The Bad Society
Robert Skidelsky doesn’t buy the arguments that justify the growth in income inequality.
The growth of inequality leaves ideological defenders of capitalism unfazed. In a competitive market system, people are said to be paid what they are worth: so top CEOs add 263 times more value to the American economy than the workers they employ. But the poor, it is claimed, are still better off than they would have been had the gap been artificially narrowed by trade unions or governments. The only secure way to get “trickle-down” wealth to trickle faster is by cutting marginal tax rates still further, or, alternatively, by improving the “human capital” of the poor, so that they become worth more to their employers.
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This is a method of economic reasoning that is calculated to appeal to those at the top of the income pyramid. After all, there is no way whatsoever to calculate the marginal products of different individuals in cooperative productive activities. Top pay rates are simply fixed by comparing them to other top pay rates in similar jobs.
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In the past, pay differentials were settled by reference to what seemed fair and reasonable. The greater the knowledge, skill, and responsibility attached to a job, the higher the acceptable and accepted reward for doing it.
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But all of this occurred within bounds that maintained some connection between the top and the bottom….
Around The Dial – July 24, 2012
Economic policy reports, blog postings, and media stories of interest:
- Andrew Zimbalist explains “why hosting the Olympics is a loser’s game.”
- Paul Krugman worries about action on climate change.
- Neil Barofsky deconstructs the “bungled bank bailout.”
- Larry Mishel previews new data on upward wealth redistribution.
- Jared Bernstein rounds up new data on small business job growth.
Explaining The Fiscal Cliff
In under two minutes, Robert Greenstein of the Center on Budget and Policy Priorities explains the significance of the “fiscal cliff” facing the country at the end of the year.
Losing The Toolbox
Louis Uchitelle of The New York Times worries that the United States has become “a nation that’s losing its toolbox.”
Craft work has higher status in nations like Germany, which invests in apprenticeship programs for high school students. “Corporations in Germany realized that there was an interest to be served economically and patriotically in building up a skilled labor force at home; we never had that ethos,” says Richard Sennett, a New York University sociologistwho has written about the connection of craft and culture.
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The damage to American craftsmanship seems to parallel the precipitous slide in manufacturing employment. Though the decline started in the 1970s, it became much steeper beginning in 2000. Since then, some 5.3 million jobs, or one-third of the work force in manufacturing, have been lost. A stated goal of the Obama administration is to restore a big chunk of this employment, along with the multitude of skills that many of the jobs required.
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And there is an incipient upturn in the monthly employment data, although the president will almost certainly finish his first term with the manufacturing work force well below the 12.6 million it was when his administration began. (It was nearly 11.9 million last month.)
Around The Dial – July 23, 2012
Economic policy reports, blog postings, and media stories of interest:
- The New York Times reports on an effort to better community colleges.
- Robert Reich sees even bigger economic problems than outsourcing.
- Jonathan Cohn mulls “the Bain economy and what to do about it.”
- Policy Shop wonders who are the winners from the Great Recession.
- Paul Krugman plumbs the “pathos of the plutocrat.”
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