Whining Over Discontent - Paul Krugman at The New York Times

[applegrove]

Whining Over Discontent
by Paul Krugman
New York Times
Sept 8, 2006

"We are, finally, having a national discussion about inequality, and right-wing commentators are in full panic mode. Statistics, most of them irrelevant or misleading, are flying; straw men are under furious attack. It’s all very confusing — deliberately so. So let me offer a few clarifying comments.

"First, why are we suddenly talking so much about inequality? Not because a few economists decided to make inequality an issue. It’s the public — not progressive pundits — that has been telling pollsters the economy is “only fair” or “poor,” even though the overall growth rate is O.K. by historical standards.

Political analysts tried all sorts of explanations for popular discontent with the “Bush boom” — it’s the price of gasoline; no, people are in a bad mood because of Iraq — before finally acknowledging that most Americans think it’s a bad economy because for them, it is. The lion’s share of the benefits from recent economic growth has gone to a small, wealthy minority, while most Americans were worse off in 2005 than they were in 2000.

Some conservatives whine that people didn’t complain as much about rising inequality when Bill Clinton was president. But most people were happy with the state of the economy in the late 1990’s, even though the rich were getting much richer, because the middle class and the poor were also making substantial progress. Now the rich are getting richer, but most working Americans are losing ground.

....SNIP"

http://select.nytimes.com/2006/09/08/opinion/08krugman.html

[TlalocW]

1. I love it when republicans accuse people of class warfare

When they talk about stuff like this. Damn straight it's class warfare. I think one of the reasons republicans hated Clinton so much was because all classes were benefiting under his policies - not just the rich.

TlalocW

[applegrove]

2. Oh yeah.. and they called him a "cracker" behind his back.

[TlalocW]

7. Yep, but what's funny is that Clinton

Proved the American Dream was possible - he came from nothing, had difficult obstacles to overcome, worked hard, and became the President of the US.

TlalocW

[Selatius]

3. I disagree with Krugman on one point

In the 1990s, the gap between the rich and the poor continued to widen. The poor fell further behind. The middle class largely remained frozen in place, and the rich got much richer. The boom of the 1990s didn't really reach small town America like it should have, but people felt better because the city boys on Wall Street were loudly proclaiming 24/7 that things were good, but just because things are good on Wall Street doesn't mean things are also good on Main Street. In the 1950s and 1960s, everybody got gains. Sure, the rich had the biggest share, but everybody improved, not just those at the top. Of course, we had a far more progressive system of taxation than we do today, and we didn't have as many loopholes and tax shelters back in the 1950s for the rich to exploit and dodge taxes leaving the poor to pay the bills, and we didn't have a problem with negative savings or a huge trade deficit or a huge national debt we do today.

[applegrove]

4. I think in the 1990s.. many people who were poor made it into the middle

class. Sure it was still not an employees market.. and wages were not rising to make up for previous losses...but there was mobility. And that is important.

[Selatius]

5. There isn't the level of mobility that was seen in the past.

You were better off at the bottom of the totem poll in the 1950s and 1960s than you are today, unless you were a minority of course. Talking to older folks gave me the impression that it was easier to move up the ladder than it is today and that it's harder to break even with the bills than it was in the past. It seems people had time to raise families instead of spending their time working for the employer for longer hours and less pay. We can do far better than that, in my opinion.

When college education costs rise faster than your wages, that impacts negatively on mobility. When health care costs rise faster than your wages, that impacts your mobility, and when the government cuts spending on social programs or even runs up debts, that impacts on your mobility, and all of that is not positive but negative impact.

[applegrove]

6. That is true. So too - more mobility in the 1890s to 1920s. USA is a

mature economy. And as more people enter the middle class..their lives are more actualized as they get education and borrow money on their futures so they own a home and such. Also mass produced items improved quality of life.

The issue is that from 1800 onwards to 1970..there was massive growth in the West (especially USA and CANADA). Once you have say 3/4 of your population actualized in terms of improved living condidtions.. it is going to get harder for the next group to come. Growth (and however that growth is distributed) slows down. A pot can only be so full and an economy is like a pot. Also..poor in the 1890s meant something terribly different than it does today. Starvation. Child labour (mostly on family farms). Working for cents a day.

The 7% growth is now taking place in countries that never had that 200 years of 3 to 5% growth.. Places like India and China. They too will slow down as the aggregate middle class grows.

But there was mobility among certain groups in the USA in the 1990s.

But you are right. In real terms.. over the last 20 years.. the vast majority of people are not better off than they were with their old wages and jobs that paid well in the 1960s. But women are. And Latinos and African Americans are. So you cannot ignore that.