By Dave Anderson:
Kevin Drum is looking at one of the dumbest policy ideas of the month (raising retirement/Social Security normal benefit age as well as the Medicare age) and notes the distributional impact of the policy:
But low earners? Their life expectancy has barely gone up at all. If you raise their retirement age, it entirely wipes out the tiny gains they've made. The bottom line is that high earners get longer retirements while poor people just tread water.
And it's even worse than that. Not only do high earners get long retirements, but they've mostly spent their lives working in cushy jobs that don't wreck their bodies and are often fairly interesting. An extra couple of years of work isn't that big a deal for them. But for truck drivers and coal miners and nursing home workers?
Modern conservative and some strains of neo-liberal thought since at least Reagan has been that the great economic problem in the United States is two-fold. The rich and powerful are not rich nor powerful enough, and conversely, the poor (defined as the bottom 80% to 90% of the income and asset distribution) have it too easy and are too insulated from market forces by a quasi-effectiev social welfare state that we refuse to call a social welfare state. Further breaking people who work at physically demanding and/or tedius, mind-numbing jobs is thus for their own good while it coincidentally continues to shift money up the distribution ladder.
Pain and austerity is a two-fer, politically and "morally" in this vision.
It has been a slippery slope but we seem to be on the nasty end of the complete subjugation of poor people. Their non-poor advocates were once called the "middle class" because so many in that population recalled a time when they or others in their families (one or two generations ago, maybe)were once also poor.
ReplyDeleteThe term middle class was always a misnomer since the bulk of our national wealth has always been controlled by a very small segment of the population. Thanks to a quaint noblesse oblige the poor were allowed a measure of social and economic upward mobility.
That system, though medieval, was primitive but not frozen. It seems now to be morphing into what this article in The Atlantic calls a plutonomy.
In a plutonomy, Kapur and his co-authors wrote, �economic growth is powered by and largely consumed by the wealthy few.� America had been in this state twice before, they noted�during the Gilded Age and the Roaring Twenties. In each case, the concentration of wealth was the result of rapid technological change, global integration, laissez-faire government policy, and �creative financial innovation.� In 2005, the rich were nearing the heights they�d reached in those previous eras, and Citigroup saw no good reason to think that, this time around, they wouldn�t keep on climbing. �The earth is being held up by the muscular arms of its entrepreneur-plutocrats,� the report said. The �great complexity� of a global economy in rapid transformation would be �exploited best by the rich and educated� of our time.
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Income inequality usually shrinks during a recession, but in the Great Recession, it didn�t. From 2007 to 2009, the most-recent years for which data are available, it widened a little. The top 1 percent of earners did see their incomes drop more than those of other Americans in 2008. But that fall was due almost entirely to the stock-market crash, and with it a 50 percent reduction in realized capital gains. Excluding capital gains, top earners saw their share of national income rise even in 2008. And in any case, the stock market has since rallied. Corporate profits have marched smartly upward, quarter after quarter, since the beginning of 2009.
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�The rich seem to be on the road to recovery,� says Emmanuel Saez, an economist at Berkeley, while those in the middle, especially those who�ve lost their jobs, �might be permanently hit.� Coming out of the deep recession of the early 1980s, Saez notes, �you saw an increase in inequality � as the rich bounced back, and unionized labor never again found jobs that paid as well as the ones they�d had. And now I fear we�re going to see the same phenomenon, but more dramatic.� Middle-paying jobs in the U.S., in which some workers have been overpaid relative to the cost of labor overseas or technological substitution, �are being wiped out. And what will be left is a hard and a pure market,� with the many paid less than before, and the few paid even better�a plutonomy strengthened in the crucible of the post-crash years.