THE NEW CLASS WARFARE

Since disappearing behind the "Select" firewall at NY Times, I haven't had the pleasure of reading much of Paul Krugman. Here is a excerpt from a speech he gave recently on a topic I've written on a lot.

And the standard of living of the typical American family is -- well, is it higher or lower than it was 30 years ago? You know, we can ask that question, but the fact that you even have to ask is telling you something. It's close enough. Consumption of material goods seems a little bit higher, but job security is clearly a lot less. People are working longer hours. The risk of losing health insurance is much greater. The difficulty of getting your kids into a decent school is much harder. So it's a mixed picture, but certainly not the -- if you had asked in 1973, “Are people better off than they were in 1947?” people would have had -- there was no question. Enormous progress. If you ask that now about 30 years ago, it's not at all clear what the answer is. It's only the top few percent of the population that have had enormous gain. So that's one thing. We've had an economic growth, but it hasn't been broadly shared.


[...]Periods, the Gilded Age, the ‘20s, were periods of grotesque abuse of cultural issues, anything to smear people who might suggest things like, you know, progressive taxation. And times when those kinds of views, when everyone had more or less accepted the existence of the New Deal institutions, were quite calm. So that same Time magazine article in 1953 is saying Republicans and Democrats have a surprising sameness of outlook and political thinking, and that makes a big point about how Eisenhower had made it clear that he was not going to try to roll back the New Deal. Well, that's why we -- that's a consequence of being a relatively equal society. And the ugliness and the viciousness of our political scene right now, I think, are in fact largely a consequence of the gross inequalities that have emerged.


Why? How did we -- what happened? There's a tendency to say, well, it's, you know, it's these impersonal market forces, or maybe it’s globalization requires inequality, or just technology. There's always some truth to that kind of thing, but much less than you might imagine. I've already mentioned a little bit about education. We keep on hearing that technology creates this premium for the education for the creative classes, whatever it might be. It turns out that that's really -- put it this way, the median college-educated American has, unlike the median non-college-educated American, actually seen some gains in income over the past 25 years. But they're tiny. It was less than one percent a year on average and, in fact, over the past five years, college-educated workers, most college-educated workers, have actually seen their incomes fall, once you adjust for inflation. It's not actually true that a college education is the key to being successful. It's being part of the tiny magic circle of the economic elite that gets you ahead. So it really isn't about education. It isn't about skills.


A little bit of it is about, you know, we like to talk about human capital being what matters. If you actually look at the last five years, human capital has been losing, but good old capital capital has actually been doing extremely well. Share of profits in national income is at its highest level since 1929. But it's not at least that particular impersonal market force. And a lot of it looks like it's -- in fact, it's the political process does a lot to drive the distribution of income, partly, of course, taxes -- there’s taxes which tax the rich and provide benefits to everyone at large -- but also other things, whether you have a political environment that basically assures workers of the right to organize or one that basically is sympathetic with employers who try to break unions, whether you have a general set of political pressure that says, that fairness is a good thing or that says that greed is good.MORE