‘Are you better off today than you were $4 trillion ago?” — Former presidential candidate Rick Perry
It’s the campaign line of the year, and while the author won’t be carrying it into the general election, the eventual nominee will.
The charge is straightforward: President Obama’s reckless spending has dangerously increased the national debt while leaving unemployment high and the economy stagnant. Concurrently, he has vastly increased the scope and reach of government with new entitlements and oppressive regulation, with higher taxes to come (to offset the unprecedented spending).
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In 2010, that narrative carried the Republicans to historic electoral success. Through most of 2011, it dominated Washington discourse. The air was filled with debt talk: ceilings, supercommittees, Simpson-Bowles.
What’s the incumbent to do? He admits current conditions are bad. He knows that his major legislative initiatives — Obamacare, the near-trillion-dollar stimulus, (the rejected) cap-and-trade — are unpopular. If you can’t run on stewardship or policy, how do you win re-election?
Create an entirely new narrative. Push an entirely new issue. Change the subject from your record and your ideology, from massive debt and overreaching government, to fairness and inequality. Make the election a referendum on which party really cares about you, which party will stand up to the greedy rich who have pillaged the 99 percent and robbed the middle class of hope.
This charge, too, is straightforward: The Republicans serve as the protectors and enablers of the plutocrats, the exploiters who have profited while America suffers. They put party over nation, fat-cat donors over people, political power over everything.
It’s all rather uncomplicated, capturing nicely the Manichaean core of the Occupy movement — blame the rich, then soak them. But the real beauty of this strategy is its adaptability. While its first target was the do-nothing protect-the-rich Congress, it is perfectly tailored to fit the liabilities of Republican front-runner Mitt Romney — plutocrat, capitalist, 1 percenter.
Obama rolled out this class-war counter-narrative in his December 6 “Teddy Roosevelt” speech and hasn’t governed a day since. Every action, every proposal, every “we can’t wait” circumvention of the Constitution — such as recess appointments when the Senate is not in recess — is designed to fit this re-election narrative.
Hence: Where does Obama ostentatiously introduce the recess-appointed head of the new Consumer Financial Protection Bureau? At a rally in swing-state Ohio, a stage prop for Obama to declare himself tribune of the little guy, scourge of the big banks and their soulless Republican guardians.
"Now, economic inequality is an important issue, but the idea that it is the cause of America’s current economic troubles is absurd."
To the contrary, inequality is indeed the cause of economic crisis in capitalism. Extreme inequality sucks demand out of the economy, produces an excess of debt and leads to financial speculation and ultimately to deleveraging and depression, as everyone except free market conservatives can see.
I hope this was a satrical post, if not I am appalled. There has always been the rich in this country and it used to be that most people were not hateful of them, but actually strived by hard work to achieve that status. America was the land of opportunity and many lower or middle income workers became rich. Now it is the society of entitlements. "inequality?" Just exactly what does that mean today. This country became great under the free market concept and now it is crumbling under the Dems encouragement of everyone being "EQUAL". Yes, they would love everyone being equal, meaning poor and depending on the few really rich that controls their lives.
Dr Krauthammer is correct, Gingrich is doing Obama and the Dems job for them. When Romney becomes the nominee, his job of defeating Obama in Nov. will now be a little more difficult. And don't think that if the worst happens and Gingrich is the nominee that Obama and the liberals will use his own political words to destroy him.
Is there any amount of inequality that would trouble you? Seriously. If so-called market forces produced a Dickensian nightmare, would you be okay with that?
The problem, of course, is that some people wonder if the 'free markets' that reasonable people want may not be so free after all. The "crony" part of capitalism may be larger than we want to admit.
The inequity has been growing, there's no disputing that, The question is what it means, and that is a difficult question to answer. But it is an important question,because if the inequity grows too large, the system is not stable, and that bodes poorly for all Americans, even the ones at the top.
The "crony" part of capitalism IS much larger than most "free market" people want to admit. That is true both in the public and private sectors. The Obama Administration does its crony capitalism massively and openly (Solyndra, GE, etc...). Mitt's record is filled with cronyism as well, as he takes very good care of his fellow Mormons. In fact, that is almost the reason for the existence of tight knit religious groupings like Mormons, Jews, etc..., as opposed to broader, less exclusive, religious orders. They take care of their extended religious family, and by doing so become rich. Business fraternities in the Ivy League exist for the same purpose. Large, close knit groups of people who are helping each other succeed have a competitive advantage over those who are not part of such groups.
Boobsmith, the free markets always work and have worked since they were introduced by the founding fathers. Anyone without government interference can, and millions do, start their own businesses and do very well in the Free Market. My father and both brothers did just that. Inequity or inequiality occurs whenever the long tenicles of the government and its faceless regulators get involved. Less government always ='s more prosparity for all. Pardon my spelling.
A little known fact is that social mobility in the USA is LOWER than in many countries in Europe, including the "class-ridden" UK.
Inequality matters. No-one that I am aware of is actually suggesting EQUALITY. Let's get that clear - maybe you can find some far out communist / socialist, but no-one even vaguely mainstream is advocating that.
Work only very rarely in the US gets a person to change their socio-economic status. The reality is that the wealthy stay wealthy for generations, the work of a long deceased ancestor is more important than the work you do today for many of the top 1%. Wealth managment has become more important than wealth creation.
That work is no longer the defining factor is leading to a decline is the reduction in mobility across income levels. The very wealthy can minimize their tax burden by allocation of income into Capital Gains, or use offshore accounts. The middle income levels are becoming (painfully, and painfully slowly) that the game is rigged. The lower income levels are realising that there is little chance of escape from their socio-economic background. They can work multiple jobs and still be left with little (and pay a higher proportion of tax than Warren Buffet!).
American society has structured itself into small 'income-level towns and villages". The higher the local income level, the better the school, the better the rest of the infrastrcuture too. This means that being being born into wealth makes a child far more likely to attend a better school, and get a higher standard of education. That doesn't even take into account the fact that there is likely more focus on education in the higher income levels.
Going back to Victorian England and the pre-industrial revolution, the laborers and peasants laboured, while to a great extent the nobility ordered and planned. They were the nobility by birthright. The industrial revolution began to change that paradigm, now work and intelligence could result in massive gains for individuals. That model continued for many years, probably up until approximately the 1970's / 1980s, when suddenly, ordering and planning, financial investing, buying and selling shares (not true investing), options, futures, derivatives, CDO's, CMO's became what made people rich. This is substantially different from the investments made in building companies, Ford, GM and other early 20th century companies. There are exceptions, of course. Apple is a great example. Steve Jobs and friends made a lot of money, and those with the money to invest in the company made more. Ford and GM built their cars in the USA. US workers worked to produce them and wealth was created and circulated in the US economy. Everyone benefitted. Apple products are made in Asia, by Asian workers (great for them). Wealth gets circulated in Asia and at the upper end of the economic pyramid in the USA.
Few are anti-rich. I work hard, I make a good living. I begrudge no-one who earns more money than me through hard work or innate talent. I believe there is something wrong with a society that allows the wealthiest to bear a lower burden of tax in percentage terms than the middle and sometimes lower income people. Give people a structure where economic mobility is easier (in both directions) and society will benefit. (I haven't figured out that bit either, but the GOP way is defintiely not the answer.)
Its obvious you have no clue what you are talking about. Income inequality depresses demand? Is it your contention that because the Obamas are richer than you (having become millionaires while Obama was an elected official) that people won't go out and buy items they need or just plain old want just because someone is wealthier than you?
Leads to Depression? I guess the 1920's were the decade of the greatest inequality leading to the Depression of the '30's.
Um, no, the income tax had just been ratified 15 years earlier so if anything 'income inequality' had been reduced.
Your whole premise is absurd and easily refuted by any 5th grader.
Obviously if a greater share of income goes to the wealthy than the average American has less to spend and there is less demand in the economy. This is well know and obvious. In the last few decades the deficit in demand has been made up by the growth of credit. Also well known is the fact that economic inequality is greater now than at any time since 1928:
"Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928, according to an analysis of newly released IRS data by economists Thomas Piketty and Emmanuel Saez.[1]
During those years, the Piketty-Saez data also show, the inflation-adjusted income of the top 1 percent of households grew more than ten times faster than the income of the bottom 90 percent of households. . . .
The last time such a large share of the income gain during an expansion went to the top 1 percent of households — and such a small share went to the bottom 90 percent of households — was in the 1920s (see Figure 1)." [2]
Not going to waste too much time on you, Marcos, but it's easy to demolish the "demand" part of your argument. If you and I each have $250 to spend, the amount of demand between us (you could call this "aggregate" demand, but I won't because I don't want to be mistaken for a Keynesian) is $500. On the other hand, if I have $400 and you have $100, the situation would be unequal (but probably fair!), and our combined demand would still be, yes, $500!
Of course the situation in actual practice is more complicated because the economy is not a zero-sum game over a period during which it's growing, and we can do other things with our money than spend it. Not to mention the fact that in a perfect world, large disparities in income would definitely exist because everyone's labor is not equally valuable, among other factors, so income inequality per se is not a problem at all.
Of course, when the coercive power of the state is used to enrich some (hint: they generally vote Democratic) at the expense of others, then we DO have a problem, the solution to which is a truly free market and the end to the power of the government to redistribute incomes.
Richer people spend a lower percentage of their incomes (meaning they save a higher percentage). If most of the gains in income go to the 1%, far more will be saved rather than consumed. Not a problem in a normal economy, but a big problem in a poor economy suffering from a lack of demand. Like now. (That's pretty obvious, isn't it?)
Two false assumptions are the foundation of your response:
1) The economy is static or shrinking which means a greater share going to the rich means a smaller absolute amount going to those who are not rich. This is a basic mistake made by the innumerate; confusing percentages with an absolute. Your statement "Obviously if a greater share of income goes to the wealthy than the average American has less to spend and there is less demand in the economy." is only true if the economy is static or shrinking. So with a socialist in the White House and Dems controlling the Senate it is true. But if we follow policies that lead to growing the economy then your statement is not necessarily true. I suggest you do a little exercise thinking about the relationship between the three things absolute numbers and percentages can do (increase, decrease or remain the same) and what the relationship is when a group divided into percentages does anyone of these things and the percentages the group is divided into do each of these things.
2) You assume that having a smaller income leads to a lower standard of living. This flys in the face of empirical evidence which shows that when we have a (relatively) free economy, market forces create products that provide more convenience or satisfaction at a lower price.
"Obviously if a greater share of income goes to the wealthy than (sic) the average American has less to spend and there is less demand in the economy."
My wife made a very tasty chocolate Pumpkin pie. I could give you a piece of that pie. But that means that I would have less pie. We also would have pie inequity because I have a whole pie (less one piece) and you only have one piece and that’s not fair. Or I could send you the recipe and you could make your own pie. In fact you could make yourself 10 pies. Then you would have 10 times as many pies as me and we would again have pie inequity. Then we have two choices, I could make 9 more pies so we could have pie equity or you could be forced to give me 4 and 1/2 pies so we would both have 5 and 1/2 pies. But, what if you really wanted 10 pies. Then you would have to bake 9 more pies and then give me 4 and a half pies so we would both have 10. That would be fair right?
So let’s summarize: We both have 10 pies. I baked 1 and you baked 19, but we have pie equity. Yea!!
Or you could bake the number of pies that you want and I could bake the number of pies that I want.
I am admittedly no expert on inequality, but it seems to me that if you have larger numbers of people dependent on public assistance, you are going to have greater inequality. People who could otherwise be working and improving their situation are staying "poor." Make sense?
What time periods would one consider to be the "best" example of greatness of The American economic system?
It could be the 1920's, when the federal government spent relatively little. Government policy highlighted by no safety net and little military. The 1920's also became known for the financial engineering leading to the 1929 crash. So we can scratch the 20's out as having robbed the future to pay for its "present".
It could be the 1950's, when the federal government was providing some level of safety net, and lots of military, Financial engineering? Not really, pretty much against the law. Wars? Not with a President wise enough to understand why wars should avoided instead of sought out.
While there are probably big holes in my simplified compares, I still vote for the 1950's over the 20's. And guess what? The 1950's are also known for a lack of a "1 versus 99" rhetoric and reality.
The economy is driven by about 70% comsumption. That being said, income inequality has lots to do with demand. If you keep working/middle class wages stagnant and prices continue to rise, that results in less disposable income(people will have less money to purchase goods and services). I think you need to go back to 5th grade with your argument.
Sorry but if you want to post on this site you need to elevate your game. Cut-pasting OWS diatribes won't suffice, too sophmoric. Next time, please pose a cogent arguement.
I noticed you didn't rebut his points at all. Perhaps you could try that next time, lest your words be considered a slightly longer version of "nuh-uh".
How do you rebut "points" like that? Marcos might have well said 'rain isn't wet' or 'pain doesn't hurt.' Who would waste their time rebutting such nonsense?
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