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Why does rising U.S. inequality matter? Paul Krugman believes it has resulted in a nation in...

Why does rising U.S. inequality matter? Paul Krugman believes it has resulted in a nation in which most families don’t share fully in economic growth. "The larger answer, however, is that extreme concentration of income is incompatible with real democracy. Can anyone seriously deny that our political system is being warped by the influence of big money?"
Comments (31)
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Does anyone really care what the idiot Krugman thinks?
    4 Nov 2011, 05:54 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > Can anyone seriously deny that our political system is being
    > warped by the influence of big money?

     

    This is an undeniable truth. And yet because Krugman said it, the irrational and ignorant among us will deny it.

     

    Just for fun, I would like Krugman to publish and article stating that 2 + 2 = 4, just to see how many of you would say it isn't so.
    4 Nov 2011, 05:55 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    D...the response is because Krugman is part of the big money influence you despise.
    4 Nov 2011, 05:57 PM Reply Like
  • megaballs
    , contributor
    Comments (45) | Send Message
     
    Yes, no bigger example of big money influence than the Obama campaigns of 2008 and 2012...$ bought influence, loan guarantees, stimulus money...all kinds of goodies. thanks Kruggie
    4 Nov 2011, 05:55 PM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    Influence..look at Obama´s jobs program..all Union all the time...that is NOT influence peddling...
    4 Nov 2011, 05:59 PM Reply Like
  • deercreekvols
    , contributor
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    What jobs program?
    4 Nov 2011, 06:07 PM Reply Like
  • WMARKW
    , contributor
    Comments (10219) | Send Message
     
    Just a factoid....auto workers wages increased 28% FASTER than the 1%'ers income which grew 275% over the last 28 years. Last week the OWS guys complained about the 1%'ers, but I'm sure they had no clue about the auto workers. So Kruggie, I think at least the auto workers would have to be smiling.

     

    Most families don't share fully in the economic growth opportunities because they have been anchored in place by a public education system that is completely dysfunctional.

     

    When you choose to be a music major or a public school teacher....you choose not to participate in economic growth opportunities. I guess you get some non-monetary gratification that has utility.
    4 Nov 2011, 06:13 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > .auto workers wages increased 28% FASTER than the 1%'ers
    > income which grew 275% over the last 28 years.

     

    I do so love facts! But only when they're at least vaguely substantiated.

     

    Here, let me show you how. This, for example, indicates that auto worker income did not increase even half as much as the 1%'ers:
    http://bit.ly/u2Pc9A

     

    And this indicates that auto workers aren't paid as much as some propaganda would have you believe:
    http://bit.ly/uGTYRW/

     

    OK, now it's your turn! :)
    4 Nov 2011, 06:27 PM Reply Like
  • WMARKW
    , contributor
    Comments (10219) | Send Message
     
    From one of my earlier posts: "Oh and one more thing….the number on the Auto Workers. 1976 it was $11.25. In 2007, it was $39.68 per hour before considering benefits. Guess what….that’s a 353% growth. Meaning the auto workers incomes grew at a rate 28% faster than the top 1%. Time to “Occupy American Labor”.

     

    Now your turn.

     

    http://yhoo.it/vZIazT

     

    http://bit.ly/vraFa5
    4 Nov 2011, 06:36 PM Reply Like
  • phxcrane
    , contributor
    Comments (413) | Send Message
     
    Still no matter how you slice it highly overpaid.
    4 Nov 2011, 06:37 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > Still no matter how you slice it highly overpaid.

     

    In a general sense, probably, but their pay recently has been roughly on par with, and occasionally even below, the wages paid to non-union workers by Toyota:
    http://bit.ly/ujOglb
    4 Nov 2011, 07:04 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Well, let's start with the premise of the 275%..

     

    Corporate profits are up more than 700% since the 1970s:
    http://bit.ly/smHMRu

     

    And I can't readily find good data on the "1%"ers' income growth rate in real dollars. Your 275% number seems like it comes from the total share of income, like this:
    http://read.bi/tb2cM9

     

    This isn't the same as real wage growth.

     

    In the interest of an apples-to-apples comparison, I'd like to see inflation-adjusted numbers for both sides.

     

    Specifically, I don't think your 1976 $11.25 wage is inflation-adjusted, especially since it's sourced (in the paper you linked to) from something written in 1979.

     

    For the record, $11.25 in 1976 dollars is $40.91 in 2007 dollars...so they would have actually /lost/ in terms of real buying power:
    http://bit.ly/s6oviQ

     

    Hey, you came up with those last two really quick, so help us both out, how about we both do a bit of looking for inflation-adjusted income numbers?

     

    I have to head out for the night, but I do hope to continue this fact-based discussion later tonight or tomorrow. :)
    4 Nov 2011, 07:23 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    By the way, also for the record, I completely agree that sometimes labor unions fight too hard for too much and can screw over their own companies. Labor has exploited management almost as much as management has exploited labor.

     

    But I also think they've won some fights over the years that were definitely worth fighting.

     

    It's all about balance. :)
    4 Nov 2011, 07:26 PM Reply Like
  • Hoopono
    , contributor
    Comments (195) | Send Message
     
    . ."a nation in which most families don’t share fully in economic growth"

     

    Most families should share fully in economic growth? I thought we were trying to get to creating equal opportunity for all. If Krugman and his comrades achieve that target level of "economic growth", that growth will amount to less than nothing.
    4 Nov 2011, 06:24 PM Reply Like
  • WMARKW
    , contributor
    Comments (10219) | Send Message
     
    Hoopono....it seems that some people don't want equal opportunity but equal outcomes. Equal outcomes represent slavery for all. Equal outcomes represent lowering the achievement bar for all. No one gets rewarded for working 18 hour days running their own business. Everyone gets rewarded for minimal effort.

     

    I think the Drivers License Division is an example of "equal outcomes". It's a place I wish to avoid at all costs. There is no such thing as customer serivce and merit. Same can be said of the USPS. Thank you no.
    4 Nov 2011, 06:44 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    WMARKW -

     

    On the other hand, true equal opportunities wouldn't lead to the extreme income and wealth disparities current in the US. You appear to be arguing that all is well because both those who are rich and those that are poor have an equal opportunity to sleep each night under a bridge if they so choose to do..
    4 Nov 2011, 07:01 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    WMARKW -

     

    Further to my previous comment, the two reports summarized in the following article point to an America that has passed beyond equal opportunity to something darker.

     

    http://bit.ly/uBd8g3/

     

    5 Nov 2011, 01:21 AM Reply Like
  • bfstrog
    , contributor
    Comments (71) | Send Message
     
    "Can anyone seriously deny that our political system is being warped by the influence of big money?"

     

    Big money is warping the political system to promote Keynesian policies, Krugman. Indirectly, you're the big banks' #1 fanboy and you're too dumb to realize it.
    4 Nov 2011, 06:36 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Here are three illuminating examples of how reputable centre-right foreign media view this issue.

     

    http://natpo.st/smgS25/

     

    http://econ.st/udaNcI

     

    http://bit.ly/sAcxX7

     

    One must ask why the US is at the bottom of the G20 in terms of social mobility and, in fact, evidences a lack of such mobility for its people more comparable to that in the third world than in other advanced economies.
    4 Nov 2011, 06:36 PM Reply Like
  • physdude
    , contributor
    Comments (110) | Send Message
     
    Huh, you mean all the propaganda about America being the only place where the American dream can be achieved is not fully true? Who woulda thought it?
    5 Nov 2011, 01:11 PM Reply Like
  • davidbdc
    , contributor
    Comments (3139) | Send Message
     
    Your right, why?

     

    Our government is the answer. We had great social mobility when our government was much smaller. And more importantly when our government wasn't picking the winners and losers.

     

    We've built decades of perverse incentives. A good example is when Congress changed the tax code to discourage corporations from paying more than $1MM salary to executives. So corporations stopped paying $1MM salaries and instead pay $30MM equity AND $1MM salaries, plus all kinds of other forms of compensation.

     

    Our politicians sell the tax code for their own personal gain. Family members working as corporate consultants, lobbyists, etc. And the most obvious is the direct hiring of politicians after they leave office. Gold plated retirement and health care for life.

     

    Our bureaucrats trade their votes for salaries and benefits far above those that they supposedly serve. They create rules for the sake of creating rules, throwing common sense overboard. They leave the rich and powerful alone to avoid the politicians and go after the regular citizen so they can show they are enforcing the mountains of regulations.

     

    Our public school teachers can't be fired unless they are convicted of murder. Teach for three years and you have a job for life (with summers off). Merit has no place. Children learning are irrelevent. Gold plated pensions and health care for all!

     

    The triumvirate of the public unions, politicians, and financial elite are the reason we don't have social mobility (along with a fiscal disaster). Crushing regulation, unfair playing fields, and riches for the communist party members have diminished the opportunities in the USA for our children and grandchildren. Destroy Big Brother and balance the budget and we may again see real growth and real opportunity.
    5 Nov 2011, 03:14 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > propaganda about America being the only place where the American
    > dream can be achieved is not fully true?

     

    There was a great TED video posted a couple months ago with a lot of good statistical correlations between income inequality and lots of bad things:
    http://bit.ly/tM02Ma

     

    At about 8:15, there's a funny little jab at the U.S. where he points out that the American Dream (social mobility) is easiest to achieve in Denmark!
    5 Nov 2011, 04:40 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    David

     

    The counter argument to that you present would note that in the immediate post WW II era supply management, subsidies and subsidization of agriculture stabilized that industry (which employed a much larger portion than now of the US population located on the farm and in small to medium sized towns and cities) and allowed an orderly migration of a large portion of that population off the land and into urban life on equitable (i.e. not forced by grinding poverty) terms over two generations. This was aided substantially by generous programs allowing returning military personnel to gain an education and move up in the world in a way hitherto unimagined (at least for the large numbers involved. Public funding of ambitious develop of post secondary education facilities made entry into the professions open to a much larger segment of the population. Government mortgage insurance made home ownership affordable for much of the working and lower middle classes hitherto restricted to renting and suburban life mushroomed (aided further by ambitious road, school and other infrastructure.constru... Urban renewal also played its part.

     

    Think as well of the massive economic spin-offs of the expansion of the defense industry in response to the cold war and the opportunities for advancement this entailed

     

    In short, between 1946 and 1970 or there about, Public expenditure paid for by heavy rates of taxation and a growing economy (a significant part of this growth being a spin-off of public programs and expenditures) belies your case.
    5 Nov 2011, 04:46 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > We had great social mobility when our government was much
    > smaller.

     

    Point of interest, we had great social mobility when the financial sector was much smaller, and unions were actually much more influential than they are today.

     

    > The triumvirate of the public unions, politicians, and financial elite
    > are the reason we don't have social mobility

     

    A triumvirate implies an equality of parts. It's much more like a hierarchy: the public unions just get away with whatever they can, trying to get theirs, the politicians do what their told by the lobbyists, and the financial elite pull most of the strings.
    5 Nov 2011, 04:52 PM Reply Like
  • davidbdc
    , contributor
    Comments (3139) | Send Message
     
    In short, between 1946 and 1970 or there about, Public expenditure paid for by heavy rates of taxation and a growing economy (a significant part of this growth being a spin-off of public programs and expenditures) belies your case
    ----------------------...

     

    The facts don't support your rememberance of history. Taken directly from United States Government Spending website

     

    Then came the Great Depression, in which famously President Roosevelt and the New Deal cranked spending up to 20 percent of GDP. World War II really showed how the United States could commandeer its national resources for all out war. Government spending peaked at just under 53 percent of GDP in 1945.

     

    President Clinton famously said, in 1995, that the era of big government was over. But he was wrong. The post World War II era has been a golden age of government spending, and it shows no sign of ending. Although spending dropped back to 21 percent of GDP immediately after WWII, it steadily climbed thereafter until it hit a peak of 36 percent of GDP in the bottom of the recession of 1980-82. Thereafter government spending chugged along in the mid 30s until the mortgage meltdown of 2008. In the aftermath of bank and auto bailouts, government spending surged to wartime levels at 45 percent of GDP. The mortgage emergency seems to have ratcheted out-year spending up a notch. Near term government spending in the future is pegging at 40 percent of GDP.

     

    -------------------
    And I'd point out that post WWII until about 1970 about 17-20% of GDP was federal government spending - and about half of that was spending on the military - we spent vast amounts of money during the cold war. And another large chunk in the 60's went to the space program.

     

    As to your point on the GI bill - I agree. But lets remember that then we had much lower % of people attending school and many more learning trades. Today its just a free lunch for anyone attending ANY supposed institution of "higher" learning.

     

    But the rest of your arguement just doesn't have merit - there were very small social programs that government spent money on. People were expected to take care of themselves.

     

    Things were much much better when our government was much much smaller.
    5 Nov 2011, 10:01 PM Reply Like
  • davidbdc
    , contributor
    Comments (3139) | Send Message
     
    I'd concede your point on the financial sector and I'd point out that if we'd allow banks to fail then the sector would inevitably be smaller.

     

    As for the role of unions - private sector I would agree with you. But the advent of the public sector union has been a disaster for this country - sucking up resources that actually used to be used to build things and instead buying votes in the form of outrageous salaries, benefits, work rules, and other assorted nonsense.

     

    And it is the Triumvirate - they are joined at the hip and must be taken down together if this country is to become vibrant again.
    5 Nov 2011, 10:06 PM Reply Like
  • User 487974
    , contributor
    Comments (1105) | Send Message
     
    Big money Paul?
    Like Obummer raising one BILLION dollars to buy the last election!
    Now we have no leadership what so ever in D.C. from Obama (who is trying to raise another BILLION to buy the re election),to a worthless congress!
    As for your tirade,must be Friday folks, the inequality you wax poetic about is nothing but poppycock!
    Ben Bernanke and his distrous QE's and the deliberate debasement of the U.S. dollar is doing more to destabilise the purchasing power of the hard working Americans you and the socialist's / communists down on O.W.S. care nothing about!
    The lame street media and you Paul, along with the rest of "The Times" talking heads are so enamored of the whole communist O.W.S. movement you wouldnt know a true threat to the soverignty of the United States Of America if Van Jones himself came up and kicked you in the keister!
    We now have the RADICALS out in Oakland Ca. destroying private / public property and raping and plundering with total imunity! How about reporting on that Paul?
    We have the O.W.S. prtesters in N.Y.C. now set up with thier own "SECURITY" forces? How abouth the women that are raped in ZOO park and are told by the heirchary not to report it to the police as to draw unwanted negative attention to them?
    When will the disgraceful Michael Bloomberg return the rule of law to N.Y.C. and the people being held hostage by a gang of thugs who are now totally mobalizes and going more and more militant with each passing day?
    People cannot even go out to thier park and enjoy an evening stroll without seeing all kinds of debuarchy in plain view!
    You Paul and the rest of your progressive / radical minions from the 60's are to be shunned. You are the darkness and the good hard working Americans who dont have the time to stay informed about the true threat posed by this "INSURRECTION", are ever so slowly waking up to you and the socialist in the white house who just cant get enough of Van Jones! Hey Valerie Jarrett, how about coming out and telling all the frightned Americans watching Van Jones(you were so proud to get him as green jobs czar,watching him for years)and all his destruction going on in Oakland Ca. that the president and the administration condems his behavior in the harshest way!
    Reassure the folks that this will not be tolerated. You cant Miss Jarrett, you are one of the point people behind it all. Cloward and Piven, collapse the sysytem! End Capatilism!
    Top down, bottom up and inside out, isnt that how it goes Val?
    Look America, you are now at the crossroads of history, choose wisely. Do you support "EQUAL JUSTICE" or "Social Justice"?
    Do you support INDIVIDUAL SALVATION or Obama's "COLLECTIVE SALVATION?"
    This is the time that will try mens souls. If you care about the freedoms our fathers and thier fathers died trying to protect, stand up, tell the Paul Krugman's of the world,no more!
    No more big goverment!
    No more wasteful spending!
    No more intrusion into our daily lives!
    This is the most corrupt administration in American history and people like Paul Krugman, who have a fiduciary responsability to be fair and honest about thier reporting of the news so as we the people can make informed decesions are compliciet in the fall of our once mighty nation!
    Demand more of yourself, look inward!
    Look to God and each other. When things get bad, really bad, have somewhere to turn. Prepare, be ready and them go out and help your neighbor!
    America is great when Americans are good!
    This great country will prevail, we face all threst foreign and domestic!
    We run from no challenge!
    We are the greatest country in the world and no matter how much the progressives of both parties want to "REMAKE" the country into some bastardized "FABIAN SOCIETY" based on failed socialist policies so marvelousy tearing apart Europe as we speak, they will fail!
    When you have the light on your side, darkness can never flourish!
    When you have the truth standing tall and proud behind you, your sheild is mighty and inpenetrable!
    The truth shall set you free!
    No amount of rhetoric from the Paul Krugmans of the world will ever bring down the "SHINING CITY ON THE HILL",we are being looked to for leadership today. Sadly we are not the leaders of the free world at this point in history. But all is not lost, we will change, just as the seaons change. We will renew our great country and with the blessings of the good lord we will again be that beacon of hope!
    It is always darkest before the dawn, fear not America. Our best days lie ahead, despite the bst attempts of the anarchists / socialists and communists trying to divide us!
    They will not succed!

     

    May the good lord watch over this fragile little experiment in freedom / self rule we call America

     

    God Bless The Virtuous
    Jerry
    4 Nov 2011, 06:37 PM Reply Like
  • TrueConservative
    , contributor
    Comments (70) | Send Message
     
    Yeah that fool Krugman?
    And Obama with all his fundraising, especially from those evil small individual donors that are ruining this country -- who do they "THINK" they are, the majority?
    No more government! Government is corrupt and we need to vote in all the conservatives so they can prove it to us.
    America is great! Demand more of your innards, look at yourself!
    It's about SALIVATION!
    We challenge no running!
    Something rambling and incoherent!
    They will not succed!

     

    God bless the Virtuoso!
    TC
    4 Nov 2011, 06:54 PM Reply Like
  • pib
    , contributor
    Comments (10) | Send Message
     
    Jerry try to be less wordy since anybody familiar with this site knows what you are going to say. Also your user name is jerry369,so signing off on every rant with your name,Jerry, only makes you seem like a jackass,Jerry. Obviously, the administrator of this site believes in democracy where everyone has a voice but this is a little bit ridiculous for a website devoted to seeking alpha. Besides a real trader knows all politicians are alike. It doesn't matter whether one is republican or democrat when seeking alpha. Jerry talk less, trade more. If you trade at all.
    4 Nov 2011, 07:54 PM Reply Like
  • davidbdc
    , contributor
    Comments (3139) | Send Message
     
    Krugman finally has a theme thats correct but can't help himself and just stick with the facts.
    ----------------------...

     

    Can anyone seriously deny that our political system is being
    warped by the influence of big money?

     

    He's right! Big money is represented everywhere in government. And who does big money look after? The triumvirate of the public unions, politicians, and the financial elite.

     

    He's correct that our income gap is damaging our democracy. He's incorrect that part of the problem is our education system (and those public union school teachers!!!).

     

    He should point out that the reason corporate management is getting rich is because our corporate governance structure is broken. The changes in tax law that incentivized companies to not pay more than $1MM in salary led to the boon in "awarding" equity.... for good results and bad. It turned million dollar CEO's into 30 million dollar CEO's..... 500K CFO's into 15 million dollar CFO's, etc, etc.

     

    And then there are the politicians. Keep half the population dependant on the bureaucrats and you get re-elected. Because half plus the bureaucrats is a majority - throw in some of the rich and your unbeatable. Sell influence for money and your rich also! Family members working as lobbyists. Brother-in-laws working as corporate consultants.... family members appointed to boards.... etc, etc. etc.

     

    What Paul isn't telling folks is that the way to get back to a vibrant middle class is to destroy the triumvirate of the politicians, public unions, and financial elite. Balance the budget by drastically shrinking goverment, reform the tax code, and then you'll see growth. Yeah, not for the bureaucrats or politicians but for the American public at large.

     

    We've been sold out - and Krugman is one of the sell outs..... promoting Big Brother caring for the defenseless masses forever and ever...... with the elite making all decisions for you, with all your money in their pockets...... picking the winners and losers.... setting all your rules.... with themselves exempt of course.

     

    Balance the budget, slash the spending, get rid of entire agencies, reform the tax code and then you can see real growth - not the borrow, borrow, Big Brother BS we have today.
    4 Nov 2011, 09:29 PM Reply Like
  • HiSpeed
    , contributor
    Comments (1063) | Send Message
     
    Krugman finally figured out that "our political system is being warped by the influence of big money!"

     

    How many noble prizes do they give you before you grow a brain stem and figure THIS one out? Yup, Kruggy's still an incompetent idiot!
    5 Nov 2011, 06:49 AM Reply Like
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