Saturday, July 2, 2016

File it Under Good News is no News

If it bleeds it leads. With all the talk of economic struggle-which is accurate-there is some good news.

The 99 percent-which I am a proud member of-had it's best year since: Bill Clinton was President.

The 99 percent just had its best year in nearly two decades."

"The vast majority of American workers are finally seeing their incomes rise from the depths of the Great Recession, a new analysis from one of the world's leading scholars of economic inequality suggests. But incomes for the top 1 percent continue to rise substantially faster."

"The analysis of Internal Revenue Service data on pre-tax earnings, from UC-Berkeley economist Emmanuel Saez and published by the Washington Center for Equitable Growth think tank, finds incomes increased by 3.9 percent last year for the bottom 99 percent of U.S. families. That's the strongest growth those workers have seen since 1998, but it's still not enough to repair all the damage the recession wrought on those workers: As Saez notes, those families on average have only regained two-thirds of the income they lost during and after the financial crisis."

"The top 1 percent, in contrast, have now regained almost all the income they lost during the recession. Their incomes grew by 7.7 percent, almost double the rate of the bottom 99 percent of workers, in 2015. Other work this spring has also suggested typical worker income growth is accelerating, including an analysis by former Clinton administration economic adviser Rob Shapiro that finds mounting income gains for young workers in particular in recent years."

"The numbers carry a mixed blessing for President Obama and his economic legacy. They bolster a case that he, Vice President Biden and presumptive Democratic presidential nominee Hillary Clinton continue to press: that the economy has rebounded from a devastating crash and that typical workers are beginning to feel the benefits, though they still have much ground to make up."

"But Saez tosses cold water on Democrats' hopes that a signature Obama policy — a late-2012 tax deal that allowed tax rates to rise on the highest income earners — will prove to be anything but a small speed bump for rising income inequality. It does not appear to be limiting income gains at the top."

"The higher top tax rates, which started in 2013, did not prevent broadly shared economic growth from picking up in 2014 and especially 2015," Saez writes. "At the same time, they did not have a significant impact on reducing pre-tax income inequality. ... Therefore, it seems unlikely that U.S. income concentration will fall much in the coming years, absent more drastic policy changes."

Here's the thing. If incomes are finally rising isn't that a good thing even if the very rich are getting even richer? 

Yes, I know in terms of pure equality, it's not. If you're a total egalitarian then it won't please you so much-though even you surely won't deny that regardless it's good to see the 99% finally seeing their income grow again. 

I'm not a total egalitarian. I think inequality might be a concern. But if you think of what people want it's to see their standard of living do up first and foremost, isn't it?

Or is it more important to see the rich do worse? Would it be better right now to see the 99 percent lose 3.59 percent if the 1 percent lost 7.7 percent?

Ryan Cooper is certainly a radical egalitarian. He has stated in previous pieces that he really would like to see the means of production controlled by the government.

He often tweets things in this meme:

"you could substantially reduce inequality by allowing tons of doctors and lawyers to immigrate, but those people have pull in Washington."

That suggests that for him equality is such a strong aesthetic goal that it doesn't even matter how people are doing on absolute terms, so long as it's equal. If we are all suffering it's better than if only some of us are. 

Chris Hayes:

"Behavioral economists at UC San Diego recently conducted a study in which tokens were distributed among experimental subjects, with a few getting a concentrated chunk of the wealth and a majority getting little. They offered the “poor” subjects the opportunity to pay a price to take money away from the rich. The catch was that rather than being redistributed, the money would simply disappear. Economic orthodoxy predicts that few would snap at the chance, since they'd be paying for something that would confer no direct benefit. But they did. In spades."

"Though only one data point, it suggests that people have a profound sense of economic fairness, that we are all, more or less, intuitive socialists. As far back as Edmund Burke, conservatives have suspected as much and feared democracy for that very reason. Read James Madison in the Federalist Papers and it's clear that many of the Constitution's undemocratic elements were designed to prevent the expropriation of wealth from an outnumbered elite."

So 'fairness' and envy are indistinguishable? Wasn't this the basic impulse of Stalinism? If one peasant has four cows and the other has two, then the first is a class enemy?

This is why I'm ambivalent about the whole populist meme.

By the way, all this talk of a 'responsible nationalism' makes me think of Stalin's achievement: socialism in one country. 

That coinage of 'responsible nationalism' is none other than Larry Summers.

Of course, socialism in one country is what Summers wants to avoid. 

P.S. It's still not clear to me that protectionism is as politically potent as the pundits assume. It didn't work for Bernie. Why would Trump's much more xenophobic brand be a winner?

UPDATE: Ok, so what does this mean politically? It is a good thing. It gives Hillary-along with Obama and Biden campaigning with her-an important talking point.

Finally incomes have started to move. To be sure, it's not enough as they are still only two thirds of getting back all the income they lost since the crisis.

But you got to crawl before you can walk and it's something significant. Of course, we need to get all the way there and beyond but again, it's  start.

I think how the future goes is going to depend on this to a large extent. If under a President Hillary we can see further meaningful progress in repairing incomes, then we might finally see the crazy and dysfunction die down.

Or from Prince Tides:

'God help you if you don't.'

'God help us all.'


  1. Well there are a couple things that might throw a little water on that good news about the 99%. 1) Dont tell me about "average salaries". Average is a worthless term with so much inequality. Even within the 99% you have plenty of people making high six figures and maybe many of their salaries have grown (middle managers or even individual business owners) while the guy doing the 50-60 hour weeks is still getting no raises, having his workload increased and seeing no exit form the treadmill 2) There is just a smaller workforce so those working may have seen some gains (but again the gains probably are very top heavy within the 99%) but we still need ways to get more people back into the workforce.

    My views on this are that we need to rethink the arenas within which capitalism works best. Find the places where a little healthy competition brings out the best in people without incentivizing people to profit from misery.

    I think we need to stat with the idea that EVERYONE is entitled to food, shelter, education and healthcare. Those areas need strong public investment to make sure no one involuntarily goes without. Someone competing in the workforce shouldn't lose access to housing, food etc just because someone else beat them out for a job.

    Its about building a floor the right height and encouraging winners without punishing losers so severely in my view. I think their is a way to have a healthy amount of competition so that people who do better will get more while making it so that no one is completely shut out.
    It all starts with a revised conception of human rights and freedom. Everyones right to the basics supersedes anyone elses right to accumulate as much as they want/can. Imposing limits on ownership is probably going to be necessary too. We already say you cant "own' a person so we can say there are limits to the non person things you can own too.

    1. The article didn't say whether it is average or median salaries.

      No matter what, it's hard to say that it's no good news. I said we have plenty way to go and I don't mean the rich can't be taxed at a higher level than they are now.