Economic inequality should ‘reverse itself spontaneously’

April 18, 2007

The WaPo’s Robert Samuelson wrote almost half of a good column today on the issue of the national challenge posted by “great extremes of wealth and poverty.” For example, Samuelson was on solid ground noting why many of us believe the richest Americans are “claiming too much of the economic pie.”

Look at the latest astonishing estimates from economists Emmanuel Saez of the University of California at Berkeley and Thomas Piketty of the Paris School of Economics. They find that the richest 10 percent of the population received 44 percent of the pretax income in 2005. This was the highest since the 1920s and 1930s (average: 44 percent) and much higher than from 1945 to 1980 (average: 32 percent).

But the biggest gains occurred among the richest 1 percent. Their share of pretax income has gradually climbed from 8 percent in 1980 to 17 percent in 2005.

So far, so good. Then Samuelson starts to talk about possible ways of addressing the large and growing class gap. Samuelson is wiling to concede that Bush and the GOP have “pampered the rich” with excessive tax cuts, but he insists that liberals are wrong to embrace the “fantasy that taxing the rich more will solve most budget problems.”

But is that really a fantasy? In the 1990s, Clinton raised the top rate, produced an unprecedented economic expansion, eliminated the deficit, created the largest budget surplus in U.S. history, and raised millions out of poverty.

Are we sure that taxing the rich more wouldn’t at least help with “most budget problems”?

Like Christopher Orr, I found Samuelson’s conclusion particularly entertaining.

It would be healthier if the trend toward greater economic inequality reversed itself spontaneously.

Why, that’s a great idea! Sure, since the Great Depression, the key to greater economic equality has been concerted and focused government policy, but Samuelson’s way sounds much easier. We can wait for a more organic solution to occur naturally.

In fact, this approach might find favor at the White House. The president raised eyebrows in January when he acknowledged that “income inequality is real — it’s been rising for more than 25 years.” Of course, he soon after said he opposed any changes to the tax structure and an increase in the minimum wage.

Now we know why. The right prefers “spontaneous” improvements. It explains a lot.

“It would be healthier if the trend toward greater economic inequality reversed itself spontaneously.”

Yes, and it would be much nicer if cancer would just spontaneously go away, without having to undergo any of that unpleasant chemotherapy. It would be much nicer if all terrorists would just lay down and die, instead of us having to track them down and arrest or kill them.

And as long as we’re completely in fantasyland, I’d like to be able to fly and control the weather.

Do these columnists even read what they’re writing? Hell, I get the impression that I peruse my blog comments more than they do their columns.

  • “It would be healthier if the trend toward greater economic inequality reversed itself spontaneously.”

    Another point: does he even realize how these things reverse themselves ‘spontaneously’? Has he ever heard of the French Revolution, for pity’s sake?

  • “Clinton… produced an unprecedented economic expansion, eliminated the deficit, created the largest budget surplus in U.S. history, and raised millions out of poverty”

    Sure, CB, give Bill Clinton all the credit for producing such a strong economy.

    But what about the many other historical factors that attributed to the strength of the economy in the ’90’s. What about the infulence of productivity gains, technology innovation, modest inflation, waining union influence, favorable interest rates, a strong dollar, etc?? Also, didn’t welfare reform, championed by a party other than Bill’s have something to do with raising millions out of poverty?

    I’m not arguing that the Clinton regime didn’t offer some positive aspects of the economy (primarily by staying out of the way) but it certainly shouldn’t be given all the credit.

  • Another pundit without a clue. Did anyone ever say taxing the rich would solve all our problems?

    But actually, you can pull yourselves up by your own bootstraps. All you need are some bootstraps that are being pulled up by you and a Saudi millionaire. Just ask George W. Bush.

    The problem is that the average Republican does not have a smidgen of empathy, or an ounce of brains. Lacking empathy, all they can see is their own perspective, no one else’s matters, so anyone without the means to succeed like they have aren’t really considered, and taxing them for anything is literally considered a sin. Without brains, they do not realize that their dreams of joining the ranks of the millionaires are unlikely to be realized.

  • The Clinton example – and why many wealthy, non-ideological Americans suppoted Clinton – turns the infamous Laffer Curve on its head. It is also why no one should shed a tear for the top 1% should we again raise the top marginal tax rates (ignoring for a second how few of them are impacted by the marginal rate by the time they avail themselves of all of the loopholes they can afford to find).

    Balancing the federal budget, and paying a lower %-age of GDP on interest on government debt, is good for the economy. An economic system, and particularly a fully-globalized economic system, is sustained on trust. As soon as investors lose faith in your fiscal management or ability to pay, they can easily move the investment elsewhere. Moreover, expenditures by the government on interest are lost opportunities for investment elsewhere (or, to please the wingers, a lost opportunity for tax relief). For these and many, many other reasons, sound fiscal management is good for the economy.

    But a good, robust economy doesn’t help all equally: the wealthy tend to be most invested, most able to profit from a robust economy. In otherwords, a Clinton-like result massively benefits the wealthy. Which is why no one should shed a tear for the rich should the Dems raise taxes.

    In the end, the difference is pretty simple. The rich have done very well under Bush because BushCo artifically manipulates the economy to their benefit, even though the economy itself is not adequately robust to support such largesse through its own growth (hence it comes at the extreme expense of everyone else.) The rich did very well under Clinton because as the entire pie expanded, the already large share of the pie held by the rich expanded – but so did everyone else’s share (so the wealth concentration ratios did not distort as much as they have under BushCo).

    The only reason one should ever have for favoring the Bush economy over the Clinton economy is if you are not only greedy (because greed was satisfied in the Clinton boom) but if you are also one evil SOB and are only happy in your wealth if there are plenty of homeless and/or jobless you can spit on as you walk by.

  • Magic thinking … while our army is breaking, world tensions are increasing, our treasury is shrinking , our middle class is sinking and the Earth is choking.
    We need an end to all these Republican fairy tales that are leading us into certain disaster.

  • Something tells me our troll wasn’t crediting Clinton with “staying out of the way” back in the 90’s, assuming he was old enough to be politically aware back then.

    Most wingnuts in the 90’s were accusing Clinton of selling our children’s souls to the UN when he wasn’t forcing people to have gay sex and abortions.

  • Perhaps the pundiot should read “Wealth and Democracy: How Great Fortunes and Government Created America’s Aristocracy” by Kevin Phillips (he of the coming GOP majority fame.)

    From AMAZON
    He states: “Laissez-faire is a pretense,” he argues; as the wealth of the rich has grown, so has its control over government, making politics a hostage of money. Examining cycles of economic growth and decline from the founding days of the republic to the recent collapse of technology stocks, Phillips dispels notions of trickle-down wealth creation, pricks holes in speculative bubbles, and decries the ever-increasing “financialization” of the economy–all of which, he argues, have served to reduce the well-being of ordinary Americans and government alike.

    FYI Phillips is not some liberul weenie, but was a Nixonian Repub (who agreed with Nixon’s economic policies.)

  • What we need is the kind of progressive income tax we had in the 1950s during the (Republican) Eisenhower Administration:90% tax on all income from any source over $1 million per year. Do that for 10 years and all the kinks will be straightened out of the economy.

  • Samuelson is obviously one of the people referred to in this:

    It’s just a shame that the mean ol’ gummint made them do it, thus muddying the issue. As a child in Mississippi in the 1970s, I grew up hearing this line of manure from the local grown-ups, who would apply it to everything from the minimum wage to the Clean Water Act to the attempt to pass the Equal Rights Amendment. By forcing them to do the obvious right thing, gummint was leaning on the common people, and it wasn’t fair. Heck, the worst thing about it was the suggestion that they had to be forced, by law, to do the obvious decent thing. It was true they’d never done it before, but they had been planning to get around to it, and probably would have done it five minutes after the law had been passed, if gummint hadn’t gone and gotten its panties in a bunch. Now all they could do was bitch till the end of their days about the injustice of being forced to not lynch nigras when there was nothing good on TV and not pay their employees in shiny beads. Not that they’d have ever done those things anyway, but oh, the injustice of being told that they couldn’t do it!

  • It would be healthier if the trend toward greater economic inequality reversed itself spontaneously.

    hmm

    Lets play a game with that curious statement…..

    Assume you make the following statements to a group of conservative Republicans what do you think their likely repsonse would be:

    It would be healthier if the trend toward gay marriage reversed itself spontaneously.

    It would be healthier if the trend toward greater terrorist activities reversed itself spontaneously.

    It would be healthier if the trend toward sex out of wedlock reversed itself spontaneously.

    It would be healthier if the trend toward seculariztion reversed itself spontaneously.

  • Right wing punditry gets goofier and goofier every day. Let’s forego any salient views of historical trends, economic reality and political dynamics when offering a readership a few musings on the current economic inequities we are facing. You know, give some of the stark facts, but then move into a fluff piece that promotes organic economic evolution as opposed to real engagement and policy that would lead to less of a circumstance of inequality. For such a column, Samuelson should have his word processor taken away. -Kevo

  • The top end of the economic food chain has already socked away so many billions of dollars (maybe trillions, who knows?) into their personal savings accounts, they won’t feel any pain for generations to come no matter how high future tax rates may become for them.

    Unless we make the higher taxes retroactive.

    Then just listen to them scream….. 😉

  • Wow — the Iraq war philosophy that violence will suddenly reverse itself and become secular, American-leaning democracy has now become an economic philosophy as well! Republicans are looking for ponies everywhere.

    I have yet to see a single economic trend that benefits anyone who is no-so-rich. Samuelson may get the spontaneous turnaround he seeks through a less regulated market when excesses cause the economy to crash. Of course just like with Iraq, Samuelson prefers to dismiss the resulting economic carnage as the price to be paid for any correction. I’d prefer if someone tried a brainier approach.

  • It would be healthier if the trend toward greater economic inequality reversed itself spontaneously.

    Would that be where the hundreds of millions of have-nots rise up and slaughter the houndreds of thousands of greedy bastards who set their own income and keep all the wealth in their own hands? Who exactly would that be healthiest for? The taxation approach sounds alot less messy and final to me, especially considering how many more votes the have-nots have in a democracy.

  • I just had a vision of an old woman sitting in the corner, knitting and cackling to herself, “Guillotine….guillotine!!”

  • Across-the-board economic collapse, or bloody revolution; these are the only “spontaneous” economic reversals I can think of.

    Having said that, this might simply be a signpost of a more encouraging trend in the media: i.e. it has been taboo for some time to blame society’s ills on economic inequality but it is probably even more taboo to suggest that taxation is the answer. These guys’ balls are in a vice and the MSM is nothing more than a product experimenting with a “new improved look” because people aren’t buying the old crap like they used to. But any industry knows better than to blow its wad all at once, but rather to proceed “conservatively” (there’s that word again) and milk each incremental step toward product perfection for all it’s worth.

    Sad, but an unfortunate fact of life I think.

    • Comments are closed.