On Friday, in my diary "Economic apartheid... with MAPS!", I used the NYT census/google map feature to take a look at some census tracts in Washington, DC around the seat of government. A lot of the surrounds there showed remarkably strong economic growth this past decade, most notably Census Tract 58, with an estimated 1,429 households, which had a median household income of $107,208, for a 105% increase since 2000.
Needless to say, most of the rest of America has not been doing nearly so well. In fact, it's like we're in a whole different country. I just wanted to start off the week by reminding folks of that a little more specifically.
Chicago
Chicago has long been known as America's "Second City", the defining city of the industrial heartland. So how has Chicago been doing this past decade? Not well, it turns out, and it's nearby suburbs even worse:
Chicago's 9% drop in income is just inside single-digit territory, same as it's northern suburban county. But the two counties to the west are well over the mark at 13% and 11% down from the end of the Clinton Era. Things are not looking well in the heartland. Maybe someone should tell the White House? Or at least Rahm Emmanuel?
Dallas
Well, the industrial heartland has been hurting for decades now. We don't really do anything about it. That would be too much "activist government". Like Europe. Or even like America when we built the Interstate system and went to the moon and stuff like that. The Sunbelt is where it's at nowadays, everyone knows that. And nothing says "Sunbelt" like Dallas, right? Even had a TV show named after it. So how's Dallas been doing this past decade? Oh my:
Dallas County's 16% drop in income almost makes Cook County's 9% drop look like paradise! And Plano County's 12% drop is not exactly cheery, either. At least the other two counties in the picture here are only single-digit losers, and Fort Worth's Tarrant County is a mighty big place, too, so its 8% decline would almost pass for cheery news hereabouts. That's only half of Dallas's rate of decline, after all.
After Dallas, just about anything is bound to look good by comparison, and Bellingham/Seattle, a high-tech powerhouse for three decades now would be just the place to go looking, don't you think? Check it out on the flip:
Inequality constitutes a rising problem in United States. Ever since the 1970s, it has been steadily increasing; today, income inequality is at its highest since the Great Depression. The fact that America is currently mired in the worst economic crisis since that period may not be a coincidence.
This site has found fifteen striking charts of inequality. Some are better at conveying the problem than others. Nevertheless, overall it does a decent job at presenting the magnitude of American inequality. Pictures like the one below are especially effective:
"Their income is our cost" is NOT a very powerful meme
I dare anybody to try it out, on a selection of their friends, family, and acquaintances. If might be a big deal for lefties, but I doubt most people will get excited about it.
What most people can relate to, much more easily, is the impossibility of competing against a foreigner who makes 5 cents on the dollar that you do, other factors being equal.
Before addressing what metamars said here, I want to hasten to add that I know metamars is not being intentionally racist. But intentional racism is not the issue, and hasn't been for quite some time now. And yet, the racist implications to thinking like this are clear. As I explained to fladem, when he echoed metmars:
Chinese Workers Didn't Steal Our Jobs
American CEOs STOLE them, and gave them to Chinese workers at a fraction of the pay.
One narrative is FALSE, and pits workers of different nationalities against one another.
The other narrative is TRUE, and pits workers of all nationalities against the CEOs who exploit them.
I'm not uncomfortable with populism. I'm uncomfortable with RACISM and LIES.
So, with that out of the way, let's return to what metamars wrote. First off, of course, what I'm suggesting here is not a popular meme. We have centuries of elite brainwashing to thank for that. But as times get worse, if work hard enough it could well become a popular meme--because, of course, it's true.
But in one sense, it is surely is not a powerful meme right now, because people are just too beaten down, and it's so much easier to blame someone else who's powerless and preferrably far away, so we can blame some faceless "other", and then feel better in our continuing misery. There's a struggle necessary to get people in touch with their own power before a meme like this can be powerful rather than debilitating.
There's a parallel here to the dynamic discussed in the first diary spin-off from that diary, "Conservatives stoke resentment between worse off & better off workers to prevent solidarity". Like it or not, as Oaktown Girl pointed out, the meme of blaming better-paid workers is a powerful one, because people lack the confidence as well as the imagination to instead think, "That's what we all should have" instead of "Why do they have that? Let's take it away from them!"
Well, blaming worse-paid workers in the Third World isn't a whole lot better, either. They're not the ones in charge. They're not the ones who are doing it to you.
Among the many theories exposed as fallacies by the Great Recession is the idea of the mass upper middle class. During the years of the American bubble economy, progressives and conservatives alike lauded the graduation of most citizens from the working class to a new elite that included the majority of Americans.
The center-left and center-right defined this alleged new class somewhat differently. In 19th century Germany, scholars distinguished the credentialed middle class (Bildungsbuergertum) from the propertied middle class (Besitzbuergertum). A similar divide separates America's progressive elite, based in the educational profession, civil service and nonprofit sector, from America's conservative elite, based in business and banking. Elite progressives and elite conservatives share the assumption that the ideal society is one in which most Americans would be more like them, in owning educational credentials (progressives) or capital (conservatives).
The folly of the conservative promise is obvious ("Bush boom", anyone?), but the neoliberal reflection is equally false:
Progressives love to claim that education is the key to upward mobility. But this is based on an obvious fallacy. The "college premium" that results in higher incomes for college graduates is the result of the relative scarcity of college degrees. If everyone had a B.A., then the value of a B.A. in generating high wages would drop. We know this to be the case, because access to college has expanded more rapidly in Europe, where the gap in wages between the college-educated and the rest as a result is smaller than in the U.S.
Nor is there any basis to the claim, repeated by politicians and pundits of both parties, that most of the jobs of the future require a college education. On the eve of the Great Recession, the Bureau of Labor Statistics identified the occupations with the largest numerical growth in 2008-2018: registered nurses; home health aides; customer service representatives; combined food preparation and serving workers, including fast food; personal and home care aides; retail salespersons; office clerks, general; accountants and auditors; nursing aides, orderlies, and attendants; and post-secondary teachers. Of these careers, only two -- accountants and auditors, and post-secondary teachers -- require a bachelor's degree rather than on-the-job training or an associate degree, and only one -- post-secondary teachers -- requires a graduate degree (a doctorate).
Lind is not immune from sloppy thinking himself, as I've pointed out often enough in the past--though not nearly on the scale of elite anti-populists. Still, using Europe as an example here is a bit suspect, since it ignores Europe's relatively strong support for labor as a whole compared to the US. For me, a much more effective way to make this point is to look at US data over time, as I did last year in my diary "Higher Education, Lower Wages", which included the following chart:
As can be seen, the average income of college-educated households barely increased at all from 1973 to 1990--just under 5% over 17 years. And the performance was scarcely any better from 1991 to 2008:
What is particularly irritating about crank complaints against "political polarization" is how utterly ineffective their proposed solutions to the "problem." The best available political science on the topic (PDF) suggests a major factor (the rise of a two-party system in the South) and a minor factor (increased income inequality):
Using National Election Study data from 1952 to 2000, we explore the relationship between income and voter partisan self-identification. We find that partisanship has become more stratified by income. We argue that this trend is largely the consequence of polarization of the parties on economic issues and the development of a two-party system in the South. The trend is much less a reflection of
increased economic inequality.
If the main cause for increased political polarization is the rise of a two-party system in the South, then a straightforward option to reduce polarization would be to entirely wipe out one of the two major parties in a large region of the country. I presume the pundits and pols who complain about polarization would not actually advocate for a one-party system in a large swath of the country (at least in public). Anyway, moving to a one-party system in one-third of the country is probably impossible anyway. As such, those complaining about this "problem" better get used to levels of polarization elevated above the 1932-1980 period indefinitely.
However, the secondary cause of political polarization, elevated income inequality, is actually a problem that many pundits and pols, including those in the center would desire to solve:
The problem is that both parties are not advocating for reduced income inequality. Barack Obama's call to "spread the wealth around" when he was a candidate became the most prominent attack ad used by John McCain in the 2008 campaign. This is some thick irony, given that John McCain has long been one of the favorites of anti-polarization pundits (McCain was the third most common guest on Sunday talk shows even before he ran for President in 2008) and anti-polarization pols, such as Joe Lieberman, who complain about political polarization.
To put it bluntly, the poster child for anti-polarization used an attack on the very concept of reducing income inequality as one of the main messaging points of his campaign, even though a reduction in income inequality is the only course of public policy that has been demonstrated to reduce political polarization.
In fact, one entire party isn't even advocating for reduced income inequality. The Blue Dogs, the exalted bearers of bi-partisan in the Democratic Party, prominently proclaim fiscal conservatism--which is largely synonymous with income inequality, and thus polarization--as their core value.
Until the cranks who complain about political polarization start actually advocating for a policy course that would reduce political polarization at its root cause--income inequality--then it is difficult to consider them anything except charlatans. Right now, most of the most prominent anti-polarization scolds take opposing a reduction in income inequality as their core value.
All this talk about Democrats worrying over deficits in the midst of a recession (forget the GDP, FDR got the GDP going up by the end of 1933, and nobody claims the Great Depression ended the year he took office) is so crazy one scarcely knows where to begin. (The 1937/38 recession, perhaps?) And targeting Social Security and Medicare? So almost at random...
On Friday, I stumbled across an early October blog post by Stephen Levy--one of the leading experts on California's economy, particularly in terms of the role of government spending and investment. In it, he wrote:
Most current public pension and health care benefits were negotiated at a time when private sector pay and benefits were growing. In recent years many private sector employees have seen their pension and health benefits decline as companies went out of business or changed benefit arrangements. As a result, public employee retirement benefits now seem high in comparison to what is happening in the private sector.
In fact, it's not just public employee retirement benefits. Perhaps the main reason we have an "Entitlement Problem" is because private wages and benefits stopped growing for the bottom 90% of income earners about 30 years ago. (And even the next 9% hasn't done well by historic standards.) The lack of broadly-shared economic progress in the era of conservative Voodoo Economics is the great unspeakable truth of our times. And this great stagnation makes taxes, public employee benefits and social insurance--such as Social Security and Medicare--seem like much bigger factors than they would be if we still had the sort of broad economic prosperity that "socialists" like FDR and Harry Truman gave us, and which persisted until around 1973--as could readily be seen from the following pair of charts from my earlier diary, "The One Percent Economy--Part One: The What"
First, the "socialist" economy of the New Deal Party System Era (plus a few extra years of spillover):
Note how the slowest growth rates were from the top 1%.
Then, the economy we've had since Democratic dominance gave way to divided government:
Levy was trying to make a relatively modest point in trying to achieve a relatively modest goal of rationality and civility in dealing with the economy we've got. Me, I want to change that economy. But first, let's hear Levy out:
In Part One of this diary, I visually presented data showing that the bottom 99% of the American people, in terms of income, have barely seen any income growth since 1973--even with the 90th to the 99th decile of income earners included. Just taking those those earners from the 90th to the 95th and the 95th to the 99th decile, we find that their incomes grew significantly less they had during the 1945-1973 era. Here's a graph of the entire era, as a an overview reminder of what that diary showed:
The questions now is why. To answer that, I will turn to a paper co-authored by the later Hyman Minsky, the man who saw the current financial meltdown coming in 1986. Later on this weekend I'll be writing about his Financial Instabiity Hypothesis, but for now I just mention this work to whet your appetites, and give you the sense that we're talking about a really major dude here.
The paper is "Economic Insecurity and the Institutional Prerecquisites for Successful Capitalism" by Hyman P. Minsky and Charles J. Whalen, Working Paper No. 165 from the Levy Economics Institute of Bard College. To repeat what I said in Part One, I'm going to quote from paper at some length because it helps set up some other topics I'll be discussing this weekend--topics that I think are very important for understanding the economic crisis we're in, and why the measures being taken are so inadequate. Above all, it establishes the viewpoint that (a) finance matters enormously as a explicit sector of the economy, (b) a related point--money is an endogenous (internal) factor in the economy, not just an external counting device, (c) capitalism changes form over time, particularly forms of finance, and economic theory must change to reflect such changes, and (d) an ahistorical reduction of economics to eternal micro-level basics misses maters of fundamental importance.
We find that the average income for the middle 20% of households will likely decline by $2,456 in 2009, and by an additional $601 in 2010, for a total decline of $4,813 from 2007 to 2010. This is a decline in income of 9.3% for the typical household over these three years. Given the decline in income over the weak business cycle from 2000 to 2007, this means that after reaching an all-time peak in 2000, by 2010 real incomes for the typical household will likely have declined by $5,729, or 10.8% - truly a lost decade.
And here's one of her charts that Meteor Blades reproduced:
I advice everyone to go read her presentation. This are really going to get ugly before they get better. But I want to take a somewhat different focus for this diary, extending an analysis I did a couple of weeks ago, "Forget The Recession--Bush Economy Sucked BEFORE Then". I want to compare the 7-year and 8-year records with a view toward arguing that things have been economically lousy throughout the Bush years, and the media have been doing a terrible job of informing the American public all along. More charts, and very little text need to tell the story on the flip.
Throughout the month of August, I responded to several Salon columns by Michael Lind--published on Tuesdays--the following weekend. This week, I responded to Lind's column the same day, in "[I Should Be] Looking For The Next FDR With Michael Lind". Out of that came a very clarifying comment by John Emerson that inspired me to write a followup diary this weekend. But as I started work on it, I realized that I first needed to finally correct a long-standing oversight, and discuss the importance of social science situationism, not to be confused with the revolutionary Situationist Internationale. The Situationist blog associated with The Project on Law and Mind Sciences at Harvard Law School explains:
There is a dominant conception of the human animal as a rational, or at least reasonable, preference-driven chooser, whose behavior reflects preferences, moderated by information processing and will, but little else.Laws, policies, and the most influential legal theories are premised on that same conception.Social psychology and related fields have discovered countless ways in which that conception is wrong."The situation" refers to causally significant features around us and within us that we do not notice or believe are relevant in explaining human behavior. "Situationism" is an approach that is deliberately attentive to the situation.
An important part of my core differences with Lind spring from a situationist perspective. I don't think that many people's basic attitudes have changed as much as he does, nor do I think that some of the actors he identifies are responsible for the changes he associates them with. Rather, I think that the political/economic situation has changed dramatically, and that we need to adopt political practices that take account of that changed situation, and seek to modify its impact.
One of the clearest ways to get a handle on that change is from the various presentations of changes in income and wealth concentration from the work of US Berkeley economist Emmanuel Saez. Here's an example:
It's my primary contention that people living in a highly income-polarized society--as we do today--will act in ways quite different from those living in a more income-equalized society, such as predominated during the Post WWII New Deal Era, and even into the 70s and early 80s. It's my second contention that while changes in attitudes and actions have taken place, and vast ideological structures have been erected, these are more reflections of a changing economic situation, and have substantially less to do with changes in core attitudes. It's my third contention that the neoliberal trap Obama is caught in--which Lind wrote about in the column I agreed with most--is itself a manifestation of old-style non-situationist thinking, which systematically misapprehends the foundations of human action. In short, the problem goes much deeper than the Team of Rubins.
We've got a black President-elect with sky-high approval numbers. We'll have a black family living in the White House, with two cute little girls. A good part of a generation will grow up thinking this is normal. So, racism's over, right?
Right.
In the real world, not so much. This week, I happened to catch a local radio interview with Dedrick Muhammad, author of a report, "40 Years Later: The Unrealized American Dream" that was released last April, 40 years after the death of Martin Luther King. It shows a mixed record. Yes, there is progress, but we are still far from being an equal society.
No surprise, really. Unless you get your news from the news media. Then it might be a bit of a shock. For example, the black college graduation rate has increased dramatically, by almost 400% since 1968--so fast the blacks will graduate at the same rate as whites in 2087. But income equality will take a bit longer.
Remember the song "In the Year 2525"? Well, twenty years after that, the black/white income gap will finally close to zero.
Daniel De Groot had a post yesterday suggesting more focus on economics issues. Coincidently, or maybe not, this is "economics week" for both the Obama and McCain camps.
Understanding where we are and how we got there is essential to the formulation of smart and effective solutions. The New York Times' Steven Greenhouse has recently written "The Big Squeeze: Tough Times for the American Worker," a book that distills much of what is wrong with our economic situation today. He discusses it at TPM Cafe, setting out what to me is the crux of what is wrong with today's economy:
In recent years, the statistics regarding income disparity in America have been startling. After-tax annual income for the bottom fifth of American households inched up just 6 percent from 1979 to 2005, according to the Congressional Budget Office. During that time, income for the middle fifth of households grew by a modest 21 percent, with much of that gain caused by women in many households working more hours. Over that same period, income for the top fifth of households jumped by an impressive 80 percent, while income for the top 1 percent more than tripled, soaring by 228 percent.
The highest-earning fifth of households received 51.6 percent of the nation's after-tax income in 2005, meaning that the income of the top fifth exceeded that of the bottom four-fifths. As for the top 1 percent of households, they received more after-tax income than the bottom 40 percent, according to the Congressional Budget Office. A study that Thomas Piketty and Emmanuel Saez did based on federal tax returns found that the top 1 percent of households, averaging $1.1 million in annual income, received nearly 22 percent of all reported income in 2005, up from 9 percent in 1980. That income shift helped create the greatest level of inequality since the Roaring Twenties.
As someone who grew up in the 1940s and 1950s, when the average CEO earned only 40 times the salary of his average worker, instead of over 300 times as it is today, this stalling of the economic escalator is one of the most dismaying aspects of modern America. Quoting Greenhouse again,
Lawrence Summers, the former Harvard president and Treasury Secretary, found that were it not for this increased inequality the bottom 80 percent of Americans would be doing considerably better. If the distribution of income today were the same as in 1979, Summers said, assuming the same level of economic growth since then, income of the bottom 80 percent of Americans would be about $670 billion more a year--or about $8,000 per family. For many households in the bottom half, this would mean a welcome 20 to 30 percent increase in income, perhaps the boost needed to avoid foreclosure.
The return to the class stratification of the Gilded Age is as much a betrayal of the American ideal of opportunity as George W. Bush's security state and executive overreach are a betrayal of the Founders' vision of a government of laws, checks and balances. It has not always been this way and it need not be in the future. How we got here is largely a combination of deregulation moves that allowed those with money to make ever more money through manipulated markets and subsidies while preaching the glories of the free market, and tax policies which allowed them to keep ever more of what they made. The history and politics are very ably set forth at length in this post by DHinMI yesterday at Daily Kos contrasting the New Deal/Great Society years with the Reagan/Bush years.
Rising income inequality is every bit as unsustainable as our excessive energy usage. It risks economic havoc as consumers are unable to continue buying goods and services, it risks political instability and it is morally wrong as an abuse of power and position by the strong and a betrayal of our ideals as a nation. We need to reverse the policies that got us here and try new solutions. Part of what makes us Democrats is a profound belief in the virtues of expanded opportunity and broad prosperity. Let us measure the proposals of the candidates against these principles.
The notion that history moves in cycles, or waves is an ancient one. In this diary set, I'm looking at the coinciding impact of two waves that are part of longterm cycles, as well as a third one indicative of global transformation that's been under way for several decades now These three waves all converge on this November's election, and in doing so, they confront a wall--the intensely fortified network of rightwing organizations and their "moderate" and "centrist" enablers.
The first part dealt with the roughly 32-40 year cycle of American Party Systems, the next part will deal with the recent wave of "post-materialist" values. This part deals with the rise and fall of successive world powers--Spain, Holland, Britain, and now us--described by former GOP uber-guru Kevin Phillips in Wealth and Democracy: A Political History of the American Rich.
John Edwards is starting to find his voice to pushback against the media narrative about him. Check out this clip:
On related notes, over at Fire Dog Lake, Christy provides a round-up of the Edwards Poverty tour. Also, I think Political Insider is right that Edwards should rephrase this line in a more Clintonian manner. When Bill Clinton fought back against the "character" slime sent in his direction, he said "if you stick with me, I'll stick with you until the last dog dies." Right now, Edwards is saying "[t]hey will never silence me." Probably rhetorically better for all Democrats who are attacked in this way to keep the focus on the voters, because these attacks are just as much an attack on those who support Clinton or Edwards as they are on whichever Democratic candidate is being frivolously slimed at any given moment
As for the substance of the Edwards claim that powerful forces are trying to silence him for talking about things like poverty and universal health care, just like the Clinton charge before it, I think there is some real truth to it. Frivolous character debates are damaging to progressives, because negative attacks increase polarization, focus on such matters tends to lower voter turnout, and when you are talking about things like swimsuits and haircuts you are not talking about issues like poverty and health care. In fact, reducing voter turnout and increasing political polarization are, in and of themselves, means by which conservatives have successfully pushed their agenda even when they do not win elections. Polarization in Congress tends to result in gridlock, meaning that government less capable of being active. Lower voter turnout, especially among lower income groups, means that members of Congress are less responsive to the needs of lower voter income groups. The resulting impact on income equity in the United States can be clearly documented:
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