6.10.2005

greed

Paul Krugman, who is an economist by profession and a liberal activist by accident, laments the decline disappearance of the American middle class.
Baby boomers like me grew up in a relatively equal society. In the 1960's America was a place in which very few people were extremely wealthy, many blue-collar workers earned wages that placed them comfortably in the middle class, and working families could expect steadily rising living standards and a reasonable degree of economic security.

But as The Times's series on class in America reminds us, that was another country. The middle-class society I grew up in no longer exists.

Working families have seen little if any progress over the past 30 years. Adjusted for inflation, the income of the median family doubled between 1947 and 1973. But it rose only 22 percent from 1973 to 2003, and much of that gain was the result of wives' entering the paid labor force or working longer hours, not rising wages.

Meanwhile, economic security is a thing of the past: year-to-year fluctuations in the incomes of working families are far larger than they were a generation ago. All it takes is a bit of bad luck in employment or health to plunge a family that seems solidly middle-class into poverty.

. . .

Above all, the partisans engage in name-calling. To suggest that sustaining programs like Social Security, which protects working Americans from economic risk, should have priority over tax cuts for the rich is to practice "class warfare." To show concern over the growing inequality is to engage in the "politics of envy."

But the real reasons to worry about the explosion of inequality since the 1970's have nothing to do with envy. The fact is that working families aren't sharing in the economy's growth, and face growing economic insecurity. And there's good reason to believe that a society in which most people can reasonably be considered middle class is a better society - and more likely to be a functioning democracy - than one in which there are great extremes of wealth and poverty.

Reversing the rise in inequality and economic insecurity won't be easy: the middle-class society we have lost emerged only after the country was shaken by depression and war. But we can make a start by calling attention to the politicians who systematically make things worse in catering to their contributors. Never mind that straw man, the politics of envy. Let's try to do something about the politics of greed. [Full column.]
Once again, I thank Mr Krugman for his honesty. This reminds me that I haven't blogged about the Daniel Okrent-Paul Krugman feud. Though it's well documented elsewhere, I did want to get to it. Soon.

18 comments:

zydeco fish said...

Sadly, many would argue that the Canadian middle class is also disappearing. I am not sure how the situation compares with the USA.

L-girl said...

How so?

It's hard to believe it could be anywhere near as bad as it is here.

RobfromAlberta said...

Some of the same trends are at work here, but I believe our economic fundamentals are somewhat better, especially now that the Bush administration has descended into an orgy of deficit spending. Over the last decade or so, Canada has shown consistently higher economic growth than the US and the major European economies (the UK, I believe, being the exception).

Lone Primate said...

That's true, but an awful lot of that grow is thanks to the deficit spending that's bankrupting the States. We're getting the lion's share of the money they don't have. That's not a great position to have put ourselves in. If China and Japan say "enough" and quit investing in US securities, Americans are really going to curtail their spending in Canada and we'll suddenly discover our own properity is shaky too. We should really be trying to diversify our foreign trade.

RobfromAlberta said...

We should really be trying to diversify our foreign trade.

Yeah, ask Trudeau how easy that is to do.

Lone Primate said...

Ask Mulroney and the people who voted for him why we gave up.

RobfromAlberta said...

Same reason they stopped sending people to the moon, no money in it.

Lone Primate said...

That would be news to China and the European Union; they seem to be doing juuuuust fine selling to everyone left, right, and centre.

I hear China's talking about going to the moon...

RobfromAlberta said...

China's doing just fine, thanks to a multi-billion dollar trade surplus with the US (sound familiar?). Oh, and they're also one of the world's biggest arms dealers, always a market for that stuff, you know.

Europe? We've been outperforming them for more than a decade and now that the French and Dutch have told Brussels to take their constitution and shove it, I don't see things getting much better for the Euro.

RobfromAlberta said...

After further research, I owe China an apology, their conventional arms exports are actually rather modest (no info on unconventional arms exports). Surprisingly, France, Germany and the UK are pretty big in the game. Europe's loving embrace of the Third World always warms my heart.

Lone Primate said...

So in other words, your moral reservations notwithstanding, they're doing better than the US, to which your favourite party long ago sewed our wallet, and we'd be facing better prospects if we had more room to maneuver when the crunch comes. I'm essentially correct in what I said... your issue is with the fact that, well... they sell guns (though not to our lamented, non-existent militia that would straighten out all our disaffected youth, if only...). Fortunately our virtuous neighbours would never ingage in such a questionable trade.

RobfromAlberta said...

Oh, the US sells arms, no question, no. 2 behind Russia, in fact. But at least they don't claim to be tree-hugging, hippy peaceniks, while surreptiously arming the Third World. By the way, Canada, as it turns out, is a pretty significant arms dealer too, ahead of China (much to my surprise).

they're doing better than the US, to which your favourite party long ago sewed our wallet, and we'd be facing better prospects if we had more room to maneuver when the crunch comes.

I'm not sure which "they" you are referring to, but I'll guess China, since European economic growth has consistantly lagged behind the US. The thing with China is, their economic miracle has been built on cheap labour (and by "cheap", I mean almost "slave"). It would be a difficult economic model to emulate, although I'm sure GM or Ford would love to pay their employees $2 a day.

L-girl said...

"...although I'm sure GM or Ford would love to pay their employees $2 a day."

You know it. If it weren't for that pesky 13th Amendment, they'd love to pay them nothing.

zydeco fish said...

When I said that I was thinking about how tax increases always seem to hit the middle class while coporations get tax cuts. I also think that there is a growing gap between rich and poor, meaning that the middle class is going one way or the other. I am no expert in this, however. I agree that it couldn't be as bad as it is in the US.

Lone Primate said...

Oh, the US sells arms, no question, no. 2 behind Russia, in fact. But at least they don't claim to be tree-hugging, hippy peaceniks

Give us a small break, Rob; I think everyone here by now is well-acquainted with the "we invade people to liberate them and furnish them with elections" line. :D

I'm not sure which "they" you are referring to, but I'll guess China, since European economic growth has consistantly lagged behind the US.

Rob, you're aware that US "growth" is, these days, predicated on the half trillion dollars a year they "earn" by selling currency and treasury bonds to Asia, right? This is like counting a mortgage beyond your means to pay off as an "asset". Europe's not perfect, but they're bringing home bacon at the end of the day. The US is looking for extraneous bits of itself it can live without and selling them on eBay. And thanks to Muldoon, we've put most of our eggs in that basket. It's like being the guy who sells Elvis hot fudge sundaes for a living.

Kyle_From_Ottawa said...

It's hard not to be jealous of the neighbor when they live in a fancy house and drive a luxury car.

However, that neighbor might be living beyond his means, living paycheque to paycheque. The U.S. is living on the credit card, both the government and the consumers are swimming in red ink.

But the unfortunate reality is that Canada is too small a market to entice the Europeans. A population of 30 million on the other side of the planet isn't overly enticing to them, especially when it's already wed to the Americans.

China, however, is actively courting us. We have something they need (resources) and they're ready to invest. Being tied to China and its debatable practices has its downsides, but at least China seems to be making progress in things like human rights, while the U.S. seems to be sinking. In the not too distant future, they'll pass each other on their way up/down.

L-girl said...

"...but at least China seems to be making progress in things like human rights, while the U.S. seems to be sinking. In the not too distant future, they'll pass each other on their way up/down."

That is a very depressing thought. I'm not sure China's making progress in human rights, or if they are even bothering to try. We know what direction the US is going. Maybe it's a race to the bottom.

Lone Primate said...

I'm not sure China's making progress in human rights, or if they are even bothering to try. We know what direction the US is going. Maybe it's a race to the bottom.

In wages, living standards, health conditions, and civil liberties; lately, it sure looks more to me like the States is migrating towards Chinese norms than the reverse. I wouldn't have said that with a straight face even five years ago, but I'm in earnest about it now. Given how dependent we've allowed our economy to become on that of the US, can Canada be far behind? :(