritance- Just another way to tax the wealthy. Wrong. Inherited money was taxed during its accumulation. Double jeopardy does not apply to money any more than it does to crime.
8)Constrain Wall Street- Very appealing, very vague. Somehow Wall Street Big Banks added to the burden of the poor through 'their excesses'. Wow, another polemic rather than data. Aside from the argument, he calls for restoration of Glass-Steagall, which mandated separation of banking from stock and investment functions. I agree with him on this. Banking should be mores table than stock speculation. Those who keep their money in banks should not be at risk from the actions of stock speculators.
9)Give all Americans stocks at birth- WHAT?? From whom and where do you get 'stock' to just give to people at birth? 'Give me a Pepsi free.' 'You want a Pepsi kid you have to pay for it!' This is not democracy, or even socialism. It is just plain communism. Let's share all that wealth that you earned so someone else can benefit from it. Because you don't need it all and they need some. From each according to his abilities, to each according to his needs is the same but sounds sooo much worse.
10)get money out of politics- I'm sorry, what? Like saying let's get human secretions out of sex, or fuel out of engines, or....oh, wait, all that is already a part of at least some policy agenda. His specific complaint is the Citizens United decision allowing corporations unlimited contributions. I don't like our campaign funding system, but other attempts to far have failed. Interestingly, when offered the chance to adhere to such limits, Obama declined even after stating he would do so. Everyone says they want money out of politics. Unless of course it helps them and their side win. Somehow money means The Little Guy is not represented. Secret here, Mr. Reich- the little guy is never represented.
I am sure Robert Reich is well intentioned. His arguments are facile and unsupported. And his solutions range from the reasonable and achievable to the perfectly ridiculous. I hope that all sides of discussions like this can lose the fantasy ideas and get to work on worthwhile and achievable improvement.
Ted
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