My Reply to Scott Sumner's Reply to Ryan Avent

     This post by Sumner is classic as it totally changes the terms of the debate in an ultraconservative direction if you accept it at face value-much does his 'Sumner Critique' premise of monetary offset.

     1. He thinks liberals should stop talking about inequality of income-because he claims income doesn't exist. This is pretty good way to stop the conversation-f there's no such thing as income then we can't do anything about income inequality.

      2. However, he agrees that something called 'economic inequality' exists but claims that liberals are 'economic nationalists' for talking about inequality within a country rather than global inequality. So we can't talk about national inequality as this is somehow a denial of global inequality.

      3. There is however a way for us to deal with global inequality-increase free trade. He's willing to throw out a sop for 'economic nationalists' a wage subsidies.

     What's interesting is that what he's really saying to American workers who have lost a lot over the last 20 years of free trade is that they have no right to complain as it has benefited workers in developing countries in South America and Asia.  He has disdain for those who try to do something about inequality within a country.

      "At the global level, however, inequality is the elephant in the room.  It’s where almost all our attention should be focused.  Any article on “inequality” (no qualifier) should begin with a description of how much better things are than back in the horrible 1950s and 1960s when inequality caused misery that is simply beyond human comprehension.  But that’s not how most articles on equality begin.  They start by referring to the 1950s and 1960s as a “golden age,” which is an insult to the tens of millions of Chinese who were starving to death while American economists were completely focused on reducing unemployment from 5% to 4%."

       http://www.themoneyillusion.com/?p=25819

       It's almost as if there's a choice. Things are better for tens of millions of Chinese today because we American workers no longer have the frivolous concern of lowering unemployment from 5% to 4%. Now we dream of a 6% rate. Meanwhile the quality of jobs of American workers have gone way down over the last 12 years. Sumner's answer is: wage subsidies.

       Wage subsidies might be an interesting idea. However, when a conservative like Sumner advocates it, it's at the price of a decent minimum wage and decent jobs for many workers. He envisages a system where the minimum wage is eliminated or at least declines in value but not being raised or allowed to keep up with inflation with an attendant cut in public services. Will a wage subsidy really make up for low wage jobs and declining public services?

      Sumner, bleeding heart that he is, won't allow us to discuss national inequality until we've solved global inequality first. Yet, another policy that could help at both levels would be a rising minimum wage. In the late 60ss Americans had their golden age where adjusted for inflation and productivity gains, the minimum wage was $16 an hour-a living wage or close to it.

      If no more trade treaties were signed without an agreement for a international high and rising minimum wage, we could solve a large part of the problem of declining wages for Americans while tackling the global concerns of the bleeding heart Sumner.