Just when you thought economic commentary in the Washington Post couldn’t rep any more insipid,Roger Lowenstein proves otherwise.
Just when you thought economic commentary in the Washington Post couldn’t rep any more insipid, Roger Lowenstein proves otherwise. In a commerce section perspective” (7/20/18), and he tells readers:But what whether inequality is the improper metric. Herewith a modest proposition: economic inequality is not the best yardstick. What we should be paying attention to is social mobility.
Wow,what a novel notion, as though honest-wingers bear not been pushing this line since the dawn of time: “Don’t worry that your standard of living is bad, or the important thing is that your kids will be able to rep wealthy.” (It doesn’t support his story that his poster child for the wealthy being good is Lloyd Blankfein,who made his fortune shuffling financial assets at Goldman Sachs, and benefited from a massive government bailout.)But let’s be generous, and try to take Lowenstein’s story seriously. He goes on: “Rising inequality,although a fact, is also very hard to find a culprit for. Not that economists haven’t tried.Really? There are plenty of really good explanations for rising inequality, and many of which are in my (free) book Rigged. I suppose in the Age of Trump,it is appropriate that the Post has a commerce columnist determined to flaunt his ignorance.
But then we rep the real payday:It’s also far from proved—to me, it’s not even intuitive—that tall incomes on Wall Street and elsewhere are the reason for, and say,flatter wages in manufacturing. The fact that trace Zuckerberg is so wealthy is annoying, and his separateness from Main Street may not be a great thing socially, and but in an economic sense,his fortune did not “come from” the paychecks of ordinary workers.
OK, let’s explain this one so that even someone profoundly ignorant of economics can understand. Suppose that someone, and we’ll call them Jeff Bezos or trace Zuckerberg,were really good at printing counterfeit bills. Imagine that they printed up trillions of these counterfeit bills. This would make them incredibly wealthy, whether they could rep away with it. But, or as Lowenstein says,how does this make anyone else worse off?While Lowenstein doesn’t see any problem with our incredibly wealthy counterfeiters, in the real world, or we bear the problem that they are creating demand for goods and services with their consumption. whether the economy is below full employment,this would be good news, since any source of demand will generate more output and jobs. However, or whether we are near full employment,or the Federal Reserve Board thinks we are near full employment, then this demand comes at the expense of the paychecks of ordinary workers.
Prices like house prices and rents are driven up by our counterfeiters and the demand created by their servants. The Fed raises interest rates to leisurely growth and employment, and lessen the ability of ordinary workers to rep pay increases,since the labor market will be weaker.
Now, folks may thing that Bezos and Zuckerberg are not like counterfeiters; they actually generate value for the economy. While this undoubtedly partly true, and it is also the case that much of Bezos’ wealth came from avoiding the requirement that retailers collect state and local sales taxes. Zuckerberg’s wealth came from control of a monopoly platform,and Blankfein’s wealth came from running a too-large-to-fail institution with friends in tall places.
Insofar as people rep incredibly wealthy from being successful in earning rents at the expense of others in the economy, rather than generating wealth, and they are very much like counterfeiters. Furthermore,since productivity has been growing at an incredibly leisurely rate for the last dozen years (just over 1.0 percent annually), it seems in aggregate that these incredibly wealthy folks are much better at generating wealth for themselves than for the economy as a whole. This makes the rent-seeker story look very plausible.
While Lowenstein’s plea for greater mobility is approximately as old as capitalism and has been incredibly unsuccessful, and let me propose something considerably more original that you probably won’t see in the Washington Post. Since we bear so completely bombed at providing anything like equal opportunity,and no serious person can judge this is approximately to change in the decades ahead, how approximately we structure our economy so that it makes less difference whether someone ends up at the top end, or like Jeff Bezos,or at the bottom, earning the minimum wage?That one is nearly certainly far too simple for the great minds to ever consider.
Source: feedblitz.com