Friday, August 16, 2013

Wealth Inequality in America Offends Our Sense of Justice

NBC News recently reported a “surprise” in Wal-Mart’s sales figures for this year:

We’ve been told that the recovery is finally settling in and consumers are now spending again. But Wal-Mart reported very cautious sales figures, and the article concludes that there are actually two different groups of consumers. Those at the higher end are indeed feeling secure and spending more. But the lower and middle folks are still pretty tight with their dollars.
What is happening to Wal-Mart sales is just one small manifestation of an issue I discuss in The Golden Calf, the worsening income and wealth inequality of the U.S. ever since economism became our dominant ideology. A new twist on the familiar data is very nicely illustrated in this animation by Adam Mordecai on the Upworthy site:

Mordecai starts with data that I more or less covered in The Golden Calf, that 1) we have extreme inequality in how income and wealth are distributed in America, and 2) most Americans have no clue that this is so, and while they think that the rich are indeed a lot richer than the poor, they guess at an income distribution which is much more equal than what actually obtains. Indeed Mordecai editorializes and suggests that we’d be a heckuva lot better off as a society if instead of the truly lopsided wealth distribution that actually occurs, we had the much less lopsided but still notably unequal distribution that most Americans think is what’s true.

Now, here’s what Mordecai adds to the discussion, which he gets from studies done by Harvard business professor Michael I. Norton, whose work is reported on here:

Norton found out both what the real wealth inequality is, and what people think it is. But he then proceeded to ask people what they thought it should be. What he discovered, quite contrary to the dominance of economism as public ideology, is a widespread sense that ideally the wealth distribution ought to be more equal than what Americans assumed it to be (which once again is far more equal than what it really is). Also very interesting, Norton found that those who reported voting for George W. Bush did not vary all that much from those who reported voting for John Kerry in preferring a more equal distribution. As Mordecai stresses, once again, the distribution Americans describe as ideal and desirable is hardly a socialist nirvana; there is significant disparity between the rich and the poor. But what most Americans judge to be the way the U.S. ought to be is nevertheless wildly more equal than what it really is.
Norton admits that some of this sense of justice depends on how you ask the question. He acknowledges that had the Bush voters been asked whether they supported redistributing wealth to reduce inequality, the majority would probably have said no.
My take-home message from all this is that despite the inroads that economism has made in reshaping what counts to most of us as basic common sense about public policy, it still seems true that most Americans would be really shocked if they actually understood what has happened to income and wealth inequality in recent decades, or even since the 2008 recession. It obviously serves important interests to be sure that most Americans never hear this factoid.

Saturday, August 3, 2013

An Economism Update, Courtesy Today’s Newspaper

Where does our society stand regarding economism today? Here’s a quick survey based on the Saturday, August 3 edition of the Houston Chronicle, the paper that some nice person flings onto our front walk each morning.

First thing we might note is an editorial cartoon by Dana Summers, a conservative-leaning cartoonist with the Orlando Sentinel, that I cannot locate on the Web. The cartoon shows Obama in a chef’s outfit serving up a roast pig labeled “more spending,” saying something to the effect that this dish pleases the diners every time.

This seems to be the sort of cartoon that is supposed to get the reader to nod sagely and mutter, “Ain’t it the truth.” This bit of popular wisdom ignores the larger picture. I agree that if we rewind the tape to around 1980, you can find fat-and-sassy liberals of the Tip O’Neill school who did in fact appear to believe that government spending of just about any sort would solve just about any problem. What economism advocates appear to have not noticed is that this species has become extinct. The level and extent of recommended government spending that passes for “liberal” these days would be viewed as very politically middle of the road, if not indeed center-right, in the world of Ronald Reagan.

The other thing that economism advocates have failed to notice is mentioned in another article in today’s Chronicle, reporting that the recent outbreak of cyclospora food poisoning had been traced to two popular restaurant chains that were serving bagged lettuce from a Mexican farm run by an American company:

What seems impossible to ignore is that with all the repeated cutbacks in the Federal budget over the past 4 decades, critical programs like the FDA’s food safety inspections are now inadequate to protect the American public. Add all the Interstate highway bridges that are due to crumble into dust anytime soon, and so on and so on, and only somebody blinded by ideology could conclude that more government spending is always and everywhere a dumb idea.

Turn the page from the editorial cartoon and we come to a column by economist Paul Krugman:

(subscription required). Krugman is angry at his fellow economist-pundits who appear to be mounting a campaign against Janet Yellen as the new Federal Reserve chair despite her numerous qualifications. He’s angry because the reasons given seem frankly sexist, which is a good reason to be angry. But he includes among the thinly-disguised-sexist rants the claim that somehow she lacks the serious gravitas that is supposedly an important requirement in the Fed position.

Krugman inquires as to just what it means to these pundits to be properly serious, besides possessing the Y chromosome. And he notes that it appears that people of Yellen’s persuasion have argued that the Fed should perhaps be more worried about helping the unemployed and others being hurt by the recession rather than fighting off a non-existent threat of inflation. That concern, apparently, gets classified as non-serious.

This point gets back to one of the fundamental features of economism I addressed in The Golden Calf. The two religious roots of today’s economism that I identified there have in common classification as parts of Christianity, but also having a marked predilection for the words of the Old Testament over the New. And while my rabbi friend gets upset when I employ this generalization, many see the god of the Old Testament as generally a nasty and vengeful deity as contrasted with the kind and compassionate god of the New Testament. To the extent that economism is actually warmed-over religion pretending to be hard-headed economics, it would not be surprising if economists of that persuasion equated sternness and lack of sympathy for the plight of the poor and unemployed with desirable traits—showing that one was a hard-headed realist who understood God’s plan for the world. By contrast, even if all the economic data showed that the “stern” austerity program simply was not working, anyone who worries more about the poor and unemployed is obviously a wuss who has no grasp of God’s plan, and hence cannot be trusted at the economic controls.
So in the end we get even more evidence that economism is an ideology that blinds people to facts about the world, and that it’s alive and kicking in the corridors of power.

Thursday, August 1, 2013

Will the GOP Ever Suffer for Opposing “Obamacare”?

Stanley B. Greenberg wrote a nice piece in The New Republic about “Obamacare”:

His main point is what a rotten job Obama has done, and continues to do, in telling the American public about what ought to be one of the signal achievements of his administration. My point in mentioning the article is slightly different. I want to ask what would have to happen, including but not restricted to Obama somehow becoming a better salesperson, for the GOP actually to suffer as a result of their vicious opposition to the Affordable Care Act. I am thinking of a wakeup call similar to what the GOP seems to have had as a result of realizing how badly they shot themselves in the foot in the 2012 elections through their opposition to immigration reform. Will smarter members of the Republican Party ever have similar regrets about their trashing of health reform?
The answer, I suggest tentatively, is that such regrets will be a long time coming precisely because the Affordable Care Act implicates economism in a way that other issues like immigration reform don’t. The GOP did not have to overcome its addiction to economism to decide that it had a problem with the Hispanic vote—but only a real moment of awakening regarding economism would suffice before similar enlightenment would dawn on health reform.

Greenberg is on to this, even though he does not foreground the issue: “The conservatives are right. Health care reform is the biggest use of government to reshape major parts of the economy, regulate business, create a new form of social insurance, restructure the distribution of public health, redistribute wealth and benefits, and create new rights since the passage of Medicare and Medicaid under Lyndon Johnson and Social Security under Franklin Roosevelt.”
Translation: Republicans are not simply channeling their vicious opposition to anything with Obama’s fingerprints on it when they attack the Affordable Care Act. As smart analysts noted from the get-go, this is the biggest government redistribution of wealth in an era when both Republicans and “new” Democrats vie with each other to regard income inequality as a part of the natural landscape and the Divine plan. Republicans are hardly overreacting when they see this as fundamentally attacking all that they hold dear. No wonder Greenberg characterizes the Affordable Care Act as “once-in-a-generation liberal reform.”

To decide that there’s no mileage to be had in continuing to attack “Obamacare,” the GOP would have to accept a number of things. They would have to buy the idea that (as smart economists told them half a century ago) health care is a market failure—that no amount of application of the “free market” to health care will yield a decent and fair system of financing. They would have to agree that there’s a positive role for government intervention in the health system, and that some forms of government regulation are essential. They’d have to accept that the only way to assure access to health care both equitably and efficiently is for the wealthy and healthy to pay more on behalf of the sick and poor.
All these ideas violate basic shibboleths of economism. You’d as soon hear the average Republican admit that as President, Ronald Reagan was overrated.