Inequality? – An Educated Discussion
Gary Burtless at Cato Unbound provides an intellectual discussion of inequality – Ben Bernanke is Right
Like many students of the income distribution, I take seriously some of Reynolds’s criticisms of the data on income disparities. No single data source is perfect, and a couple of them have serious flaws. An unwary user can draw misleading conclusions if the data problems are ignored. Reynolds points to some serious problems, and in many cases fair-minded experts will agree with him.
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There’s an important difference between the rise in inequality in the earlier period and in the more recent period, however. Between 1979 and 1989, the percentage gap between the incomes of the middle-class and the poor got bigger, and the percentage gap between the rich and the middle class also got bigger. Inequality widened up and down the U.S. income distribution. Starting at some point in the early or mid-1990s, the proportional gap between low-income and middle-income Americans stopped rising and in fact probably shrank somewhat. After the early 1990s, the main way in which inequality widened is that the incomes of very well off Americans increased much faster than those of both the middle class and the poor.
[snip]
You can argue, as Reynolds does, that much of the increase in incomes at the top is due to turbo-charged stock prices and other special circumstances. Using the same line of reasoning you could also argue that, adjusting for the weather and the season, no homeowner in New Orleans ended up with a wet basement in August 2005. It might be true, but it’s not much comfort to the residents who had to flee a flooded home.
The article is worth the read.
(via RCP) Mort Kondracke provides a political view – ‘Income Insecurity’ Emerges as Leading Issue in ’08 Campaign
It’s the Lou Dobbs agenda — the list of complaints that the CNN anchor rails about each night, which has given rise to protectionist populism in both parties and which cries out for some straight talk and novel remedies.
The worst temptation will be for Congress to reject trade agreements that the Bush administration is preparing to submit, cutting the United States off from both export and import opportunities. Instead, the U.S. needs to improve its competitiveness and bolster the safety net for workers who lose their jobs.
[snip]
However, he also was compelled to urge corporate boards to “pay attention to the executive compensation packages that you approve. You need to show the world that American businesses are a model of transparency and good corporate governance.”
Mort brings in his feelings and does not get into the data in the way Burtless does. However, they both conclude that inequality is something to address. This is another slippery slope issue for the DEMS – push too far and the true socialist agenda will show; don’t push enough and they will have a perpetual political message as they do with social security.