Thomas Piketty said that the rich manipulate the system to their benefit in Capital In The Twenty-First Century, and said that it was a grave danger to democracy.
Krugman advocates this view, as well as several of Piketty's proposed solutions.
1
Surely you have been reading my work on the overweening influence of the real estate industry of NYC on municipal government. You are on the right track here, Paul!
Very clearly biased in this column.
Says Krugman "And when it came to entitlements, the policy preferences of the wealthy were clearly at odds with those of the general public. By large margins, voters at large wanted to expand spending on health care and Social Security. By almost equally large margins, the wealthy wanted to reduce spending on those same programs."
Bloomberg looked into the 2016 individual tax returns data in detail.
1. The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).
2. The top 50 percent of all taxpayers paid 97 percent of total
individual income taxes.
https://www.bloomberg.com/news/articles/2018-10-14/top-3-of-u-s-taxpayers-paid-majority-of-income-taxes-in-2016
So, of course, those who pay the most have a right to question why/how so much of their taxes are misspent on entitlements. Just a few quick points:
1. Every month, 14 million people now get a disability check from the government.) https://apps.npr.org/unfit-for-work/
2. Importing poverty - so the bottom is constantly replenished by liberals for votes. https://www.heritage.org/immigration/report/importing-poverty-immigration-and-poverty-the-united-states-book-charts
So an honest economist (very few now) would be more factual and fairer in such a column.
Great article. You showed how the influence of extreme wealth is corrupting the political system.
Would it not be a good idea to promote reduction of that influence first, rather than to attack the wealth head-on?
Maybe some of these measures might get promulgated, but as long as the influence is there, there is little hope for a successful implementation. Maybe there can be progress, I don't know, but right now it's put your dollar where your mouth is. Money is speech in the USA.
I'd like to see more public awareness of what you have written here, and proposals to mitigate it.
1
I loved this article. I'm gonna try and save it and redistribute it to my family. We are few,and barely if at all, above the poverty level. But I think it will educate and stimulate them in the proper way.
1
The biggest lie being spread right now is that "Americans love their private health insurance." This is based on a survey put out by the Kaiser Family Foundation (KFF). Yes, that Kaiser family. Their web page claims there is no relationship but Wikipedia says both that foundation and Kaiser Permanente were founded by the same man. The family foundation was funded by Kaiser Industry stock and two family members always sit on the foundation board of directors. The KFF sponsors professorships at major universities and generally pushes the private health insurance agenda in public. I just about puked when I watched the post-2nd debate dissection at Morning Joe. Noting that Kamala Harris had raised her hand when asked about eliminating private health insurance, the panel exploded: "You're gonna lose your doctor!" "What does that mean for families who want to keep their kid's pediatrician!" "180 million Americans have private health insurance and are happy with that!" "This could be devastating to people!" The brainwashing has begun. No one in their right mind likes their private health insurance.
4
"income inequality" is not caused by greed, it is caused by a declining economy and country. It is caused by coming off the gold standard, printing trillions to finance the country and government and exporting the source of our wealth (manufacturing) to Asia.
It is NOT caused by CEO's earning too much money. If you took 90% of the wealthy's income, it would not make a dent in the national debt.
also we do not need to invent the wheel here. How
do other countries deal with inequality.
1
The Congressional Budget Office (CBO), in a report released on June 25, estimated that large budget deficits over the next 30 years will "drive federal debt held by the public to unprecedented levels—from 78% of gross domestic product (GDP) in 2019 to 144% by 2049". I hope Mr. McConnell and Mr. Trump are happy.
3
The large middle class has driven Tech and Medicine for the last 60 years. We live better than John D. Rockefeller. He didn't have MRI's or Cell phones or the internet. Once the middle class is gone kiss these advancements goodbye and things will start to get worse. The current wealth distribution isn't bad because it's unfair it's bad because it will kill the economy and Tech an medical advancement with it. They didn't cure pancreatic cancer for Paul Allen and will be less likely after there are less doctors and engineers.
Root of the problem is labor has lost bargaining power. This is because of a labor glut mainly because of automation. The destruction of the unions also contributed to the labor glut. We need to create an artificial labor shortage by reducing the work week to 30 hours. I don't know what the magic number of hours a week are but I'm guessing it's pretty close to 30. That way employers would have to start offering benefits again and higher wages to get enough employees. This is why minimum wage never really fixes anything, it doesn't create jobs or address the fundamental problem of us needing less and less workers. Labor shortages cause economic booms, this is why inequality has reliably ended only in catastrophic violence: wars, revolutions, the collapse of states, or plagues and other disasters. These all create labor shortages. This is why the .1% need act now to advert catastrophe.
3
When considering the economic problem, Keynes noted that there were two kinds of people, those that could be satisfied and those that could not. With technology, satisfaction is attainable for most. Our culture must adjust as the need for growth diminishes.
1
Where is the strategy to get the bottom 20 percent of the income distribution to vote in their economic best interest? "What's the Matter with Kansas" has become "What's the Matter with the Fly-Over States.
1
I recently watched the American Experience documentary "The Gilded Age" and was struck afresh by how little things have changed in the wealth vs workers struggle in America. We are still trapped in a Social Darwinism "survival of the fittest" hall of not-so-fun house mirrors.
2
While on the subject of Social Security, we need to seriously increase the income limit on contributions and consider an excise above a certain threshhold. That's my 2 cents.
2
I have always believed that those in Congress who all become millionaires are on the take. The Panama Papers showed us how. We cannot follow the money because it’s nearly impossible. And they have never, ever had any inclination to close the loopholes. Of course not.
3
Americans have every reason to be disgusted with the wealth interests that are being supported by Trump. The four listed "ideas" are fine with me because they will ultimately favor my children and grand children. At 82, I don't really count.
But along with the befouled money distribution issues, there are still 320 million Americans who are part of the whole and they (we) all need to be included.
3
Prof Krugman -- Have you ever compared your prof's Princeton salary with what an adjunct at a state school is making? Just askin' -- and maybe this issue could be a subject for your next brilliant article on inequality in America. Best wishes, a faithful reader of your columns.
2
The top .01% undoubtedly have more voice in this system. But are they not supported by the many earning more than $400,000, or even $150,000 per year - who have access to favorable health care benefits and retirement safety nets?
The overall sentiment of the voiced is to protect these 'entitlements' - even if this means limiting the expansion of benefits to others under the guise of reducing budget deficits.
In general, I agree with Paul Krugman. However, I do not believe in panaceas. I think, the first order of business is to really try to understand where we are and how we got here. In doing this we must not succumb to the notion of the "good old days."
So here we are, early in the 21st century, and we see a global economy which is dominated by cheap labor. Just like when the textile mills left New England for the south well over century ago, profit was and still is always king. Notice, the key point here is that by and large outsourcing is not about making a profit it is about making more, much more profit.
Today, here in America, this is one of they features of our economy, is making more, much more profit.
Another aspect of profit is how it is counted or actually how it is not counted and how it is hidden, and in the process defrauds the US Treasury, State Treasuries,.... and if it is a public Corporation the stock holders. Notice, until white collar crime is really prosecuted and people go to real prisons for long sentences, there will be no meaningful changes in how Corporate America, in collusion with the Financial Sector all with thousands of lobbyist and even more lawyers all bent on making more and more profit off the backs of 90+% of the American population.
Now if we dig a little and look all aspects of our economy, with very little effort we can see there are layers upon layers of corruption.
How do we fix this when the enemy is us?
#1 we don't vote
1
@Ben Roth
I hope you mean "#1 We ALL Vote". Apathy is the enemy of democracy.
1
This column focuses on the effect of extreme wealth on public policy. I would like to see a discussion of how extreme wealth affects the economy through the spending or investing activities of the extremely wealthy. It seems that even in personal use spending the very wealthy distort (for lack of a better descriptor) the economy. Think about the multiple mega-homes built by and for the wealthy and how much land and materials each consume vs. how much of these homes one family can "consume." How many homes can one family live in, really. Think about what the existence of homes the size of small luxury hotels does to a local real estate (land availability) and home construction materials economy: a rising tide raises all rents and mortgage payments. In addition, no self-respecting group of upscale "home" owners will permit lesser mortals to lower their property values by suffering the proximity of low or moderate income housing in the vicinity.
4
The problem is not the power of too much wealth in the hands of too few, but the incredibly overwhelming lack of understanding by the people of how to use their democracy to take back their power. As Jefferson noted, the only way to attack this problem is through a better educational approach to support the learning of the people in their endeavors to gain this power. We and our paltry educational system have simply never done this. If or when the people find this learning, the wealthy will simply slink back into their well decorated holes.
3
Like most economists, Krugman does not understand anything about regulations or their costs, so assigns either zero or a low cost to them.
There are many regulations that have a positive effect on the economy as well as quality of life. Preventing industry and municipalities from dumping industrial waste and sewage effluent into the waters of America leaves the waters clean, fishable, prevents illness currently as well as the need to later clean up the pollution. Creating a rule that prevents a Montana rancher from digging a hole on his hilly private property as a swimming hole or watering hole, creek fed, that doesn't result in any pollution is useless.
And yet, the Justice Department under Obama sent a septuagenarian to jail for digging a hole, with a state permit, on his private property. Meanwhile, NYC dumps millions of gallons per year of partially treated sewage effluent into the navigable waters of America every year, along with one million gallons per year of raw sewage. NYC hasn't even gotten civil fines for violating environmental laws, much less having the responsible parties criminally indicted.
Obama came into office promising new taxes and regulations. Businesses were discouraged from investing in the US until they found out how much capital they were going to spend on compliance with the new Obama rules.
The reason the economy did not rebound after the Bush recession ended in 2009, was the Obama threat.
With Trump in power and the GOP running things none of your recommendations will be implemented. Further worsening the problem is this country's complete inattention to the results of inadequate funding through taxation, of Social Security, Medicare, and other social safety net programs. We have come full circle in terms of having another gilded age. All that we have to wait for is another Depression like the one that started in 1929.
4
Krugman omits an important element of policy that is prevented by the 0.1%, with at least twice as much money being contributed by Democrat mega wealthy as contributed by Republican mega wealthy.
A simple change in the tax code would force the mega rich to contribute: elimination of the ability to take unlimited deductions for charitable donations of unrealized appreciated assets that have never been taxed.
That will never happen. The Ford Foundation is still in existence, influencing government policy a hundred years after it was funded. It spends 10% of its endowment on salaries, solicits federal grants in excess of its costs on philanthropic activities, skimming overhead to limit the burden on its endowment to pay its executives. Its endowment grows every year because they carefully avoid spending principle.
The same policy is followed by most charitable foundations, allowing the heirs of the wealthy to control their wealth in perpetuity. Plus, at the time of donation, they get to use assets that have never been taxed to reduce the income taxed on current reported income. Nice work if you can get it.
The irony is that the NYT has used partial data to hypothesize that Trump has underpaid his taxes, but has never used the publicly available information to do a financial colonoscopy on Soros, Buffet, Steyer or Gates. Trump has been paying far more in income taxes on his piddling few billion in wealth than the big boys.
Krugman ignores an important point in his analysis. If you examine the political leanings of the top 0.01% and the 0.1%, they are overwhelmingly Democrat supporters. Democrats complain about the undue influence of the Koch brothers [who did not support Trump's election], but for every Republican mega donor, there are two or three Democrat mega donors.
Take the latest list of the Forbes richest Americans and google the list for political affiliation, to the extent it is available. Then add up the dark money that goes to superpacs that favor Democrats relative to Republicans and you understand how Hillary [or those acting on her behalf] was able to spend three to four times what was spent for Trump's benefit.
There is a reason why Democrats advocate increasing taxes on the rich, defined as individuals earning over $150,000 and MFJ earning over $200,000. [For reference, those are the people who got hit when the Bush "tax cuts for the rich" expired.] Soros, Buffett, the Koch brothers did not pay a dime in extra federal income taxes when Obama shut down the government in order to raise taxes on the "rich."
As two examples, Amazon paying zero taxes, subsidies to the fossil fuel industry...this sort of "thing" (cr*p) has to stop. Perhaps I missed it but I don't hear many of the candidates talking about it.
2
50 years of trickle-down has led to millionaires becoming billionaires, and the working -class to become the working poor
5
The truly wealthy would rather lend money to government via bonds, than lose it via taxation....
2
Interesting that even though the laissez-faire policies of the past several decades did not trickle down proportionally to produce mass shared prosperity as predicted, the current Republican consensus (with the exception of some of President Trump's attempts to protect workers and businesses with the tariff experiment) recommends implementing those same tax and regulation reduction strategies. This reveals their real priorities. Even when the theory proved flawed, they didn't even try to amend it.
Something was wrong, and people noticed. This I think is a root cause of the surge in populism. Voters in both parties are looking for a new paradigm, something they are not getting from the elites. They sense, often correctly, that the elites don't care about them.
3
@CC And Trump gave Laffer the presidential medal of freedom! Here is an "economist" who literally has impoverished millions of my fellow citizens with his completely wrong policy solutions yet, the Reagan crowd, he is a god.
Wealth leads to narrow thinking and narcissism. You really start to believe that you are better than everyone else eve though you probably did not have all that much to do with how you got your money. Sure people can create nifty new things but it is the society that creates and sustains your good luck.
4
On the issue of universal child care, what about this: "Caregiver" employment (a living wage) for a parent to care for children at home until something like age 3 when they then go to universal pre-K and kindergarten. And similar "Caregiver" employment for a person who cares for an elderly parent or disabled person at home. We once had a variant of this in "Welfare" but it was mistakenly named, became tainted and was ended "as we know it." While the caregiver is in employment they also can learn parenting or cargiving skills or other education suitable to later enter or re enter the workforce. Where did we get the nutty idea that it's better for our society for parents to work outside the home while putting their very young children in a childcare center? We are beginning to understand why home care is better for the elderly and disabled. It's even more important for young children.
7
The rich can lose some now or lose it all later. Imagine the next Donald Trump a Democrat with control of both houses. It isn't if, but when, Trip.
Those with the economic power tend to perceive human rights as a third world problem beyond the reality of the centuries-old western growth bubble. The big idea, in my mind, is to decide how a post-western globalized representative democracy might work. In my view, this is where AI becomes the obvious problem-solving tool for big, holistic problem sets in our shared, intertwined economies today and into the future.
2
The injection of new currency absolves the issue of spending. Duly noted.
I was quickly disabused of the idea that rich people were somehow smarter or wiser than the rest of us the first time I met a Texas oil man.
Billionaires and democracy do not mix. We can have one or the other. I say lets get rid of billionaires. Wealth over 1 billion dollars should be taxed almost to the confiscating line. Income over 1 million should be taxed at 70%; as it was during the heyday of the American middle class that began with FDR and the New Deal.
"The wealthy class hate me and I welcome their hate."
Our democracy is in the tattered state it is in in large part because the media and press abdicated their responsibility to report on truth and facts and started down the road of false equivalence. Probably for the same greedy reasons that so called centrists politicians did.
Do these wealthy people really think their children and grandchildren will be able to live happily ever after surrounded by millions and millions of desperate poor people? Poor people who are usually armed.
10
Nothing wrong with being Uber-Rich but a system that is creating folks at or below the poverty line faster than its population has grown since 1968 has a more fundamental problem. Uber-rich don't have enough political heft...It's the rungs below them that imagine it could be them that are killing the rest of us.
1
I am sceptical of academic macroeconomists. If we are to do something about Social Security and Medicare staying viable we do not need progressives. We need young, high earning "Wall Street stiffs", etc. to fill in the retiring baby boomer gap. Therefore, I don't understand why this allegedly, unbiased author completely failed to mention the 2019 proposal by President Trump for merit based immigration that both the .01 per cent and the rest of us "stiffs" can endorse to neutralize the retiring baby boomers impact.
1
@Curiouser
The tax for Social Security is capped at $132,900. Above that the SS tax is zero.
So, those Wall Street stiffs you think are going to be contributing a lot to SS, won't be. There won't be enough of them and they won't be paying SS tax on most of their income.
14
You missed the etc. and it is not the Cap but the increased numbers of youthful contributors that is salient.
2
@Curiouser To me, "merit-based immigration" just reflects more control by the rich and by corporations, who want "turn-key" employees, workers who are already trained and can be "plugged in" to work immediately. The rich and the corporations don't want to spend money on educating American employees for the better-paying jobs that "merit-based" immigrants can take. They want to take advantage of the educated workers that other countries have spent money training. So with robotics and automation taking over much of manufacturing, where does that leave the American worker? In minimum-wage, low-paying jobs like a health care aide, cleaning person, etc.
4
@Ms. Pea -- it's great you got another job at age 63. And, sure, putting just the last 10 years on your resume helps you stick to relevant work experience. If you're doing it to hide your age, though, forget about it. It's way to easy to find out someone's age these days for free -- check out intellius.com, spokeo, beenverified, familytreenow, Facebook, etc. Most of the time you can get someone's age w/o having to pay a dime.
2
I'm 70, I cannot afford to retire. My need is not to help support or maintain a comfortable life style but out of necessity a frugal life. A friend my age lives on Social Security. He lives in a subsidized senior housing studio apartment where the cockroaches often out number the residents. He rides a second hand bike for transpiration and shops the local food bank. He is chronically depressed but cannot seem to get the professional help that he needs from the VA and this is a guy who served in Vietnam and deserves better treatment.
And then I read about President Bone Spurs spending millions of our tax dollars to take his golfing junkets and to treat his daughter and her husband Jared to an all expense paid vacation to England, again at taxpayer expense. There really is a simple solution to much of this, double or triple the taxation on the 1% that own more than the bottom 90%. Put and end to Citizens United. If your congressional representative or senators are not on board with income redistribution and campaign finance reform, replace them.
Christ threw the money changers from the temple in a fit of anger and disgust, it is past tome we voters did the same.
16
The President has focused increased attention on every phase of the military including the VAH. He also wants merit based imigration that would neutralize the baby boomer retirement gap developing in Social Security. In other words high earning immigrants will take up the slack keeping it viable and robust. Simply re-elect the POTUS in'20 and this man of action WILL get it done.
1
@Curiouser
This Potus hates immigrants especially those of color. He has promised his base jobs for existing white guy Americans not immigrants. so far he hasn't delivered. His border policies are cruel, Where is his "wall". Where is his cheap great health insurance plan. Where is his infrastructure rebuilding plan. This guy cant get anything done not even appointing a functioning high administration. I have never seen such a disaster in all of my 70 years. My dog is more competent than trump.
8
Lyndon Johnson was a venal lying politician. He helped Brown and Root become powerful. And he was a huge defender and helper to the poor, particularly poor farmers. He was instrumental in bringing electricity to hundreds and thousands of rural citizens and thereby improving their life immeasurably. we need real populists today, like Elizabeth Warren and many other Democrats. and by the way back then Republicans didn't want to provide government support to help rural America get electricity, or go to college. thanks to Texas Democrats like Johnson and Sam Rayburn their constituents and other rural Americans joined the twentieth century. and that benefited all Americans.
5
Kansas still has GOP majorities in both of its bicameral assemblies, even after the population suffered through the Brownback fiasco. I have lost hope that political means can reverse the slide towards oligarchy. A full collapse of economic demand is what it might take to finally stop supply side voodoo economics.
7
The eye opening statement in this great column is that so few people understand Keynesian economics. I learned about it in public high school, almost 50 years ago. Dr. Krugman uses his columns to remind us of these basic principles on a regular basis. Perhaps one more thing we can aim for is a better curriculum in public schools to educate citizens on these basic economic principles. If more people understood these concepts, then the wealthier folks would not be able to repeatedly pull the wool over our collective eyes.
7
I agree with Paul Krugman's analysis and recommendations.
Nevertheless, Democrat politicians and commentators need to avoid recommending racial reparations. That is the kind of issue that wins elections for the Republicans.
2
Is there any data that supports the tax distinction between earned income and capital gains and the importance of taxing capital gains at such a lower level than earned income rather than the other way around? It is my opinion that this is the prime driver of inequality.
4
# 1 really needs more love. Yes, a lot of bad things about the economy happen because of things that are technically legal, but the amount of plain ordinary fraud is also through the roof.
John Rogers of "Leverage" fame had this to say on Twitter:
"The one thing gratifying about the publicity around Rep. Collins insider trading & the massive fraud/corruption of Trump and his Cabinet members, is that the insane levels of unprosecuted white collar crime we found while writing Leverage are entering public consciousness. It was overwhelming, it was crushing, it was one of the reasons I was kind of okay with the show ending. I grew up knowing the system is rigged. I had no idea how systematically rigged it was. If a "black market economy" is an economy that exists around skirting the law, then the entire economy is a black market economy. That research was an unending parade of sociopaths made successful in a system optimized for them."
6
Two basic facts before we get ahead of ourselves.
When typically less than 50% of registered voters vote a democracy will not survive. That is why we are a plutocracy. You don't vote you don't get.
Big money controls Washington. K Street lobbyists own our elected officials. Good luck with getting big money out of politics but until we do our politicians will work for big money and not their electorate.
These pie in the sky fantasies the dems propose will never get off the ground. And that is a fact big shot NYT readers.
1
Agreed that wealth does not mean one is wise. Neither does a column in the NYTimes nor a PhD.
2
Didn’t most “really rich” people donate to and vote for Hillary in 2016?
Yeah, they did. Hollywood, Wall Street, Big Tech all supported her...
1
Is there any data that supports the tax distinction between earned income and capital gains and the importance of taxing capital gains at such a lower level than earned income rather than the other way around? It is my opinion that this is the prime driver of inequality
1
Unfortunately, the voters to whom this information is addressed neither subscribe to the Times nor possess the critical thinking abilities to digest it and act on it at the voting booth, because it's so much easier to blame those other people getting a benefit that they don't think they also get. And besides, they're gonna be rich one day too and why should they have to pay higher taxes on that future wealth?
3
I would add one more item to the list: a tax credit (including payments to the tax payer) for health insurance premiums. it won't solve to hc cost crisis but it will level the playing field between employer and self paid insurance.
2
Excellent column, clearly written. I wish Paul Krugman would write more columns like this that cast light on what Is a difficult subject, economics.
4
And let's not forget that many of the super-rich pay substantially less tax proportionally than ordinary working folk yet they get to set the agenda for spending that money.
6
Let’s not forget who controls America’s “social agenda”!
The economic engine of the United States is in the deep blue states—yet we have a minority of citizens in deep red states telling us how to live and justifying it by their “Christian” version of sharia law. And taking blue state’s money while they do it.
I will be happy to follow your prescription, Dr. K, when I can stop paying to support folks who attempt (and are largely successful) by their appointment of reactionary federal judges to lifelong terms.
9
While it was certainly true that 2011 was a time when it made sense for the Federal Government to borrow in order to invest ( and empower states and local governments to invest) in activities that had present costs and future benefits, it was also time that made sense for the Fed to have been providing a lot more monetary stimulus. Instead we had a series of self-limited QE's with the Fed unwilling to commit to "doing what it takes" restore an average rate of inflation of 2% and unemployment of 4%. Now we know that even 4% was too low a target but it would have helped.
2
Good, timely article. Thanks!
I keep looking at the accompanying picture from the 2011 job fair. I hope that man in the middle got a job.
5
Paul: thank you and good luck.
1
As I recall the Tea Party was all about the deficit under Obama. All I hear from the same people under the Trump deficit is crickets.
9
@flaind "Deficits don't matter (except if our rivals/enemies can be blamed)."
2
@flaind Don't worry. As soon as we have a Democratic president, deficits will roar to life as a primary concern of all Republicans, everywhere.
6
With a confiscatory inheritance tax, think of what society would have been spared: Betsy DeVos and Eric Prince; the Kochs; Donald Trump and eventually, Ivanka Trump and Jared Kushner; Rupert Murdoch.
It's a matter of public health, and an urgent one.
14
To block the political swamp creatures from dominating our politics, we have to 1st face reality and change who pays for our elections. That's the major blockage to everything the 2020 candidates are trying to promote--in HC, energy, jobs, education, fair taxes, voting rights, etc.
But before election reform can happen, the media has to 1st stop avoiding the topic like a hot potato. NYT columnists included --- except I recall 1 Edsell column a few months ago that actually dealt with it. Unusual.
Other democracies don't hand over their elections to big money sponsorship, so the corruption they have is ILLEGAL. But American corruption is LEGAL ---blessed by our highest court in Citizens United, equating money with 1st Amendment Free Speech--- a Trumpian distortion in 2010.
Most voters and 2020 candidates now want to reverse Citizens United, to regain the shut-out voice of the citizen majority in politics, to restore public interests as 1st priority, not last.
In the 2020 debates upcoming, the media might be forced to discuss it. That'll be a change.
Then even Krugman might write a whole column or 2 on it, instead of just a line ---- the economic effects of Citizens United, dis-uniting our politics into widening poles and increasing our inequality. Use a graph to chart all this.
Trace cause/effect --- the destruction of the 'American Dream'.
7
Even in the free-market loving U.S. it is becoming increasingly evident that the invisible hand is driven by a very strong Wall Street and corporate arm, and is directed by some very self-serving, greedy brains.
The flaws of laissez-faire capitalism were very much evident in the financial collapse of 2008 and have remained evident ever since. Here in the U.S., the coronation of King Trump is directly due to these flaws: mergers and acquisitions result in too-big-too-fail financial institutions and corporations; competition decreases; entrenched wealth dominates the political and legal systems; disparities between the wealth and incomes of the top 1% and the lower 99% continues to increase; ordinary people feel in their bones that the system is rigged and perhaps rotten to the core; lower-middle and working-class resentment flares and finds its expression in support for a superficially anti-establishment Leader who proclaims that he alone can set things right.
King Trump is a plutocrat's plutocrat and a kleptocrat's kleptocrat.
Will democratic resistance to his reign prevail, or will America, like Putin's Russia, succumb to an all pervasive cynicism and apathy, and become a kleptocratic authoritarian state with a democratic facade?
8
Middle class lives matter. Democrats have been awful at making middle/working class realize that tax cuts for the rich are destructive to their well being. Maybe what we need is a little more bombastic class warfare rhetoric and a little less decorum and respect for the ideas of the destructive trickle downers.
5
As Paul Krugman points out, we are headed toward oligarchy, indeed, we are already there. The control of national politics is not the only arena for this corruption. Organizations like the American Legislative Exchange Council (ALEC) have a stranglehold on Republican legislators at the State level.
The oligarchs are writing our laws to benefit them, and to destroy anyone who isn't white and rich. How much money do they really need? After the fifteenth mansion and the tenth yacht where is the meaning? This makes us look just like the apocryphal banana republics we have been sneering at for decades.
7
All research shows that a more equal society (Finland, Norway, Sweden), with higher taxes and welfare spending, is a happier and more productive one (however measured). However, social values shape attitudes and in the US there is as stronger belief than in Europe that you get what you deserve with a strong work ethic to avoid poverty. This can reduce support for policies to close the wealth gap, and even provide a 'moral justification for selfishness' in the words of J.K. Galbraith. So that the rich can preach austerity to improve the moral character of the poor and lower taxes to motivate them to work harder, even though there is no evidence that lower or higher taxes affects productivity.
8
I have to say that the economic efficiency of the austerians (that is, the wealthy misers) is widely over-rated.
While I have identified as a socialist for 50 years, I have no quibble with small-scale capitalists, nor wth small-scale libertarians. The retail shops of my youth provided many people with livable incomes, perhaps because of the economically inefficient system of keystone pricing (retail = 2 x wholesale). As well, I have no trouble with small scale sins involving drugs and sex. I do feel they should be moderated by public health considerations: Make safe drugs available and cheap, and restrict the dangerous stuff. And work hard to make condoms and safe sex part of the social norm.
But the socialist in me observes that on a large-scale, capitalism and libertarianism are socially toxic.
In short, I think we should remember, and act upon, the wisdom of the ancients: μηδὲν ἄγαν -- nothing to excess.
7
For a certain portion of the very wealthy, those less fortunate are just part of the unclean ramble. You know your got trouble in River City when "Atlas Shrugged" was held in high regard by a Speaker of the House. Although it may not be spoken, providing social safety nets is considered by many as just throwing good money after bad. A person's bad situation is of their own making not the result of societal biases that are baked into the system. In other words, "Don't bother me with your problems."
10
I lost my job of 5 years in November of 2013 , "happy holidays," right? I landed a job in August of the following year. Congress in their cruelty had recently limited unemployment to 6 months. I had never needed this benefit previously, and I will never forgive this country for its cruelty. This arbitrary time limit could have put me out in the streets if I had not been part of a two income family. And what social good would that have accomplished? As it is we missed out on the social security and savings I would have accumulated during those nine long months. Collecting what I consider an earned benefit would have eased our family pain.
4
It's the very serious people again, like CNBC's Joe Kernen who called PK a unicorn for advocating countercyclical spending in 2010. Unfortunately, the financial news networks, which are purely 24 hour infomercials for brokerage houses, are what people regard as the 'gold standard' (pun intended) of macro-economic thought.
6
.
There are two possible approaches to dealing with a less than optimal situation.
You may attempt to reverse it, but you may end up in an interminable struggle that saps your resources while never achieving permanent victory.
Alternatively, you can allow the dynamic to continue and in response, design the policy levers that mitigate and neutralize the negative aspects of the situation while promoting progress in the necessary areas. Such an endeavor can achieve permanent success.
The choice is to repeat the past or to design the future.
.
2
Thanks, Paul Krugman, for keeping this topic in the public eye. It is non-partisan, and every American should be informed about it.
My observation: Wealth tax and other government measures to address economic inequality reforms will be a long time coming.
And so, I posit that America can begin to solve critical, big picture problems, right now, with the help of that wealthiest .01%, approximately 170,000 families.
They can be America’s “170,000 Points of Light.” (With no apology George HW Bush. I think he’d like this idea.)
Inspired by their peers or just by good old-fashioned guilt, many billionaires have already signed up to give away at least half of their fortunes. MacKenzie Bezos is a recent and high profile joiner, pledging $18 billion of her fortune to charity.
The challenge is to identify and prioritize a portfolio of critical, big picture problems that range from Deforestation to Lunch Debt and Potholes, and then ask these folks to give at scale, and get involved in delivering the solution.
Why not?
I write more about this on my blog.
4
Revising our electoral process and laws would also help to mitigate the power that the one percent has on our elections. Prohibit campaigning until April of election year. Have a country-wide primary in May. Prohibit campaigning until the conventions. Hold the conventions in August and campaigning in earnest begins after that. No traveling campaigns. All campaigning is televised like the debates are now. Each party gets the same amount of television time which is donated by the networks. No internet ads either. Prohibit election contributions period.
5
@Linda Bell
May I add to the list:
Campaign spending caps = to the publically funded campaign allotments.
2
@Tim Kane
I'd like to add:
address voter fraud in our voting system, including getting rid of electronic voting machines.
Don't think redistribution of wealth. Think fairness in the returns from our common investment in creating and maintaining the American money-making machine. It is a machine, built on the great nation that we share, to their partners and shareholders in the USA.
To understand this, try to imagine the huge salaries, bonuses, and retirement packages, common to the wealthiest in the US, being received in Bhutan, Chad, or Paraguay. The super-wealth in the USA exists because the USA provides the means for super opportunity for property, industry, and for the protection of wealth.
The greatest wealth in our society is the product of our collective effort and commitment. Indeed, much of our wealth as human societies cannot be owned at all—it lies in the spheres of knowledge and insights that are open to everyone to access and use. Each is therefore made wealthy through the work of others.
3
Don't think redistribution of wealth. Think fairness in the returns from our common investment in creating and maintaining the American money-making machine. It is a machine, built on the great nation that we share, to their partners and shareholders in the USA.
To understand this, try to imagine the huge salaries, bonuses, and retirement packages, common to the wealthiest in the US, being received in Bhutan, Chad, or Paraguay. The super-wealth in the USA exists because the USA provides the means for super opportunity for property, industry, and for the protection of wealth.
What accounts for the huge difference in salary in the corner office and on the loading dock. Compare the CEO of a national delivery service and that of its drivers. Does one work longer hours? Does one have greater personal risk? Greater financial risk? Who gets the golden parachute? Does one actually produce goods and services that add to the cumulative, national wealth substantively and not just by manipulation of fisca systems and institutions? Are CEOs that many more times shrewder, smarter and more talented? Is it actually harder to recruit a successful CEO than drivers? Are most high salaries largely attributable to allies on the compensation committees of their companies? Is a key difference that compensation potential is strengthened by the macro USA - where wage earners’ jobs can be sent somewhere else, but for CEO's the sky's the limit? What company's ever outsourced it top management?
3
PK says reducing the extreme concentration of wealth is a necessary step toward a healthier political system.
No, cart before horse. A healthier political system is the crucial 1st step to change our extreme concentration of wealth.
Or we'll be waiting in 2030 as reforms we need are blocked by big money influence.
To block the swamp creatures from taking over our politics, we must change who pays for our elections. That's the major blockage to everything the 2020 candidates are trying to promote.
In other democracies where they don't just hand over their elections to big money sponsorship, they still have corruption of course, but it's ILLEGAL, vs America's, which is LEGAL. Big money domination of our politics is blessed by our revered highest court in Citizens United, equated with 1st Amendment Free Speech.
Most voters and 2020 candidates now see through the Court's Trump-type lie, and want to reverse Citizens United. The 'free speech' or political input of the average citizen is muffled.
Soon, in the upcoming election debates, this crucial cause/effect might even get mentioned, Then the media, which avoids it, may be forced to discuss it
That'll be a change.
Then even Krugman might feel motivated to write a whole column about it---- the economic effects of Citizens United, dis-uniting our politics into ever widening poles and worsening our inequality. Just the opposite of the 'American Dream'.
A sure fire column, and debate topic.
6
The Tax cut that Trump is proud of cost me money. But, I am not complaining. I am in or close to the upper middle class thanks to an Air Force colonel’s pension, a Boeing engineer’s pension. (don’t blame me for the 737 disasters. Every microsecond of my 24 years at Boeing was on Mlitary programs.) Plus I worked till I was 69, and my Social Security pension is above average. In addition, my medical costs are trivial, despite being 82 with marginal health. Not because of the VA, but because of TriCare, the health program for Military retirees, which my wife also enjoys, being a military dependent. I totally agree with higher income taxes, plus with very high estate taxes. The ultra wealthy live in a different America. Their children don’t go to public schools, and don’t serve in the Military. They use personal jets for travel and could care less about our infrastructure. They live in gated communities. Our Congress devotes most of their attention to pleasing the ultra wealthy. I don’t know why the public isn’t aware of this. I volunteer to be a guillotine operator comes the revolution.
46
Congratulations on your career success and cushy retirement plus health care and shopping at the commissary, all paid directly or subsidized by my tax dollars. As a retired teacher, I envy your perks.
2
Krugman does not lay out the mechanisms for control of content by the mega-rich. Isn't it all controlled by markets?
Controlling shares in all mass media are owned by global conglomerates or directly by the many billionaires that own news outlets outright, like Murdoch, Bezos, Bloomberg, etc. Notice that Murdoch is Australian, but controls the most watched news outlet.
The shareholders hire the CEO who who hire the producers and publishers who hire the editors who hire the talent. The talent may or may not vote for Democrats but they are hired for their neoliberal (not "liberal")worldview, which is that corporations make the world go round and nothing is more important than corporate tax cuts.
Yes, they let markets drive much coverage, especially when the public demands celebrity gossip and and local crime stories, but everyone knows that certain topics are off limits or are to be approached using the assumptions of billionaires.
Supply Side Economics, for example, never, ever worked, not even once. Tax cuts for the rich have never increased revenue, never trickled down to the average person, and never created economic growth that was more than a short bubble. But global corporate mass media has spent 40 years claiming that tax cuts for the rich will grow the economy with little skepticism, every time.
Meanwhile programs that require taxation are derided even if they work well in other countries.
The hiring process influences the interpretation of events by news pundits..
6
Too late the phalarope. Good luck on disgorging the rich from ownership of the government. That will surely happen…never.
2
@ADN
It is relative. Their will always be rich people and some of them will always be trying to use levers of power to make themselves richer and more powerful. The thing that seems to go up and down is the willingness of We the People to reign in their corruption and excesses through public action.
When the king of England overreached, we had a revolution to reign him in, actually taking the reigns of government from him and giving them to Our Representatives.
After the Great Depression there were millions of people protesting, canvasing, educating, occupying, etc. This grassroots political power forced major concessions by the powerful that made major improvements to the lives of most people and to the economy.
Wealth inequality went down and the economy did better.
Ever since the 1980's., the public has gotten lazier about public participation in holding politicians and the rich accountable, and so inequality has gone up and GDP growth, productivity growth, and capital utililization are are lower than they were in the 1970's.
After watching various populations and governments go through these cycles of engagement and disengagement by the public, I now almost think that the actual system of government is not as important as how willing the public is to hold their representatives accountable.
You wouldn't hire someone to manage your store and leave them alone for two years. We should not be hiring politicians and then trusting them to do the right thing.
10
Oh, and don't you dare mention the term "democratic socialism" anytime, ever. Naughty.
4
“in the end big money will find a way — unless there’s less big money to begin with.”
Of course! Millions know that who want to reverse Citizens United. And how would Krugman, the liberal fighter against inequality, suggest we even start to lessen the 'big money' dominance of our politics? How about a whole column devoted to that for once---not just 1 line occasionaly--- on this huge factor?
If the news media, and progressive opinion writers don't start making this THE big issue in our politics, then it means they want to stay more safely centrist. They don't really want to defy the powers that be.
If they make campaign finance a major issue, the right wing GOP/FOX state media will indentify them as allied with the *extreme left wing liberal radical socialist big govt* types.
Main media doesn't want to be categorized this way, so they stay cautious, and just compain about our unbalanced economy and politics unfair to average citizens. The takeaway? So seems the vast rw GOP media has succeeded in 'regulating' the more liberal media and Dems so they stay careful.
It's safer to lament and protest the EFFECTS of big money dominance, but not trace the CAUSE. Every column ranting against our worst president ever, takes our attention from our needed reforms---that most voters favor---reversing Citizens United. This is NOT left wing radical.
3
@Meredith
Follow the money. Big money owns the media. They call themselves "liberal" while they sell us tax cuts for the rich and wars for oil.
That way the left can be blamed for the policies sold to us by corporate media.
7
Money = free speech.
I just contributed $33 to Elizabeth Warren's campaign. Why so little? I get about $500/month of social security and I am 69, retired whether I want to be or not. My money does not go very far, by free speech seems to even less far. I have virtually no voice. Billionaires have more ability to be heard politically and also own many of the media outlets and help to control what voters can hear.
Keynesian economics is almost always gotten wrong. Stimulate the economy when bad times come economically. This includes deficit spending like work programs for those out of work.
THEN: when good times return PAY DOWN the debt. Politicians in charge ALWAYS forget that second part. They tend to always want the party to keep going. Wrong way to run the economy.
Bad economy=stimulate, good economy=pay down the deficit to slow the economy from overheating.
Wrong way Don is tax cutting and stimulating the economy during a relatively good economy. Just the wrong thing to do. It will lead to a greater recession at some point. It is like a bad hang over from to much partying.
13
@Eric Peterson - You might be interested to know what has happened EVERYTIME we paid down the debt in good times:
The federal government has balanced the budget, eliminated deficits for more than three years, and paid down the debt more than 10% in just six periods
since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, and 1920-30. The debt was paid
down 29%. 100%, 59%, 27%, 57%, and 38% respectively. A depression began in 1819, 1837, 1857, 1873, 1893 and 1929.
Furthermore EVERY depression (6 or more quarters of decreasing per capita GDP) has been preceded by a period in which the debt was paid down 10% or more.
It's about time people learned that the finances of the federal government are NOTHING like your personal finances.
PS It works in the other direction also. While after WWI we paid down the debt leading to the expected depression, after WWII, we INCREASED the debt 75% from 1946 to 1973. That period has been called the Great Prosperity. GDP growth averaged 3.8% and real median household income surged 74%.
8
@Len Charlap
Apples, oranges a guava. Everything you brought up for paying down debt was pre Great Depression. Which is also before The New Deal and economic restrictions that were designed to limit or eliminate the run on banks and the banking frauds that have created many of the recessions. Making fools of most of the people most of the time has always been the forty of magicians and bankers. And bankers,lawyers, politicians and of course lawyer banker politicians, same snake different skins.
Independent Central Banks can direct economic policy for the benefit of most people or the few. Independent of political pressure Central Banks can do the right thing and do a good job for the nation.
Political pressure on the Central Bankers has been extreme of late.
1946-1973 was just after WWII and extremely positive for USA growth. Most of the rest of the world was in a non productive state. Other productive countries had been bombed into a previous century economically. The USA was the engine of the world. We had the productive capacity and expertise, and a living breathing work force. We had just come out of the Great Depression. Everyone wanted work and we had lots of it. We built things for every other country in the world. We could and we did.
The guava comes in when we compare Trump economics with everything in the past and every other advanced economy of today.
Nice try.
@Eric Peterson - First ler's dispose of what Krugman calls the "Europe was Rubble" myth. Here is the bottom line. Look at http://piketty.pse.ens.fr/files/capital21c/en/pdf/F1.1.pdf which shows that the output of
Europe was about the same as the US in 1946 - 1973.
Now let's see why all 6 times we significantly paid down the debt we fell into depression. When the federal gov spend. it sends money TO the private sector. When it taxes, it takes money OUT. The deficit measures the net flow INTO the private sector; a surplus measures the net flow OUT. A sustained period of surpluses which pays down the debt takes a lot of money OUT of the economy. The banking system cannot support this and crashes.
The point is that it is just arithmetic which hasn't changed since the Great Depression. While there have been some changes, arithmetic still rules.
From 1996 to 2008 (except for a brief period in 2003), the trade deficit was larger than the federal deficit, so again the net flow of money was OUT from the private sector. By 2007 the big banks had 27 or 28 times the amount of outstanding loans as they had reserves. So much for your restrictions.
Not only is it disastrous to take money out of the private sector with federal surpluses, ANYTHING that takes enough money out of it will STILL lead to some pretty bad conditions. Not only is paying down the debt with taxes foolish, but not supplying enough money to the private sector is also, i.e. the deficit must be large enough.
A while ago a reader from Boston who uses the nym "max" succinctly summed up where mainstream economists including Krugman go wrong:
"So much of our economic issues could be solved if people understood that the US cannot run out of money, & how hard it is to cause hyper-inflation from government spending alone."
Krugman's recommendation of more deficit spending is correct, but while he has moved away from Keynes' error that we should have "austerity at the Treasury in the boom," he still fails to understand the reasons why. max does.
Briefly, the first part of max's statement is just a fact. Let's see why the second part is true.
It is true that prices are proportional to the amount of money in the economy. Other factors being equal, you can expect there to be lots of inflation if the federal gov creates a lot of money & spends it.
BUT prices are also INVERSELY proportional to the amount of stuff we produce. If we have a bumper wheat crop, the price of wheat goes DOWN.
If the federal gov spends money in a way that gets it to the people who need it & will spend it, that added demand will causes businesses to produce more stuff & the added production will compensate for the extra money.
Hyper-inflation happens when there is some reason that production cannot be increased. After WWI, Germany did not have enough arable land to grow food to feed its people and not enough hard money to import it. A million people died of starvation. There was no way to increase production.
3
@Len Charlap
I recall it had something to do with the French occupation of the Ruhr too.
On top of that Germany had to import in order to export. The only commodity it had enough of was coal. Also, the German diet was based on consumption of animal fats, a very inefficient use of ag output & Germany could not grow enough food to feed it’s hogs & chickens to, in turn, feed its people. Prior to WWI Germany did have access to Iron in Lorraine but it had to give that back to France after WWI - which meant it needed more hard currency not less. The German economy never really got the traction it had before WWI but the deficit spending (war Keynesianism) created a sense of traction, even if it was based upon all kinds of financial juggling - like the use of promissory notes such as mufti bills.
1
@Tim Kane What you say is true, but I ran out of characters, Besides the food shortage, there were the reparations in kind which required Germany to send steel and cattle to France. When Germany fell behind in 1923, France occupied the Ruhr. They made the workers work and took the steel, but they did not pay the workers. This contributed to starvation and the skyrocketing price of food.
But my point is that all these things CAUSED the initial inflation, and constrained the economy and that, in turn, caused the excess printing of money, not the other way around, just as max says.
@Len Charlap
Wealth is not necessarily equal to money. Most of wealth is actually means of production (buildings, factories, software, land, technology, raw materials - including wheat, cotton, etc.) and means of subsistence (food, clothes, education, health care, homes, cars, etc). Nowadays, the so called financial assets (derivatives, promissory notes, securities, and all forms of fictitious capital) represent wealth. The problem is not money. But the claims on future wealth creation. Today’s gdp is only 1/5 of claims on its value (in the form of financial assets). I doubt production will realize that given the global slowing of productivity growth.
Daily Beast re NY Times article by N. Confissore in 2016:
" The Times wrote up a terrifying study on how just 158 families, and their companies, contributed $176 million in the first phase of the campaign..... Not since before Watergate have so few people and businesses provided so much money in a campaign, through channels legalized by the Supreme Court’s Citizens United decision five years ago.”
The NYT op ed page has mostly ignored this huge cause & effect on so many problems they write about. What blocks our media from making this a front page, top of the hour issue every day?
Here's a contrast, kept dark here. Wikipedia on campaign advertising:
"Many countries restrict the use of broadcast media to broadcast political messaging. In the European Union, many countries don't permit paid TV/radio ads for fear wealthy groups will gain control of airtime...distorting the political debate in the process."
Gain control and distort? That's centrist in America.
In the US, wealthy groups are free to distort the political debate---legally. They define what's left/right/center. Remedies for the basic rights of citizens in a democracy are simply labeled left wing radical big govt removing our Freedoms. Thus we're generations behind the modern world in health care for all, etc.
Our main media and opinon writers, proud of our free press, don't discuss this or how media profits. Most voters want to reverse Citizens United. Where are the columns on this?
Plz discuss!
11
@Meredith
The. GOP excels at giving their Bills patriotic names that are total lies. Citizen’s United had the effect of disenfranchising all but the ultra wealthy. Same thing with the Patriot Act.
@Meredith
Gain control and distort / Left wing radical big govt & other issues that benefit GOP are portrayed as "socialism", don't ya know?
Every one of the Democratic debate moderators is a multi-millionaire. I doubt that Lester Holt or any of the others personally know someone who lacks health care, or retirement funds, or who's had to use gofundme for medical problems. Chris Cuomo encapsulated the views of wealthy (even if not super-rich) journalists when he asked Bernie Sanders "did [earnings from his book] give you new perspective about how people with more money feel about the government or someone like you forcing policies that demand them to give amounts as opposed to what they want to give?"
Clearly, that's why Biden's assertion that "nothing would change" resonates with journalists and pundits who serve their own financial interests as well as those of the .01 percent who own the media.
6
But this isn't anything new. In "Wealth and Democracy." Kevin Phillips points out that there is a feedback in economic distribution because as the rich get
richer, they use their wealth to get more power. They then use their power to get more wealth and so on. In the olden days they hired gangs of thugs called knights to extort money from the peasants and merchants. Today they hire politicians to pass laws that benefit them financially.
There seems to be a tipping point where this process becomes impossible to reverse. When inequality becomes bad enough, the country soon goes down the
tubes. He gives several examples, e.g. the 18th century decline of the Dutch Republic. Chrystia Freeland used 14th century Venice to illustrate this process in a Times article, but history is replete with other examples.
According to Phillips, the great success of America has been that before the tipping point was reached, something has always happened that reverses the flow of money upwards, e.g. the rise of unions, FDR's reforms.
Will that happen this time?
Seems unlikely to me.
11
@Len Charlap
See Nobel Laureate & Econ Historian “Structure & Change in Economic History” pages 100-115 on the fall of the Roman Empire.
Wealth had concentrated so much that merely 6 senators owned half of North Africa. The wealthy & powerful used their influence to avoid paying taxes. The Roman Legion still held a tactical edge but it had thinned so Rome needed a larger army to control its boarders. The Roman Empire simply lacked the political will to raise enough resources to fund a large enough army to control its borders at time when Rome controlled ALL the resources of Western Civilization - when that still included North Africa and the Western half of the Middle East.
The same thing happened in mideavel Japan, only it wasn’t overrun but Balkanized from within. Similar events occurred in the collapse of Ancient Egypt’s New Kingdom, Byzantium (in the 50 years before Manzikurt from which it never recovered), Hapsburg Spain, Bourbon France, Romanov Russia, Coolidge America (triggering the Great Depression & thus the rise of Hitler, WWII, Holocost) and BushJr’s America (triggering the Great Recession).
Scroll down & see graph #2 at Bit.ly/EDI-study
Our policy elites are playing with fire.
8
Dr. Krugman, you not only have to neutralize the likes of the Peterson Institute but those within the Democratic Party itself, the Third Way and the CAP think tanks. They claim they are center left but in reality they are Wall Street focused Center right outfits. Getting some of our centrist politicians to not pay attention to them is going to be tough. Biden is a poster child of this group of people.
8
@Gary Valan
Yes the "polarization" that the media keeps talking about is not really between the left and the right.
The real polarization is between the actual middle of public opinion (what MOST people actually want) and the fake, corporate establishment "center" that sells policies that make the mega-rich richer as if they were some kind of compromise between left and right. Both the left and right are against tax cuts for the rich. Large majorities want tax increases on billionaires, but the establishment center sells tax cuts for the rich as a compromise.
Things that neither the left nor the right want cannot be a compromise between left and right.
The fake "center" has now discredited itself, so the back up plan is a fake populist repackaging their policies as a right-wing "movement," sold by alt-right sites owned by billionaires.
5
It's beyond past time to scrap government programs doling out scraps here and there, that recipients need to jump through hoops for, and institute a basic monthly income for all. Then the unemployed or underemployed could spend their time improving their skills and have the "luxury" of being able to pay their bills. Too, an actual living wage is imperative...how is the most wealthy country in the world tolerating having so many poor overworked people? I agree our media need to take a hard look at how they approach their job and strive to seek out the truth and not be swayed by the wealthy perspective that is blasted in all our media. Off topic but apropos is the coverage of the recent tanker "attacks" in the Strait of Hormuz...is that really totally confirmed those were attacks? I wouldn't put it past our government to take advantage of any situation and twist it to their advantage, or somehow be the source of an incident. The media should call these incidents "alleged attacks".
8
@JK
"How is the most wealthy country in the world tolerating having so many poor overworked people?"
The answer is quite simple, the system was explicitly designed this way, have you heard of The Poor People’s Campaign:
A National Call for Moral Revival
is uniting people across
the country to challenge the evils of
systemic racism, poverty, the war economy, ecological devastation and the nation’s distorted morality.
https://www.poorpeoplescampaign.org/
This is true national emergency, instead of orchestrated ones.
8
@faivel1
The Poor People's Campaign is awesome.
The Constitution was designed to promote justice and the general welfare, but it has been corrupted to do the opposite.
Please, do not throw out the Constitution with the corrupt. Save the Constitution to save the USA from usurpation by the mega-rich.
The Party of Trump wants to end the Constitution so that instead of citizens, we can all be subjects again. "president for life" Trump has actually said that he can interpret the Constitution to decide who is a citizen. Do you really think he will stop at immigrants.
Trump wants to Make America Grovel Again.
That he why he said Americans should "sit in attention" for him, with "fervor," like the people of North Korea do under pain of torture or death.
1
Also make sure that the environmental laws are properly enforced. Any environmental laws that have been nullified need to be reinstated. These two steps will help to more evenly distribute wealth.
6
We need to put an end to Ronald Reagan's destruction of the federal government and the idea that we should cut taxes no matter what. We know cutting taxes does not spur the economy. We now know that those who recently received a windfall with the latest tax cut for the rich want to keep things the way they are. They are selfish and have no interest in helping anyone.
In order to survive anyone who earns under $100,000 should vote for a 70% top tax rate, eliminating the 15% tax rate for hedge funders, bring back the estate tax and other initiatives mentioned in this article.
We need to level the playing field. It's been tilted too long in one direction and I'm tired of that. An now that Republicans have shown themselves as the liars they are, re: deficits, let's spend our way back to prosperity for all of us. The infrastructure in the US desperately needs to be repaired. Let's start spending and investing on infrastructure and see how much it helps people with good paying jobs. Not the corporate welfare infrastructure plans many Republicans want which generally just put more money into the pockets of the rich.
We need a champion for THE PEOPLE, not the rich, not corporations, REGULAR PEOPLE. I hope we find him/her in the multitude of Democratic Candidates and that person goes on to become President. Republicans have been driving the bus towards a cliff, I want to get off, then they can drive themselves over the cliff and we can begin to get this country back.
10
It's past time for NYT columnists to grapple with our political dependence on big money donors, shaping our warped politics.
We're forced to hope for basic representation by our elected govt. "Please, sirs", can you give us some affordable health care for all? Generations after multi millions of citizens have it as a centrist norm in other democracies?
We see the start of change, but with strong blockage by big corporate profiteers. It took some 'radical extremists' like Bernie Sanders and now some others, to move our politics out of its deep rut. Who can help hoist us up and out?
We've operated within the limits the donors set our definitions of left/right/center---for their gain and our loss. It takes a brave politician to defy these norms. And brave media columnists.
Our main media tries to stay 'objective' --yet 'humanitarian' in this unbalanced, political culture—so it won’t be bashed as left wing radical by our true radicals, the rw GOP and its state media.
Our cautious centrists try to safely navigate, so just 'improve' ACA---be ‘INCREMENTAL’. Don't upset the balance of power in America, while seeming to give citizens a bit more of their rights.
Per GINI Index-- our proud land of upward mobility lags behind many OECD nations.
We're now more class stratified than countries are today that not too long ago had monarchs and aristocracies. We overthrew the British King, demanding representation for our taxation. Where is it?
6
Excellent column! But won't the wealthy always run the U.S.?
2
@PeterE
Not if their heads are lopped off as with the French Revolution.
Can you name a single child from a wealthy family that served in the military since WW2? My father was an immigrant from Scotland whose first job was in the WVa coal mines. My daughter and I are retired Air Force colonels, and my son served 27 months in Iraq as a junior Army Officer.
1
I once asked a relative who worked with the Federal Reserve, if Alan Greenspan then chairman cared about the rate of poverty in the United States. His response was that all that Alan Greenspan cared about was the economy. I think a big problem is that we have divorced people's everyday lives from what is considered the economy. There is more concern about the stock market, interest rates, the success of large multi national corporations than how the average person is doing. There was a time when our government was concerned about creating programs to support those in poverty. Now we have to worry about a diminishing middle class. Hopefully we are not on the edge of an apocalypse but rather there is an awakening that will create limits on wealth accumulation that harms the common good.
5
The GOP tax bill has worsened the economic inequalities considerably, as designed. Trump, who has a massive record of hard corruption, has become much richer through both soft and hard corruption. Why his base, presumably whites without a degree earning 20-100K a year, see it in their self-interest to support him and the GOP is a mystery. The SALT limit jacked up taxes by as much as10-30k a year for many taxpayers, in the upper 20 percent in income, in california. It should be rolled back and the democrats are not even talking about it.
The GOP base have been brainwashed by Fox News-feeding them disinformation, hate, fake news, and false hopes-which is funded by the same billionaires who are pushing the policies that serve their self-interests, in DC.
6
Republicans only care about deficits when a Democrat is in the White House.
We put the debt clock in Manhattan because of Reagan's increase in the deficit.
This latest Ryan / McConnell / Trump tax cut will increase the deficit from $600 Billion to $1 Trillion.
We got 2.6 Million jobs in 2018.
Sounds good until you realize we got 2.7 Million jobs in 2015 and 3.01 Million jobs in 2014. All without tax cuts for the wealthy. And 20 Million people got health care.
Every Republican senator voted for the $1 Trillion deficit. Not one Democratic senator voted for it.
Republicans know they are hypocrites. They don't care. And as long as Fox and Rush don't tell their base, they get away with it.
It's not that hard. Put back the taxes on the rich that Republicans have been cutting since Reagan.
10
Maybe, if we could get Supreme Court Justices to stop taking trips like duck hunting with a certain VP or any other perks from the politicians, we could pull Citizens United out of the mix and begin to change the way candidates are supported.
Then, maybe just maybe, we could get some balance back in government.
Just a thought!
Oh yes, and rid the Senate of McConnell and the “tea party”.
7
The rich never view their actions as corrupt. All they can talk about are the petty crimes of the poor and how they are superior because they have made it when their wealth comes from luck and inheritances.
6
“Excessive Wealth Disorder”? While Dr. Krugman concentrates, of course, a discussion of this damaging and dangerous extremist ideology within the realm of economics, I would think that the American Psychiatric Association should seriously explore adding this condition to its Diagnostic and Statistical Manual of Mental Disorders. The most wealthy, by far, people in America if not the world, zealously advocate and even corruptly lobby for policies which lower the standards of living and the resulting life expectancy for the poor, the working and the middle classes while without conscience seek to add to their unprecedented, staggering riches. If this profound narcissistic disregard for the majority of humanity is not an indication of a “mental disorder “, than what is?
10
Without winning both the Presidency and both houses of Congress, nothing substantial on the list of "reforms" is going to happen. So the progressives who are obsessed with the Presidency, both in 2016 and 2020, need to grow up.
What is the problem in my view? Obsession with social issues, failure to address economic issues and failure to identify the factors of Earth ecology. We are killing our mother, the Earth. Too many people, too many policies that put humanity at risk, too many policies that ensure the imminent arrival of the Four Horsemen.
Economic Items: The Car Crisis of 2010 was bungled. Miillions of working people got the shaft and the corporations got the bailout. Dem failure
Fair labor law change of who is a manager: Slow work in the Obama admin leading to rollback by Trump: Dem failure
My point - If you don't focus on economic issues, voters will listen to lies and promises about jobs. Many workers don't immediately care about social issues or disagree to a degree. And some social issues, like Open Borders and Reparations, are so crazy that the Dems loose ground with such extreme views.
It is looking like good governance, voting reform, etc and Senate majority isn't in the offing for the 2020 Dem team. So we will have at least a few years in the leadership wilderness. "There's no success like failure, and failure is no success at all." BD
3
@Paul
One of the biggest problems Obama faced was Mitch McConnell.
Even with Republicans in a minority in the Senate, McConnell was able to block a lot with the filibuster.
It is a wonder Obama was able to accomplish anything.
4
Before joining the socialist circle of the opponents of capitalism, Professor Krugman may recall Goethe's word, in translation something like "everything hangs on gold, everything turns about gold".
1
Elizabeth Warren advocates all items on Krugman's policy list, so there is a champion among the presidential candidates. But the Democratic Party, especially those in Congress, are Biden types, who would "pull a 2011."
Most notorious lately is Rep. Cheri Bustos of Illinois, who has brought the hammer down on the progressive wing in the House. Bustos owes her affluence to investments in securities, and her husband is a financier. Most ominously, her campaign funding doubled from 2016 to 2018, due almost exclusively from corporate money.
There are many such 'corporate Democrats,' with Beto O'Rorke raking in more than $0.5M in donations from the oil industry. For the local NY Times reader, there is Rep. Sean Patrick Maloney who represents affluent areas in Westchester. Maloney tends to vote with Republicans on economic issues.
Corporate Democrats win by the politics of distraction: watch them play up issues involving personal autonomy which don't cost the wealthy a dime, in particular feminism, as Kirsten Gillibrand is doing. Gillibrand has a track record of being Wall Street-friendly.
Cleaning up the money cesspool must start with the Democrats. Otherwise, those like Paul Krugman are left spitting into the wind.
7
The rich are despised by the large number of Americans who do not support President Bone Spurs and who believe that government of the rich, for the rich and by the rich should perish from the earth.
1
Let's have dialogue on human over-population. Then we will start to appreciate the humans who are here if we know we can't make as many as we wish. Human over-population coupled with unbridled capitalism equals slavery.
2
I can remember reading that F. Scott Fitzgerald once told Ernest Hemingway that "the rich are different from you and me" and that Hemingway responded "yes, they have more money." If true that was one of the wisest things the old boy ever said.
3
Are there any .1%ers out there reading these comments?
Whether you have anything to do with media or not, I'm dying to know what you're thinking. C'mon, there's hundreds of thousands of you out there! Some of you must be thinking of something pretty profound RIGHT now?
3
@thcatt
Most of the Billionaire class seem to be like the Koch brothers and Robert Mercer.
For an exception, read Melinda Gates' book, The Moment of Lift.
Then there is their colleague, Warren Buffet, who said it was wrong that he paid a higher tax rate than his administrative assistant.
But I haven't found any others like the Gates and Buffet.
The Kochs and Mercer's are definitely ruling our politics.
3
@Independent
CORRECTION;
Warren Buffet, who said it was wrong that he paid a LOWER tax rate than his administrative assistant.
Capitalism has no self correcting mechanism short of violent revolution, Thomas Pikkety claimed.
6
After the last crisis of 2008, the media failed to adequately address the subject of horrendous, obscene wealth and immense income gap that was in a works obviously for many decades.
The bitter harvest is upon us, who can predict how it will all end...every few days we have a new book coming out...
This Ends Badly: How Donald Trump Conned America Hardcover – September 17, 2019
by Joe Scarborough (Author)
6
Astute. Prescient. Compassionate.
2
A pertinent example about the behavior of the wealthy appeared just yesterday, June 22, in the NY Times.
Who Gets to Own the West? - A new group of billionaires is shaking up the landscape.
https://www.nytimes.com/2019/06/22/us/wilks-brothers-fracking-business.html?searchResultPosition=2
4
How the O.01% set the Agenda - and not to repeat 2011
How the 0.01% set the agenda
Predominantly via campaign contributions but they discovered another mechanism
A case study, from 2011
From the NY Times
“Handicapping IAC’s Investment in Chelsea Clinton”
Chelsea Clinton as a corporate director? Really?
Ms. Clinton was appointed last week to the board of IAC/interActiveCorp, the Internet media conglomerate controlled by Barry Diller.
For her efforts, Ms. Clinton will be paid about $300,000 a year in cash and incentive stock awards.
Not bad for a 31-year-old in graduate school.
NY TImes OCTOBER 4, 2011
Note:
Mr Diller is a 0.01% , and media are one of the most government regulated businesses in the US
From the LA Times
"Why did NBC reportedly pay Chelsea Clinton $600,000 a year?"
The disclosure raises the obvious question of NBC's goal in giving a person without any measurable journalistic
or broadcasting experience .. The answer is equally obvious. Plainly, it was done to curry favor with the Clinton family
LA Time, JUN 16, 2014 | 12:08 PM
Note: Media are one of the most government regulated business in the US
In 2011, Ms Clinton, was Foreign Secretary of the United State, and after her 2008 run, expected to run in 2016
Powerful enough to set agendas
2
@Woof
And no Republicans do this?
Just look at all the industry insiders as part of the Trump administration.
Not to mention, how many have had to step down for bad behavior.
So much for draining the swamp.
4
Next thing you know "excessive wealth disorder" will have its own code in ICD-11 medical coding manuals when they appear. It is probably too late for it to be added to ICD-10--shucks.
2
We can all agree, that the most precious commodity in in our day and age is time.
Time to reflect, to think and observe, what's going on in our government apparatus, and use your critical thinking which is in great decline.
It's no wonder, that our ruling class tries to make every person life as hard as possible, so there won't be anytime left to think, when you work several jobs just to stay afloat, when you don't even have $400.00 in case of any emergency.
I still remember when I was young and living in the USSR, my dad would somehow get the glossy magazine called America.
I tried to google it but nothing came up.
It was pure propaganda, basically rap as shiny object targeted for Russian intelligentsia circles and ready for consumption.
Lots of smart people bought into this American myth.
Of course we didn't know anything about riots, pervasive racism, civil liberty, intolerance, bigotry and the rest.
It was presented with perfect camouflage, call it photoshop in today's terms.
The base doesn't have time or energy to understand, that as citizens we've been coned for quite awhile.
The ruling class are the richest people in the world, the best book written on this subject is: Winners Take All: The Elite Charade of Changing the World by NYTimes own Anand Giridharadas
Dismally, the formula is still working.
It's time to take Krugman's thoughts to the people, otherwise we will continue preaching to the choir.
3
And so, Mr. Krugman, and all you progressive redistributors out there, just how would you go about peacefully divesting big money from the wealthy? Who should decide how much money is too much for the good of the wealthy? For example, what argument is convincing enough for the likes of the Facebook, Apple and Google barons to give more to "the good and the welfare of the people"? And who decides who is chosen to be relieved of their wealth? What are their qualifications? What percentage of wealth would eligible for redistribution? Would we simply elect such deciders to their posts? Who of the Democratic Candidates would be qualified to preside over redistribution? Booker? Warren? DeBlasio? Hickenlooper? Biden? Bernie?? Now for me, there is no doubt that some people have way too much money for their own good. No question. Color me white and privileged, I suppose. I traded a modest trust fund, early, for a zero-mortgage rural residence on a big hill where my nearest neighbor is in clear view, and more than 100 yards away. Sent our child to public schools. She prospered. She's successful. I survived bubbles. So, I'm set, relatively speaking. At 70, I work every day assisting a blind lawyer in his quest to defend the poor, drug addicts and not-so-petty thieves in their late search for equal justice. Redistribution is old news and we work our ourselves into a lather. Blame the rich? Oh no. Look who have their heads up their phones. Ignorance reigns supreme and blossoms richly.
Dear Mr Chapman, as an erstwhile Progressive Redistributor, I thank you for setting me straight. I think all of us should learn from your example, we should all live our lives the way you lived yours, starting with the small trust fund.
4
@Robert Chapman
Simple. We don’t redistribute wealth. We redistribute bargaining power.
To understand this problem please scroll down to see the 2nd graph at Bit.ly/EPI-study
You will see that from 1945 to 1972 GNP basically doubled & the median (meaning everyone’s) wage in lock step w/ it. Since then GNP has gone up 150% but the median wage has remained flat.
The inflection point of 1972 then is a hard inflection point. As some workers wages have gone up (tech/health) & some have floated along (the 7% in functioning unions) the broad majority of workers wages have gone down. That’s 47+ years of declining expectations for huge majority of people. Quite frankly this isn’t sustainable w/out complicity from elites in both parties (CAP/Clintons/NeoLibs).
The rich thru the GOP/NeoLibs have concentrated wealth by undermining other groups bargaining power agencies: Unions/Workers, Affordable Quality Ed/Middle Class, ACORN/very poorest; while enhancing the bargaining power of the rich (Ltd liability corps -80% owned by the <1% - see Citizens United). Meanwhile they use moral issues to get people to vote against their interests. As morality is a middle class characteristic (the poor can’t afford it & the rich don’t need it) the decline of the middle class means the decline in morality too (thus Trump).
Redistribute bargaining power to where it once was pre 1972 America (presumably when it was great) & let the chips fall where it may. Maybe some people won’t go for the money.
2
You have heard, perhaps, of democracy?
Our government does not depend on wisdom or fairness for its legitimacy. We have still in this country, legally and philosophically speaking, government by consent of the governed.
Our elected officials did and will decide who is taxed how much when on what. There will be no consensus on why; there never was nor ever need be. Taxation does not require consensus. It requires only consent.
Will those taxes be fair and wise? Were they ever? It does not matter, and anyway no one sits in judgement. All that matters is that if the taxes are deemed unacceptable — for whatever reason — the governed will elect a government to change them.
We should not discount the impact of race here. Deficits mattered when Obama was President, but now they don't. Scandals mattered when Obama was President, but now you can payoff your mistresses, openly embrace dictators, be endorsed by Russia, and have 29 open investigations that aren't front page news, and still have 90% Republican support.
Deficits were just a form of keeping the mixed race Obama from accomplishing his goals of raising taxes on the rich to expand healthcare and educational opportunity and limit the power of the rich. Fear was used to motivate the Tea Party.
Lost was the fact that Obama inherited these deficits from Bush, as CBO reported prior to Obama's inauguration that the deficit in 2009 would be $1.2 trillion and would not return to pre-crisis levels until 2012 (assuming Obama let the Bush tax cuts expire in 2010, which he did not).
3
Thomas Frank indicated, among several things, that people vote against their personal best interests because they believe that, in spite of government, the rich have earned their wealth and that they themselves will be in that same situation “someday”. This is hard Corps Trump country. An annual return to my small, rural hometown presents the same rundown houses behind fences beyond repair with weathered Trump-Pence signs hanging on broken and rusting gates. Every elderly person from my class of 62’ that didn’t manage to escape, lives on Social Security and Medicaid. They believe that their monthly benefit check continues to be the money that they paid into the system. Medicaid? The government? Yep! Nope! Mention in passing the republican position on entitlements and the whoosh you hear is what you said going over their heads. Truman Democrats who, thanks to Lyndon Johnson are now whomever republicans. There is no convincing them otherwise. The “black guy” (charitably) all but destroyed their country and Hilly? Don’t even go there. Any of you city slickers that think this country is going to trip over a kumbaya moment and sit down together for a glass of Chardonnay suggesting notes of oak and pear, go ahead and start without them or risk dying of thirst. My old friends are good people, they and I just live in different places. That makes one of us the “them” in the “us” and “them” that’s our country.
2
You would think that, with his epiphany in 2011, Paul Krugman might have been better disposed to the candidacy of Bernie Sanders in 2016, the only candidate that was really addressing the issue of income inequality. But no, Krugman was relentlessly dismissive and scornful of Sanders. As a result, Krugman went from an admired source for me to someone whose opinions on issues of equality I find insincere and untrustworthy.
1
There is a way around the part about convincing people what is fair. I do not need a progressive tax to redistribute money and power. What I want and what every business person says they want is a level playing field. A flat tax [ this includes SS ] that treats companies the same as individuals. A flat tax that starts after you earn your first $20.000,00. Both can keep their wright off's. The difference would be that there would no longer be separate categories of taxation. All monies earned will be taxed at the same rate. No more finance managers just paying capital gains. Or fees not being taxed. [ Did you know that baggage fees are not taxed as a lot of other fees, pure profit ] In other words no special treatment for the way you earn your money. Close all off shore tax havens with treaties with our trading partners that make it in all our best interest to participate. It would not be a simple thing to accomplish but as what all economist talk about is increasing the size of the tax net. I can imagine a tax rate close to five percent when you think of all the money that this new net would catch that has slipped through before. A quick look at total net income would give a clue to what the rate would need to be. Way back in the 80's read an article in the WSJ by two junalist pegged it at 2%. With this larger net we would be able to have more social programs to help all of us because healthy/smart individuals make for a better family units which snowballs into a better life.
2
It is well established that the rich and powerful shape overall values in a political-economic system. Members of the trump cult accept the economic and political values of the 0.1% because they have been inculcated by the messaging of the wealthy.
Money and policy changes must take place that creates values and policies that benefit the majority of Americans. To so so would require stronger messaging from Democrats, which is unlikely because of their timid fear of offending anyone.
Somewhere in the New Testament, Jesus said (to paraphrase) that those that love this world will rule this world.
It was a fact then, and it's still true now.
3
I love Tevya and have often repeated to myself the lines he sings in the song, "If I Were A Rich Man": ...The most important men in town will come to fawn on me. They will ask me to advise them, Like Solomon the Wise...And it won't make one bit of difference if I answer right or wrong. When you're rich they think you really know..."
I remember one young man responding to a pollster in 2016 that he was planning to vote for Trump because Trump was so wealthy that he couldn't possibly need anything more for himself and so he must be incapable of being corrupted.
Thank you as always, Mr. Krugman, for standing by us who need the education you provide to help us understand how we can be tricked into voting against our best common interests.
9
Fantastic column Mr Krugman! I was luckily employed in 2011 and tuned out much of the rhetoric at the time. Too look back and see the effect of the ultra wealthy on not just policy but news coverage is pretty remarkable. Everything in America seems to be in a state of flux right now lets hope the forces of reason and broad public interest rule out.
6
A balanced budget supporter always wants to take from the poor (privatize Social Security and Medicare to begin with) and give to the rich. Of course, god forbid if someone should suggest that the Congress was not ever supposed to be able to touch the Social Security and Medicare funds. These funds were set up to be separate from the General Budget. However someone in the Congress is always looking at how to raid this fund. Citizens paid, as did their employers, to aid in retirement living.
If there was serious concern about balancing the budget, then stop giving tax relief to Companies and the Wealthy. Get rid of loop holes, have all Non-profits pay taxes, including Foundations, Churches, Private schools and universities. Get rid of that last Tax Reform bill.
And while these so called wise politicians are at it, stop bailing out privately run banks and corporations. If you are going to bail out anyone, it should be those who lost homes due to the malfeasance of the Real Estate Industry and the Mortgage and Banking Industries. And maybe get rid of Wilbur Ross while you are at it. Wells Fargo and all that.
In addition, economists have to get out of their Ivory towers and actually talk to families and individuals who are trying to live on a Federal minimum wage, that does not even cover rent, let alone anything else.
The Wealthy will always live well. Our Government is seeing to that. What happened to "a Government for the people, by the people and of the people"?
7
We have been taught throughout our lives that there isn't enough of anything ...... money, food, clothing, land, housing which makes greed acceptable, even necessary.
We really need to approach reality with fact rather than fiction which is why our founders were very explicit with regard to the separation of church and state.
The use of invented deities has been a mainstay in male social control for several thousand years and it has worked .....for them.
2
It is not just the rich who care about the national debt. Common sense suggests that Obama and the Republicans were correct to try and strike a grand bargain to tame the deficit. But history suggests otherwise. Modern Monetary Theory (aka printing money) suggests that the U.S. can get away with deficit spending indefinitely. The only difference is that Republicans prefer to print money to pay for tax cuts, whereas Democrats want to print money to pay for social programs. MMT also requires a certain percentage of skeptics who think printing money is bad. The irony is that if everyone comes to agree with MMT, inflation will take off and the value of the dollar will collapse. But as long as doubters balance out believers, MMT might actually work. It has so far.
1
In a society where everyone put their own financial success first, there is little surprise that the 0.01% would use all of their advantage to preserve their status.
The more fundamental Wealth Disorder is insatiable greed. We should have a rule forcing people to "spend on short term goods or donate" their surplus income (after inflation correction) once they reach lets say $20M of assets. May be there should be a pledge for that?
Progressive tax with higher marginal rates are kind of achieving the same thing, but there are many assets that can still built in value, be tax little on exit, and exacerbate the wealth gap.
$20M might seems ludicrously low compare to Billions, but it is be hard to argue that holding 300 years or more of median family income is not enough to have a very comfortable life without doing anything to earn more money.
Still, once it come to ones own life, people live in a bubble and have as a reference point the people that are doing (or seems to be) a bit better than them. We all want raises in our income regardless of how much we are making 20k or 500k. We want the $5M house if we have a $3M house...
I am very privileged to be able considering not working at 50, I think I'll forgo pursuing owning a yate.
1
Prof. Krugman's 4th point: "[The 0.1 percent] has an extraordinary ability to set the agenda for policy discussion," and among the reasons are the assumption "that being rich also means being wise" despite policy results which regularly fly in the face of evidence, common sense, and public wishes.
That phenomenon was already encapsulated, long ago, by Tevye in "Fiddler On the Roof":
"And it won't make one bit of difference
if I answer right or wrong.
When you're rich,
they think you really know!
2
Let's be clear, if some folks happen upon or through hard work or outright luck create an amount of wealth considered unequal, in a free society nothing can be done about that: the person is not jailed, is not forced into equality. The only equalizer method available is a progressive wealth or income tax, to which the 'offender' either moves to a country where the tax is lower, or stays put to foot the bill. Most by far would chose the latter option. This is because they will figure that a difference between a 10% tax increase on 10 billion still leaves them with 9.
4
Oh, so a free country is one with no income tax?
Which one would that be? Examples, please.
As far as I know the only countries without taxes are countries without functioning governments. I doubt many living in them would consider themselves free, or prefer their circumstances to any country with a functioning government.
1
This is a great educational article.
My question is Dr. Krugman's statement/question as follows
" So reducing the extreme concentration of income and wealth isn’t just a desirable thing on social and economic grounds. It’s also a necessary step toward a healthier political system."
How?
Ralph Nader proposed that all executive income in the US be capped at $100,000.00. I did not vote for him.
Dr. Krugman did not addressing is that in China - which out numbers us 12 to 1, and India roughly 4 to 1, have executives, CEOs, and leaders who do not have the magnitude of wealth as those in the US. And they are in my opinion, outperforming us.
I don't know the count of executives in China/India/S. Korea/Japan.
Trump seems to think that the more money any one person, executive has, the better they will perform, of course to his bidding.
But After Trump is gone, how do we reduce extreme wealth?
2
He's certainly wrong about China. The wealth accumulated by Chinese billionaires is huge and much of that is flowing into the U.S. and into tax havens around the globe.
1
To answer your question, by reducing wealth inequality we reduce the ability of the wealthy to use their (lessened) wealth to influence policy.
The case that the wealthy have directed policy for decades is measurable. See “Democracy in America?” by Page, et al.
@James K. Lowden
Again, how can this happen? Our democratic societies, and the Communist Societies, and to some extent the socialist societies, divide people into groups of earners. We are all a number of one sort or another. How, do we turn the pyramid of wealth with the point down?
An electronic scoreboard should be created and displayed publicly, with the numeric data representing the actual dollars the top earners are making versus their off the books workers and then the income of their disposable employees.
So Prof. Krugman is back to supporting Progressivism.
It seems like he supports progressivism ONLY when it isn’t advocated by Bernie Sanders.
But Bernie was the only candidate in the Democratic Party advocating for Progressivism - in fact he made it popular and pushed it back into the mainstream discussion.
Trump did use progressive rhetoric (even though he doesn’t practice it) and that got him elected over Bankster friendly Hillary Clinton (who still could have won had she added Bernie to her ticket, instead of Tim Kaine and thus expanding her base, apparently Hillary + Banksters + BigMoney rather lose to Trump than allow Progressives a seat at the table, even if that seat is the VP which has no portfolio).
Most candidates lack credibility on Progressivism.
We are talking about demand side economics which existed between 1941 and 1972 (when, i suppose, America was great). These days, even in the Democratic policy, if you advocate for demand side economics a bevy of commentary will call it radical.
Indeed, Krugman called it radical back in December 2015.
He still hates Bernie and is advocating Liz Warner. Better something than nothing.
5
@Tim Kane
I'm personally grateful for this column, regardless of Prof. Krugman's many, many reports and opining of th past. We're trying to convey to our intelligent younger ones of today that no one is perfect and, or perfectly consistant about anything; particularly those who write and say so much; week after week, year after year...
2
@thcatt
True.
"So reducing the extreme concentration of income and wealth isn’t just a desirable thing on social and economic grounds. It’s also a necessary step toward a healthier political system."
I'm glad you closed with this. Our politics is so distorted by extreme wealth that in order to have the priorities of average Americans heard and implemented, we need to reduce inequality enough that our representatives actually represent us. On that list you could also include reforming the election and voting systems in place across the country. Everything from gerrymandering districts, voter suppression, eliminating the Electoral College, and returning to paper ballots has to be addressed. I realize this is another issue, not entirely related to your topic, but the unequal representation of constituents is also strangling democracy.
6
In short, the Money-Is-Speech crowd (that's how they defend the destruction of campaign-finance reforms) enable a kind of 'zombie politics' on the basis of (bad) ideas that are never allowed to die, because a plutocrat has the financial means to provide a make-work program with hired hacks to make sure the unwitting public keeps seeing these zombie ideas-that-aren't-allowed-to-die put in front of them, as if they still have merit. Together with unlimited campaign financing with 'dark money' (untraceable to the names of donors) the politics of Washington become poker chips, bought and sold and placed on the gambling table by the croupiers in the casino: the Democrats and the Republicans. (The press function as the casino security, watching over the cameras and the oxygen levels)
8
I've noticed that the few wealthy people I know seem to consider our country's assets as "their" money because they pay substantial taxes. Thus, they feel they're entitled to more say in how it's spent.
4
@KJ
As Warren Buffet said, something is wrong Buffet pays a lower tax rate that his administrative assistant.
1
Paul, you are one of my favorite columnists, and this is an important column.
While many columnists are falling back into the "all Trump all the time" pieces that I think helped Trump win in 2016, you are marshaling facts and talking about issues that matter to the average person. Keep it up!
9
The real problem of wealth inequality is not political, but financial. The recent Times article on the investment in Atlanta residential property reveals the obvious - the extremely wealth can use housing as an investment vehicle, driving up the prices for the people who by a house to provide a home for their family. What we are seeing is the wealthy outbidding each other, and leaving the rest of us on the sidelines, unable to compete, and forced to hand over ever large percentages of our income to those who clearly have too much.
11
One of the most insidious aspects of wealth inequality is its effect on how Americans view our "democracy." Inequality is a word that doesn't equate with the word "democracy."
So, when people view our society more as a plutocracy with all the benefits going to the ultra-rich, they begin to question just exactly what type of society we have become and if their needs are considered irrelevant. This creates a fertile ground for demagogues.
7
Great insights, but I would definitely put your number 4 reason at the top. Conventional wisdom has it that uneducated white voters elected Trump. His base. But it was the 0.1% who really did it. With their donations and, now, their impact on policy. As Elizabeth Warren says, the game is rigged. Under Trump, they’ve gotten everything they want. Tax cuts. Deregulation. Access. Etc. This small minority has always had an outsized influence. Under Trump, it’s out of control.
14
Among the reasons that those concerned about income inequality utterly fail to enact policies to address it is the use of the phrase "income inequality" to describe the problem. The actual problem is the over-class power elite's outsize political power...period. THAT is the fundamental problem, which thereby creates ever greater misery for everyone else. Any political order which allows the excessively wealthy to become even more dominant is doomed to a very bad future. So "soaking the rich" is intrinsically necessary to prevent the decline and fall of "democratic" governments. This is obvious and irrefutable, given what we know about human tendencies. And I say this as a truly radical centrist: it has nothing to do with "leftist" policy preferences, fundamentally.
6
I don't see any numbers that answer the question of how much a 70% tax rate on the 0.1% would add to the total tax revenue. If it's on the order of half a trillion, that would significantly impact the trillion dollar deficit. If it's under 100 billion, it barely scratches the surface.
Anyone?
1
I am an affluent moderate democrat who is by no means a "leftie."
But the accumulation of wealth by the .1% (Krugman astutely points out wealth is far more concentrated than the 1% moniker would suggest) has gotten to grotesque levels. It is truly good for no one, including the obscenely rich.
A progressive tax structure with a much higher top tax rate than the current 37% which also taxes capital gains as regular income is essential to preserving our democracy. This should not be a partisan issue, but an issue of basic common sense.
That we are flirting with authoritarianism at a time of such enormous concentration of wealth is not a coincidence.
10
@Sparky
Just an observation, but the fact that you refer to "leftie" in a vaguely derogatory way might suggest that you are not as "moderate" as you consider yourself to be.
It's semantics, but I consider "lefties" to be those who are very oriented towards the needs of others, and not so focused on preserving the status quo.
1
It has always been money and greed ahead of public good in politics, but I think the Citizens United decision could well be the death sentence of our democracy. We sold our ultimate right to free speech or at least equal representation for the right of a few to spend obscene amounts of money trying to buy elections. Now it’s poison is unchecked at every level of politics, and those able to stop it are unwilling. We truly have the best government money can buy, and its alliances are to those who bought them.
7
What are some reasons the rich have influence on policy proportional to their share of the wealth (the top 1% own 40% of it) rather than their share of the population?
1. Unions are no longer able to ask: "So CEO, you got a big payout. Where is ours?" Even in domestic service industries safe from international competition, unions have not caught on.
2. Billionaires own popular media, like Fox News, allowing them to amplify their voice.
3. We have a culture that praises the financially successful and punishes those who aren't. The movie "Wall Street" was a reflection of that culture. Fortunately, young people are rejecting that culture. Teachers and nurses are far more valuable that bankers.
4. The rich are the "cool kids" and we are supposed to want to be part of that club. Many vote against their own economic interests (e.g., for tax cuts for the rich and spending cuts for themselves) as part of aspiring to be part of the club. Voters would be far better off with Medicare for All and free college/trade school tuition (worth thousands of dollars per year) vs. the $900 Trump tax cuts for the median family.
5. The rich have branded the Republican party (in truth the party of capital) as the party of "real Americans" (i.e., white), and many vote identity ahead of economic interests.
7
When I look at the popular press, there seems to be little awareness of the eminently sensible issues Dr Krugman raises here. Instead, there is endless obsessing about "our privacy," the notion that tech firms are "tracking" people's web activity and collecting their "data," and well, doing something really nefarious with this information. As far as I can tell that mostly comes down to trying to sell people stuff, reinforcing people's own preconceptions or concocting more enticing iterations of the free software and services on which people have come to depend, and for which they are actually paying with their "data." If I am adversely affected by all this, it is very difficult to tell as an end user, whereas the issues Dr Krugman raises materially affect my interests as a citizen in significant ways. I tend to think of the privacy mania as one of those feedback loop-like phenomena that spontaneously arise from the Internet, like anti-vaccine paranoia. But sometimes I feel just a little nagging suspicion that it is deliberate misdirection by the Usual Suspects to direct our attention away from the very real problems of excessive wealth.
4
Excellent piece. And it really only touches the surface of the influence game. The proliferation of so-called think tanks -- at the state and federal level -- since the 80s is nothing more than corporations attempting to remove their fingerprints from influencing public opinion and couching corporate propaganda as political ideology.
It is easy to follow this game if you zero in on the actual individuals who show up opining for the "think tanks." Then you see the same individual writing about, say, how the free market will solve rural broadband, for multiple think tanks, and always as policy changes are looming to upset the apple cart. Of course, that individual is ultimately being paid by a corporate entity, and is a propagandist and not the scholar or journalist he or she pretends to be. And the politicians and the ideological audience of said "think tank" eat it up.
8
Wealth is wasted on the wealthy.
lets overwork all our days and have a massive coronary 2 weeks before we retire
lets get so conditioned to working that we are packing groceries at the supermarket when we are 82 even though we have no financial reason to do so
I have never bought into the bit about work for the sake of work, bring in the gerbil's treadmill
definitely redistribute the wealth to those that know how to enjoy it rather than hoarding it and checking your stock portfolios performance on a daily basis
2
Each group, each person usually has their own needs as the top priority. The wealthy have accumalation and protection of their wealth. Thats expected and they will promote any agenda that follows this. The average citizen needs, shelter, food, health care and some secure retirement.
We have a corporate capitalism designed to protect the business world. Its bought and paid for by those that need this. The voter has given up and allows these groups to choose the people who will protect them at the expense of the average citizen. Result? 400 people have more wealth then 60%. Upper 20% wealth increased 100% and rest lost 10%.
Social democratic government states that wages, education, health care, infrastructure, retirement security are the government priority and they will act to do these things. Private business? leave them alone except make sure they don't cheat. Folks, wake up and vote for a government that will help you.
3
All excellent - and important - points. Dr. Krugman should also include a discussion of how concentration of wealth distorts the economy.
Imagine, for example, that a family living on $50,000 gets a windfall of a few thousand dollars. Some of that will be spent on consumer goods and services which will help support other families making the same. This goes on to benefit many other families. Economists call this money velocity.
Now imagine a family getting by on a hundred million a year. What will they do with a few thousand - or even a hundred thousand? They will probably invest in equities, which is useful if the economy is limited by lack of capital. Ours is not. In essence the concentration of wealth has the effect of taking money out of circulation.
The balance between the spending class and the investing class has been skewed in favor of the latter. Wealth redistribution, however achieved, is not simply good for the people on the bottom, it's good for the entire economy, i.e. everyone.
10
Why should the wealthy care about wealth redistribution?
Because when the 99% storm the Bastille, it's far too late to start caring.
The winds are blowing.
12
"Entitlements" is a pejorative word that should not be used when referring to "Federal retirement benefits". SS and Medicare retirement benefits are earned by retirees over their working lifetime. Allowing the wealthy to 'frame the issues" like this even affects serious thinkers like Dr. Krugman as he used the word in his column today.
This type of "framing" has let the per cent of wages under SS to fall from 90% of wages covered in 1960 to 84% of wages covered today. Slowly raising the level back to the 90% 1960 level would extend SS for an additional 75 years
The rich win again if we don't reverse this basic principle
11
I would like to see an end to things like the "Forbes 400". After a certain amount of money, it's all about keeping score with some people.
Forbes should score wealthy individuals and corporations by how well they treat their people, how much money they give away, how much they pay in taxes, how much they are polluting or preventing pollution and other factors that make them good citizens. We don't need more rich people, we need more rich people who also do more good for others.
12
Mike Pence suggested the other day in his speech that his party does not raise taxes. It is plain lies. The GOP tax bill has worsened the economic inequalities greatly. Trump and GOP trade tariffs(the GOP as Trump's party and enablers cannot escape responsiblity for trump's tariffs)- indirect taxes in themselves, are hurting the billionaires the least and average people the most.
It raised the taxes on many people earning over 100k by pushing them to the 35% income bracket, from 32%, and adding the SALT deduction limit. Together these increased taxes on the over 100k tax paying category by 10s of thousands of dollars in high state tax paying states like California. Even retired school teachers are paying higher taxes after the GOP tax bill. The bill should be rolled back.
10
Ah yes, let’s follow experts like Dr K. How many saw the housing crisis coming? How about Dr B , head of the Fed who said, as the snow ball was gaining momentum, that all was well. Or Dr K again who predicted that the election of the Trumpster would be disastrous for the economy. Some disaster. Or those on the right who have been predicting inflation just around the corner...must be a long corner. They are disastrous predicting. All they are good for is saying if you do X then Y is likely to occur.
1
Dr. Krugman, the outline you have prepared could apply to any number of policy makers, however, Mitch McConnell seems to hit all 4 of them to a "T"
3
Yesterday, there was an article that perfectly described the power of the filthy rich to buy local and state governments in the West. One even cited his belief that God was rewarding him and his family with their wealth--which was based on developing the equipment that allows him and his ilk to speed up the ultimate destruction of our environment. His property adjoins national forest land which has been used for recreational purposes for a hundred years. The people who live nearby and visitors used old local roads to access that public land. The Texan closed those access roads not because they inconvenienced him but because he knew the local government was too poor to object.
In Colorado and other states beyond Idaho similarly selfish rich people and industries have done the same thing. In the county to the east of mine, large swaths of land have gone to the oil and gas industry because of subsurface mineral rights. That government has done nothing to protect the owners of the surface rights. The western part of that county is now a morass of dead land filled with the ugliest possible infrastructure. A house blew up because of unmarked underground pipelines and two people were killed. The county government is owned lock, stock and barrel by the frackers. Until this year the state government was equally bought. And now the enraged filth of the industry is angry because there is a law that gives local governments some say over those operations.
19
@Ceilidth
Very true. While working in Montana, we had to get permission from landowners, not all as rich as Ted Turner, to access public land in order to do our job. These are people to pay obnoxiously low fees to graze cattle on publicly-owned land and can control who gets to recreate on lands the public owns. I recall reading a reg where grazing permittees were required to allow access to public lands but never saw it enforced. I’m not sure if the Trump administration is only interested in rolling back regs that will increase pollution. He’s definitely not a guy who spends time in woods or sagebrush, only on his chemically enhanced golf courses.
5
The underlying game of unfettered capitalism is to make money which in turn makes you a winner. No one wants to be a loser. It’s a terrifying prospect. So terrifying that the excessively wealthy will support unconscionable wars in the name of “spreading democracy” in order to make huge sums of money. For example selling arms to Saudi Arabia is justified by stating that there is too much money to lose by not selling the weapons and anyway if the USA doesn’t sell them another country will. It doesn’t matter that the weapons are used to create the worst humanitarian crisis in Yemen. Who is going to reap billions by yet another war in the ME, this time in Iran? The so called news we see on tv too often focuses on the surface machinations of our so called leaders instead of exposing the billions to be made be the excessively wealthy. And when the war crimes are exposed by those courageous enough to speak truth to power, those individuals are silenced punished locked up for good.
7
So let us then, in American society, welcome as many citizens into the middle class as we can. The middle class is the golden mean, it is moderation. In the middle class, you have everything you need, and some extra.
Let us not turn on anyone else in the middle class, or in the poor class. Let us not turn on anyone, meaning the obscenely wealthy, but let us require that they obey the law, and stop bribing to write and rewrite laws that harm us.
The middle class folk, however, must start being more truthful and more courageous. Call out the obscenely wealthy for their assaults on our safety, happiness and prosperity. Don't let them trick us into hating each other. The obscenely wealthy are master manipulators: they know how to pull our strings, freak us out, and yell at each other. We then get distracted by a side show, and they steal even more from us.
There is enough wealth, enough goodwill, enough resources, for all of us to have a good living. Good living. We are not asking for anything more. A good living for me, and a good living for you: the middle class.
10
The best way to rectify would be through violence, hence why the naïve left i never successful. They are too nice to be successful.
1
This is a simple question from a citizen of Canada: Most thinking people in other westernized industrial countries really have a problem with your much used, lauded, idolized etc. American Dream. Maybe we do not understand it but most of us think that what your American Dream is all about is the acquisition of filthy lucre i.e. money at all cost by each individual American citizen and once you have it, keeping it. I lived and worked in NYC from 1995 to 2007 and in that time came to the conclusion that your In God We Trust slogan on your paper money should be changed to In Money We Trust. Having this as the primary goal of the USA has made your country the least socially progressive country in the western world and is essentially the underpinning of most of your problems.
9
For me the biggest "tell" about our how terminally corrupt our society is, was the Obama administration's reaction to the financial panic. Miscreants whose depravity caused financial institutions to fail still got their bonuses thanks to the largess of our elected leaders. We taxpayers covered all the bad bets of our betters. No one went to jail. But at one point Obama offered up our Social Security to Republicans as a bargaining chip to help pay for it.
Now, Obama wasn't a bad guy, but if that was the best he could do, we are terminal.
10
The outward effects of extreme wealth concentration begin with the inward effects. People like Don the Con, who grew up in Richistan, are not American, or British, or French, or Chinese. They are citizens of Richistan. And the rich are not like you or me. It's almost become a cult, the deification of the rich, especially in their own minds. A pathological narcissism that is allowed to run wild and foist itself on the less powerful-- and those people are expected to be grateful for the foisting. America-- actually the whole world-- has allowed this cult to take power. You can get locked up for stealing a loaf of bread in America, but if you are powerful and you steal a billion dollars, people applaud you. We have normalized this pathology over the last few decades and we are almost unrecognizable now. Lady Justice now sells herself to the highest bidder.
12
It's not that these people don't understand what life is like for those of us who actually have to work for a living; it's that they don't care, because we're not human beings to them. We are just drones, to be used to increase their own fortunes. Who cares what happens to a drone?
8
Matthew 19: "I tell you the truth, it is hard for a rich man to enter the kingdom of heaven."
Rich men say capitalism works. If life were a commodity, they could buy life from the poor that way all the poor would be bought up, they'd disappear. There'd be no poor people to worry about. Ponder the upside. No need for rich men to pay a minimum wage, Medicare for All would be unneeded.
Matthew 19: "Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God."
I told you. It is easy for a rich man to get through the eye of the needle. He can buy every camel in the world and corner the market on needles. The rich always seem to win.
3
It’s been said before, and over and over at that, but I still can’t get over the GOP’s care and feeding of unmitigated greed.
Pushed by the donor class, the first thing the GOP did on winning both the presidency and control of both houses of Congress was to hand the already ultra rich better than a trillion dollars in tax benefits, not to mention fattening their income streams with tax cuts for the corporations they control. And as if that weren’t enough, those think tanks Krugrman mentions quietly continue to stock our courts with far right judges and justices—jurists intent on eviscerating the administrative state and thus delivering the holy grail of battened down wealth and political power to those who already hold most of the marbles and the power that comes with them.
What is wrong with these people, for whom more is never enough? Who seem to have no qualms in making more and more on the backs of those who have less and less? And what on earth is wrong with the Evangelicals, who have made their home in the GOP and who self-righteously wave the banner of “Christian values” over everything the party does?
Back when I was force-marched to the Southern Baptist church, I was taught that “to whom much is given much is required” and that “you cannot serve both God and mammon.” But mammon is the god the GOP worships, apparently with the Evangelicals’ blessings. The poor, the meek and the hungry will just have to get their rewards in heaven.
12
One complaint: as you said yourself, the 0.1% is the real problem, and almost all their income comes from capital gains, so a top 70% tax rate won't have much effect there. Raise the capital gains tax instead. At only around 24% it's absurdly low. That's what would hit the truly insanely wealthy.
Yes, a wealth tax might have the same effect, but it would be much harder to pass and to implement. And as others have argued, a real Estate Tax reform would have a lot of the same eventual effect and be easier to get approved and to put into effect.
6
There's little to add to what DR. K and responders have already said here. Nonetheless it might be noted that our president may have disabused some of the 99% that there is an ineluctable link between wealth and intelligence.
4
About 26 people own as much wealth as 3.5 billion of their fellow human beings. Apart from the immorality of gross income and wealth inequality, there is the issue of social stability. Scholars have examined nations that have collapsed into revolution. One of the best of these studies is Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu and James Robinson. The book considers many failed nations over the course of centuries. The authors conclude that the countries all had one thing in common - rule by a narrow elite whose main focus is on maintaining and/or expanding their own interests at the expense of the rest of the population. These nations inevitably face social unrest, chaos, and eventually revolution. Consider who benefits most from a stable society and who has the most to lose from its dissolution. The answer is the economic elite at the top of any nation. Political opposition against raising taxes on the ultra-wealthy uses terms like "class warfare" and raises dire predictions of the awful consequences that will follow higher taxes. In reality, however, the people who are the primary beneficiaries of higher taxes on the ultra-wealthy are the ultra-wealthy themselves. This conclusion may seem counterintuitive at first until your consider all that the ultra-wealthy have to lose from social unrest, chaos and revolution. Reducing income and wealth inequality promotes social stability while increasing it can tear a nation apart.
8
Wealth inequality is nothing new. The "who" among the wealthy may have changed from royalty and their courtiers in the 18th Century and earlier, to the captains of industry in the 19th and 20th centuries to the 1% now. What they did with their wealth was much the same; buy privilege which buys power and power buys ever more inequality.
The wealthy never "earned" their wealth, they captured it through inheritance, luck and with the help of custom, government policy and the law. It is not coincidence that the rich get richer and the poor get poorer, it is predetermined in national policy.
There are only two forms of government which have made serious attempts to diminish inequality and promote equal opportunity in a substantive way as a binding principle and that is socialism and communism. While they have succeeded in some ways, through free education and health care, they have faced strong headwinds and even sabotage by capitalists who feared the writing on the wall.
Fee market capitalism is a prescription guaranteed to succeed in producing inequality. Only socialism offers the possibility for equal opportunity and true democracy.
6
LouisBrandeis-You can have wealth concentrated in the hands of a few or you can have democracy, but you can't have both.
10
@libdemtex
Love that! Thank you!
Many good points made again about the way the Wealthy think and act in their own best interests. Thank you.
2
Superb column touching on a core question Who is government for?
My simpleminded analysis:
Born in 1942, I witnessed a massive value shift in our culture from believing that government was to help society and its people, to government is to help the economy and thereby the wealthy, which would eventually trickle down to us
During and after the war, we believed we had fought against the horrors of fascism and its nightmare ideology and for a strong democratic society (put the emphasis on "society").
We all sacrificed for the war effort, and greedy, wealthy cheaters who tried to aggrandize themselves at the expense of most of us were detestable and despised (e.g., Arthur Miller plays).
Unions surged (always hated & maligned by the rich), but the cultural values were that American is a middle-class society that shares in our nation's growing wealth. Social scientists wrote that strong democracies were built on a strong middle class. In bipartisan fashion, people's tax dollars were allocated to building society and the public sector: infrastructure, education, a social safety net, and later health care.
Then the Vietnam war, the military industrial complex, Ronald Reagan and an engineered shift by the rich and the media from government is for bettering people and society, to government is for bettering the economy for big business, the military, and the richest of the rich--all assured by decades of economic & political, laws at society's expense
Bring society back in
9
Thanks Prof for clearly stating the obvious, but often disregarded reality. We need representatives that truly represent. Thanks again.
5
As the writer explains, people have their inherent economic philosophies. With the take over of the media by right wing pundits, that philosophy has little chance of changing. We are what we watch on TV and what we listen to on the radio.
1
Tax all gains as ordinary income and make infinite the social security tax ceiling and subject all gains to social security taxes. It’s the price to play the game of capitalism in which profits are privatized while costs are socialized. Not paying your fair share is unpatriotic and unAmerican...
6
Concentration of wealth at the top 0.1%, as the professor says, is a major concern. How did this happen? For that, we have to look at the corruption of our tax code that started during Saint Reagan administration. The grandpa managed to pull a great con on the gullible public, focused more on appearances than his policies. He managed to cut tax rates for the rich and corporations and when deficit ballooned, managed to slyly shift the tax burden to the middle class. Spending increased but was paid for through ever-increasing deficits. Since then, EVERY Republican administration has followed the same tax cut mantra (mostly for the rich), sold to the public by snake oil salesmanship (remember the the dogma that tax cuts lead to better economy and therefore reduced deficits, contrary to all evidence). Only when Democrats took over, deficits matter and have to be reduced by cutting social (not military) spending.
The strategy is quite brilliant, though simple. Remember the goal is to shift the tax burden from the rich to the middle class by tax cuts and more tax cuts. If tax cuts increase the deficit and public debt, so much the better, because then the deficit issue could be used as a weapon to cut spending on societal welfare. The strategy has worked spectacularly. The voting public has been kept distracted by non-pocket book issues (e.g. abortion), while its pocket has been picked clean by tax code changes favoring the rich masters of the Republican party.
Wake up America!
13
Paraphrasing Amartya Sen, what counts is how the fruits of economic prosperity are used. Imagine if, instead of building a second or third summer mansion for one of the 0.01 percenters, that same devoted those same resources to building housing that actually met the needs of people who might live in them. But, too many do not see this as an option. Rather, they think that the people building the additional summer mansion would be unemployed so they should be happy to be working for the super wealthy.
3
@PJM
Exactly, PJM, as you point out to the broad base of ‘we the American people’ — “resources to building housing that actually met the needs of people who might live in them.”
Unfortunately, the extreme greed, avarice, looting, and pure self-interest, housing is an example of how deceitful Crony Capitalist crooks were exposed by “Fortune” magazine of using their wealth to make private fortunes by monopolizing the housing stock in America and play this ‘market of houses’ as their piggy bank:
http://fortune.com/longform/single-family-home-ai-algorithms/
3
2011 was better than now. People who were out of work found work. Now people in their 50s and 60s who were laid off cannot find work.The unemployment figures, which indicate low unemployment are completely bogus. The GOP model of feeding the elephants-giving billionaires and companies a big tax break is only making the billionaires multibillionaires. Nothing is coming out of the other end of the constipated creatures for the sparrows-the poor, middle class,seniors and the white collar unemployed. 50 and 60 year olds are retiring after being laid off.
7
Paul, the mistakes of 2011 were all made in 2010, when Obama and Pelosi decided to continue pushing Obamacare despite the Scott Brown election, which was the best example of handwriting on the wall I've ever seen. That led directly to the loss of Congress that November and to all the consequences flowing from that.
So yes, by all means study just how that catastrophe came about and what its lessons are for 2020.
There are some key reasons that a majority of American voters prefer republicans at local, state, and national levels that overcomes their concerns for the economy, justice, environment.
Everything republicans do to increase inequality, pollute the environment, start a war, increase the debt, tick off allies, kill education, promote medieval religious dogma - makes them more popular among Americans - and not less.
Democrats have not found any such enduring reasons for loyalty toward them, except from a small segment of American voters. By and large, the party is cloying for votes from an inconveniently large segment of know-nothings in the center, who have no moral or intellectual heft, think both sides are equivalent, and are skittish and unintelligent about civic engagement. It is this segment that chose a grossly unqualified Obama over an experienced, qualified Romney. But the harm unleashed by their switch to Bush I, Bush II, and Trump will hurt the republic for 100s of years.
I do not worry about the hard left or hard right; they are unwavering in their agendas (yes, hard right is disproportionately larger in number). It is the ineptitude, disengagement and apathy, and intellectual callowness of the center that seems to be the problem here. They are unmoved by and indifferent to reasoned arguments from economists, scientists, demographers, psychologists; enthralled by a litany of charlatans on the web, TV, radio, and churches.
But thanks for trying Paul.
I agree with some of this statement, but I have to question "grossly unqualified" as a description of Obama after his first term. What qualification for being the President does a president lack?
2
@Kalidan
Romney was a vulture capitalist. He bought companies in trouble, raided their pensions and savings, and sold off their assets. Employees were left with nothing. If that is what you consider a good businessman, I assume you are in his cohort. Voters preferred Republicans until Hoover; then they swung to Democrats and FDR. If it were not for FDR, there would be no Social Security; if it were not for Truman and LBJ, there would be no Medicare. Eisenhower created the inter-State highway system; Nixon created the EPA. The current Congress is now getting what they can before they are thrown out. The damage done will take decades to repair. Most American citizens are trying to survive.
8
When Obama defeated Romney in 2012 he already had four years as president under his belt, had saved the country from a second Great Depression which was handed to him before he was even in office, had found and killed Ben laden, had passed healthcare legislation and saved General Motors from Bankruptcy and had presided over the Middle East mess including two ongoing wars he had been handed (and had killed more terrorist leaders than any other president albeit wit a controversial drone program). In the election for his second term in 2012 there was no one else in the country with that kind of executive experience and Romney wasn’t even close to being anywhere near as qualified for the office of the presidency. Actually McCain four years earlier would have been a better example for you to use to make a point of comparison concerning experience.
5
As just a layman who cares about such issues as this, my biggest frustration is that the general public, many college-educated, many not, are close to totally indifferent to even thinking about economic policy, let alone Keynesian Economics. A big part of the problem is the noise created by the TV business channels and the right-wing radio loudmouths who espouse some combination of raw capitalism and supply-side "economic theory." They are paid well for shouting those simplistic ideas from the rooftops. Most of our political leaders, including President Trump, Mnuchin, Mulvaney, Kudlow, and, of course, McConnell, profit handsomely from this kind of economic balderdash. Although many of us learn volumes from Dr. Krugman, our political leaders and one percenters do everything in their power to ignore the professor. As long as Trump. et.al. and their enablers remain in power, honest dialogue in political circles about the economy is impossible.
7
The use of the term Wealth Redistribution is at the heart of the low tax, rugged individualist narrative. It implies that wealth was earned through extraordinary means and is taken away unjustly. The narrative doesn't allow for the converse fact that the wealth accumulated through the use of the low-tax mindset that prevails throughout our system.
The beneficiaries of the system decry any attempts at reform as "Socialist" when they thrive in a system of Capitalistic Socialism. Calling it capitalism justifies the wealth accumulation.
7
@tom ... CorRECT. Word warriors like Frank Luntz have twisted the republic's english in favor of the plutocrats, and we of the hapless herd just go along. The rightist propaganda masters re-labeled progressive taxation as 'Wealth Redistribution" (who could be for that?) and Social Security and Medicare as "entitlements" (nobody likes an entitled person). Reagan said "Government is the problem," and Donald Trump says 'witchhunt.' There is outright lying and there is more subtle lying, the kind that oozes out of right wing think tanks.
1
Dr. Krugman correctly points out the public's fallacious thinking regarding deficits and stimuli when he noted that, "In November 1936, just after FDR’s reelection, Gallup asked voters whether the new administration should balance the budget; 65 percent said yes, only 28 percent no."
But Dr. Krugman assumes that his readers are aware of the economic history of that period. After FDR took office in 1933, he correctly applied stimulus in every area his brilliant team could figure out how to do it. He had the support of both House of Congress, and his only impediment was the very conservative Supreme Court that overturned many of his most effective programs.
But even with what remained, we were pulling out of the Great Depression quite smartly toward the end of 1935 and through 1936, and FDR was rewarded for it by the greatest landslide reelection in our history.
Then, possibly because the right wing and the largely right wing press had persuaded the public that this spending was reckless and dangerous, as the poll Dr,. Krugman cites demonstrates, FDR pulled back sharply on the stimulus in 1937, which started out as a pretty good year. This threw us straight back into the Great Depression, which persisted until WWII provided a different, HIGHLY unpleasant kind of stimulus.
Of course, WWII resulted in the largest deficit in our history as percent of GDP, which we only dug out from under by an income tax where the top marginal rate was well over 90% for the next 15 years.
7
One aspect of this story is the Horatio Alger myth that is so inspirational. If you work hard, young man(sic) you will succeed. Compare that to the actual stories of very wealthy people. Some are smart, have a good idea and work hard at it: Boomberg, maybe Ford and Edison or Jobs. Some get lucky: Kroc, the Walton family. Many are ruthless: Rockefeller, Weyerhauser, Morgan, Insull, "Chainsaw Al" and others. Another problem is that both Macs (pun) are really good products. Sorting the rules out becomes a challenge: would they have been as successful under Warren rules? I think so, but do you? Are there tradeoffs to consider: fewer blockbuster ideas versus fairer distribution,e.g. I was marinated in Koch brothers type ideas before Koch. Remember Col.McCormick's Trib, or was that before your time? These are not new issues,but perhaps amped by the speed of media and TV.
1
We can do all the talks, but only the rich 1% can do the walk by pushing the senators & congressmen to make laws in their favor. In China, if you give money to government officials in return of a favor, it is called corruption. But in US, the 1% gives money to lobbyists or non-profit organizations in return of changing or updating laws in their favor, it is called legislation. One is illegal and the other legal. They are doing the same thing but are different in the name only. Until we close that kind of loopholes, we just still do the talks only.
11
President Obama was also seriously concerned about deficits. He kept the spending he inherited from Bush flat at around $3.5 trillion from fiscal year 2009 (the last year budgeted by Bush) to 2014, unheard of when historically spending goes up about 5% per year.
By 2014, with revenue recovering along with the economy, the deficit was 2.4% GDP, below historical average. By May 2014, the total number of persons with jobs was back to the pre-crisis level. By 2015 GDP grew 2.9%, the same rate as 2018.
The main part of the economic story that was utterly misunderstood by the media was that households were paying down debt from 2009-2012, for the first time in modern history. From 2000-2008 households added nearly $8 trillion in debt as the bubble expanded, and from 2009-2012 they paid down nearly $1 trillion, slowing the economy significantly. From 2013-2018 they added $1.9 trillion, half of that in 2017-2018.
One key fiscal policy lesson we should have learned from the crisis is that we have to keep households from getting too indebted, and when households are paying down debt government must be adding to it. We probably should have added another $1 trillion to deficits/debt over that 2009-2012 period than we did, roughly doubling the size of the Obama stimulus.
1
What Professor Krugman calls Excessive Wealth Disorder is a later stage of a pathological fixation on money. It is pathological insofar as it substitutes for a healthy sense of identity, for healthy relation to others and to the transpersonal. It often coexists with dehumanization of others, cognitive distortion and an unquenchable desire for power and control. This latter does not satisfy, however, resulting in unacknowledged sadism and acts of cruelty which are rationalized by an inflated self image as being better than other people, often itself justified by the pseudo logic that one's wealth is due to being elevated by God, proving one's specialness and superiority.
This condition has increased in prevalence as money has shifted from hard cash to electronic accounts, as technology has enabled huge capital gains based on the multiplier effect in a now accessible global economy, and as financial machinations result in previously unthinkable gains.
Advertising and the media have created the meme that being "rich" is the goal and purpose of adulthood so even those with little will strive for great wealth and support it in others.
Thus, this desire has become the "Holy Grail" of modern life and society as a whole has majorly strayed from the path of what is truly of value. The result is alienation, environmental collapse and social chaos. This will only get worse until we name it for what it is: group psychopathology.
4
Perhaps a couple more ideas at reform might address the problems, public financed elections and election reform. Certainly the Citizens United decision gave the extremely wealthy even more ability to influence the system.
2
I would add one more influencer to Mr. Krugman’s list: Rupert Murdoch being granted a broadcasting license to form the only new national network after the initial three companies from the infancy of broadcasting. By legal maneuvers he created a news division that didn’t play by the same rules as the other three, and he fed the appetite of people who wanted America to go backwards. Murdoch saw it as an income growth opportunity, as opposed to any personal political belief. He ushered in the money before principal business plan—while it existed before—the unapologetic public dealings of the Murdoch organization was on full display for others to see and learn from.
3
Business owners who support an incumbant president might decide to hold off giving modest pay increases till shortly before the election making it more likely that a sitting president would prevail.
1
We do not have pure competition in our market yet we treat our economic system as if it were (the Republicans and their donors).
We have the very rich funding inane foundations such as anti-vaxiers and expressing their desires on all us. (This anti-vaxing thing is just another idea that the individual is held back by society, aka Ayn Rand).
That the wealthy use their wealth as scorecards against each other shows a degree of not being moral. The Calvinist creed that you know that you are saved if you are blessed by wealth is gospel to this group and they believe that other people should (CAN) pull themselves up by the bootstraps. What happens when there aren't enough bootstraps?
No, the wealthy should care more for their fellow man and share the wealth as they become more successful with all stakeholders. Just because you have the channel power to exact a certain wage or price from a worker or supplier doesn't mean you should.
It is this lack of respect from the wealthy that government HAS TO STEP IN! If the wealthy were more Christian or more so empathetic they would do the right thing and be proud and enjoy all their fruits. If they want admiration, they'd get it.
This waiting to the end and giving all your wealth to such and such charity is at least better then creating more Trust babies but it is not efficient in spreading the wealth to where it is needed. If you want to give out a bootstrap, share along your growth!
1
While I agree with Mr Krugman's premise that the wealthy have far too much influence over policy, I think he ignores the fact that the intellectual elites share that characteristic. In our world of two classes - protected, and unprotected - it's the protected class that generally directs or influences policy. That class includes not only the wealthy but the intellectual elites.
Mr Krugman's article seems to reflect an unawareness of this class distinction. He confers insight on the common man in wanting more health and social spending, but denigrates the common man for thinking that budget deficits matter. So the common man is only wise so long as he's in step with the writer's opinion? This large and forgotten unprotected class has no power and no voice. Is it any wonder we're in a world where the unprotected class is in revolt?
3
Who explicitly and openly declares these same truths that Mr. Krugman expresses in this column, with the same knowledge of fundamentals and priorities?
Only one candidate in the Democratic Party.
Bernie Sanders.
Why doesn't Mr. Krugman say this important and evident truth?
2
The inadequate stimulus of 2009 and the actual reduction of government spending 2010-2014 were mistakes, but another one was bailing out the big banks in 2008. Most liberal economists including Krugman recommended that the government take over the banks, at least partially. but instead they were given all the money they wanted. Not only did the big banks get bigger and more powerful economically, their inside political power in the Obama administration was not lessened from what it was in the Clinton and Bush administrations.
Unfortunately major economic and political changes may not happen until there is another disaster such as the 1929-33 Depression - or the imminent threat of one - which would change the balance of political power. TARP was put over with the votes of Democrats in Congress - that in retrospect was a mistake (although the negative votes of Republicans may have been for show, knowing that Democrats would put it over). Had there been more sense of emergency, and had the banks actually come closer to collapse, there may have been a more decisive victory for Democrats in the election which would have allowed more drastic fiscal action and many other things. Anyway, in the next crisis Democrats must not take the role of protecting the financial overlords, even if it means deepening the crisis temporarily.
2
Let's imagine for a minute that the Republicans knew many years ago that I had the personal budget of austerity to better control my personal meager finances. Let's also imagine that the Republicans believed my thoughts were all golden. Are all their thoughts real or truthful and right? mine are not. Some are thoughtful reflections based on facts while at peace. Still others are wrong in times of duress. Now would you adopt my austerity on a national scale because my budget was under duress? They did, and they were wrong. Even worse, their furtherance of my personal austerity spread worldwide and world economic activity declined for several years. The price of oil was what placed my budget in a precarious situation.
Was my story real or contrived? You be the judge.
Krugman explains the dilemma. The Commenters provide the evidence. If only America was a democracy, but sadly it is not. So as the economic minority continue to hold power over the economic majority, they will hand-out enough crumbs which, together with their corporate media propagandists, will assure that nothing will change. Trump ran and won by appealing to workers--and once in office he's done the bidding for the traditional Republican investment class. I guess "businessmen" know a thing or two about "bait and switch".
5
This is spot on. And it's well supported by Joseph Stiglitz' new book, "Power, Profits, and People." The Noble Prize-winning economist clarifies how entrenched the notion is that unchecked markets and corporate greed have allowed capitalism to corrupt the good that capitalism can exert in a democracy like America's.
The power that the tiny minority of the extraordinarily wealthy exert on the political/economic direction of the U.S. is unimaginable: devious, manipulative, and invasive. And almost always aimed at maximizing profit and power for those who already have most of both.
Thank you for noting what is a hidden persuader in the country -- one which our president and most of Congress well know keeps him in power.
6
Krugman and Stiglitz whole heartedly supported Hugo Chavez when he enacted precisely economic policy described here. it work great for 2 yrs, and has lead to destitute misery for over a decade. A 'Democracy' where people vote to take other peoples money is always doomed. Appealing to greed and envy this way invites tyrants and dictatorships, ever increasing demonization of those who have a little more wealth until everyone is equally poor and without freedom.
As a math teacher, I am a strong proponent of going back to definitions and the logical connections between them, to analyze the assumptions behind policy. Surprising things can be learned when you clear away fluff to see the logical structure of an argument.
For example, the media has spent decades making "capitalism" synonymous with "markets" by constantly using the words interchangeably, when they have completely different meanings.
Markets are the use of money to make trade easier, and the relationships that grow up around trade.
Capital is land, buildings, machinery, and financial instruments used to buy them. Capital is one aspect of trade. There are other important aspects, such as labor.
Capitalism is the theory that the owners of capital should receive constant favors from government, the demand by the owners of capital that government interfere in markets on their behalf.
Special tax rates for capital, tax cuts for capital, subsidies for sectors of capital, no-bid, cost-plus contracts that move tax dollars to the owners of capital are each and interference in the free market, not the opposite as their proponents claim.
Even a corporation itself does not exist until a government charters it. It is an interference in markets.
Controlling shares in all mass media (and much alt-right media) are owned by the few thousand people that control, literally, half of the world's wealth, and want ever more.
Read between the lines, using definitions and logic.
6
Appreciating Paul Krugman. Recall hearing Robert McNamara state unequivocally that he paid a 90% tax rate when he was
Pres of Ford and felt that was right. Meanwhile we continue to affirm that social security tax needs to be paid for any and all income (especially over 250K) Al Gore was corrrect about that "lock box". Remembering during VIetnam War when LBJ fuzzed up the social security part of the budget to make it appear he was spending more domestically relative to the war. Tragic error!
1
I thought this was a very good article. However, I thought this was going to be a column on individual excessive wealth disorder, as in why do excessively rich people feel so entitled to becoming even more excessively rich? and on other people's backs? I have often pondered this question. Anyone have any ideas?
3
Money, past a certain level, is a way to keep score. The score isn’t just relative to the other rich, which it also is, but as measure of their personal value relative to “the unwashed masses”. As such, the higher the score, the higher their intrinsic value.
3
When the 99% will not be able to afford food and shelter the only things that will happen will be more violence, brutality, criminal activity.
The unions were made irrelevant, the general population is victim to the systematic destruction of general education, especially government and history. The politicians will continue to stick with their richest supporters and this once strong and proud country will deteriorate into a totalitary regime with soup kitchens and military on the streets, perfectly Orwellian.
5
@Jay Tan
It's interesting to read "Gotham" by Burrows and Wallace, about the history of New York City, which in its way is a microcosm of U.S. history. It shows us that throughout the white person's history of the U.S. these cycles were always happening; radical mal-distribution of wealth creating huge poverty, soup kitchens, repression of rebellions. This was until the New Deal, which lasted post-WWII until the 1970's. But I grew up with general, white prosperity in those times, and thought it was normal. You discover that it wasn't normal if you read history.
1
Billionaire Pete Peterson also funded - through his Peter G. Peterson Foundation - a whole curriculum based on his self-interested political views at Teachers College, Columbia University. I attended a reception there where Pete Peterson & Co. were congratulating each other on their accomplishment. A Teachers College 2010 press release - "Teaching Kids About the National Debt" - announced: "Teachers College has received a three-year $2.45 million grant from the Peter G. Peterson Foundation to develop a comprehensive social studies and mathematics curriculum about the fiscal challenges that face the nation, WHICH WILL BE DISTRIBUTED FREE OF CHARGE TO EVERY HIGH SCHOOL IN THE COUNTRY. (My caps) Titled 'Understanding Fiscal Responsibility: A Curriculum for Teaching About the Federal Budget, National Debt and Budget Deficit,' the non-partisan, inquiry-based curriculum will teach students the facts, significance and consequences for the United States and its citizens of public policies leading to persistent deficits and a growing national debt..." After "field-testing the curriculum in 56 classrooms in Texas, Ohio, and New York," the final version was to be "distributed nationwide in 2012," Teachers College said.
5
The most equitable distribution of wealth experienced in the U.S. was in the 50's, 60's and 70's, not coincidentally, a time when the top tax rate was around 90%.
5
The top .1% and .01% are certainly a unique lot. And given how vastly more power and influence this group wields, deserves unique attention.
-They can single-handedly buy the main organs by which public information is disseminated
-They can single-handedly found think-tanks, wielding enormous influence on what counts as accepted wisdom
-With campaign contribution influence, they can wield veto-power over policies they dislike
-They are too big to sue, their battery of lawyers no match for those on the public payroll
But it does not follow that those who are "merely" in the top 1%, or the top 10% are not also significant contributors to inequality, and very important players and shapers of the consensus of the powerful that is currently resisting reforms.
Of note:
-The AMA, representing physicians, are part of the leadership in campaigns against healthcare reforms, since reforms will reduce their out-sized compensation (currently a much greater proportion of their patients' income than 50 years ago).
-Developers, landlords, real estate firms, and wealthy homeowners are at the forefront in resisting reforms that would lead to more equitable access to housing, and more sane and equitable prices.
-Business owner-managers, law-firm partners, tenure-track professors, masters of trades, senior administrators of all stripes, public or private, are at the forefront resisting more equitable pay and status.
Let's focus on the whole picture, not just the shiniest parts
4
Typo, Paul:
"Vulgar Marxist" should be capitalized, to distinguish Marxists who use crude language ("vulgar Marxists") from Marxists who believe that all aspects of the superstructure (ideology) are determined by economic relations in an unmediated way, viz. "Vulgar Marxists."
Which appears to be your intended meaning.
But precisely political economy has reduced its investigation to the merely empirical forms (as they appear immediately) without troubling itself with the conceptual category of value, which Marx investigated from the abstract (value) to the concrete (profit, interest, rent, wages). Vulgar economics still prevails as it defends precisely the personification of concentrated wealth
Thank you Paul Krugman. Today’s column was an oasis of clarity in a chaotic domestic & political environment that resembles a combination craps game and 3rd rate reality show.
The pernicious effect of BIG money -directly, indirectly and especially in setting the political agenda has led to our downward spiral. The idea that the 1% have better ideas then the “other 99%” is nonsense; Tevye’s comic line from Fiddler comes to mind “When you’re rich they think you really know...”
Tax monies spent on vanity projects - the silly wall, corporate welfare- could and should be directed to rebuilding our infrastructure, securing Social Security(which would be fine if Congress hadn’t allowed itself to “borrow” from the trust fund to cover shortfalls), education, jobs, health care. We spit on allies & have weekly fake crises; we struggle in the quicksand of the Middle East which only sinks us further. We are friends with the murderous terror-supporting Saudis, while feeding old grudges & being a general nuisance. We killed thousands of Iraqi civilians & virtually destroyed their country to win a pathetic war, then left those who survived/couldn’t escape to rebuild from scratch without aid. We pick at imperfect but democratic Israel whose loonies & journalists have opinions without fear of bone-saws.
The White House wacko has to go if we are to have a healthy growing prosperous democracy where we can “pursue happiness”
6
Please explain your position on #3 - campaign contributions. You say “yes they matter” and yet the NYT is resuming its hit job on Bernie.
1
There's something else that sustains the absolute hegemony of the ultra-rich: the corrupt promise of freedom as an all-you-can-eat buffet for the ultra-rich that's free of consequences or any moral calories.
This goes way beyond the Calvinist calumny of wealth being divine preordination and a sign not of moral perfection but instead moral exemption from any social responsibility or human empathy as the poor are poor because they're wicked and hell-bound.
There's no free will or moral agency and thus no free lunch for those marked by god with the stigmata of suffering and deprivation for all eternity.
Of course those preordained as wicked don't understand they have a spot reserved in hell and there's nothing they can do about it. If they did realize this, they would have no hesitation devouring the filthy rich or looting Walmarts.
For America's .01% freedom means free of moral responsibility or obligation for anything or anyone other than one's self.
As Walter Cronkite used to say at the end of his nightly news: "And that's the way it is"
Until it isn't.
2
one of your very best!!!!!!!!!!!
1
There's something else that sustains the absolute hegemony of the ultra-rich: the corrupt promise of freedom as an all-you-can-eat buffet for the ultra-rich that's free of consequences or any moral calories.
This goes way beyond the Calvinist calumny of wealth being divine preordination and a sign not of moral perfection but instead moral exemption from any social responsibility or human empathy as the poor are poor because they're wicked and hell-bound.
There's no free will or moral agency and thus no free lunch for those marked by god with the stigmata of suffering and deprivation for all eternity.
Of course those preordained as wicked don't understand they have a spot reserved in hell and there's nothing they can do about it. If they did realize this, they would have no hesitation devouring the filthy rich or looting Walmarts.
In America freedom means free of moral responsibility or obligation for anything or anyone other than one's self.
As Walter Cronkite used to say at the end of his nightly news: "And that's the way it is"
Until it isn't.
2
Is it against the NYT's policy to self promote? Why didn't you provide more information about where this event can be viewed?
1
The rich are heading US for anarchy
Lol that its funny.
Biden will be nomenee
Trump will be reelect but dems sure will keep the house and maybe even senate.
And they hate so much each other nothing else than super rich dudes wantings will ever get done
Trump got his tax cut but not his anti inmigration agenda.
Even if warren wins she will got her abortion pro lgtb and inmigration agenda but not a dime on new taxes.
As coulter says . You vote, vote and vote and boeing still wins.
1
Economics. How are the 'least of mine' treated? How much is luxury and decadence exalted in this land?
Economics. Who has a home and food and safety? Our hierarchy of needs has to be met for all. We the People must be good enough as citizens and spiritual beings to have real compassion and love, and not love property so damned much.
Yes; let's deal with economics, equality and community.
1
I agree. You are certainly right about bribery. Tom Steyer’s rise in the Democratic Party can be attributed to nothing beyond bribery. He bribed Podesta to be in the Clinton Administration—noting that he did not actually care about the environment, he simply wanted a ‘role’. It is quip pro quo. He has also bribed the Governor of New Jersey and members of the Connecticut political establishment to go over his ‘enemies’.
He is a man with no actual talent—he inherited his money from his parents—and by simply investing in real estate and taking advantage of inflation it has enabled him to become the influential and hateful billionaire he is today.
He wants credit for driving a Volvo; however, he overlooks the fact that by buying a Volvo when he could afford an Aston Martin he is just hoarding money that would otherwise be in the pockets of other people—and he somehow wants to be praised for this extreme form of selfishness.
Luckily, his talents do not match his political ambitions. He speaks like a pantomime and stands barely above the mic of every podium he graces. However, that does not stop him from being one of the most hateful despicable men in America.
There are, however, good billionaires, like George Soros--who actually have made it their life mission to better the world, and fund good causes without obvious alterior motives. Unlike Soros, Steyer is an idiot--who is also corrupt and an egomaniac. Dems would do well to stay away from him and put him in jail
@nickgregor "He is a man with no actual talent—he inherited his money from his parents—and by simply investing in real estate and taking advantage of inflation it has enabled him to become the influential and hateful billionaire he is today." Are you talking about Steyer or Trump? Oh, right ... can't be Trump because most of his "investments" were frauds or failures.
1
Why aren't you on MSNBC and CNN?
1
Of course it makes sense, as Dr. Krugman insists, to "deconstruct" the process that creates a policy consensus, to see whose interests it represents.
I must disagree, strongly, however with his endorsement of a 70% top marginal tax rate. The top tax rate is irrelevant when the top 0.1%, indeed, perhaps the top 2%, are so adept at avoiding taxes,
Consider Mint Romney, a guy who probably avoids taxes conservatively, not flagrantly. Yet in the year for which he reported his taxes as a presidential candidate, he paid 14% on his multi-million dollar income.
Forget about about raising the top rate. Instead we must reform the treatment of non-labor income, so that the top 0.1% pay 40% of their income as taxes, rather than 14% when they are good boys and nothing at all when they are crooks.
The Social Security tax is the largest tax for a majority of households. No accountants or lawyers are getting rich helping these households avoid paying SS taxes. The goal in reforming the personal income tax should be to treat all income the same (from capital and land as from labor) so that the rich pay as much of their incomes in personal income taxes as the middle class.
The slogan should be "treat all income like labor income." Without providing the rich with the politically effective "Socialism" response, it is possible to raise vastly more income taxes from the rich, just by eliminating the avenues -- the highways -- for tax evasion.
1
Excellent article Dr. Krugman. On the opposite side of the influence extreme wealth has on social policy is the wealth influence on wages. As shareholders or outright owners of large businesses the sole focus has been on maximizing profit at the expense of their employees.
The ultra wealthy distance themselves from their workers by hiring what I have long referred to as "corporate MBA wiz kids" given a mandate to increase profit. It has been a constant refrain over the past 25 to 30 years to cut expenses and contrary to the post-war period when employees were consider key elements to business's success.
Business decisions and services became more centralized with less local input then local decisions have been removed further as senior staff were also downsized. The result is a downward spiral in wages and a decreasing value placed on the employee. You don't value what you don't see.
6
Dear Professor Krugman,
The cognitive dissonance is killing me. PLEASE do yourself, the NYT, me and the rest of the American public a BIG favor and ask your NYT's colleague Jeff Sommer to read your Op-Ed.
In the far, far distant past of YESTERDAY's NYT, on June 21st, Mr. Sommers can be found peddling the exact same austerian garbage (excuse me, I meant to say "sage economic advice") as was handed out in 2010-2011 in his piece in the Your Money section on what we need to do to "fix" Social Security. The piece leads off with a picture of "the three wise men" with the following caption:
Former Senator Alan K. Simpson, right, and Erskine B. Bowles with President Barack Obama in 2010. Mr. Simpson and Mr. Bowles led an effort to find solutions to the budget deficit and Social Security.
Well, guess what? Mr. Sommers is proudly carrying the banner of Simpson and Bowles again today, in complete ignorance of the failure of the Obama approved policy of austerity years earlier. This is, by the way, a classic example of one of YOUR favorite rants on "zombie ideas" that just won't die. Well, guess what? You've got a zombie down the hall from you, and his paycheck says New York Times on it just like your does.
If you truly care about this matter please get your own house in order. Do you wish to extinguish economic ignorance? Then meet with Mr. Sommers in the NYT's cafeteria and have at it. I'm sure he'll thank you. I know I will.
4
@Greg Gerner
Yes, most ironic is that all the serious folks who warn that the coming SS funding shortfall has to be addressed to avoid future benefit cuts propose doing so by cutting benefits today. Generally by more that the most dire predictions foresee if nothing is done.
5
I wonder about the role of family foundations. Rich people now affect policy and practice on a wide scale due to their foundations that work outside government. The social impact is enormous and seems not widely discussed.
3
Henry George, Progress and Poverty (1879). Still true.
2
Until Citizen's United is reversed and campaign finance reform takes hold and voters stop falling for voodoo economic promises of the right, Krugman's very insightful ideas will evaporate into all the hot air. Effective advertising has allowed the right to influence the minds of heartlanders to vote against their economic interests. They know how to jerk the knees of people and distract them with abortion debates, fear mongering about immigrants and Blacks. Yes the .01 percent rule....but we let them.
6
Another aspect of “defining the agenda” that Krugman does not discuss here is the practice of defining who is a hero and who is a villain, or at best not a hero. Conservatives no matter what they do or don’t do are always hero’s while Democrats no matter what they are never hero’s.
For example, the first Bush was a hero of Desert Storm, despite taking no action to deter Saddam Hussein while he was massing troops on the border with Kuwait. Zero preventive action from a President got a free pass. His son, W. ignored the evidence leading up to 9/11 but is a hero because he “united us” after the attack. W. also got a free pass on lying about WMD to invade Iraq with claims of a successful troop surge. But that troop surge was a complete failure.
Meanwhile, Clinton got no credit for anything he did, for example saving the Mexican economy or Bosnia. Obama saved the economy in 2009 but do you ever hear it mentioned? Nope, because that not part of the agenda.
Defining hero’s and villains with constant claims of “liberal bias” is one of the most parts of setting the policy agenda.
2
I challenge the assertion that W is exalted and Clinton is reviled. And the commenter didn’t even mention Obama in the counting of whether it’s possible for a Democrat to be popular despite the supposedly all-powerful right
It’s fascinating that so many NYT readers perceive conservatives to be in control of public perception.
2
Thank you for another depressing breath of sanity, Mr. Krugman. Unfortunately, you are too often treated as the modern Cassandra. But I continue hoping that people will listen to you.
4
I went to the S.C. Democratic Convention yesterday. I was interested to see Bernie Sanders supported by a group of kids, while Joe Biden was supported by older folks, including the black community.
The fact is, we can call millennials spoiled all we want, but they’re going to be running the country in a couple of decades. If the very rich don’t contain their greed and arrogance, they’re going to find out how democracy works the hard way.
Your politics are shaped by lived experience. Millennials have suffered the worst from unchecked greed and education cutting. My millennials family members each have thousands in medical debt because of a burst appendix or hernia surgery. The hernia came from working in a store unloading trucks.
They’re also the ones who grew up doing active shooter drills, hiding in closets from those who worship the 2nd Amendment. Some folks are in for a shock when those kids take over.
4
@JLW, I wish I could live long enough to see it. The past 40 years have been insane; when the pendulum swings back toward sanity, it's likely to move a pretty good distance.
1
Paul is spot on! And in their economic ignorance there is a HUGE swath of Americans, both conservative, liberal and whatever, who are shooting themselves in the foot - err, perhaps in the head. An apt metaphor? Also, would that more of the press, politicians and pundits studied the principles of Modern Monetary Theory.
The extreme wealthy and their courtiers have always assumed their brilliance and assumed their exceptionalism and assumed their needs are the worlds all along smoothing the voyage with smiles and manners!
Mean while...DeVos has turned your education non system to their financial advantage, the war machine that grinds out souls in every state run by Boeing, a president who thinks cheating on his taxes is the American way!
Professor you are accurate and I am grateful for facts to pass on.
A glance at the global wealth inequality distribution is very illuminating.
https://en.m.wikipedia.org/wiki/List_of_countries_by_distribution_of_wealth
According to the data, the US indeed scores high on wealth inequality but so does Venezuela. China is pretty low. Iceland and Israel are almost the same but Sweden is higher than either. Denmark is actually higher than the US. France, despite its high taxes, is higher than Germany and strangely close to Hong Kong, which, the last time I checked, has low taxes. What does it all mean? I suspect that the answer is much more complex than the “soak the rich” rhetoric emanating from the American left. Taxation matters but so does culture, education, social cohesion and a host of other factors that are missed by the simplistic solutions peddled by economists and demagogues.
And how culture, education and social cohesiveness affect the wealth distribution?
Beside of taxation, it is also matter how do you spend the collected taxes. You can spend them on poor, to improve their wealth accumulation or you can spend on projects that will help only wealthy to accumulate the wealth (bailing out banks)
The rich want privilege. They want gated communities and private schools. They want an arms-length to separate themselves from everyone else. What’s the point of being rich if it’s not exclusive?
Exclusivity means gutting social security because who needs it? Not the rich. Exclusivity means gutting Medicare because again, nobody needs it if you can afford a private insurer.
Exclusivity means keeping out the ‘riff’ and the ‘raff’, and all their cousins.
Exclusivity means going to heaven and being excluded. As a God intended.
2
Would you be happy with the same income spread if the minimum wage was $100/hr?
Citizens United made direct corruption and bribery perfectly legal. Thanks, Roberts!
100 Sen
1 President & 3 of his kids
9 Sumpremes
435 reps
That’s only 548 people to throw a few bucks and family members a few jobs to have almost the entire wealth of the country. Not a bad return on investment.
3
Power and greed. What has changed since the utterance of "let them eat cake?"
5
Wow!! What an insightful article! The rich want to reduce taxes... who would have thought!
The Trump Wall st people are False Profits.
@SHAKINSPEAR
They create false profits by conveying false predictions. It's a biblical thing in John's Revelation.
Have you ever heard an Oil analyst say the price of oil was going to go down?
The three causes of all human misery are:
Greed
Hatred
Delusion
Those who suffer from EWD regularly practice all three.
The rest of us suffer in the misery they have caused.
Don't start the revolution with out me.
And people wonder why the suicide rate is so high....
2
When we cut taxes for the rich we simply shifted the taxes to the average American thru...tariffs. They are simply a huge broad tax that is paid every time some one pays a higher price for a product. Are wealthy business owners going to "absorb" the increased cost of the tariffed product and thus tax their own rich selves? No. Will wealthy owners go under from this. No. Will small businesses go under from this? Yes.
So we are sold a bill of goods that tariffs are "good" for the poor because it will bring jobs back to the US. At the small company my husband works for they would have to have a 500-1000% tariff to make it financially beneficial to move factory production to the US from China. In addition, the infrastructure for factory production is no longer here and would take years to build. Years when the rich would be hoarding their money and the rests of us would have nothing to spend.
There will be no new US jobs from tariffs. That is a 0.01%-crazy-rich-person distortion for the purpose of confusing Americans about the real reason for tariffs. They are a heavy tax on the average American that is funding the tax cuts to the rich.
Why aren't journalist screaming this from the roof tops? Because many of them swallowed the pill whole.
1
Tax cuts paid for by social security cuts (or just letting the same thing happen through not adjusting for inflation) is nice for the very wealthy.
But if they can't get that, then tax cuts paid for by giving the very wealthy U.S. Government bonds instead of tax receipts (deficit finance) is at least something.
Mr. Krugman is a very smart guy and is excellent when explicating economic theories, otherwise not embraced by him. Outside of his field, he disappoints, his punditry falling within the expanding basket of socialist dogma advocated by left leaning partisans. Unconvincing evidence, pulled like a rabbit out of a hat, is advanced to support, say a 70% tax on high earners, that in the long and short run would drive entrepreneurs, capitalists, to other venues, with a less confiscatory attitude toward their wealthiest citizens. They will be welcome; Silicon valley, a farming community, with "longhairs" who refuse to vaccinate their offspring.
It’s all about what you think is important in life.
I am a retired teacher. At 65, even though I’m perfectly healthy and active, I couldn’t get a teaching job in my dreams, even with a Master’s degree and 30 years of experience. At 52, when I was first unemployed, I pounded the pavement for two years trying to find a teaching job. I sent out hundreds of resumes, got a handful of interviews, but not even temporary or substitute job offers. Discouraged, I decided to look into another field: insurance. Maybe I could still use some of my skills to help people. So, I attended a few orientation sessions for people entering the insurance field.
When teachers meet formally, the discussion is almost always about helping kids. For example, if you pick up any teacher’s union publications, at least half of the articles will be about ways to help children. In the insurance field, however, the goal is to make money. As much as possible. After 30 years in a helping profession, I could not wrap my brain around the idea that I should stop caring whether the people I deal with are having problems and just focus on making money. Oh, I could pretend that I cared, if it would bring in more money.
I walked out of the last meeting, went home, and took up babysitting. The pay is not great, but with my husband’s salary (he’s a teacher, too) it’s enough to take care of our bills. We don’t have luxuries, but we’re pretty happy. But I still don’t understand why money is more important than anything.
5
I am with you on that. My younger sisters teach. I feel fortunate that I changed careers mid life becoming a social worker / therapist. My husband passed away last Aug at the age of 63. Luckily I went into my practice full time after his death, in conjunction with an agency. I can work as long as I feel like it as an independent contractor. The money is not big but enough to support me and I can continue doing this with retirement. But it is not the money that has kept from completely falling apart with my life long partner gone but helping others. (Plus my dogs, family and friends).
Understanding economics is important, I took some eco policy classes, but to understand economics you have to under human behavior in terms of motivation and values. We have much different value systems than this .01 percent as Dr Krugman makes clear. Too much concentrated wealth inhibits freedom, although it may provide the illusion of freedom (and love).
Upshot: the wealthy (with rare exceptions) do not care about anybody else but themselves. A quick glance at British and European history prior to the American Revolution shows how the the wealthy have always operated, and it’s always at the expense of the non-wealthy.
7
"Excessive wealth disorder" is an actual serious ailment. It starts as the patients discover they are doing better than their neighbors and becomes more severe as they sense "better" is turning into "way better." (This could happen when income hits a modest $250,000 in the Heartland; $400,000 on the coasts, and becomes more acute with more wealth) The primary symptom is rationalization, "I'm smarter; I'm more deserving; 'Those people' get what they deserve;" and finally, "There is no 'too much' for me." At some point their sense of superiority fully justifies the disordered behavior Professor Krugman describe in his 4 points.
2
My brother is a labor layer, representing several unions - police, fire, public works, etc. He told me that the average draw on retirement income was 1.8 years before the retiree died. That's it. Working people sock away an entire work life of significant savings towards retirement and only get to collect a tiny fraction of what they put in. Meanwhile, the .1% live off stock dividends and rent seeking opportunities, but are taxed at half the rate or less that labor income is taxed. Many even get subsidies and rebates. Or they cheat on their taxes through financial gifts to their children to perpetuate their wealth, generation after generation. Then they use wealth worship, bootstrap mythology and the prosperity gospel to hoodwink the masses into giving them even more. Then they hire sanctimonious ideologues like David Brooks and Ross Douthat to blame the plight of the poor and stagnating middle class on their own moral laxity and lack of character.
11
The Supreme Court decided that money by individuals in support of policy statements during a campaign is free speech in Buckley v. Valeo in 1976. Citizens United applied that principle to payments by organized groups of individuals such as labor unions and corporations. Obama deliberately misrepresented that.
2
The latest example of the corruption of the .01% is the college bribery story. As usual, the coaches and others who took the bribes are losing their jobs, but the .01% who engaged in the corruption are pleading guilty but getting no jail time. Where is the incentive to stop trying to bribe your child's way into college? So it is with government. If there is no oversight, if there are no sanctions, nothing will stop the oligarchs from taking over. Vote for a progressive Democrat to give the rest of us some chance of justice, the Republicans are entirely bought and paid for.
1
@Eero
Um, the "coaches and others" concocted the scheme.
Infrastructure : water systems, roads, bridges, interstate expansion ,airports , solar fields in all highway medians and along all railway systems, and solar fields for 30% of South and North Dakota
Increase teacher pay and increase teacher qualifications, provide free college at all state universities for students achieving 3.5 GPA for first three semesters who volunteer to teach in rural and poverty areas for three years
Provide outstanding free school breakfast and lunch programs to all students and teachers and staff.
Mandatory school exercise programs 3x a week
Free dental , mental and health care for all. And yes you can still buy private insurance.
Subsidize rural hospital systems immediately.
Impeach, convict and imprison the con man in chief.
7
@libel
Focus on these issues and racism and income inequality will decrease and all members of society will benefit with a higher standard of living and less violence and crime
1
I can identify with the premise that no nation can ever logically adopt an economic policy of just one person who merely decided his own conduct was one size fits all for the nation. I wouldn't know the best policy for the nation but I know the best policy for my personal budget. It appears Trump is projecting his personal budget policy on the nation. He's gambling the biggest Casino there is.
2
The rich supported breaking the budget sequester of military spending along with tax cuts, on passive income, that grossly expanded budget deficits.
If you own the property and assets of the USA you want a big military and wall around those assets to protect them.
Budget deficits don't seem to be that important to the super wealthy when it involves deficit spending on walls and military to protect their property and assets both in the USA and around the world.
The rich have figured out that large budget deficits tend to leak out to the small donor class. Thanks in large part to "Citizens United".
3
When I hear of a super-wealthy person, I wonder.....
How were those hundreds of millions made?
How poorly were the workers compensated?
How much was the consumer over-charged?
What safety and environmental corners were cut?
Is this person's company knowingly and willingly exploiting cheap labor conditions in a Third World country?
How much of the fortune was inherited from daddy, who inherited it from his daddy? How far back into our history does the fortune go? What were the labor conditions when the fortune was actually made?
To what extent was luck a factor in their fortune?
Is it even possible to make a fortune without shorting the worker or the consumer?
Is this a person who after a silver spoon education, sat in an office trading stocks and securities on a computer for years, who has never worked up a sweat in his life and now is claiming "hard work" is the key to success?
One of my last considerations is the possibility that this is an honest, hardworking person that has literally earned a fortune. That so many blindly bow down in assumption that the person has some sort of worldly expertise is aggravating. That these people have such an out-sized influence on our politics and future is one of the most basic problems we face as a society.
I'm not ready to believe that behind EVERY fortune is a great crime as the old saying goes, but I do believe that is the truth in many cases.
12
And another thing: it’s nice that billionaires like Buffett and Gates have pledged a large portion of their wealth to charity after they die, but wouldn’t it be nicer if they gave it now? These people are just hoarders who accumulate without end. If they can’t think of any additional health care, educational or poverty causes to contribute to, how about a special tax contribution to a local, state, or federal infrastructure project or fund?
No - they say ‘let’s let the kids or grandkids worry about that!’
6
@frostbitten
Seriously ? the Bill and Melinda Gates Foundation is active NOW world wide , they are way more than " giving " .
the Foundation aims to give the $1 to $ 2 a day earners things we expect without a thought... water , safety , electricity.
this is mostly not in the USA and in places where there is nearly no "local, state, or federal "
thanks for caring
It would be useful for readers to review Marx on this subject as written on volume 3, in the section called the Revenues and their Sources.
Profit, interest, and ground rent appear “as creators of surplus-value; creators of a portion of the price of commodities, just as wages create the other. The secret wherefore these products of the splitting of commodity-value constantly appear as prerequisites for the formation of value itself is simply this, that the capitalist mode of production, like any other, does not merely constantly reproduce the material product, but also the social and economic relations, the characteristic economic forms of its creation. Its result, therefore, appears just as constantly presupposed by it, as its presuppositions appear as its results. And it is this continual reproduction of the same relations which the individual capitalist anticipates as self-evident, as an indubitable fact. So long as the capitalist mode of production persists as such, a portion of the newly added labour continually resolves itself into wages, another into profit ... and a third into rent. In contracts between the owners of various agencies of production this is always assumed, and this assumption is correct, however much the relative proportions may fluctuate in individual cases. The definite form in which the parts of value confront each other is presupposed because it is continually reproduced, and it is continually reproduced because it is continually presupposed.”
2
@Enri
“To be sure, experience and appearance now also demonstrate that market-prices, in whose influence the capitalist actually sees the only determination of value, are by no means dependent upon such anticipation, so far as their magnitude is concerned; that they do not correspond to whether the interest or rent were set high or low. But the market-prices are constant only in their variation, and their average over longer periods results precisely in the respective averages of wages, profit and rent as the constant magnitudes, and therefore, in the last analysis, those dominating the market-prices.
On the other hand, it seems plain on reflection that if wages, profit and rent are creators of value since they seem to be presupposed in the production of value, and are assumed by the individual capitalist in his cost-price and price of production, then the constant portion, whose value enters as given into the production of every commodity, is also a creator of value. But the constant portion of capital is no more than a sum of commodities and, therefore, of commodity-values. Thus we should arrive at the absurd tautology that commodity-value is the creator and cause of commodity-value.”
@Enri
“However, if the capitalist were at all interested in reflecting about this — and his reflections as capitalist are dictated exclusively by his interests and self-interested motives — experience would show him that the product which he himself produces enters into other spheres of production as a constant portion of capital, and that products of these other production spheres enter into his own product as constant portions of capital. Since the additional value, so far as his new production is concerned, seems to be formed, from his point of view, by the magnitudes of wages, profit and rent, then this also holds good for the constant portion consisting of the products of other capitalists. And thus, the price of the constant portion of capital, and thereby the total value of the commodities, reduces itself in the final analysis, although in a manner which is somewhat unaccountable, to a sum of values resulting from the addition of independent creators of value — wages, profit and rent — which are regulated according to different laws and arise from different sources.”
A piece that hits the nail on the head. The 250k a year investment banker is doing well but if they are living in an expensive locale like Manhattan don't look dramatically different from a middle-class person elsewhere. They aren't worried about paying an unexpected $400 bill, and are probably taking a nice vacation, but they are not funding a think-tank that puts a talking head on Fox News to espouse their personal views. They are working because in order to finance their lifestyle of some luxuries, they still have to. Compare that to the billionaire who is at the top of the heap and doesn't even comprehend the idea of needing to work (except for when it comes to the poor). The world is his / her playground, and they are free to mold it as they see fit. The tax system should be designed such that we don't have the idle rich. Estate taxes and wealth taxes are the key to that.
We shou
9
I’ve often wondered how those .01% in power can abide the denial of climate change, and have concluded that they believe it will not apply to them. There are too many people on earth, and climate extremes that are coming will kill off many of them. Yesterday there was an article in the NYT about how the rich are buying up huge amounts of land. Safe havens for the .01’s and their families? Will there be bunkers with food and water just in case? Why else wouldn’t they influence the government to do more to avoid the global tragedies sure to come?
2
@RGillen. When you are super rich, you are also able to afford the luxury of not getting educated or being smart. The very poorest of us can't afford education, and the very richest of us are not interested.
2
I am afraid that what is missed here is that the so-called centrist Democrats are really the moderate Republicans that they insist we court, but moderate Republicans are uninterested in the courtship. They are already married, thank you, as Hillary and her think tank over at Third Way should have learned. Instead of acknowledging that "for every Bernie supporter we lose, we will pick up two moderate Republicans" was a poor strategy, they continue to double down on it by pushing Biden to the front of the crowd in spite of his very heavy baggage train of terrible policy.
Biden has already told a group of very wealthy donors that if he wins "nothing will change" for them. Corrupt? Hard or soft corruption, as Palin would say, you bet'cha.
Average Americans are concerned about economics and tend to confuse personal, family finances with national ones and that allows pundits to tell them that deficits are horrible and Keynes was a socialist. It also allows them to push the idea - no doubt firmly believed by the wealthy (as seen in Tubby Trump) - that they are smarter and wiser than everyone else, which is hogwash.
Get the rich back where they belong, huddled in the corner hoping nobody starts talking about tar and feathers or the guillotine.
Get news editors back where they belong, lean and hungry so they can relate to the people instead of noshing at the billionaires banquet.
The corruption isn't JUST in the government officials and their patrons.
4
Right now, your average American does not earn enough to pay for all their necessities. Lowering taxes on the middle class and creating some higher marginal tax brackets for the super wealthy would help the middle class and boost the economy.
6
The true culprit: the Legislative Reorganization Act of 1970.
This act provided that House votes in the Committee of the Whole be recorded on request, changing the previous practice of NOT recording individual members' votes.
Votes taken in standing committees, where most of the REAL business of legislation takes place, are also recorded.
These changes resulted in an avalanche of lobbying, a deluge of politically attached funding, and the death of bipartisanship.
Why? Recording votes allows OUTSIDE groups - labor unions, public interest nonprofits, but also corporate lobbies, special interest groups, and, not least, Party leadership - to keep tabs on how individual members voted.
BEFORE the "sunshine" reforms, lobbyists and campaign contributors could rarely tell for sure whether their targets voted as intended. Ditto for party leaders trying to keep their troops "in line."
To understand why, just imagine that, with you in the voting booth, watching as you mark your ballot, are a) your boss, b) your clergyman, and c) your family.
Recall that it was precisely to prevent this sort of undue influence that the secret ballot was introduced.
Repeal would mean that lobbyists would lose leverage, and their clients would stop injecting so much cash into the legislative process.
Senators and representatives would once again feel free to reach across the aisle, hammer out compromises, and dig in to the actual work of writing and debating bills.
5
To what extent is the wealth of the 0.1% reflected in the type of wealth most of us have - car, house, washing machine, lawn mower, etc? As opposed to invested capital in the nation's economy?
I suppose that GM and GE are actually examples of the plutocrats pillaging the nation's economy. But putting that aside, if we tax invested capital out of the private economy, there must be downsides besides rich people not being able to send their kids to USC.
This is like believing that if you pray to god, the beatings on the child or wife you hear taking place next door will cease. That if you put all your faith (and dollars) in the wealthy and do as they suggest, the problems underneath their wealth level will miraculously disappear. My philosophy is : "The needs of the many outweigh the needs of the few or of the one". Simple, yet effective.
8
PK, Thanks for the Op-Ed. Especially thankful that you found a way to describe something without using tRump's name! Not sure but I'd guess that this represents a "first" for you in several years.
4
Let's not forget the massive propaganda funded by the rich against climate change, welfare, health care, and Social Security. The wealthy don't want one dime of their money going to anyone else but themselves and they constantly barrage us with lies and deception about government programs that help the poor and the middle class.
13
The Income Levels ($25,0000&$35,000) for taxing Social Security need to be updated to account for inflation. These
parameters have been in place since the Reagan/O'Neil Tax
Plan of 1986.
6
@ricopet2004
Yes! Talk about a tax on a tax.
1
The Times recently published a “news” article claiming a crisis in social security and anticipating cuts in benefits without at all discussing the obvious remedy of raising or eliminating the wage cut-off for the social security tax. Exactly the kind of conventional wisdom to which Krugman refers.
2
Retirement age to maximize SS benefits is 70. Not sure what Prof K meant about 65.
Rather than our elders dragging themselves to the finish line, lowering the max benefit age would be helpful. Those who need that to retire, of course have to do it, but it is also making employment harder to find for those newly entering the job market.
6
It is the nature of capitalism to concentrate economic power. The big firms eat up the little competitors. Across our economy, every industry is consolidating into a handful of powerful corporations, into a semi-monopolistic system. This is the economic foundation of Trumpian Fascism. . . . And with economic power, necessarily follows centralized political power, such as Mr. Krugman rightly decries. But the only way to change the political outcome is to change the underlying economic system. And that Mr. Krugman cannot prescribe.
2
Sorry Professor Krugman,
You are plain wrong about life expectancy. It has increased dramatically for the vast majority. Your thesis that it is only the wealthy or the socioeconomic privileged that have benefitted is incorrect. When the Social Security program was initiated in 1935, the average life expectancy was 61 years old. Considering that the average age for retirement has remained consistently around 65, beneficiaries in the early years of the program were receiving payment for a much shorter time. Currently, average life expectancy has increased to 75 (plus 14 years) and the average retirement age has remained at 65. You are talking about the upper .1% which does not influence the "average" very much.
1
@John G How old are you sir? Anybody nearing retirement knows that the SS full retirement age has already gone up to 66 and is on its way to 67, due to the deal made in the 80s.
2
@Dennis I am 67 years old. Retirement age and social security are not technically the same.
Somehow, the obsession of wealthy Americans with the deficit always stops when you reach one of the potential solutions -- increasing their taxes.
8
@Dario Bernardini Our healthcare industry should be a concern.
I like Krugman. He's not radical. He's just right and we know it. That's why we read here. This essay comes from a widely known, read, and educated economic leader. It doesn't get more truthful and based on facts than this.
9
Yes, or as Francis Bacon put it, "Money is like muck, not good unless spread."
7
Thanks Paul. Keep hammering the truth home with your writing.
Unfortunately the Republicans who need help the most seem to always fall in line with the 0.1 percent propaganda re economics.
4
Where to start...
Last fall Mr. Krugman asked, why after 4 yrs of proven failure, did republicans continue to tout trickle down economics... he then went on to ask why the American public kept buying into the failed concept...
A report within the last year noted that, since 1982, the Koch, Walton and Mars families saw their net worth grow by an average of 6,000%... the average American middle class family's grew by 3% in the same time... adjusted for inflation.
September 2017, here in the Times there was story titled, The Story of Two Cleaner, worth a read for it's insight into the nature of jobs today and of the not so distant past... and the mindset of companies when it comes to their attitude to their employees.
Also, in Sept 2017, a story here on George Romney... a couple of points to note, the average CEO in the early 60s earned about 20 times their employee's wage... today it's about 270 times.
And lastly, on the previous point, a recent story reported here on Walt Disney's niece objecting to CEO Bob Igor's $62 million pay packet... the median income at Disney is about $53k, that makes Igor's pay equal to about 1,169 times the median wage.
If these don't open your eyes, perhaps this will... through into the 60s the top nominal tax rate in the US was 91%... you built roads, schools, and other infrastructure, heck, you even put man on the moon!
Want services, infrastructure, to educate yourself and your children... taxes pay for all that and more!
8
I would be interested in your “defining the agenda” item also from the perspective of what is left out of media coverage, or those subjects, political perspectives, or politicians that even supposedly independent journalism and “liberal” broadcast media either deliberately ignore or subtly disparage? Such as the way the NYT treated Bernie Sanders in the last election cycle. Could you discuss how this kind of thing defines the agenda in favor of the elites?
3
Thank you Professor Krugman. Add “EWD” to the next DSM because it is a disorder that is maniacal and dangerous. It inflicts untold harm on others. This bling-bling distorts perceptions. It corrupts dreams. It results in suicides. The dichotomy between oily, choking wealth and stripped, naked poverty is a sickness. Dare I say terminal?
4
Cmon Paul, vulgar Marxist? Isn`t it the teaching of Karl Marx that if labor does not have a seat at the table of the boards of directors of mega corporations,or even semi-mega corps, then labor gets rolled over, and only the considerations of the ultra rich are considered?
Really, if you write a column like this, and never even mention Labor or Unions, you are kind of missing the point, and overlooking the solution. It isn't just about voting, its about having a say in how the corporation makes its decisions, and spends it money. Pay the workers, or the CEO`s,( the .001 percent you demonize in this article).
Make a place for Labor on the boards of directors, and watch the behavior and profitability of companies improve.
3
Apart from what Mr. Krugman writes which I agree with, I have noticed something else: envy.
In fact, I was even personally lectured by an extremely wealthy person that the cause of their great "pain" was my creativity. I. was . stunned.
Holy cow! Some of these extremely wealthy do indeed have a sociopathic disorder. Check out the insidious demise of the creative arts, who sits on the boards, investors and why mediocrity and uninspired choices have ruled all the arts for some time now: Books that suck with rave reviews, horribly vacant visual arts - auction prices for name recognition, but not for anything that might inspire them to grow up.
But the bottom line for them is unconscious envy, sexism, racism and hatred for creativity. Can the self hatred of the super wealthy be the reason for poisonous power grabs and oppression of the creative arts that inspire so much else; real medicine that heals with a very high bar of intuitive wisdom for us to have inspired doctor practitioners who actually heal people- a rarer mix of qualities hardly available today?
I love Oprah, and other wealthy people might be cool, but please tell me why she/ they have to have a 70,000 square foot house , blast an entire mountain side and have a huge co2 footprint? What ultimate emptiness do these people have?
5
1) “In a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.” Matt Taibbi
6
"False equivalency means that fascism and autocracy is ignored while progressive ideas are called 'socialism'." America is a joke.
author unknown although right on
3
Could not read too much further than those scary words of “entitlement reform”. You know, take away social security monies from people that have paid taxes into the system for de axes that MUST rely on those checks in older age. Ah shucks, it makes perfect sense to reform entitlements to the elderly and give ILLEGALS free healthcare, housing, food, cell phones, WiFi, education and more ...... back to the head under the covers. Night all.
1
@Pandora: You fall for the age old trick of the robber barons of dividing the poor against the even poorer, to divert attention from the real thieves and exploiters.
4
Oh, it's coming....it has happened before and it will happen again....the average person will not tolerate living in squalor forever while the 0.001% thrive....
3
We are 99 percent they are 1 percent why can we not outvote them and their excesses folks dont need a triplex on 5th ave for 100 million when vets are sleeping on the streets. The 1 percent finance think tanks to write reports that see things their way cut food stamps and eliminate the estate tax after all spoiled rich kids need billions for a start in life. Income and wealth inequality spawns resentment and corruption in plain sight as we see in the trump admin taking bribes at his hotels for govt favors. Trumps kids in govt more nepotism and corruption in plain sight.
6
@REBCO. Many, many people will simply vote the R candidate. They don't think. It hurts too much, or they just don't have the equipment to do it. Their parents voted the R and they will just keep doing it.
3
The old tax system that forced by offering a deduction the wealthy to invest in creating jobs and building America is what made us great.
Not the degenerate system under which criminals like Carnegie and Rockefeller raped the nation and its people to get wealthy.
What we have today by the design of the GOP is that degenerate system reborn since 1980.
3
I see Krugman doesn’t mention single payer, a financial transactions tax, taxing capital gains as income, and increasing that income on which Social Security tax is paid.
I notice too that he omits dividing the ibanks from normal banks. So no more JPMorgan-Chase.
Regulation of derivatives is also missing. Those used to be called “junk bonds”.
Submitted June 22nd 7:18 PM eastern
4
@Yaj: Those are five more columns you mention there...
@Anna:
No, Krugman largely avoids advocating for those things for an obvious reason. Yes, a single obvious reason.
Submitted June 24th 10:13 AM eastern
Case study on taxing the Ultra-Rich : Hedge Fund managers
Object of study : Kenneth Griffin, hedge fund manager
Latest notable purchase : $ 238 million Penthouse Apartment in NYC - rarely used
Federal Income tax rate of Mr. Griffin : 23.8 %
How come ?
Mr. Griffin benefits from he carried interest loop hole
It is here were it gets interesting
From the NY Times
"Mr. Schumer has been busy with hedge fund and private equity managers, an important part of his constituency in New York. He has been reassuring them that he will resist an effort led by members of his own party to single out the industry with a plan that would more than double the taxes on the enormous profits reaped by its executives.”
NY TImes 7/30/2007
Analysis
Mr. Schumer, Democratic Senate leader, has and still is actively working to minimize - not maximize - the income tax rate on the Ultra Rich .
Why would he do so
Top campaign Contributors, Charles Schumer 1989 - 2018
Goldman Sachs
Citigroup Inc
Paul, Weiss et al
JPMorgan Chase & Co
Credit Suisse Group
The history of taxing the richest of the rich is that the chief obstacle to do so is the leader of the Democratic Party in the Senate of the United States
5
"While popular discourse has concentrated on the “1 percent,” what’s really at issue here is the role of the 0.1 percent, or maybe the 0.01 percent"
OK, you got your fellow joggers in Riverside Park off the hook. Just as you have no qualms about ranting at supposed racists in flyover country but not a word about your racially segregated public schools in NYC.
NYC liberals great - flyover country folks bad.
"Textbook economics offered very clear advice about what to do under these circumstances. "
That's because on its best day economics is a pseudoscience.
The essence of Krugman in two points.
Bravo Krugman! One of your best columns ever!
3
In NYT this week was one story concerning investors buying up started home real estate:
https://www.nytimes.com/interactive/2019/06/20/business/economy/starter-homes-investors.html
And today, a story about billionaires buying up vast tracts of land in the western states:
https://www.nytimes.com/2019/06/22/us/wilks-brothers-fracking-business.html?action=click&module=Top%20Stories&pgtype=Homepage
With so much wealth concentrated in so few hands, don't be surprised when the rich own everything and we are merely renters.
2
@JD Ripper. Already happening. You have to buy into a streaming service with a monthly charge to obtain music. You have to pay a monthly charge to watch tv or listen to radio. Most people are leasing or financing cars when Ford's "better idea" was pay your employees enough to buy your product. Next you can expect places like Amazon and Walmart to become "clubs" you have to pay a monthly fee to in order to buy anything at all.
1
I would suggest that the people who get rich in America are very far from being Saints. They are closer to being Criminals and Sociopaths. Don't expect a Billionaire Sociopath to want to pay taxes to help the poor and middle class. Don't expect a Narcissistic Sociopath to want to pay decent wages to their employees. It would make them feel sick inside to share their Wealth and improve other peoples lives.
6
This is one of the best articles Krugman has ever written.
As an extremely vulgar Marxist, I can't help wondering, Where is the economic muscle supposed to come from, to put into effect the wonderful egalitarian policies liberals like Mr. Krugman are always prescribing? The American labor movement is almost destroyed. Students, once a radical force in many countries, are now just happy to be employed. And the Democrats are about to nominate a candidate who has just guaranteed his billionaire backers that, when he is elected, nothing will change! . . . The truth is that, under capitalism, economic power concentrates--and with that, follows political power. There is no reforming such a system. It must be replaced. But that is exactly what liberals like Mr. Krugman cannot admit. And so they will go on, writing "recipes for the cook books of the future." (Marx)
My conclusion after years of observations is that if the stinking rich can grasp an additional 500 dollars they simply want it.
3
The challenge lies in convincing a middle or lower class citizen that a 70% top income tax rate does not work against them, but for them. By the time a conversation in this topic starts with that group, they have been somehow indoctrinated with the dogma that high tax rates are a bad idea for the economy. This is based solely on dogma stemming from fear, anger, and hate rather than science, reason, and data.
This has been a very serious challenge for the Democrats and they still do not fully understand that introduction of these ideas are not to be used to promote individuals but the party. Yelling "70% top tax rate" can be scary even to those who are not even remotely associated with it. Dogma creates this fear, they get angry and hate those suggesting such a winning formula. Serving the people requires properly communicating with them.
4
I am certain there has been a study about this, but, it seems to me, in my conversations with individuals with some wealth, that at some point in their wealth accumulation three switches go off: Switch 1 -- jettisoning the concept of the common good---what is good for my wallet is the common good; Switch 2---you can never have enough money; Switch 3---I will do everything in my power to keep ALL the money I have earned---
9
Add to this that with the decline of print media, most reporting is TV, and TV has become very big business, with a huge part driven by rent payments for content. So reporters and producers inhabit a world of the .1%, and perceive the world accordingly.
1
It's a pleasure to read Krugman breaking down the way huge wealth corrupts our politics with such simple and clear analysis- 4 ways.
Then he takes a single example of how a few extremely wealthy people manipulate our government to increase the suffering and hardship of working families in order to turn up the spigot of their increasing wealth even higher.
What we have here is a perpetual motion machine of corruption- the power created by the corruption creates more power and more corruption.
As far as the softer corruption of Krugman's fourth method, another example is how the Koch brothers have manipulated the public perceptions of global warming in this country and turned it into an idiotic, anti-science argument from the most powerful political party in the U.S. right now. This is as disgraceful as it is dangerous.
Time to break up the trusts!
10
The wealthy got wealthy through greed. They are swarms of Locusts devouring the wealth of our nation and moving to others lands to devour yet more. It was unwise to care less about their customers and fellow citizens. I can't hold back the swarms of locusts. People of wisdom must prepare to endure hardship fruitfully and peacefully. They will prosper in other ways in the future.
4
So in 2011, the media adopted the conventional wisdom of the super rich that, via deficit and entitlement reductions, we should make the super rich even richer. Dr. K. has adequately debunked these ideas and their fake justifications for a decade at least, but the rich and the media don't listen to him or any other economist, and certainly not to any progressive politician. How we get them to listen is unclear.
Fine. What I want to know is why does anybody want to be super rich? This is not obvious to me. Is pouring over quarterly reports and brokerage statements really more rewarding than savoring the wonders of nature, music, literature, or pursuing the excitement of new ideas? Are they nuts? Rat-race addicts? Honestly, the super rich are some of the most impoverished people I can imagine. I would pity them, if they weren't hurting other people by hoarding resources far beyond what any human being can create.
We will never fix the appalling inequality in our society until it becomes generally recognized that great wealth is a mental illness.
3
These tired bleats for leftist agenda items are not any more interesting or persuasive now than they were when Krugman began them years ago. The call for a federal wealth tax is particularly silly in light of the fact that it would require a constitutional amendment, which would be politically unlikely if not impossible. See, e.g., the Wikipedia article on the sixteenth amendment to the U.S. Constitution for an easy-to-read explanation of why a federal wealth tax doesn’t work under current constitutional law.
1
Of course, the results of dicking with the economy: raising or lowering interest rates, increasing or lowering federal funds rates, and all those esoterica, can be debated, but allowing people to have billions of dollars and thus giving them huge disproportional influences over our country is undebatable: such individual wealth is more than a thorn in the side of grand ideals of democracy.
2
James Carville had it right. "It's the economy, stupid!" The problem is that the economy to the uber-wealthy in this country is one thing, and to the average Joe and Joannes in this country, it is altogether another.
4
Another aspect is that they did not go to jail for wrecking the economy with fraud.
6
Under raw corruption I would add the word naked: One that stood out at the time was the invention of huge speaker fees. The original case was of some old guy retiring whom had regulated the entity that was paying him 6 figures+ to appear and speak. Like most things after reagan got elected it appeared in the news for a couple days them disappeared and soon this open corruption was as the corrupt like to say "the new normal". Normal is not new, ever.
If you did not know prior to the invention of this sham, speaker fees were in the hundreds of dollars for people like this old retired Civil Servant. A thousand or more would have been exceptional. I think it also stood out because he was taking the fee, more than a year or two's wages, within weeks of retiring.
Another thing that coincided with the speaker fee sham was the rocketing upward into 6 figures+ of the salaries of reporters and other professionals whose jobs carry a significant duty to public trust over a very few years. Oddly enough the trustworthiness of these people's professions began to decline as the salaries rose.
As a nation we need to go back to the beginning of the destruction of rational government in 1980 and hold every person accountable for what they have done since. I assert the laws of 1979 apply today because the changes made to make what was illegal legal were part of a conspiracy to commit those crimes and get away with them by having done so.
Can we please add stop subsidies on fossil fuels. and prioritize action on climate change and species extinctions, as two of the first priorities of a progressive agenda.
3
Mark's father had it right. Ths super-rich, just lke most of us put self-interest first before the common good. Unlike most of us, however the super-rich have the power to get the government to do their bidding.
6
A 'wealth tax' is pure 'taking' since it isn't based on income and most likely will be challenged all the way to the Supreme Court and most likely overturned. You could take all of the top 1% money and redistribute it and it wouldn't make a hill of beans difference in the overall economic situation. It's a progressive 'feel good' exercise and poorly thought out.
A 70% income tax rate, combined with high tax states like CA, NY, NJ will mean 80-85% of income of high income earners will be taken (top marginal rate). And the purpose of that is? Just another feel good exercise. And wealthy earners can afford to hire the best tax attorneys to mitigate the tax.
Mr. Krugman's ideas are just more progressive nonsense. We are spending too much money and sucking it out of the economy in trying to pay for it. Krugman is way off base here.
2
I recommend Keith Payne's book The Broken Ladder: How Inequality Affects the Way We Think, Live, and Die to understand why extreme wealth inequality is so unhealthy.
1
I must be ignorant. Voting for Republicans to cut my Social Security and Medicare all the while the Democrats were cutting them too. I should have been voting Democrat all along. I loved it when Hillary explained how people were living longer but now it turns only wealthy people living longer. A fact, hiding in plain sight, recently discovered by the progressive press. Must be all that oxycotin and cheap ammunition cutting their lives short.
Since the British government has been falling apart there has been a shortage double ought agents to blow up billionaires in their secret lairs we really can't do anything about them.
So what happens now? Vote for Trump in 2020? Watching progressives going into fits at the sound of his name is getting old but still worth it. The real fun begins when Alexandra Ocasio Cortez runs in 2024. According to her standards I'm probably a rich white man unworthy of Social Security and Medicare and should only be qualified after I go through my savings and sell my house to pay off my medical bills and insurance. I'll definitely vote for her If I'm still alive.
You know I'm not joking. When and not if they decide you have to much money they'll take it away.
@JoeG
It's no joke. Trump is actually the only politician who has not proposed cutting SS. The Dems are all for raising the retirement age for non "laborers", means testing benfits (e.g. cutting yours), higher taxes on SS benefits, etc.
When the Supreme Court ruled in 2010 with the Citizen’s United decision that political spending is a form of “free speech” they granted unconscionable outsize power to families like the Koch’s Mercers, Adelsons, Singers, Uihleins, Wilts etc. to shape this country’s politics and legislation to their “liking” and as we have seen it rarely coincides with the needs and well-being of the other 90% of Americans. The Supreme Court lost all credibility with that disastrous decision and have continued on their path to right wing politicization ever since.
7
The same goes for conservative evangelicals. They directly profit from donations from wealthy conservatives, and they are important part of the pro-wealthy propaganda. They preach obedience, work hard and leave politics to others, and hatred to social programs. Don’t rock the boat because you may end up just like Venezuela.
The wealthy conservative cabal is pretty broad and also includes right wing media.
There is nothing of that sort on the left, and it shows.
4
Previously posted on the immigrant roundup article today.
All you authorities charged with the responsibility of rounding up Hispanics; this isn't about immigration enforcement. It's about the economic wealth and desires of the wealthy you have always served as they have the money. If you are honest, you will agree. It's about the anger towards the presence of millions of hard working good Christian Hispanics diluting the wealth of the nation. It's all about money. But the fact is, their labors build wealth as well. Trump's counsel, Kellyanne Conway, was a consultant to Suffolk County Executive Steve Levy who first cited the burdens of Hispanics on the government services, even as they contributed to the economy. That was a couple of decades ago. Now she advised and advises the wealthy Trump Wall st Administration. Do you understand that this isn't about immigration, it's about wealth and now I wonder if Kellyanne Conway has roots in the Financial industry and Wealthy back in NY.
The Hispanics are good Christians and the Trump Wall st Administration is not. Trump is playing God. And I'm not a Devil.
1
Mr. Krugman, why didn't you directly state that the ultra-wealthy want to shrink the US government to a tiny and insignificant size? Big government is worse than kryptonite to them.
1
Thank you Dr. Krugman. Louis X!V economics, in which the rich rule while paying virtually no taxes, led straight to Robespierre and the guillotine. It would be nice if our ultra-rich could come to their senses and start sharing a bit so as to head that off in this country.
2
Paul Krugman, this is a smart piece. I only wish you had supported Sanders in the last election so that we might have made some headway vis-a-vis the stealth politics and agenda-setting of the extremely wealthy, something Sanders spoke eloquently about. And after all, Hillary Clinton was the pick and the spokesperson for the 1%. Shame on all who helped to get us into this terrible spot. Hard to imagination how we're ever going to get out of it at this late stage.
2
Less than 24 hours after the election the big media including the Times made the radicalness of the Democrats the big issue. Not only were the policies dismissed as shere lunacy but the consensus was that the Democrats would lose in 2020 unless they held the centre. Within those 24 hours I realized and td friends that the so-called liberal media was a wolf in sheeps clothing. I fear that if the Democratic party nominates a "socialist" the media will ensure Trump will be re-elected. Apparently there are worse things than Trump and McConnell guiding the US with the dangers that represents both for the world including the US.
Then the Poor People's Campaign appeared before a Congressional Committee, Bishop William Barber noted that the Representatives had little interest in the poor people sitting at the table, except that the Republicans kept asking questions of the two Republican poor people. To their credit, some of the Democratic Reps. began asking about the lives of these poor people. This is the crux of the matter. If Congresspeople and rich people knew how the poor lsuffer, they might change their minds. They are abysmally ignorant. Bravo to Elizabeth Warren for her video of the wall in Detroit dividing the haves from the have-nots', on purpose. When shown in black, white, and color, such things still have the ability to shock.
2
Basic economic facts on taxing the Ultra Rich
1. The ultra rich do not derive their income from wages, but from the return on capital assets.
2. In a global economy, capital assets can move with the click of a mouse
3. In theory, those shifts do not reduce the tax burden of the US Ultra Rich as the US taxes on world wide earnings
4. In practice, this is not the case. A world wide industry exists hiding income from assets and move the income they produce through chains of dummy corporations until untraceable
Recommended read : “London’s financial flows are polluted by laundered money” (The Economist Oct 11th 2018) through chains dummy corporations
5. A 75% income tax was tried in France but failed
Recommended read : France forced to drop 75% supertax after meagre returns (The Guardian, 12/31/2014)
6. The bottom line is that in a global economy, not only the wages of those exposed to it must fall to the global average (consistently denied by Krugman) but also the income tax rate of those able to move capital
7. In France, Macron, a former banker recognizing this, eliminated the wealth tax (another form of taxing the rich) on capital and other mobile assets, (yachts, private planes) and limited it to immobile assets - lavish villas at the French coast, Chateaus in vineyards that can not be moved
The French experience shows that in a global economy it is simply not feasible to tax the Ultra Rich at the 70% proposed
2
And everyone said, "Amen", except for the 0.1%.
My belief is that if the very very wealthy accepted much higher taxes, they would be better accepted by the masses and there would be less incentive to bring them down. As it stands, they are among the most vilified in U.S. society because they are perceived as: not paying their fair share; corrupt; paying off politicians; insensitive; unduly privileged.
1
What is truly astounding about the problem of debt is the fact that progressives want to pretend that debt is not a problem. The fact is that debt is a problem. It transfers income from taxpayers to the debt holders and can get out of control if the tax structure is such that debt grows faster than income. By refusing to face reality and pretending that debt is not a problem progressives loose credibility and elections. The way to deal with this problem is not to deny it, but face reality and confront it directly with progressive ways to deal with this problem the way Roosevelt did in the 1930s, namely, by offering progressive solutions to this problem. See: http://rweconomics.com/Deficit.htm for a complete explanation as to why Democrats loose on this issue.
I do not share Dr. Krugman's sanguine attitude (or AOC's) toward deficit spending. Debt must be serviced, i.e., the interest and principal paid off. From the NY Times (https://www.nytimes.com/2018/09/25/business/economy/us-government-debt-interest.html):
"The federal government could soon pay more in interest on its debt than it spends on the military, Medicaid or children’s programs."
and
"Within a decade, more than $900 billion in interest payments will be due annually, easily outpacing spending on myriad other programs." This compares to the $300 billion interest on the debt paid in 2018.
Can we grow our way out of this Dr. Krugman? Don't bet on it.
Greed used to be a "deadly sin", but now has become a virtue under Trump.
2
retired attorney F/70 FL voter
Three thoughts not in others comments:
1) Lysistrata. Should be mandatory reading--out loud--with boys and girls together starting about eighth grade + taking turns on inflection. Lots of laughs by line 22.
2) WHAT'S the matter with KANSAS? 2004
One history professor's illumination of why people everywhere there are ballots vote against their self-interest. From Kansas to Istanbul tomorrow.
3) Poverty. Recent studies show an average 13-point IQ drop as a direct result of living in poverty. This includes stunning study design with farmers in India who are their own controls: during the no-money months of a year, IQ drops v. during the crops-sold money-in-hand months of the year, IQ rises.
I watch this every day across all age groups in my neighborhood. My contribution? Listen and teach.
Last week I bought a new car for an almost-40 single mother of three. She finally asked me, "When do I stop paying for really expensive repairs?" I told her that we would go to edmunds together to find the as-is value of her wheels to get her answer. When she showed me a sell price that was much smaller than the repair price, she said "Stop now." No hesitation. I invited her to grab her biggest boy and go fit-drive a 2019 Sonic.
People who really need new cars in our world cannot afford them. While those who can afford them are not spending their wealth . . .zip nada nunc on anything that helps my neighbors.
1
On #4, “Defining the agenda,” I think it’s also worth pointing out that much of the damage is being done behind the scenes where many—most—of us can’t see what’s going on. There are signs of it in things like environmental policies that enrich polluters at taxpayers’ expense, massive military programs that suck the life blood out of anything useful to the broader public, climate-change policies that favor a narrow fossil-fuel donor class, etc. A lot of those “regulatory and administrative” rules are made behind closed doors and over late-night dinner meetings between the wealthy who stand to benefit from it and politicians who stand for re-election—and not much else.
To your point of the 0.1% considering themselves smarter than everyone else because, well, they’re rich, I have this to say: They, too, apparently have children and grandchildren just like you and me, and what does it say about their intelligence (as well as humanity and basic long-term strategic thinking) that they would saddle their descendants with a polluted environment and all of the problems of catastrophic climate change just so they could get an extra billion or two on top of the billions they already have? “Craven” is about the kindest word I can use.
2
Progressives have the fight of a lifetime before them in 2020. Local elections, statewide and national all matter. Time to rally up.
Look at the world - plutocracies (e.g., the U.S.), oligarchies (Russia) and state capitalism (China) abound. Business interests align themselves with the government in order to increase their power. The global trend seems to be away from pluralistic democracies and toward corrupt alliances with the business community.
Alliances among powerful religious leaders, the government, the media and business interests are the most dangerous. Donald Trump and the Republican party are obviously moving the U.$.A. in that direction. You can believe what you wish, but this dangerous alliance will make sure many of you believe what they want you to believe. It's just a coincidence that Republican policies align so well with what wealthy business interests prefer, right?
1
Those you speak of are Randians. They run the Republican Senate. Both Ayn Rand and Ethical Egoism were logically demolished Decades AGO! But, the Poor Public looks the other way. Must be from Embarrassment. The Charade is so good they don't notice.
1
In a credit based economy even the dolt making $400,000 in Manhattan can pretend to have 10X that. That is the genius of the .01 they've created an aspirational ladder which most folks fall for and vote against their own economic interest.
1
There have been changes since the 1950's. Both sexes work. The world now is not recovering from WW II. Other nations produce quality goods. Labor has been leveraged by computers and efficiencies in the supply chain. There is less demand for labor, though there are temporary lacunae due to lack of specific worker skills. Art. Intel will further leverage and decrease demand for labor.
Less demand causes labor and unions to lose power. Pay diminishes a percent or two a year– 80% less income after forty years. Less income, less spending, less demand for goods, less demand for labor, less disposable income to buy goods . . . Repeat the cycle.
Capital is taxed at less than half the rate labor is taxed. Payroll taxes and health care dependent on emplyment are absolutely stupid. Payroll tax is charged at more than 15% from dollar one. No better way to discourage hiring– though additional paperwork and liability created by payroll taxes discourages hiring.
Tax capital the same as labor, including charges for "payroll tax" on stock and other capital sales. It is a tax for the benefit of the commons, no different from defense or food inspection.
Try "trickle up" economics, as Mr. Yang has suggested. Complement with Gov't spending for improved life in the commmons: health care, education, child care, environment and public spaces.
These would improve the economy and life in general. They are impossible with the arch villain, McConnell, in power for power's sake.
4
Here Krugman sounds like a Modern Monetary Theory acolyte. I think Krugman, Bill Mitchell and Michael Hudson ought to sit down one evening and get a little hammered together. They'd probably find out that, operationally speaking, they're not that far apart.
Otherwise known as "Excessive Greed Disorder",
for which there is a cure, and that would be Progressives,
Sanders/ Williamson 2020.
Raw corruption may be illegal but at least Is honest crookery, soft corruption may be legal but is dishonest crookery.
1
Humans are just as un-evolved as we have been. We chase the richest, strongest and best looking people to lead us; even when they are terrible people or leaders.
The ignorance of humans is the reason that evil men always are chosen to lead.
1
Well Paul, your concerns are well-founded, but what I find really puzzling is how and why you abandoned your support for more progressive ideas espoused by Bernie Sanders that address these problems, in favor of a died-in-the-wool centrist (or more accurately, a Republican-In-Dem-Clothing), Hilary Clinton? She was the Queen of the Status Quo, the obvious standard bearer for the plutocracy, and yet you supported her while rejecting Sanders's platform. Now that many Democrats are copying his agenda, or at least moving in that direction, you reverse course.
Despite your Nobel credentials and other esteemed awards and accolades, what you did seriously undercuts your integrity. While you rightfully blame the media for their complicity in building the false "consensus" that deficits were more important than the well-being of the majority of ordinary Americans, you joined their ranks in 2015 for reasons unclear. As smart as you are I can't believe you actually thought Hilary would do anything different than her husband or Obama, both of whom were part of the plutocracy under the Third Way philosophy. So what drove you to shill for her?
Whatever the reason, it gutted the moral authority you once had. And worse, if you had used that moral and intellectual authority in support of Sanders, we might well be discussing how the economy has finally truly recovered for all Americans, and how "trickle down" was a failed footnote of history.
You have much to atone for.
1
Extreme wealth may damage some people's souls.
My son has a chronic medical condition, and wife and I raise money for the research foundation that studies it. A friend of my wife's is married to a very wealthy man (probably many hundreds of millions), and they were very generous donors to the cause.
Until 2008.
When Barack Obama was elected, my wife's friend sent a note that they wouldn't be able to donate because they were afraid that the new socialist president would turn them into paupers.
1
As the administration flirts with war, there's so little noise about the massive conflicts of interest.
So little that distrusts the economics of war and demands that we change it.
There are a lot of war profiteers, and a lot of them are connected to politicians.
Pacifism is another of those crazy ideas. Just as going to war with Iraq was deemed sane and responsible a while back, and those who didn't think any kind of war, if it was avoidable, was worth waging, were sneered upon.
I wish progressive candidates will begin to speak out on this with clarity.
1
I get that the extremely wealthy are as likely as the rest of us to wear blinders that conceal from them the suffering of others, but what I didn't get until reading this essay is why the extremely wealthy would only but control of one political party. They've bought them all. That famous photo of Michael Flynn sitting next to Putin showed Jill Stein at the same table. Now I get it.
2
Focus your talk on the single greatest factor taking place here. Immorality. The super wealthy are, at their very core, sadistic and unethical. Completely amoral and lacking in human compassion. It’s that simple.
2
Although I would add "willful" to Mr. Krugman's use of the aphorism "...failure to understand how the other half lives..." its use is both unfortunate and inaccurate as it is no longer the other half but at least the other 90% to which the willful failure applies.
It's simple: GOP believes that money is good for the rich, but bad for the poor.
Tax cuts for billionaires are essential, but feeding poor children school lunches is nasty socialism.
The hypocrisy takes many forms.
3
Read Democracy in Chains if you really want to know why things are the way they are. If our 'experiment in democracy' ends badly, at least you'll know why.
2
Is it possible to make Stephen Moore the avatar (anti-avatar ?) of this event, along with his misguided philosophy "capitalism is a lot more important than democracy ?"
1
Does Krugman count the Sulzberger family among those calling for cuts to "entitlements"? I can recall several NY Times editorials, during the Obama admin, calling for raising the retirement age, means testing, etc. Only the proverbial brick layer (and only the poor ones at that) were worthy of receiving SS. The only difference between the position of the elite Democrats and their media allies (E. Warren, NY Times, etc) and their Republican counterparts is that the Dems would allow for the existence of the very poor and the very rich. The middle class can pick up the tab (and kiss the benefits they have supported all their working life goodbye).
2
Prof. Krugman; This example should be the starting p[oint of your talk. In 2016 a Detroit newspaper reported; “Last spring, the DeVos-backed group was the chief force behind the defeat of legislation that would have established standards for identifying and closing failing schools, both charter and public, in Detroit, where a flood of charter schools in the past decade has created what even charter school supporters call chaos.”
“The summer of 2016, the DeVos family contributed $1.45 million over two months — an astounding average of $25,000 a day — to Michigan GOP lawmakers and the state party after the Republican-led Legislature derailed the bipartisan provision that would have provided more charter school oversight in Detroit.7
“The DeVos family, owners of the largest charter lobbying organization, has showered Michigan Republican candidates and organizations with impressive and near- unprecedented amounts of money this campaign cycle: $1.45 million in June and July alone — over a seven-week period, an average of $25,000 a day.
“The giving began in earnest on June 13, just five days after Republican members of the state Senate reversed themselves on the question of whether Michigan charter schools need more oversight."
DeVos was sued for bribery and the case was dismissed on a technicality that her conduct was not a legal cause of the harm that befell Detroit chidren as a result of her efforts.
1
Eminence ('as the high priest of Keynesiamism'), certainly wish we could be in attendance.
A good avatar (anti-avatar ?) for the event would seem to be Stephen Moore, along with his ilk's corrupt revelatory motto: "Capitalism is a lot more important than democracy."
1
5) Everyone convinced wealth will make them happy, as if life were what you have, not who you have.
1
Short list of policies that should have at its top Medicare for All. Why not, Mr. Krugman? #M4A
Jeff Zuckerberg plans to control The Global Currency.
The first sentence in the Libra white paper:
"Libra’s mission is to enable a simple global currency and
financial infrastructure that empowers billions of people."
He is not going to repeat the mistakes of Brexit and 2016, he is going to exceed them.
1
Sorry, but I think this is a bit of a lame treatment of a very serious, and colossal problem. Not only is there a missing bit in how the media came to parrot the interests of the wealthy, it understates the destruction most citizens face. I find that as disappointing as alarming.
Take for instance the reality that most people in the new jobs and especially those in their 40's and 50's who weathered the Great Recession losing their life savings and now find themselves in the new jobs that pay too little to save with no security or benefits to speak of and facing depleted social security and medicare and having to work much further into old age.
Old age will become the misery before Johnson.
Not one word about it here. Shameful.
3
You forgot to write about immigration. It is an integral part of the story you outlined. Imagine a nation with millions more immigrants. Imagine the effects on the economy. It is so in line with your thesis.
1
Your columnist is still recommending "A 70 percent top tax rate"
instead of a 70 percent marginal tax rate.
Do we really want conservatives to hammer us on "The Dems want to tax us at 70 percent!" ?
1
You are really on the money, to use a pun.
I'm very glad this appears on a Saturday for weekend reading. Thank you and your talk will be well received because it is the truth.
Matthew 6:24 ESV
“No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money."
3
I love Paul, but perhaps if he had 'ridden herd' on Hillary some more, instead of bashing Bernie, we wouldn't be where we are today.
How come no one is talking about slashing the Pentagon budget? I never understood the need for huge spending on sophisticated arms when scores of Americans are begging in NYC subways ( the majority of whom claim to be war veterans)? Shouldn't the money be used to help the poor instead?
3
Paul, you are an American treasure. Thank you for this article AND for pointing out the role of the media: "Through a variety of channels — media ownership, think tanks, and the simple tendency to assume that being rich also means being wise — the 0.1 percent has an extraordinary ability to set the agenda for policy discussion, in ways that can be sharply at odds with both a reasonable assessment of priorities and public opinion more generally." More on this important point, please: the ROLE OF ALL THE MEDIA.
2
5. Threats to move businesses, jobs, or wealth out of the US or to reduce jobs, hiring, production, etc. if they don't get what's good for them as individual agents, as industries, or as a class.
6. Attention: They have the ability to get--demand and command--attention from government--public officials and the government agencies--anytime they want. This allows them to use government time and other resources, even if they don't get anything tangible in return, that would otherwise be used by government to engage with the less wealthy, and those of different interests and agendas than the .1%.
1
Krugman always makes great points - for those of us who read him. One of the commenters today noted the 3 points his working class father taught him and those points jive with PK's more wonky analysis. So why don't other working class people get what the commenter's dad got? How does Krugman convince them? Heck, how does Krugman convince the many journalists who sold the supply side bull he mentions? I have another question. I get how easy credit caused a crisis, how the stimulus helped get us out of the last financial debacle but I wonder what it is that keeps the economy growing and many seemingly content. But since real wages have not gone up in 20+ wages, since real wealth for the bottom 50% has declined 900B since 1989 while real wealth of the top 1% has increased I think 21T in the same period, and with unemployment at historical lows, where are many getting the money to keep the economy going? Is this another credit debacle in the making? Maybe it's more complicated, probably is, but just wonderin'.
4
Krugman takes an economists revisionist view of 2011 that I think leaves something out of the story. While the economist may very well prescribe continued gov't spending that year, I think that everyone was suffering from "spending fatigue" and concerned that we could not institutionalize such high levels of deficit spending else we would wake up someday with a severe hangover.
Perhaps it is the same topic as Krugman's #4, but I would pose it slightly differently. I do not understand, and suspect an economist can't explain either, how so many people in our country can vote against their own best interests. People that are down and out are not voting the bums out, instead they're only focused on the 3Gs (Gays, Guns, & God) when they cast their ballots.
1
The wealthy, as evinced by this article, set me in mind of a extreme body-builder who has used steroids to the point where they suffer the delusion that theirs is the ideal form that matters. They do not see themselves as others do; puffed up beyond all scale and in a whole separate delusional universe from the rest of us.
They have poisoned themselves, and I daresay it is beyond repair at this point. Yet as is the case with body-builders they are loud and extreme in their insistence that theirs is the path that matters. It's a stance that is clearly having an impact on all of us. It is now at the point where we must do something about it.
First step, remove the abusive substance from their grasp that is causing their puffed up behavior; start curtailing the source of their addiction. Money. Increased taxing on the extremes of their wealth is a good place to start. It's for the greater good, so let's begin doing it shall we?
If we bring it down a few notches we might shock them back to more rational levels of discourse. Regardless we have to do something, because the societal situation has become untenable and, like all abusive relationships, cannot last can it?
John~
American Net'Zen
3
Did QE cause excessive wealth? I think it did. The Feds print money-> most money goes to the wealthy -> wealthy bid up asset price -> asset price (not wealth) trickles down to bottom 50% -> bottom 50% has to spend most of their money on rent, mortgage, etc. not much left to spend to 'stimulate" the economy with 70% contributed by consumers-> inflation is hidden in asset price owned by wealthy. Low inflation is due to in this economy, the poor doesn't have much left to spend after rent/mortgage/student loans. Every round of QE repeats the same cycle. QE doesn't create inflation. It has been proved again and again in the last decade, its main achievement is to raise asset price, so wealthy gets wealthier and wealthier (not helping the economy since they don't need to spend it). The Feds and wealthy are not stupid people, do they just pretend they don't see the QE cycle?
2
The very wealthy have this problem, shooting themselves in the foot. Increasing taxes on upper upper incomes and corporations still leaves them well off. But here's the bonus. That money when distributed to citizens with lower level income results in increased spending, a boon to all in the economy.
It is hard to swallow that those in the very top wealth brackets ignore the benefits from infrastructure improvements, health insurance paid in by all over a $30,000 exemption, environmental measures, welcoming neighborhoods, and the fact that livable wages increases productivity and loyalty.
Making college and trade training more available can only bring more talent and energy to bear to increase wealth for all, even those those 1 percenters or less.
Distributing wealth properly is a win-win situation. This is not a socialist dream, but supports capitalism at its best. Capitalism has been described as a competitive enterprise that breeds corruption. Better to look at it as filling niches in the economy meeting citizen wants or needs.
It is past time to realize that a unified nation democratically and economically produces the most freedom for all.
4
Yea, I'm in total agreement.
In particular, this statement: "there’s absolutely no reason to believe that the policy preferences of the wealthy are based on any superior understanding of how the world works" seems entirely accurate, and I think that most normal people are surprised at this notion. Many working people, if not most, assume that wealthy people know best; that their wealth was most likely attained through superior knowledge and wisdom.
This attitude by the working voters enabled the system to go on autopilot until it crashed in 2007. That woke up a lot of people, but many of them still adhered to the notion that rich people know more about how the world works.
This isn't a matter of low IQ or stupidity. It's just that long stretches of apparent prosperity for all relieved skepticism and increased blind faith. But also, the world is difficult to understand and it requires a lot of effort towards gaining uncompensated knowledge. Most people use most of their time towards anything providing compensation and little towards anything else.
I think the country needs to revamp its civics education, both in high school and in college courses. We need a better approach to teaching history, economics and government. And hopefully we can provide free public college to those who can make the grade.
454
@DudeNumber42
Let's take those "super-geniuses, the hedge fund managers for example. Through a combination of luck and insider information they can beat the market for a stretch of years, and then just as suddenly, no longer can. What happened, did their genius expire or did their sources and luck dry out? Even when exposed as frauds, they continue to win because they are "money managers" receiving a fee come what may, and barely taxed using the carried interest loophole so beloved by their boy Chuck Schumer.
69
@DudeNumber42
Most "earn" their obscene wealth the old fashioned way, they inherited it.
43
@DudeNumber42
So true. I can't tell you how many times during the weeks running up to the 2016 election I heard "but Trump is a businessman" as the single most obvious reason he deserved their vote. His ability to accumulate wealth was proof, to them, of his superior knowledge and skills. My reply at the time was "But the country isn't a business". Perhaps I was wrong.
45
It is always interesting to hear lower income Americans oppose taxes for the wealthy when the very probability they themselves will ever become wealthy belies the statistic that only 1% truly become very wealthy and even getting to the top 10% means there is only a 10% chance. Somehow, they think tax cuts for the bottom 80% has to be matched by tax cuts for the top 20% or it won't pass Congress and they believe what congress tells them.
2
Krugman makes a good point about wishful thinking among the wealthy. I can extend that idea: I live in Silicon Valley and have seen appallingly bad investment decisions among people who thought they were Incredibly Savvy because they made millions on . They failed to recognize that luck played an enormous role in their successes, and their follow-on investments betrayed their arrogance: investment properties purchased in 2007, bad schools that no one wanted to attend, and new software that no one wanted to use. And all through this, hubris and refusal to even glance at the warning signs.
It's also important to focus on the 0.1% or the 0.01%. Taxes aimed at the 1 or 2%, who mostly rely on paychecks, can often be avoided by the wealthiest. Sure, it's good for the top earners pay their share of taxes, but it's more important to redistribute a large portion of multimillion and billion dollar fortunes. Bottom line: a billionaire who loses 70% of his fortune can still fly private between his houses in Aspen, London, and St. Lucia and can still leave fortunes to his children. A 1%er earning $400K who loses 70% will be wheezing almost immediately.
As for everyone else...well, the nation as a whole could really use some wealth redistribution.
508
@Valerie
The old tax and regulation system forced them to make their money work. Instead of sitting on it and buying what or who they like they had to invest in building America and creating long term benefits paying jobs to get deductions and avoid paying the high rates they fear.
59
@magicisnotreal,you don't avoid taxes by investing in jobs onshore. That's not how the extremely wealthy do it. You move your money to a tax haven, then you sit on it.
31
@Valerie
Exactly, Valerie, the only two words that will sober-up the .01% with a slap to the face are:
“Wealth Reform!”
Although, the threat of a people’s peaceful “Political/economic & social Revolution Against Empire” are likely to be very sobering to the .01%, if Bernie has the brains and guts to use them.
15
I suspect that some of the uberwealthy proponents of entitlement cuts for the needy and tax cuts for the wealthy understand that they are setting up the conditions for catastrophe. Look no further than Trump fan, Peter Thiel, who bought himself an escape pod in New Zealand.
5
I want to relate a recent experience, I was in a cab in London (UK), driven by a Sikh. On being told that I am from USA, he went over a long list of his relatives who in USA (all highly successful). I asked him why he continued to live in UK, since all his relatives were in USA and doing well. He responded that UK was paradise (his words) for senior citizens (he was 75). He had free health care, free transportation, he did not have to pay any property taxes, on and on. This is when poverty and homelessness are rising in UK, and the very future of NHS is in doubt. My request to Dr. Krugman is to address how far these generational inequalities have developed in USA and how to stop them from getting to where they are in UK at this time.
3
It is the extreme wealth of this .1 percent, and its corrupting influence on government, that helped fuel so much anger in response to President Obama's plan to scrap College Savings 529 Plans. Obama proposed doing away with College Savings 529 Plans (tax sheltered investment vehicles to save for college tuition) because the plans tend to favor the upper middle class and not those families most in need for tuition assistance. The idea was to end 529 plans and use the taxes the government would gain to fund a more equitable tuition tax break for all families. The backlash was severe and Obama ended up removing the proposal from his budget plan. While it is true the 529 plans disproportionately serve upper middle class families, that may be ok if you consider the extreme advantages the government gives to the .1 percent, a tiny group that doesn't have to save for anything. The reason the upper middle class becomes so angry at additional efforts to tax its wealth is because so little is ever done to draw more money from the super wealthy. America's upper middle class are the worker-savers, still needing to work for money, but making enough to save some of it. The US government, when it needs increased revenues, like Obama's college tax break plan, goes after the low lying fruit of the same upper middle class group, again and again. The .1% remain untouched and coddled. People had simply had enough, and Obama heard that. Other aspiring presidential candidates should too.
5
‘Citizens United’ opened the floodgates for moneyed interests to wield lopsided influence over our legislation and governance. In fact, those with deep pockets can literally buy themselves greater wealth. Forget representation or fairness for the rest of us. Money talks, and those in power are listening.
500
@NM
And what do you think bought Citizens United? The roots are deep and deep-pocketed.
24
@NM
First was ending the Fairness Doctrine of equal time to both sides, then the coup de grace of Citizens United.
Money talks, walks and runs.
23
@wanderer
Ending the Fairness Doctrine was a brilliant move for the wealthy. It ranks right up there with gerrymandering.
19
Three points I learned from my blue collar father years ago:
1) After wealth, there is only power, and the wealthy exert it in many ways.
2) When times are good, everybody has money. When times are bad, the rich still have money --and still exert power.
3) When I asked him why the "government" do something to rein in big business,he responded "My boy, what you don't understand is that big business IS the government."
684
@Mark
Exactly. To paraphrase Frank Zappa, "Politics is the entertainment division of big business."
195
@Mark, good comment. I would add that the wealthy don't suffer reverses in a depression because they can wait it out. Unlike the middle class, they don't have to spend their money and suffer permanent losses.
In many ways recessions and depressions are an opportunity for the wealthy to acquire more wealth by buying up foreclosed real estate and failing farms and businesses. Mitt Romney said as much in the 2012 election when he argued against helping homeowners who were underwater on their mortgages; his solution was to allow the foreclosures to happen so that investors could profit.
129
@SandraH.
Better than "waiting it out", as you point out the wealthy use depressions to buy up resources at fire sale prices. It is great for them, as are distressed municipalities who sell public goods to raise cash they can't get from cutting taxes. New Orleans and Detroit are case studies in how the wealthy take advantage of disasters. Never let a disaster go to waste!
58
Krugman’s argument that the ultra wealthy set a reactionary political agenda is at best a weak one. George Soros, Bill Gates and Jeff Bezos, the owner of the Washington Post, are hardly conservative. Why aren’t their obvious attempts at promoting a progressive agenda successful? Furthermore, you don’t need to be a billionaire to set the agenda. Tenured economic professors from Princeton University do manage to get their liberal views across. (Granted they are very rich but hardly billionaires.).
2
@Bill Gordon Perhaps because the reactionary billionaires (1) outnumber the progressive ones by a lot, and (2) the progressive billionaires tend to invest in programs to address specific problems (such as the Gates' spending on education, or Soros on a wide range of social issues), while the reactionary ones spend on political efforts (such as the Kochs, DeVos family, etc.).
3
@Bill Gordon
Sure, Bill. It is amazing what impact tenured economic professors have compared to, say, Wall Street.
3
Krugman, as often the replies, cast the failings of the economy and the unresponsive political system, on the undue claims to wealth by the 1.0, or 0.1, or 0.01. There is the notion if the numbers were "better" the ails of the land would be redeemed. The magic of the "land of opportunity" would be restored. Yes, the disparity in wealth, as well as its political power, are out of proportion for a functional "democratic capitalism".
While the wealth gains may be out of whack, what has become the life-style of the land has no less disoriented the state of the land and the well-being of its inhabitants. And the economic foundation, and the economist's perspective, on growth and incessant consumer consumption, has fueled the central role of $$ in the satisfaction of individuals.
Where as the access of individuals to health care is regularly criticized, the expenditures reach 20 percent of GDP and the greatest portion of expense is for self-inflicted life-style disorders. Mental health, addiction, obesity, diabetes, child abuse, gaming addiction, self-mutilation, auto accidents injury, alcohol and cigarette illness, sports injuries and numerous other life-style inflicted harms make up more than half the the medical care expenses. These are not just poverty casualties. While those that treat these afflictions have good paying jobs...nearly 15 million with wages from human health miseries.
It is an economy for a society that lacks a sense for an enlightened destiny.
3
In other words, if you’re sick, you deserve to be. Therefore, the wealthy shouldn’t be inconvenienced by helping society care for the poor. The wealthy, who also suffer from disease, never get drug addiction, obesity or depression because of moral superiority. God loves them more. We will ignore the huge number of millionaires who have needed liver transplants or been found dead in their homes. We will especially ignore the girth of our billionaire president, who has very big bones.
2
"And when it came to entitlements, the policy preferences of the wealthy were clearly at odds with those of the general public. By large margins, voters at large wanted to expand spending on health care and Social Security. By almost equally large margins, the wealthy wanted to reduce spending on those same programs."
Fortunately, there are billionaires who disagree with this: Warren Buffett, Tom Steyer, Bill Gates come to mind. But, unfortunately, the quoted paragraph from your column probably does reflect the view of the majority of the very, very wealthy. What is even more unfortunate, as you pointed out, is that they each have more influence over government policy than hundreds or thousands of us ordinary citizens. Republicans with the support of these billionaires continue to chop away at social programs, and, if Trump is elected for a second term, Republicans will probably retain control of the Senate, and I wouldn't be surprised if they retake the House. If that happens, the social safety net will again be in jeopardy and reasonable universal healthcare will be a nonstarter.
If you believe in the social safety net, it is crucial that you vote in 2020.
5
Thanks to Krugman for this essay. Yes, it is so obvious but needs to be spelled out.
The wealthy literally don't care about the concerns of 99% of the people because they don't have to care. 99% of us HAVE to care about our basic survival abilities.
Besides being shielded from having to care about their daily survival, the superwealthy have another advantage: they can buy more power! So they have more than one person, one vote power. That's even more unfair than the first advantage.
So the playing field needs to made just a bit more level by taxing the wealthy to reduce those unfair advantages. Sure, they'll always have more money than the rest of us and have some of that advantage BUT at least they can be forced to contribute to a country that we all need to share.
"Excessive Wealth Disorder" could be considered an antisocial personality disorder when the person feels entitled to excessive wealth and entitled to abuse power with that wealth to the detriment of other people.
638
"Excessive wealth disorder" also affects the non-wealthy, many of whom often cry "socialism" and worse at any attempt to level the economic playing field.
The uber-wealthy may be self-serving, but for many of the non-wealthy, the enemy is in the mirror.
33
@sfdphd
I think it would be good to stop psychiatricizing and medicalizing all human behavior.
It's sad to see that an Economic Policy Institute would use this term. Is it supposed to be catchy? Inviting? Trendy? It's none of those.
Not everthing is a disorder. This is truly idiotic language-wise.
It's called greed, income inequity and many other things that result from our capitalistic system.
15
@sfdphd
If you want to see this change in any way, vote for Bernie not Biden or the others courting the mega-rich for scraps from their table. If you take their money for your campaign, you will dance to their tune whether you think you are better than that or not. You do want to get re-elected, right?
11
I grew up in a working class family. We never missed any meals but there were no extras. No music lessons. Rare vacations, etc. My sister was enthusiastic about marrying up and did so. Her wealthy (Republican) lawyer husband once ask me "Don't you think if your parents had invested a bit more and budgeted more carefully they would not have needed social security?" This completely clueless rich guy (son of a rich guy) evidently didn't know that working class people had no money to invest. My parents would have lived in poverty without social security.
1062
@MB Blackberry MB, You wrote that your parents had no money to invest. But your parents definitely could have had the cash to do so. After all, they chose to have kids (at least two). Unless raising kids cost nothing, your parents could have invested the money spent on their children in a low-cost Index fund and doubled their money every decade or so. And since it seems “they would live in poverty without social security,” those kids do not seem to be helping them muchl; money-wise, the kids were not a good investment. Stock market returns would have been much better and allow them to live not in poverty - even without social security.
7
@Ernesto - That is why the average retirement account holder at retirement is less than $40,000. Go figure
26
@Ernesto
It is a sad sad day when you live in a culture where you work hard but cannot afford to have children.
Ernesto’s dystopian world assumes no sense of community;that those who have more are under no obligation to share. Such a world view impoverishes all of us.
192
What I find amazing is that there is consideration of raising the retirement age at the same time that age discrimination makes it impossible for those over 55 to be considered for a job. I am a 58 year old teacher with over 25 years experience who can't even get a response when I send out hundreds of resumes. At the same time I have been offered a prestigious position at one of the best schools in Taiwan. I have no desire to retire at 65 or at any time that I can mention, but I will have to go to the other side of the world to get work, which I am. Here I think all I could do is greet shoppers at Walmart.
1076
@Greg Jones
At age 55, US employer-paid health insurance costs 2 to 3 times what it would for a 30-something. And the employer pays it ALL. A 55-year old being paid the "same" wage as a younger person ... is actually much more expensive.
You can ban age discrimination all you want, but money talks. Loudly.
57
@Greg Jones, that's the dilemma. It's difficult for any professional over 50 to reenter the job market, no matter how willing they may be. The result is that people who lose their jobs before retirement age spend down their savings. It's a no-win situation; I've seen professionals in their 70s take low-wage jobs just to supplement their Social Security.
171
@JD Im wondering if you take this as a blanket justification for discrimination. Let us say that health care for women might have higher costs then it does for men. Does this justify gender discrimination contra the Civil Rights Act of 1964? Given the fact that African American men have a higher chance of high blood pressure would this justify racial discrimination? If not why would this apply to age, which is also prohibited by federal statute?
136
The power of wealthy people to spend huge sums of money has taken large pieces of the country out of public usage. The NYTs reported the Fulks Bros bought 100000s of acres of land in Idaho and put up no trespassing signs up. The land had been there for public usage for years. Now the Fulks Bros unilaterally decided they knew what was best on the notion that they were protecting the land. Money turns one into a genius. Krugman answers the age old question why do people vote for people who do contrary to voters interests on taxes and spending. It seems voting is a formality before the wealthiest interests decide what their issues are. Its not just campaign spending which Citizens United has altered with the amazingly self serving plutocrat mantra money is free speech. In a capitalist country of the USs libertarian bent money has no limit in its capability to intrude and change the way people live.
2
I have never understood what drives the -uber-wealthy to accumulate yet more, no matter what the cost to others who have less to begin with. To me the ultimate obscenity in human affairs is the iact that a few have far more resources than can possibly benefit them in any material way, while so many have barely enough with which to survive (if that). I have had the opportunity to query people with more knowledge of thisthan I have, and perhaps the most cogent (and in a way disturbing) explanation came from a venture capitalist who was investing in my wife's startup. (He had started his career as a chemist.).
I proposed to him the following: The whole thing isn't about money per se, but money is just the way to keep score in a game. He enthusiastically agreed saying that it was the greatest game of all. (I gathered that he, like me, had no direct experience of war). Is that really all that is going on? Is that what the Kochs and Icahns and trumps and Russian gangster oligarchs are about? Are the rest of us just pawns in a game that we will never get to play?
4
Dr. Krugman, I would suggest you reread about Adam Smith and his thesis on why the East India Tea Company was a monopoly and why they were breaking the King's coffers and the populace in general.
In general, yes it is the sneaky policy forces out of this 0.01%. The CATO Institute, the Heritage Foundation and several other foundations funded by these individuals have way too much influence. The Heritage Foundation gives a list of potential Supreme Court nominees to Republican Presidents.
I believe that there is money being spent in comments sections and like places on Facebook to shift America right.
You realize Elizabeth Warren is a moderate Democrat while the Democrats we have had are bought-and-paid-for quasi Democrats. I consider Biden one of them. It is the money as you also say.
Money has corrupted our politics as surely as ignorance.
9
Blame George Washington (and his fellow oligarchs). The colonials paid less tax than the British, but the wealthiest ones, like Washington, were still not satisfied. The strongest agitators for revolution are rarely the 'have-nots'.
Paul Krugman is tilting at windmills, saving us from the evil wealthy people who somehow arrive at the crazy conclusion that our government is at fiscal risk. As if only Scrooge McDuck would care about that. As if Simpson and Bowles were Koch brothers toadies rather than dedicated, perceptive public servants
That someone even has the gumption to say “aggregate demand” in the face of the evidence of the last couple years is a giant testament to stubbornness
1
@Robt Little
If your (somewhat incoherent) point of view is the opposition to Dr. Krugman's, you make him look like a genius.
2
Although there has been considerable support for the single payer model of Medicare for All, the prevailing rhetoric has now become "letting you keep the insurance you have," and this bears directly on the wealth inequality issue.
The single payer model addresses wealth and income inequality by switching from a system heavily dependent on individual contributions (premiums, deductibles, and especially forgone wage increases) to a system that uses progressive taxes to fund the 18 percent of our economy that we're devoting to health care. This is one of the most important tools available to us to reduce the inequities in income and wealth distribution.
Most of the politicians who claim they support Medicare for All actually support the perpetuation of our highly regressive method of funding health care through employer-sponsored plans - health care financing that is costing middle-income Americans a significantly larger percentage of their incomes than they would be paying under single payer, whereas the wealthy are paying a percentage that is not detectible to them, unless they study their accountants' reports.
Only the genuine single payer Medicare for All proposal of Bernie Sanders and Pramila Jayapal would take a major step towards reducing income inequality. The other Medicare for Some proposals fall miserably short of this crucial gaol.
6
@Don McCanne actually most successful global models of universal healthcare are not single-payer and rely instead on highly regulated private insurance companies (Germany and Switzerland) or a form of HMOs (Israel). Regardless, every civilized country allows supplemental and/or private insurance that would be outlawed under Sanders’ plan, which is why it is a non-starter. I lived in Europe and their systems are much more more efficient than the clunky contraption of the US. But if you are telling me that I should get the same healthcare as a homeless junkie, even though I have the means to pay for a supplemental or private insurance, forget about it. Not going to happen.
2
If we are going to do this, will we also address effort disorder?
Surely if the money I earn in excess of what you earn is to be taken away, we need to look at when it was earned. I make money working 80 hour weeks. My excess income comes between hours 41 and 80- ie overtime. So I’m sure you will all agree that those making less should just work a lot more and then see how unequal we are?
6
@Ny Surgeon I think your comments underline the difference between physicians and physicists: physicians work for money while physicists work for pleasure. Physicians obviously hate their jobs and get no pleasure from helping humanity, that's why they need to have high incomes. How much did Jonas Salk make for developing the polio vaccine ?
1
@Ny Surgeon It does not matter where or when or how you earn your excess income; what matters (to others, and to you too if you stop and think) is how you spend it. If you spend it on "wasteful" personal (or family) consumption, then you will be leading a wasteful life; if you channel your wealth to give back to society, you will be leading a fruitful life. Either you can do that yourself; or you can pay higher taxes and let the government do that for you!
3
Not talking about you. You a still basically an hourly wage earner. The Uber wealthy play and win by other rules.
6
Thank you. Thank you.
In this very paper today there is a piece bu one Professor Mankiw worrying about current and future deficits. He confesses a personal preference to cutting spending than raising taxes. But nowhere, nowhere does he acknowledge that, “But this deficit, although far less justified by macroeconomic considerations, was created by tax cuts — and somehow the deficit hawks are fairly quiet.”
So thank you.
6
This movie is not going to end well.... this is not the first society in human history which imploded because a coterie of oligarchs took so much more from society than they needed that the rest of them banded together and booted out the oligarchs and the system they misused. And, the end is coming sooner than any of us realize...
Sure, there are a few excessively wealthy folks like Gates and Buffet who channel their wealth to societal improvement projects. And, those are powerful illustrations of how the excessively wealthy could behave. But, that enlightenment is sadly missing; perhaps, the press and the academia should focus on educating these excessively wealthy
7
@anatlanta I would argue that even benevolent billionaires should not be able to sway public policy. Bill Gates has been experimenting in public education. Why should he, a single citizen with little experience in the field other than as a student, be able to dabble and disrupt a social program in a democratic nation? His voice is amplified by his wealth, but how does that impact the voting desires of the rest of us? If he wants to spend his money he could do it in the public sector.
3
@Mary T there is merit in debating whether the government does a better job or private enterprise does a better job in using resources to achieve desired outcomes. In some fields, yes, you need to take what the government (public sector) does - policing, justice, defense, etc. In other fields, maybe not so - making bread, watches, medicines, equipment, etc
1
@anatlanta
Dog I hope you are right, because we got no time to waste. But I will argue you are not right, ain't no way useless Americans will let their 'exceptional' lives be ruined. Poor people vote Republican - that is all you need to know of where the problem lies - stupid and poor people.
A big problem is cultural communication. Economics is a mystery to most of us. Most people try to translate it through their own experiences - their own households, their own small businesses, whether there are jobs in their area. People have to see tangible outcomes of a theory right in front of their faces in order to accept it. American culture is deeply invested in the "what's in it for me" ethos. And many people cling to soundbites that are easy to remember. Reaganomics was boiled down to the simple formula: "a rising tide lifts all boats". Many memorized this and can't be budged. Likewise, "what's good for business is good for America." Small business owners feel they have a common culture with all other businessmen - even when large businesses are actually crushing the small businesses. The "villain" is never seen as business. The villain is always "government" and "regulation." Rooseveltian approaches and regulation are easily smeared as "socialism" and "handouts" -- more soundbites that are easy to remember. People cling to soundbites even unto their own destruction. A sociologist did a study of people in Louisiana whose cancer rates are among the highest in the US -- and those rates are clearly a result of local pollution by big businesses. When asked about this, the people said, more or less, "pollution and cancer are the price we pay for jobs." ("Strangers in their Own Land"). What to do? So many people are so misled by the simple catch-phrases.
22
@ps Rooseveltian approaches and regulation are easily smeared as "socialism" and "handouts" -- more soundbites that are easy to remember.
and "entitlements".
The vocabulary adopted by the media all too often sets the agenda. And, you guessed it, the wealthy own and control the media. Their campaign contributions buy senators and representatives who quickly adopt the vocabulary and refer to Social Security and Medicare as "entitlements" even though ordinary Americans pay a higher tax rate on their incomes than Trump.
17
I’d suggest we add “secular stagnation” to the list of dangerous catchphrases. And that those looking for economic enlightenment look further than just this column
2
@ps
A rising tide lifts all yachts. The dingy tied to the dock by a short rope gets swamped.
4
For an example of category 1, raw corruption, look no further than Donald Trump. He bragged about contributing to political campaigns of both Republicans and Democrats to gain influence. He had no ideology beyond self interest.
As president he is personally profiting from the office. The Emoluments Clause may as well not be in the Constitution. His policy agenda focusing on tax cuts for the wealthy (his single achievement) serves his financial interests. While his cabinet focuses on cuts to HUD, Food Stamps, education, Medicare, Medicaid, he lavishly spends our taxpayer dollars on his weekly junkets to his golf resorts.
Of course he is corrupt in many other ways, but his abuse of our government and the people is being brazenly performed on center stage for all to see.
27
Today's movie, "The Death of Excessive Wealth."
The fear mongers always want to use Venezuela as proof.
They assert that it is a great example of what happens to a
wealthy Democratic country when the "socialists" take over.
But it is really a great example of what happens when obscene wealth-power controls everything for a few generations.
Secure in their power to underpay the working class, pay little or no retirement benefits, keep health-care as just another one of their corrupt and profitable investments complete with their own hospitals that only they could afford, control the agenda by flooding the press with distortions, set themselves up in luxurious gated communities while the poor sweat it out in little tin roof concrete block shacks, keep down lower-class voting turn-out by making registration and voting difficult, costly and time-consuming, swap political control between two parties who answer to the wealthy and do little or nothing for anybody else...
Funny, after living in Venezuela during the early Chavez years and seeing the improvements, then watching the costly over- reactions that resulted from generations of abuse, we moved back here to watch the same movie again and to work as unpaid extras.
15
I’d just like to applaud the courage involved in baldly cheering for Chavez (still), and the willfulness in believing that the story of Venezuela’s ruin is that the country had too little socialism too late.
Upside-down land
1
@Robt Little
no not that. not too little socialism too late,
too much greedy control by wealth for too long, and the over-reactions to those abuses and the intransigence of the wealthy until it was too late
1
It's worth noting that European leaders also quickly switched to demanding deficit reduction early in this decade, in the face of even higher unemployment rates in many countries, culminating in the disastrous Eurozone policies that have crippled a generation of southern European youth.
7
Dear Dr. Krugman:
While you might be right in your conclusions as to what the influence of the hyper wealthy is, and some of the ways to ameliorate the problem, you utterly miss the point.
The hyper wealthy are in control and the population is not. That is the point. Absent a serious upheaval in American society do not expect this to change.
Or, as was once told to me in jail, "It's mind over matter. They (the guards) don't mind, and we (the inmates) don't matter.".
And you are dead wrong about one point. Some of us in the Great Unwashed do in fact buy into Keynsian theory. Not everyone who has come up through the cargo hatch is so focused on survival that we can't see the larger picture.
25
@Alternate Identity
The most fascinating comment I've ever read in the NYtimes.
How did an articulate commenter end up in prison?
I agree with Dr K, and the objections raised here.
11
@Oh
To answer your question: he/she ended up in prison because the USA has the highest incarceration rates in the world due in large part to prison ownership being privatized and those wealthy prison owners manipulating the agenda exactly as this article talks about.
22
@Oh
Ah, yes... my special crime.
They got me with not one, not two, but three, I'll have you know, individually and separately rolled marihuana (sic) cigarettes. It was the Crime of the Century.
I got three years.
5
Most wealthy people in our country and almost all large company CEOs and elected Federal servants literally have zero sense of how most people in our country live.
Speaking recently to one of the .001% about minimum wage and Health Savings accounts and detailing how so many families in our country face daily struggle I was stunned at his views. This was particularly striking because he is largely 'self-made'.
His idea for how a family of four can make it and have a HSA to help manage health care costs is:
- Both parents have base jobs that earn $20k each a year.
-"Mom" gets a week-end job as a waitress.
- Father gets a second job two or three nights a week.
-Children go to vocational schools and get after school and summer jobs.
-By buying HSA plans at $2k a year and 'shopping' for health care and not borrowing money for college they can all have good lives.
When we look back at how the upheaval in Europe in the first half of the 20th Century was underscored by the absolute ignorance by the 'haves' as to how the 'have-nots' lived we can see what is coming in the US and Latin America.
Too late to stop this ?
29
My top priorities for this election are wealth & income concentration and climate change. Both are urgent, but wealth concentration is probably more so, because enough people are close enough to the edge financially that violence could be a real possibility sooner than most think. Countless government policies have the effect of moving wealth from the middle and lower classes toward the top, in a way that is systematic and pervasive. And it is extremely expensive for the society at large, including eventually even that top ,01% despite the fact that they are pushing for it. Here Krugman talks about how those with real economic power, through their control of the media, think tanks, etc, have convinced the rest of us that their priorities should be ours too. This, along with the inevitable noisy resistance of very large pigs being pushed away from very large troughs, will be a major challenge for Democrats (the GOP doesn't recognize this problem) about how to reverse this trend that has been accelerating since the Reagan era.
14
The people who think we’re close to violence are living in NYC co-ops. The people they’re saving keep voting for centrists, or even Trump.
@Robt Little That's part of what Krugman concentrates on in this article. Control of the media by the top 1% convinces many that policies which favor them (like recent tax cuts) also favor the middle class. This means there is an immense task of communication and education that must be part of attempt to reverse inequality trends.
The political power lies not just with the 0.01% of the most wealthy but with the 20% that are doing well economically with their incomes and investments and with the politicians who identify mostly with the wealthy and who aspire to gaining greater wealth via their contacts and service to wealth -- the club of growth.
11
Thank you. I think this may be the most important opinion piece you have ever written: A lucid unmasking of our naivety and a wake up call to support the long term measures you have listed. Hope others will follow your lead and that you will continue to write about why these progressive measures require widespread support. Repetition without irritation fosters awareness. And awareness, for most of us, fosters change.
17
How about a guaranteed basic income for all funded by government run casinos? Does it have a chance of success?
The issue with wealth disparity is that its presented (by the wealthy) as an emotional argument of "fairness" and "morality" in which inequality is an argument based on opinions.
But inequality had hard economic outcomes. The wealth disparity we witness today - the USA is the most unequal advanced society, with only tinpot dictatorships more unequal - is collapsing American society.
Inequality is formed through poorly managed capitalism - "de-regulated capitalism" and boosted via explicit government interference.
Neo-Liberalism is the ideology that created the modern version of equality - now, it is as high as the 1929 version, which created the Great Depression through "underconsumption", where the rich remove the consuming power of the middle class, such that they cannot buy the products of the economy.
In the modern context, inequality is caused by serial tax cuts for the rich - starting with Reagan - and continuing to Trump. It explains why all advanced economies are deeply in debt - "healthy capitalism" rests in a narrow band of income distribution between capital and labor - the rich have succeeded in converting their tax obligation into a income source, because the economy needs to "borrow back" the unpaid tax to balance their budget.
It was inequality that caused the Great Depression - the demand needed to drive the economy simply disappeared into the bank accounts of the rich.
We are at that exact same point in 2019.
32
@Axis Great explanation, thank you
1
Ordinary voters by and large are insufficiently concerned with politics and—as distracted and as busy as they are attempting to meet their own and their family’s needs—seem not to realize that their democracy has been hijacked by career politicians and lobbyists who primarily serve the interests of a powerful economic elite.
America’s political-economic system, thanks to the obscene role of money in politics, is a form of competitive authoritarianism—an anti-democratic system wherein the interests of mega-bucks donors determine the policies of both major parties.
I suspect neither Republican nor Democratic politicians will risk changing the political-economic structures and practices that each—especially the Republicans—views as essential to their future competitive victories over the other.
The Russian oligarchs and U.S CEOligarchs, banksters and finagliaciers have much more in common than we “little people” generally believe possible.
Putinesque Capitalism and New Gilded Age Capitalism have much in common. Raw corruption, as Mr. Krugman notes, is a far greater problem than is generally acknowledged.
26
@Andrew G. Bjelland, Sr. Unfortunately, the collapse of Communism created an over confidence in obscene capitalism worldwide.
2
@
What passed as Communism in the U.S.S.R, and China led many to believe that Communism had not failed; rather, it had never really been tried.
Nevertheless, in the free-market loving U.S. it is becoming increasingly evident that the invisible hand is driven by a very strong Wall Street and corporate arm, and is directed by some very self-serving, greedy brains.
The flaws of laissez-faire capitalism were very much evident in the financial collapse of 2008 and have remained evident ever since. Here in the U.S., the coronation of King Trump is directly due to these flaws: mergers and acquisitions result in too-big-too-fail financial institutions and corporations; competition decreases; entrenched wealth dominates the political and legal systems; disparities between the wealth and incomes of the top 1% and the lower 99% continues to increase; ordinary people feel in their bones that the system is rigged and perhaps rotten to the core; lower-middle and working-class resentment flares and finds its expression in support for a superficially anti-establishment Leader who proclaims that he alone can set things right.
King Trump is a plutocrat's plutocrat and a kleptocrat's kleptocrat.
Will democratic resistance to his reign prevail, or will America, like Putin's Russia, succumb to an all pervasive cynicism and apathy, and become a kleptocratic authoritarian state with a democratic facade?
This is a gutsy move by Mr Krugman to hold these well-documented truth as self-evident:
" - A 70 percent top tax rate
- A wealth tax on very large fortunes
- Universal child care
- Deficit-financed spending on infrastructure"
To which I will add my two cents from experience: It's not from raising taxes on the wealthy that you'll stop them from trying to get wealthier. Quite the contrary. Less taxes means less incentive to reinvest profits in productive investments. just ride the stock market and let generations of trust-fund babies jet off to Moustique in the summer and Zermatt in winters.
Case in point: Trump, who had to pay a minimum income tax imposed by Obama got himself elected president and reversed that tax, plus passed a tax break specifically made to benefit his real estate business, notably the pass-through income deduction, while giving crumbs to the hoi polloi. Yet another deplorable example of the kleptocracy that America is gradually transforming into.
67
You are wrong
Trickle,down does not work
Tax cuts for the rich will not juice the economy, in fact more will be salted away
America is a consumption economy so giving more money to the working poor, policies to favour them, reduce inequality is better bang for the buck, bottom up works....
3
@Pedro Andrash
Read it again. Xavier is not wrong, and he is not disagreeing with your views; he's just saying that increasing taxes is not enough to stop the growing wealth inequality.
2
Paul,
You used the phrase 'redistribution away from the wealthy toward citizens with lower incomes'.
I object. This implies somehow a taking from the wealthy instead of a demand that the wealthy pay in proportion to the benefit they receive from government. The wealthy may be outraged by this phrasing, arguing that they don't get value from the government, but I think this emotional response overlooks the fact that the US government is essentially the insurer of their fortunes. Their fortunes are secure largely because of the degree of order and stability (both political and economic) that is, in large part, traceable back to the US government. Those of us without wealth get far less value and certainly not equal attention or respect, from the government.
The more wealth one has, the more beholding you are to the government. Without government, you would be spending far more on private means of protecting your wealth. Government protects your wealth both directly, through law, courts, police, military, etc. and indirectly, by stabilizing society. Yes, you can argue about how much 'entitlement' (bad term) is necessary to stabilize society, but so-called entitlement spending benefits the wealthy as well as the direct recipients by stabilizing society.
In the end, I don't think we should demand redistribution from the rich. I think we should demand they stop poaching off the rest of us and pay their share.
79
@Jay He's describing the economy. You are describing political party agendas.
The government will not do that much if the wealthy get wealthy thanks to the, so to speak, self-organisation of money. Money itself is able to generate new money. The more wealthy you are, the easier it is to expand.
This is actually a broader topic and I am glad that Krugman is at least trying to break it down into priorities.
Think the next 10 years. What will happen? Well, the US will be more and more in debt. Once it reaches 130-150 % of the national GDP, we do not know what will happen, simply due to the insane amount of money as debts (currently $22 trillion, if I'm not mistaken). Nobody will pay this. It's not like Greece or Spain are in debt, because their economies are small.
Now, when this happen, what will politically happen? More tax reliefs. More corruption by the rich. Why? Because a financial crisis of this magnitude will last longer than the last crisis, due to the budget cuts and its effects. You may have medical care today, but if the country is so seriously in financial trouble, where will they make their cuts? The poor. The unemployed. The less educated. So that the wealthy stay wealthy in order to -- save the economy. This way the wealthy can prolong as wealthy even during a crisis.
It really is quite simple if you think about it. For as long both parties believe that this is how economic growth must go, well, it will not change.
4
@Wirfegen Two things disappear simultaneously when you pay your taxes: The bill, and the money you used to pay the bill. Money does not grow on the rich. Congress has no need for the money of the rich, because the money of the rich don't fund any public spending. You tax the rich to extract some of their wealth and, therefore, reduce income inequality. At the same time the tax frees up resource space the government requires in order to elevate the material well being of the general population.
2
@Jay
Thank you Mr. Jay. You have articulated what I have sensed for years. Your logic makes perfect sense to me.
1
It's quite encouraging to read such a concise and well-stated defense of rational thought--of which there tends to be less every day (I confess to being almost addicted to MSNBC, where Rachel Maddow clears the decks each evening to convince me that I'm not alone in my anxiety). When Trump makes his rabble-rousing hateful speeches promoting anger and punishment and vengeance, I have to wonder how so many Americans can listen to his hyperbole and lies with such enthusiastic belief. Maybe it would help if the Mueller report were re-published as a graphic novel, and columns like this were printed on chocolate-chip cookie packages. Anything to get people to look at the facts.
28
Bravo!
70% is so generous. How about Eisenhower-era 92%? MAGA indeed!
Another useful story is found in real estate. A normal neighborhood is "discovered" by the uber-wealthy. They start buying up apartments and buildings... the prices rise and rise. The local businesses, typically renters, see their rents rise and rise. All the mom-n-pop stores move away. All the high-end fashion stores move in. Those renters from the old days are squeezed out, even those with regulated apartments. (Landlords offer pay-outs, sub-par services and maintenance, etc.) The neighborhood is denuded of all character. See SOHO and Chelsea and West Harlem and Berlin etc.
The super-rich, whether they mean to or not, ruin whatever they look at. They like a neighborhood for whatever reason. They then buy in... and their lack of concern for price drives up everything. The solution is to eliminate the super-rich, the 3-comma types. Not the people, just their over-the-top-money.
That extra comma is really devastating.
15
@Rosebud. If they treat neighborhoods in their own countries like that, think how they treat Nature - as a piece of real estate to be destroyed for their stupid ugly golf courses, mansions, strip mining, deforestation for beef growing pastures (you've seen one tree, you've seen them all), etc. And how they treat the "lesser" countries...the ones that provide them with the cheap labor and the cheap "resources" to maintain their disproportionate greeds and egos.
I am beyond disgust really with what is now happening.
Dr Krugman, please don't join the crowd in calling Social Security an "entitlement". "Entitlement" is the polite word for "government handout", which everyone feels fine about taking back.
Social Security is a retirement fund that I paid into, and paid into, and paid into, from the time I turned 16 and got my Social Security number and my first part-time job. For Congress to take it away now is just plain evil and should be illegal.
129
@Linda It's true that the word "entitlement" has been twisted by the right wing, but it's the correct term--we who have paid into the system are entitled to collect our share on retirement, just as partners are entitled to shares in the profits when a business does well. That the word has taken on a pejorative connotation is due to conservatives' prejudice against anything they see as threatening their wealth, and Dr. K's column makes it clear that the .1% is experienced in such cons.
51
@Linda. True. it is theft.
4
“[R]educing the extreme concentration of income and wealth [is] a necessary step toward a healthier political system.”
As Dr. Krugman hinted, a 70% income tax rate, on extremely high income ought to be introduced, as well as an annual wealth tax of at least 1% in order to slightly reduce extreme inequality.
I would suggest a 40-42% marginal rate on top 1% incomes - the initial 99% incomes will still be taxed at the current rate. And a 50% rate on top 0.1-0.05% incomes as well as a 70% or at least a 60% rate on top 0.01% incomes.
The wealth tax ought to start at 1% annual rate on top 0.1% wealth. Eventually the wealth tax ought to replace the inheritance tax.
These are modestly higher taxes on the rich. If explained properly 95% of the public would accept it. A sizeable minority of the rich also would accept it.
I would also suggest to cut payroll tax permanently on the first $10K to 1% and the second $10K to 2% to help the working poor. Lift the cap, but again cut to 1% beyond say $500K to be less unpalatable to the rich. This would also extend the social security solvency.
7
Let's not forget that the further down the 90% get pushed, the more they are forced to submit to offers of credit at insane interest rates. These rates should be heavily regulated, and capped around 10%.
First we're going to squeeze all the money out of you, then we'll give you some back at 25% interest so you can pretend you're living what's left of the American dream.
15
Many of the .1 or .01 percent have little patriotism or commitment to this or any other nation. They view that the world is where they live, and they move money from one slowly disintegrating nation-state based on tax and inheritance laws.
They view that 80% or more of the world's population is good for two things: producing goods and services that they control and sell at high profits to the top 20%.
They view the next 19% as consumers and borrowers who go into debt buying good and services.
Jean-Jacques Rousseau: "When the people shall have nothing more to eat, they will eat the rich."
18
@Brad. Thanks. you nailed it down.
From time to time I feel “obliged” to submit my “tiresome schtick” about the essence of capitalism as we know it. I live under capitalism (and will die under it). Marx had part of it right: the key feature is unremitting profit. Never mind what motivates this primeval drive. Thomas Piketty had it spot on in his seminal description of wealth in the twenty first century. (And his model reflects this phenomenon for as far back as the 18th century.) If the system is to avoid existential shock then the “sensible” recommendations of Elizabeth Warren may ameliorate a potential disaster (even for the uber rich to “some” extent).
9
America was a great country in 60s when the highest tax rate is 70%. Now, the highest tax rate is cut by half from 70%, so billionaires like Ross do not understand why government employees are standing in line for free food donations during government shutdown. It seems that billionaires cannot see beyond themselves and so they always advocate policies that are good for them. We cannot blame the billionaires altogether, people get what they deserve. If people vote against their own economic interests by holding on to Guns, God, GOP (GOP), they get the policies they deserve.
13
The Republicans are using generations of negative portrayals of Socialism mindsets to harm democrats. I too react negatively to name only, but after thinking about it, what is Socialism and why is it lumped in with a trained bad attitude like Communism? We all know we don't like communism because in practice, it is a way of controlling people's lives. But socialism is a benevolent means of a government to fully care for the well being of it's people. Capitalism seems to me to lie somewhere between. Capitalism at this point in practice appears to be wholesale whole population robbery eliminating laws and watchdogs to prevent it. That is precisely what has happened as you wrote of in other ways. So Socialism is not a bad system. It has been given a bad name ingrained in generations of us by Capitalists who don't want to pay any taxes or give any means of aid to those who need. The Republicans clearly serve the extremists of Capitalism while the Democrats mostly reside in practice somewhere in between as they support ways of growing our Capitalist economy but want to share to save lives.
Would you scorn Jesus? He was a Socialist as he fed the masses and healed the afflicted.
He was a Socialist without an economic interest as he scolded the money changer at the door of the Temple to stop the payment of tribute to a Temple tainted by it. Money is a tool, not a religion. That was his lesson.
11
@SHAKINSPEAR First, socialism and communism are the same thing. Read Marx: socialism is the first stage on the road toward communism (classless society). The USSR, China under Mao, and Venezuela today are all socialist societies. Which one would you like to live in? Socialism is the state’s ownership of the means of production and so, by definition, necessitates controlling people’s lives. Socialism has failed in every country in which it was ever tried. And no, despite ignorant propaganda of the American left, no European country today is socialist. As for Jesus, this is both theologically wrong and irrelevant to those, like me, who are not Christians.
@Mor
Thank you for proving my premise. Are you from Orange County, the most extremely conservative county in the nation?
You should know people like me care about everyone, even you. But I'm a Democrat as I described, perhaps projecting, but firmly believe that Capitalism is a system less reputable, cunning, and convincingly untruthful. It is an alternate truth, a lie built on greed and psychology. It's a new and improved heist.
At least Socialists care about their people. Communists only care to control their people. Republicans are the "Party of Red".
@SHAKINSPEARNo, I am actually from the USSR - at least I was born in that great socialist experiment that jailed my grandfather, hounded my dissident mother, tried to brainwash my entire generation, and when it finally collapsed, left behind poverty, ignorance, and never ending misery. And sure, our socialist masters cared about the people. They really did - only they thought they knew what the people needed better than the people themselves. I see that this mindset persists in their American heirs who don’t even take the trouble to study the history of their predecessors’ failure.
According to every source of historical budget data I could locate, including the White House's (https://www.whitehouse.gov/omb/historical-tables/) the deficit figures were (as a % of GDP)
2011 -8.4%
2012 -6.7%
and:
2018 -3.8%
2019e -5.1%
Of course, I agree with the argument presented 100% but the figures provided in the article do not match official figures. What gives?
3
Great article. And it's not socialism. It's democratically mandated public policy.
15
@Iowa Girl: Just because it's democratic doesn't make it right.
I agree with your statements regarding the at-odds-with-reality opinions of the extreme wealthy.
I simply do not understand the "Why" of it. These people are already wealthy beyond belief. How much can a person spend? How big a house can they build? Since their influence is already huge - how much more can it be? They almost live in a different world. What else do they want?
For people with billions - what is so missing that they want more of?
It seems to me that until we return to feudalism (with them at the top) they will be unhappy. But - what do they stand to gain with a few more billions or a few more people toadying up to them?
This seems to be more of a psychological illness than anything economic.
14
i share dr. krugman's anger and indignation and i believe the social policy proposals he offers are worthwhile and economically positive.
question: where is the carbon tax?
i've looked at the top wealthiest americans, and many of them now hail from technology. surely, the "do no evil" crowd could help spread a little "we see the future" influence around to usurp the carbon industries that have lied about climate change and distorted our politics through their "dark money" contributions and politicized non profit policy writers.
tax the rich, feed the poor, save the children -- do all that, and we're still enmeshed in an infrastructure running as a ponzi scheme, pushing an appalling climate debt onto people not even born yet.
until you explain how prosperity is possible without economic growth, and how economic growth is possible without population growth, you're being too coy by half, professor.
what does a ponzi scheme look like? more than half of all the anthropogenic CO2 emitted since 1750 has been emitted in the last 30 years (Oakridge National Laboratory estimate). an equal amount will be emitted in the next 20 years -- if all we do is expand social security.
it is a manly thing to make sure the babies and the poor make it into the lifeboat. more people of your stature and influence need to acknowledge and say publicly that the ship is sinking.
7
Elizabeth Warren is the candidate who best understands these issues and who knows best how to solve them. I think she has some pretty good economic advisors in her corner as well.
Speaking as former long-time Republican who voted for Goldwater in my first election, how the Republican party has evolved since makes me nauseous.
No matter how today's Republican politicians try to paint Elizabeth as a socialist, she has some very sound policies for fixing our country's ills. Warrem basically is a capitalist who believes that without common-sense regulation, capitalism will self-destruct. I am in her corner all the way!
54
@Bobcb I too voted for Goldwater in my first presidential election, mainly because I was still in South Carolina and my relatives leaned Republican, as did my favorite actor at the time. I've never voted Republican again, and in fact since the reign of Dubya I've considered myself an anti-Republican. And I too would love to cast a vote for Warren.
10
@Bobcb: She'd make a good presidential advisor.
The economic "wisdom" of the common man is that if we, through government action, make it harder for the wealthiest to get even wealthier, through taxation, regulation or unionization, the big companies will flee to low-tax, low-labor cost, low-regulation countries and take their jobs with them. Everyone who depends on a paycheck has that nagging fear in the back of their minds when they hear any of the "share the wealth" prescriptions -- aka "socialism" -- prescriptions of progressives. I would like to hear Mr. Krugman address this fear. If it is a rational fear, can anything be done about it?
4
@abigail49
Ah, the Captains of Industry would go on strike.
Yes, I've read that book.
Probably the model used by the wealthy to fool the people. Again.
1
@abigail49
retired federal attorney F/70
Find and read MontrealMoe's reply published 40 minutes ago. The province of Quebec is one example of how a reversal of public policy can create a new culture - albeit over 70 years.
One other thought: ultra-high-net-worth people really don't want to live in no-taxes-ever Monaco. Not on land. Not on water in yachts that cannot be moved because of the scrum.
The problem this country has is that, starting with Baby Bush and Liz and Dick Cheney running this country, wars financed off-budget and tax cuts for the wealthy have stolen all current and future wealth.
I will never forget standing outside Senator Dianne Feinstein's Capitol office waiting with a client for five minutes with the Senator and her Chief of Staff. Ahead of me in line, also waiting for his turn, was the Chairman of the Joint Chiefs with two aides. When I asked an aide why they didn't move to the front of the line, he replied: "We wait in lines all day. To get sign-offs on war funding bills one Senator at a time."
He showed me his ankles. Twenty-something guy with ankles swollen beyond repair in required dress shoes from literally pounding the marble halls of House and Senate office buildings and waiting. War spending through borrowing certainly displacing veterans care now and, maybe, forever?
1
@abigail49 Say the state of GA increases its state income tax to 25% and doubles its property and sales taxes. What would you do?
Dr. K,
I urge and hope that this EPI conference is on C-Span. This is an extremely important topic and the thoughts of the speakers should be made available.
Maybe your piece will alert EPI to make the call to C-SPAN.
5
@james jordan
C-SPAN is such a gift.
Content unfiltered by pundits, news anchors, etc.
1
We have the same tired arguments her about the trickle down economy. The winning party her only had the policy of tax cuts - mostly for the wealthy. I was interested in your observation Paul of the internalisation of the values of the rich. This definitely happened here and many voted against their own interests.
3
@Lyn Bender: [many voted against their own interests.]
As do those with money who vote for Democrats.
It's called patriotism when you vote for what you believe is right as opposed to voting for your own self-interest.
The problem is that people with 10,000 times the wealth of the average American have 1,000,000 times the power to get their voices heard. That's not free speech by any meaningful definition.
22
Nothing said here is crazy or wrong, per se, but it is incredibly disingenuous to suggest there is anything "wrong" with the people from whom a huge proportion of taxes are paid to support lower taxes and lower transfer payment from them to other people. Nearly everyone supports costs paid by someone else. There are real issues, not discussed here, that put very strong downward pressure on wages, creating a huge demand to make these low-wage workers whole--they simply can't survive on such low wages--and continually flooding the labor market with new unskilled labor really hurts their pricing power. But Mr. Krugman's "shock" that the wealthy are reluctant to pay more in taxes to support transfer payments to others, is completely phony and undermines his case here.
4
@james s. biggs
I don't think PK is at all "shocked" by the opinions of the wealthy; indeed, he regards their opinions as perfectly natural and obvious. What he's shocked by was the readiness of the press to fall meekly into line with those opinions, and the rapid spread of those opinions in the general public.
18
While unmitigated greed is understandable, even emotionally intelligible, it is still wrong. I'll go further: defending it is evil.
1
This entitled 0.1% don't realize where their wealth came from. They have taken it from the labor of the 99%. They have been endowed with federal corporate entitlements such as oil depletion allowances, carried interest, tax free municipal bonds .... They spend less than 1% of their income for creature comforts such as food, clothing, and shelter.
There are various good policy reforms that can be done from VAT, financial transaction taxes, wealth tax, tax simplification, etc. However, the most important thing is to vote the republicans out of office in 2020.
36
Incisive description of how realities are affected by wealth. Focusing on the 0.01 percent and plutocrats in general there are larger questions than concerns about huge tax cuts for the few and benefits for the majority in need. Doesn't the unfettered nature of Capitalism today present a threat to Democracy? Can Democracy survive when the power resides in the very few whose only concern is to expand their control over the system which they have subverted?
26
Thanks for your thoughts with on "the problems and dangers created by extreme concentration of income and wealth at the top."
I have been in the weeds on this issue since 1980 when the economy of the U.S. was body-slammed by the fiscal policies of the Reagan revolution.
During the double dip recession in 1980-82. It was a very tough time for wage earners and small business.
One discovery "The Rise and Decline of Nations", published in 1982, Mancur Olson, a University of Maryland professor, explained how stable, affluent societies get in trouble. In Olson’s view, successful countries breed interest groups that become more and more powerful with time. The groups win government favors, in the form of new laws or friendly regulators that benefit them at everyone else’s expense. Not only do they grab a larger piece of the economic pie, but they stop the pie from growing as much as it could.
The 2nd was revealed by the work of Senator Bill Bradley of N.J. He was the driving force behind the 1986 Tax Reform Act which cut taxes for millions of Americans and closed billions of dollars worth of special interests tax loopholes. His slogging on tax preferences to make the U.S. Tax Code more fair was a lesson on how difficult it is to be fair. It was a tough fight but a lesson in political hardball that you cite.
If this seems like ancient history, it is not. I follow this issue and the unfairness of tax preferences and the excessive power of the 0.1 percent remains prevalent.
16
@james jordan
Three questions that I hope you will raise at the EWD conference is: would the conferees agree that the distribution of income would be better served if we eliminated the cap on payroll deductions and ALL income received by individuals for the social security insurance program?
2nd, would the conferees agree that All income realized by individuals be subject to income tax? This is at the root of the unfair tax preferences problem.
3rd, would the conferees agree that stashing income in off-shore hidden accounts is not fair?
4
I am for many of the tax policies Krugman supports. A primary reason is that the lack of a meaningful estate tax and the lack of high rates on very high incomes allows people to always say if we only could tax the wealthy, all of our problems would be solved. It allows talk of reparations and free education and enormous changes to the health system. Once these taxes are in place, we will quickly see that all of these dreams are not sustainable without nailing the upper middle class and probably the middle class. So, bring it on and reality will strike.
4
@Robert
I say economics is not a science because experiments can never be repeated. That said, here in Quebec we had a revolution which we call he Quiet Revolution.
We went from low taxes and small government and church run health, education and welfare to what America's right would call a nanny state.
Most of us maintain a dual allegiance but our provinces have tremendous economic independence and even as great as Canada's economic performance has been Quebec is a superstar.
High taxes and huge government participation in our economy has not stifled growth and if anything we don't know what to do with our success. We have nowhere near the manpower needed and may not have that manpower for at least a generation.
There is no reason for large corporations or great wealth to promote the general welfare and I cannot imagine why they would. Reagan lied to America about cigarettes, freedom, science and your social contract. I am happy that Trump has at least taught some Americans the truth.
When Reagan taught you to be cynical about YOUR government he opened the door to all the crooks, con men and demagogues who were more than willing to take advantage of the cynicism.
In the ultraconservative Quebec of my birth there was small middle class, 70 years later we are wealthy beyond our wildest dreams. I remember when America was more like us than it was like the Oligarchy of Russia. I miss the America that aspired to a better future.
18
@Robert: You miss the part about deficit spending on infrastructure. This could reasonably include things like education, healthcare, and childcare, as these build as much value as bridges and roads.
4
@Robert
This 'let them eat cake' attitude did wonders to shorten the vertical height of the French elite during the French revolution.
3
If these pithy several ways of corrupting our system is merely roughly correct is no surprise our infrastructure is approaching developing world standards; public colleges can only do a fraction of what they historically could do for students; our health is subpar compared to most developed countries; and the fight against climate change is woefully insufficient.
You can add another five very important ways we are drifting downward.
9
I think the income disparity is the #1 problem of our time. Everything else can be fixed with it. If we have greater income equality, we'll have greater opportunity for all disadvantaged minorities, more justice, safer environment, less crime.
13
Krugman's analysis of the attitudes of the economic elite should dispel the illusion that these people understand capitalism better than the rest of us. In the Great Depression, they hated FDR because he exposed their folly in believing that they could preserve their wealth by abandoning the middle and working classes to the vagaries of a flawed market place.
In recent years, they have once again demonstrated their inability to understand that capitalism works in the long run only when most people benefit from it. Higher progressive taxes and a strong safety net proved a relatively cheap way to stabilize the economy (and save the fortunes of the upper class) in the 1940s, but that was not the lesson learned by most rich Americans.
Will the Democrats produce another Roosevelt to save wealthy Americans from themselves? If they do, we can rest assured that these masters of the universe will feel no gratitude.
29
@James Lee
I like your observation that capitalism works in the long run when most people benefit from it. Interesting that even though the laissez-faire policies of the past several decades did not trickle down to produce mass shared prosperity, the current Republican consensus (with the exception of some of President Trump's attempts to protect workers and businesses with the tariff experiment) recommends implementing those same tax and regulation reduction strategies. This reveals their real priorities. This is why I think voters in both parties are looking for a new paradigm.
3
The greatest problem with this strain of anti social disease is the entitlement certain people feel to have it. The second greatest problem are the steps they take to prevent it becoming contagious. If only Ebola was so containable.
I work for a multi billion dollar railway company where the President and CEO makes around $52,000 per day, his cohorts prorated per position. The highest income achievable by a union employee is around $130,000 per year, so around 2.5 days for the boss, and that takes a great deal of effort and sacrifice (around 100 hours per week). Working conditions are broadly appalling: four workers have died on the job in Calgary alone since November 2018, another four across the system in that year. Our share price is kept artificially high with big corporate buybacks occurring at the end of each business day. Alternating board members take it in turns to legally disclose their insider trading activities, and they’re immense. One VP was trading 4,500 shares per day at nearly 300 bucks each for weeks on end.
Shareholders are ecstatic: on paper, the company is performing brilliantly. In the trenches, it’s like waiting to go over the top towards one’s destiny. This plundering cannot go on, but, even in the face of its redolence, it continues unchecked.
It might be worth noting that this venerable company, at 150 years old, is under American control, and all of the spoils head south. Canada gave its railways to a foreign power. Fortunately, I retire soon.
82
@Marcus Brant
In addition to a minimum (living) wage, we need a maximum wage - tied to the minimum.
28
@Marcus Brant
In Germany, worker representation is more prevalent in corporate structures.
I think Germany could be accepted as a reasonable standard for manufacturing.
Mr. Brant has an explanation for why worker representation is resisted in the U.S..
5
@Marcus Brant well said and brave. Your 'trenches' analogy is perfect. WWI but with money instead of bullets. The common folk die and the Generals retire !
6
"Through... media ownership [and]... think tanks... the 0.1 percent has an extraordinary ability to set the agenda for policy discussion... extreme wealth... has degraded the ability of our political system to deal with real problems...The example I have in mind..." The example I have in mind is 'climate change'. In 2013, one study figured the U.S. climate denial industry pulled in $1 billion a year, mostly from conservative billionaires (the Kochs, etc). This went to 91 think tanks, advocacy groups, and trade organizations, all with the goal of convincing the public that its a 'chinese hoax'. This has obviously worked. These people, and others like them globally, are making $1 trillion a year in pure profit, so inaction on climate change is important to them. And some conservatives have really bought this propaganda: Recently Oregon tried to pass a 'cap-n-trade' law. GOP representatives fled the state to keep the law from coming to a vote, and militia members have threatened the lives of those voting for the bill. Meanwhile, in the real world, the warming continues. One recent study determined the U.S. will spend $400 billion in the next 20 years fighting sea level rise. If the present oligarchic system continues, I know who will not be taxed to pay for that. And who will.
13
No, no no. With all due respect to Mr. Krugman and many of the opinions expressed here you have all missed the point. Remember we have a republican form of government. It's the elected members of the house and senate that make policy and they have only on goal ---to be re elected. The solution is doing away with Citizens United and publically funding all political campaigns so that our representatives can't be bought off. As it is follow the money.
14
@alan goldman
Yes, elected politicians like to keep being elected. However, they like even more to have a safe and well paying place to land if not re-elected.
The 0.1% can and do provide such a landing pad for Republican politicians. Furthermore, the cost of the landing pad is tax deductible to the funders since it is an "educational" donation!
Even with full public funding, a politician will still vote with his friends -- his class. A Republican will still vote the way that his richest and powerful friends think and talk.
8
@alan goldman
Check out HR-1 bill passed by the 2018 Democratic House in regard to election reform. One can still check a box on IRS 1040 which allows $3 of one's tax return to go to the Presidential Election Campaign, which should be its only financing. Apparently Republican Senators, led by McConnell, still believe the best path to re-election is by opposing all legislation on a partisan basis. However, economics alone cannot explain why some of the most economically disadvantaged in the nation are among their supporters.
4
@Alan J. Shaw
and when the Presidential Election Campaign fund becomes the ONLY financing for political campaigns, I will cheerfully contribute lots of money to it. Right now, this source of funding cannot compete with the megabillionaires' funding of their favored candidates, so my tax money is better spent on strengthening the infrastructure.
Yes, people with too much money on their hands often use it to cause mischief. In addition to providing more government services, that is an excellent reason to raise taxes on the wealthiest. What's also scary is that the Koch network has been funding university institutes and professorships to indoctrinate young people with its pro-plutocrat ideology.
14
@CH
retired attorney F/70
Anybody watching the Koch sons? They're trying to hide, but reliable sources tell me that they are "the anti-thesis" to their loco parenti.
1
Don't forget that in 2008-2011 bogus research from Harvard economists and others indicated that historically economic slow downs were caused by budget deficits. Rather than showing that, historically, budget deficits were a response to an economic slow down. If you take one year as your time interval in your analysis, you would have conveniently missed this. Thus you had calls for austerity, when Economics 101 called for deficit spending. Poverty in the US and the UK is a direct outcome of faked and bogus economic research.
10
@Phil Otsuki
Recall the "minor" spreadsheet error.
Since the error confirmed beliefs, it took years to be discovered.
http://theconversation.com/the-reinhart-rogoff-error-or-how-not-to-excel-at-economics-13646
had this terrible mistake been understood; maybe the response to the recession would have been as large as it needed to be.
2
@Phil Otsuki
Jinx!
Two things that need to be incorporated into the narrative on 2011:
1) The frothing Tea Partiers. Of course, it’s radio silence with those folks now, confirming that that there was a large element of bad faith. But the mainstream media took it all at face value back then.
2) While I can’t say for sure why that was the case, one contributor may have been mainstream economics. Note that in 2011 the infamous spreadsheet errors were still undetected. The original paper (published, I think, in 2010?) was being widely discussed and and appeared entirely credible to nonexperts. This may well have primed the deadline-afflicted to take the Tea Partiers at their word. A sincere grass roots, magically in harmony with Ryan.
6
@ew
Wasn't the Tea Party originated, and funded by the
Koch's and their band of billionaire donors? If I remember, there's a lot about this in Jane Mayer's book "Dark Money".
1
@ew
This spreadsheet error:
http://theconversation.com/the-reinhart-rogoff-error-or-how-not-to-excel-at-economics-13646
Of course has the spreadsheet not predicted what the original authors' basis said, the error would have been found sooner.
@ew
A brief follow-up, in case anyone is still reading:
A quick search shows that the NYT published over 200 articles or columns mentioning "Tea Party" in 2011 (the op-ed folks were especially prolific, though there was tons of reporting too) . From the vantage point of 2019, it's hard to remember just how much oxygen they sucked up at the time. But it was a lot. (Try doing the archive search yourself; it's kind of a jolt.)
Why so much attention from the legit press? Because, I imagine, the Tea Party looked for all intents and purposes like a legitimate grass roots movement. This implies that the thesis about the influence of the .01% would have seemed non-sensical at that time. The diametrically opposite argument would have felt more convincing.
To me, that's one the press' bigger failures in recent years. No one really questioned the idea that people would mobilize and take to the streets over...government debt. But it's a patently ridiculous idea. To state what should have been obvious in 2011, no one marched against Reagan or for Clinton on those grounds.
It may be that the Tea Party was actually astroturfed by the Koch brothers, as Mattie suggests, below--which would lend credence the .01% thesis. I tend to think there were other things festering there as well, though it's surmise.
Prof. Krugman always makes a partial argument about Keynesian stimulus, forgetting to mention that you get to do it once (ever) unless you either run budget surpluses in the good years or interest rates on long term government debt are persistently below the rate of economic growth.
The Last dollar borrowed sets the interest rate. Ask Greece what that's like when you can't sell the last few bonds.
4
@Adam
retired federal attorney F/70
May be that Greece was prohibited from doing what our Fed has done since our last crash? Assure that there will be no "last few bonds" to tell Americans about because quantitative easing/QE now includes buying back our own bonds and parking them in a quiet place rarely added up?
Marketwatch in print and Bloomberg TV and radio are daily sources of these completely lawful activities and totals.
2
@Adam
A a trillion dollar reduction in high earner and corporate taxes does what?
It may be a minor point, but when political parties have fund raising dinners, which are already too expensive for the average working stiff, they often offer private chats with elected officials for contributors who chip in even more.
This is certainly a form of corruption and ensures that politicians will hear more from the 0.1% than from ordinary people.
24
Extreme concentration of wealth is an absolute necessity for searching, drilling or mining, and globally distributing fossil fuels on a daily basis. The elimination of the fossil fuel economy will result in huge decentralization of energy production which in turn will bring about decentralization of the economy. Decentralized economy means a more equitable economy with wider distribution of wealth.
I just read more coal mines and coal power plants went out of business recently. General Electric said on Friday it plans to demolish a large gas power plant it owns in California only ten years after it was build and sell the site to a company that makes battery storage increasingly needed in replacing fossil fuel plants.
On the other GE unveiled a 40-year design certification for its onshore models, which will lower the levelised cost of wind power. European countries smashed records for wind-power generation last year, and solar energy has a record 2019 start. All these are good news for wealth distribution.
The best way to cure the Excessive Wealth Disorder is not only to focus on the symptoms such as corruption and control of the media but also to work hard to hasten the demise of the beloved by Trump fossil fuel economy. Accelerate the adoption of clean, renewable, health giving, decentralizing and therefore democratizing energy will also bring about economic equity.
20
Ever since the Republicans gained outsize power, the crooks have been coming out of the shadows and rallying in a concert of unbridled greed driving an obfuscation of the laws, even changing and repealing them. It seems the Citizen's United decision was another Republican strategic search and cultivation of an obscure case, or a deliberately designed case to enable the buying of political representatives without fear of legal reprisals. Everything appeared to avalanche after that as money poured into the Republican coffers and appear to have been rewarded with the tax cuts bill. But an equally important fact is that the Republicans are draining the nation of wealth and moving it in all forms out of the country. From factories elsewhere to the engineers trips away to there to teach the low skilled low educated workers how to make their products, the wealthy are preparing for hasty escapes if chaos results from their robbing of the nation. Foreign Homes, factories, secret accounts, are all meant to sustain them later as the leaders are building up the militarized police and replacing democracy with martial law mission creep and courts packed with Republican Judges to administer that future.
From the wealthy to the scam artists who are jamming the phone systems, no one is safe from the Hoods Robin', even Grandma and Grandpa.
9
@SHAKINSPEAR
There is an obvious Republican strategy afoot at least back to last decade when George Bush said the Democrats were rewriting history after which the message, ingrained in minds, they commenced to rewrite history themselves. Just try getting any unbiased information about businesses on search engines now. Or the fact that a famous Republican proclaimed that the Democrats were legislating from the bench. Now a long time after that message took hold, McConnell is feverishly packing the courts with their cohorts. " Citizen's united" must have worked well enough to make it a practice. My point is, the Republicans are resorting to lies to gain the appearance of innocence when they do it themselves, now at a fever pitch with Trump.
1
"Where do the preferences of the wealthy come from? You don’t have to be a vulgar Marxist to recognize a strong element of class interest."
Indeed. And when I read that a British businessman kidnapped by Somalia pirates was given soap and toothpaste by his captors, I must concede that it is now better to be kidnapped by pirates than seek refuge in the USA.
Excessive wealth disorder is affecting our government administration's treatment of its own citizens as well.
Inequality continues with its wider divide. You'd think these billionaires would care about climate change. They actually have the clout to be a positive force for preparation and mitigation, but apparently they do not care. At the end their money won't save them either.
17
The apparent flaw in the idea that deficits don't matter because the government can borrow at near zero interest rates is that federal government debt will not be paid back, ever, and interest rates will no stay at zero forever.
Interest consumes a larger and larger percentage of the discretionary federal budget. The inevitable return of higher interest rates will either make the ever increasing debt load unbearable or the debt will be inflated away, and so paid by the citizens whose money will be worth less and less so the government can escape the consequences of its recklessness..
3
@David I hope you explained that to the Republicans who passed Trump's tax cuts, which will cause the deficit to balloon out more than anything the Democrats are proposing.
10
Of course Billionaires are looking for "entitlement reform" - meaning reducing the cost and taxes to fund Social Security and Medicare. Look at it from their perspective.
If your 'investment income' (notably, subject to lower tax rates and labor-derived income) is in the six- or seven-figures each month, then the Social Security payment you will definitely still be taking (have you ever heard of any wealthy person -not- taking the payments? My aunt, a minor few-millionaire said to me "You bet I'm taking it! I paid in all my life, it's -my- money!" She got quite heated about that...). But a reduction of a few tens of dollars, in a few hundred or thousand-and-some payment is less than trivial to a billionaire. A reduction is SS payments won't affect what -they- eat, what medicines -they- buy, or what their life is like. So of course they want "SS reform".
And Medicare - no billionaire or even 'poor' multi-millionaire is going to miss out on medical care because they can't afford a co-payment, medigap insurnace, or the necessary medicines. Since it won't affect *them*, they are all for "entitlement reform". It will reduce the chance that they will be taxed to pay for others benefits, and change their own lives not a bit.
The first thing we should do with "entitlement reform" is remove any caps on the SS and Medicare taxes income levels, and apply it to everyone, on all income, whatever the source, all the way up. Then see what we can cover, and how long it will last.
20
Mr. Krugman asserts the wealthy form their political and policy agenda based on self-interest.
This is false in many cases. During my working days I was in the top 0.1% by income. I got there on my own, from a community that was disproportionately welfare-dependent.
Yes, I opposed (and oppose) expansion of entitlements and transfers. But not from self-interest; rather, from my first-hand knowledge of the sad destruction our transfer programs work on the self-respect and motivation of individuals.
The welfare state is a failure and the human toll is massive. Wealthy people, especially those who've been there themselves, want to cut it back for all the right reasons.
9
@Stuck on a mountain
So you knew a lot of people who enjoyed living on the dole and you saw that it sapped their self-respect and motivation? You must have lived in a much different environment from the one I (and many families I knew) had to contend with. Qualifying for Medicaid robs no one of motivation. And Social Security, last I checked, was a government-operated investment program.
12
@Stuck on a mountain;
So its self respect and motivation of individuals that is the key to riches? So say you from your ivory tower.
The .1% are there because of luck and circumstance, and if it were just hard work and discipline, then most of American workers would be in that category.
For you to focus on entitlement reform as a way to justify your right reasons and your situation is disingenuous. Better to look in the mirror to see who can be improved.
And btw, Krugman is talking about SS and Medicare here, not the welfare state which is mostly disassembled already thanks to Bill Clinton and republicons.
I have paid into SS and Medicare all my working life, I funded my own as well as my fathers benefits, therefore it is not welfare, it is the benefit owed me for faithfully paying my premiums.
1
Doubtful.
1
Dr. Krugman:
I think it's important to put the impact on inequality of these conservative, upward-transferring policies into language everyone can understand:
1. Inequality costs the typical middle class family about $20,000 per year pre-tax or $4,000 after-tax.
Shocking? CBO reported that the 40th-60th percentile family made $58,500 pre-tax in 2015, the last year of CBO data available. In 1979 this group received 16% of the pre-tax income, vs. 12% in 2015. So $58,500 x 16/12 = $78,000 if we had pre-Reagan inequality, a difference of $19,500.
Voters, do you want that $20k? Then you know which party to vote for.
2. We could eliminate our deficit almost entirely with higher wealth and income taxes just on the top 1%.
For example, the top 1% own about $40 trillion in household net worth, mostly in financial assets. Assuming those assets go up 5% per year on average, that's $2 trillion in gains each year. Simply taxing half of those away still allows them to grow their principal while eliminating the $1 trillion deficit we have today.
That's just taxing wealth/capital, which we can get at through taxes on stock buybacks, estates, financial transactions, and treating dividends and capital gains as ordinary income. Brokers typically charge a bit less than 1% to their customers based on wealth. Uncle Sam could do the same.
18
"What happened, essentially, was that the political and media establishment internalized the preferences of the extremely wealthy."
And you indeed do not need to be a vulgar Marxist to recognize the acuity of what Marx wrote about this:
The ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force of society, is at the same time its ruling intellectual force. The class which has the means of material production at its disposal, has control at the same time over the means of mental production, so that thereby, generally speaking, the ideas of those who lack the means of mental production are subject to it. The ruling ideas are nothing more than the ideal expression of the dominant material relationships, the dominant material relationships grasped as ideas.
5
While the headline might be somewhat tongue in cheek, the wealthy actually are suffering from a mental illness or disorder caused by the lack of lag-time between desire and fulfillment. Studies show that they cannot attain a sense of satisfaction if they can immediately fulfill their desire - for a Birkin bag, for a yacht, for another house, for an expensive dinner out. That is why they acquire and acquire and acquire without any rationality or end. Notice that the few wealthy who escape this do so by focusing on wanting things they can't readily attain - like the Gates desire to end serious diseases.
Instituting policies to end income inequality is the only way to save the planet and life for the rest of us, and it is what the wealthy actually need to end the mad cycle they can't free themselves from.
15
I love the way the wealthy invest their money overseas in low wage labor markets, then transport "cheaper" goods to the U.S. while trumpeting that they've lowered the costs to American citizens. But those American citizens have had basically stagnant wages for the past 20 years or more. It's a case of looking ahead two-quarters and expecting a miracle while creating a downward spiral for citizens because they are not the one's manufacturing the goods anymore. Every year, citizen buying power erodes and the decay pulls down most boats. Over-the-horizon thinking is totally absent in this particular economic process. Greed is always short-sighted and eventually self-destructive but at the same time the wealthy still make tons of money while the citizens eventually wind up twisting in the wind.
15
Well, yes. I get that America's faux democracy has devolved into a political version of Monty Python's Spam café: order what you like, but you're going to get a plateful of plutocracy no matter what. The question is: What is to be done? Behavioral economics shows that with enough money to spend on media clout and psychological savvy, it's pretty easy to manipulate many voters into acting contrary to their own interests — and liking it. Getting ultra-wealth out of politics will be an impossible dream as long as the current crop of right-wing robojustices controls the courts. So what's left to do?
12
@JL Williams
And now the psychological manipulation is so complete that those voters acting against their own interests are being told to get out their guns and start shooting their neighbors of a different political persuasion.
1
#5 The exclusion of the working poor from the legal system and free time to express their public opinion. Policies which set the time, location, and payment for people in your community to be screened for jury duty exclude the working poor. Same with setting times for public information meetings and community meetings.
5
you don't have to be a brilliant economist, or even really know anything at all about economics, to understand people and their motivations. the very wealthy simply live in a different universe than the rest of us because they never have to worry, or even give a second thought, to their own survival. no matter what, they will have enought to eat, a roof over their heads, their kids will survive infancy, they have no worries about going broke due to a medical emergency, or seeing life go off the rails because the car broke down again or the roof blew off or the landlord decided to get rid of them to make more money on the space they called home. these things are simply not on their radar, although they're the kind of issues most of us are absorbed by. the rich may be wound up with pushing rivals off the board, or polishing their subordinated debentures, or making sure their income is taxed in some special way, or adding to their trophy collections, or being busy morning to night with their complicated finances and business machinations, but in fact, because they are so insulated from the risks of life, they have nothing but time to dwell on how great they are... and how to preserve that greatness and make themselves even greater. they meddle in politics not because it is existential for them, and not just because they can afford to make a difference, but because they really have nothing better or more compelling they must do. idle hands are the devil's playground.
11
Sadly, most people view government debt the same way they view private debt - it has to be paid back at some point. They don't realize that every time the government borrows it also creates a secure asset, probably the most secure asset in the world. How many times have I heard somebody say that they don't want their grandchildren to pay back all that debt.
4
The .1% probably have most of their policy influence in their corporate roles, especially as they have used those roles to increase industry concentration, monopolies, these past 40 years. To fight off bad economics, we need a villain to blame. The original progressives got a lot of mileage out of blaming, fighting and defeating the Trusts. The history of the rise and falls of bad laissez faire economics (Laffer curve anyone?) has repeated itself now we are in Gilded Age 2.0. Why couldn’t history of anti-trust repeat itself, resulting in the dawn of New Deal 2.0? Am thinking Elizabeth Warren, the FDR of our age, is just who we need to pull off this magic trick.
5
When it comes to distortions and misperceptions one point I find amazing is how many people believe our current $22 trillion national debt is the result of runaway entitlement spending (Social Security, Medicare).
The huge debt is not the product of too few payroll tax dollars or overspending. Quite the contrary. Both programs have surpluses and Social Security is the largest CREDITOR of the national debt.
The current $22 trillion debt is the product of too few income tax dollars and the decades of overspending on programs those income dollars are tasked to pay for. Discretionary programs that Congress knowingly and willingly appropriates budgets for that greatly exceed their funding mechanism.
Prof. Krugman would do us all a big favor by writing some columns on the Unified Budget Accounting Process and break out these two tax income streams to look at them separately like a company would look at two of its divisions separately to determine which of the two is under performing.
6
@medianone: Trillions on the Afghan and Iraq wars alone, not to mention all the weapons boondoggles.
Back in the 1990s, right-wingers were complaining about the $500 million cost of a new light rail line in Portland. They didn't like it when I pointed out that it was half the cost of a B-1 bomber.
In hawkish mind, no military expenditures are ever "wasteful government spending."
15
"...it’s going to be really important to ride herd on both centrist politicians and the media, and not let them pull another 2011, treating the policy preferences of the 0.1 percent as the Right Thing as opposed to, well, what a certain small class of people want. "
Calling David Brooks...
8
@Deering24
Yeah, its funny when now homeless pundits like Bret Stephens, David Brooks, and George Will are freely dispensing advice on how the Democrats can win. Of course, the Democrat they all have in mind is Joe Biden, the closest thing to a traditional Republican in the race.
1
What the "progressives" like Dr. Krugman keep forgetting is that many Americans no longer see themselves as in the same camp anymore. What flows from this is "Why should my tax dollars be going to pay for those people? They aren't like me or mine, thus I don't want to." The pushing of identity politics truly exacerbated this divide and clearly pushed everyone into the ethnic or ideological camp that they most identified with. Once there, they close the door on the other camps. This is why Krugman's pieces are seeming more and more like wishful thinking from yesteryear "when we were all in it together like a melting pot".
12
@No big deal. Funny how a lot of people in red states complain about "their" money going the "them" when those of us in blue states are net donors and red states are net recipients.
Maybe its time for blue states to stop subsidizing red states.
1
Your description of the current economic climate is not concordant with a democracy, so it will benefit the majority...and 'allow' the 0.1 percent to be magnanimously just...by paying fair taxes instead of socializing capitalism in favor of the rich and poweful corporate world, especially the awful market power of a few, eliminating a healthy competition and magnifying the odious inequality so prominent in this capitalistic society. This, further aggravated by de-regulation and lack of public supervision. This gave rise, for lack of ethics, to selfishness and greed. As it stands, we are living a plutocracy, perverting politics. Just as you defined it, a corruptrd system in need of a paradigm. Only this way may restore our trust in democratic institutions. And while we are at it, how about reversing "Citizens United"?
5
I'm leaning towards the 70% top tax rate - strongly associated with the strongest growth periods in national economies
I reckon just do it.
12
I think we forget that all 35 year olds will someday spend their life force energy working for many large companies and paying many taxes. The social safety net is there for the average person who contributes to society, and then when the body is changing or aging needs a fair return on that life force energy (having paid into the system, and honoring the social contract), older or retired workers can contribute to society in other supportive ways, but not if they are struggling with poverty. I think the VAT tax that Europe has makes sense; if it's not a necessity, then that kind of tax can be returned to greater society. In any event, people need a generative society, and also a safety net. We need both for different phases of life, in my opinion.
3
Although the example is one that Krugman has repeated over and over, his point is very well taken. It would be better taken, however, if he sometimes pointed to how liberal billionaires distort agendas on the left, for example in the diminished importance in Democratic politics of union rights and power or the replacement of employed workers with contract workers. The role of wealth in influencing political agendas is pernicious everywhere, not just from the right. I would like to see Krugman address the issue in a broader context.
7
In 2011, I thought ignoring Keynesian economics was simply a way for the GOP to sink the economy as a way to sabotage Obama. Now I know it was simply the GOP executing the wishes of the uber-wealthy. I feel much better now.
5
The consistent lie regarding a 70% tax rate is that we historically had one in this country and that wealth distribution was more equal as a result. If we look at the NET EFFECTIVE tax rate (i.e. actual percent collected) it has been a close constant for the past 50 years, dipping slightly in the most recent past. Why? Because past top tax rates were accompanied by huge tax deductions, loopholes, tax shelters etc that lowered the actual tax paid to very close to current levels, only in the 1920s were net effective rates less than half of what they currently are. So yes, support an argument for adjusting the top tax rate, just don't engage in the sophistry of conflating the nominal rate with the net effective rate because that is what the government actually collets.
Claiming that wealth inequality is worse now than in say the 1950s when the top tax rate was 70% is true, but also completely irrelevant.
2
The economic singularity is happening now. The elites have been padding the odds and preparing the ground, and now their momentum is overwhelming. It's like a Monopoly game where they have hotels on everything past New York Avenue, and the rest of us own the Water Works, and houses on Mediterranean and Baltic Ave. One bad roll of the dice and it's game over.
There's good news! I used to bore my friends warning them about this, and now it's gone mainstream. I can talk about the weather and complain about Trump like everyone else.
3
The main economic thing it's been creating for the past 20 years or more is successive asset bubbles (and busts) as the super investor class chases marginal returns towards the outer realms of the risk/return bell curve, privatizing the profit and socializing the risk.
2
Wealth is created as a function of the national/international economy, a mostly uncontrolled dynamic which some strategically placed individuals have exploited to their own benefit. However, their own benefit, as Mr. Krugman points out is most often detrimental to the health of the overall economic system. We must develop and foster the concept of a commonwealth, where the economic product of a society is seen primarily as a tool to benefit the society as a whole. The accumulation of private wealth is a symptom of and inefficient and damaged economic situation.
1
But why are they, the 0.1%, obsessed with "the debt crisis"? I don't understand why a "debt crisis" puts their fortunes in any danger. I wish Krugman had expanded on this point a little.
1
@JB I believe he was making the point that a "debt crisis" can be solved either by increasing taxes or cutting spending. Vice versa, one can be created by either cutting taxes or increasing spending. Increasing spending benefits a majority of Americans while cutting taxes (especially one targeted towards the very wealthy) benefits those who pay more taxes. So it's not the "debt crisis" that bothers them but how the gov't chooses to respond. Tax cuts good. Increased spending bad.
3
@JB I am no economist but am pretty sure the very rich, who get a lot of income from bonds, worry that high deficits will lead to higher interest rates. These higher interest rates will apply to new bond issues, but old bonds will have lower rates, making those investment worth less. In the end, am pretty sure the very rich argue against deficits because they are trying to preserve the value of their bond portfolios.
4
I think Paul is actually understating the problem. I suggest that people ask themselves the following questions:
1. Are people who have been very successful in business often inclined to run up the score? In other words, are they often driven to acquire even more wealth and power, even though they have an abundance of both?
2. Would one of their tactics be to influence public opinion toward their own views?
3. Would we necessarily be able to observe, or even know about, their efforts to influence public opinion?
4. Having made their fortunes in the business world, is their opinion on matters of government regulation generally affected by a bias toward business interests (and away from the interests of consumers, workers and future generations)?
5. Would they be more likely to back the political party that seeks their favor and enacts their agenda? Is money important in domestic politics?
6. If you were a wealthy individual born outside the U.S. and obsessed with growing your wealth, which country in the world would most attract you?
Wealth begets power and power begets more wealth. Where in the world is this process most likely to get out of hand, if not the U.S.?
2
Paul Krugman will get no argument from me re: this column, but I think two things should be added:
--The Calvinist ethos, so pervasive in the philosophical underpinnings both of much of our law and the mindsets of our libertarian oligarchs, adds considerably to the wealth concentration problem herein detailed by locating the fault of poverty within poor people themselves rather than in any systemic tilting of the playing field. While many have forgotten the religious origins, we still see this ethos in how those with the most do not see structure or luck as any part of their ability to accumulate, and in the "if you're so smart, why aren't you rich?" presumption that those not rich do not "deserve" a basic standard of living, education, health care paid for through taxes/redistribution as they are obviously poor due to their own bad choices. Other nations do not have their inequalities philosophically augmented in this way.
--The single biggest reform we could effect, one that would make many others possible, would be to ban private contributions to campaigns and make all elections publicly funded. As it now stands it is impossible for representatives to represent anyone other than those who fund their runs. Despite Supreme Court "speech" rulings, much energy needs to be harnessed in the cause of turning us as a nation from one-dollar-one-vote to one-person-one-vote. Then, perhaps, legislation/regulations to address our inequality could be considered.
24
@Glenn Ribotsky Profound, Glenn.
1
@Glenn Ribotsky - interesting - Calvinist philosophy blames the poor ?
reminds me of coming out of Patna train station in NW India on arrival from Nepal
going with the flow of the crowd of people, I saw at the last second and stepped over what looked like a pile of rags at the bottom of a few steps.
then I stopped and looked back - it was a dead woman - presumably poor - as the crowd of people all around paid her no attention at all
'Hinduism and Jainism in particular teaches that reincarnation is the transmigration of the souls and that the soul continues to learn “life lessons” ' - https://campuspress.yale.edu/tribune/beyond-religion-how-past-life-belief-is-becoming-more-widely-accepted/
so in India poverty tends to be blamed on you doing something bad in a past life - not - my - problem ...
Either belief system works well to assuage any guilt in the wealthy elite.
1
@Glenn Ribotsky....see "Citizens United"
1
Number 5: Purchasing assets that others need to live, then raising the prices. This is happening to housing, education, and medicine. Expect food to follow.
63
@mlbex
And Water!
4
@White Buffalo: Oops, I forgot that one. Add it to the list.
There's another kind of "excessive wealth disorder" effect: skewing the basics of the economy toward the desires (needs?) of the very wealthy.
A large amount of the US economy consists of people chasing money. If you're chasing money, you go to where the money is. That means that if you make goods and services, you have a choice between providing goods and services that will be used by a large percentage of the population, or focusing on those that may attract the favorable attention of the rich.
The former typically means large sales, low margins. The latter typically means low sales volume, high margins. Obviously many businesses still pick the former (razor blades! toilet paper! hot dogs!), but as the distribution of wealth becomes more and more skewed, there is more and more reason for businesses of many different types to focus on the chance that they might get lucky focusing on the wealthy.
This is not good for the economy, and it's not good for people.
4
Really helpful column, clear, with helpful historical comparisons. Most of us are scared of economics, and need information. Thank you. It's extraordinary, that we allow such skewing of priorities, and some of us even let the purveyors get away with claiming to do it on our behalf.
2
Uh, yeah.
I live in HUD financed senior and disable public housing for very low income Americans. We need far, far more of such housing. When I moved in, ten years or so ago, the waiting list was three years. Soon it became six years, and now there is no way to sign up as the list is impossibly long.
So if someone suffers a new injury or disabling condition, or simply ages into the senior years, they used to be able to hope for housing after living on someone's couch or in the weeds for six years. Now, there is no hope but that a lottery might open up.
I have absolutely no hope that anyone can reach the hearts of the Republican Party, for they are bought and sold to the very rich.
Words, well, your words comforted me, and for that I am grateful.
Hugh Massengill, Eugene Oregon
31
> I suspect that raw corruption is a bigger deal than most of us can imagine
Those of us who have spent time in such places as Texas have no trouble at all imagining it.
15
Poor people actually suffer from lack of money, rich people are not happier than the middle class, who actually spend more money to grow the economy.
Spending money productively really grows the GNP more than saving money in non productive investments.
For 100 years the USA had the largest middle class in the world but no more.
A healthy economy needs a healthy political system and visa versa.
6
Dr Krugman, I think a good first sentence in your talk should be to define the 0.01% as the BOTTOM and all the rest of us as the TOP that is being PULLED DOWN by their wealth.
The sheer mass of their wealth means that gravity has a much greater effect on EACH of them than it has on any one of us. The 0.01% are the problem.
But there's no reason any one of them couldn't survive in the real world by weighing about the same as most of us.
When a boat starts to sink, the first thing that has to go overboard is the DEAD WEIGHT of the ballast.
The world's economies all need lightening urgently.
11
The heart of the issue here is that a democratic republic cannot exist with massive wealth in few hands. The Roman Republic lasted 500 years, but through most of that time had a system of universal wealth redistribution. There was a universal male draft, and draftees were given a minimum amount of farmland or a stall to run a business in a city. That ended after the 3rd Punic War. In less than 100 years, the Republic was no more. The Roman Republic fell and became the Roman Empire.
Wealth redistribution or other mechanisms which limit the differences between rich and poor are a necessary part of a functioning democratic republic.
42
I agree—draft everybody—rich and poor. There will be a lot less war.
2
“So what was the origin of the conventional-wisdom consensus that emerged in 2010-2011 — a consensus so overwhelming that leading journalists abandoned the conventions of reportorial neutrality, and described austerity policies as the self-evident “right thing” for politicians to be doing? What happened, essentially, was that the political and media establishment internalized the preferences of the extremely wealthy.“
The Citizen’s United decision came on Jan. 21, 2010.
21
@EddyFuss The American news media are pawns of the corporations that employ them. Every time a network TV or radio station, or newspaper blasts out a story, it starts about halfway up the trellis pole...so that anything associated with the roots or early growth of an idea or conclusion is arbitrarily chopped off as if it doesn't exist. Anemic news pablum is their primary product.
This is an excellent column, but/and I do hope you will devote columns in the near future to items #1-3.
Each deserves its own focus.
7
Maybe, but first you have to win. Passing the 100% progressive litmus test may win both coasts, but fail in the Electoral College. Let’s not underestimate the populist right again.
6
@van schayk The problem is that "Centrist" Democrats, such as Hillary Clinton and Joe Biden, are perfectly happy to ride the gravy train, favor and pander the wealthy, and turn against the poor. The Progressive agenda is the only one that eschews contributions from the rich.
4
@annabellina. Amy Klobuchar is, I believe, an exception to that. A Midwesterner with a moderately progressive agenda. I can’t for the life of me understand why she is not getting more attention.
3
@van schayk The Electoral College is neither elected nor performs at a college level. Yet it picks our President. Who the heck do we think we are? The BIG LIE is STILL driving the bus!
Most people espouse taxing the wealthy until they become one, or are already one. Here is an article on how millionaires from San Francisco who got rich off of tech IPOs are moving to lower-tax states.
https://www.nytimes.com/2019/05/09/technology/uber-lyft-low-tax-millennials.html?searchResultPosition=3
And where are all those 400+ millionaires and billionaires who signed petitions asking the Republicans to not cut their taxes? Why don't they step up and pledge to pay the top 70% income tax or the 2% over $50 million wealth tax (Warren's proposal) to show their commitment to alleviating the excessive wealth disorder? Even Sanders and Warren paid the lower taxes under Trump's tax cuts. It would have been really cool if they went ahead and paid the higher taxes under pre-Trump just on principle.
5
You seem to miss some low hanging fruit that would create greater equity in the tax system. Namely, subject all earned income, not just wages, to FICA and medicare taxes. The current approach was developed in an era where most income was through wage income, but now we recognize significant amounts of wealth are developed thru equity income. Secondly, eliminate the gap between earned income rates and capital gains rates and tax all earnings at the same rate.
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@LTR
Although i grnerally am in complete agreement with Krugman, I have noticed certain consistent blind spots. I fully agree with the comment on taxing all income equally. With such a move, not only would the funding"crisis " for Social Security and Medicare disappear, but the tax rate could probably be lowered.
The other low hanging fruit that Krugman misses is single payer health care. In his list of sensible current proposals that the right wing try to demonize as crazy he ignores the obvious benefits of single payer. But this is consistent with his misplaced praise for Obamacare and saving the useless, greedy private insurance companies and his blasting of Bernie Sanders in 2016 because of his falling in thrall to Hillary Clinton.
5
I must again remind everyone of 300 years ago when Jonathan Swift wrote his Modest Proposal that anticipated by 120 years Ireland's potato shortage.I know the darkest satire is not
part of the economic's curriculum but the neoliberal The Economist of 1845-1850 clearly tells us what economist hate to admit.
Even as economics is clearly not a science because the experiments can never be repeated it is clearly doesn't belong with the humanities because serving humanity's real needs has generally taken second place to serving the needs of the right numbers.
I remember John Kenneth Galbraith and I remember a Paul Krugman discussion with Tony Atkinson and Chrystia Freeland.
It is wonderful that Piketty, Saez and Zucman are all recognized for their studies in inequality but until economists take responsibility for the side effects of their design America and possibly the world will not recover from today's malaise.
Economics is supposed to serve we the people and when we continue to believe that it we the people that serve the economy the Trumps will continue to take us on self destructive journeys.
6
In a recent Elizabeth Warren town hall in Dayton Ohio I was struck by the fatalistic reaction of one working class Trump supporter to the idea of raising taxes on the wealthy: "they would figure out how to hide their wealth, move it offshore, so what's the point".
For such a Macho crowd it's amazing how little fighting spirit there is. Compare American workers to France's "Yellow Vests". They've been violently demonstrating for months. America used to have a militant labor movement. Will something like that ever return? Throughout all the plant closings beginning in the 70s there has been very little worker resistance. Resignation and opiates have ruled the day.
It is a great thing to see warriors like AOC, Sanders, and Warren in mainstream politics today. But they won't succeed unless workers can stand up and fight for themselves. Power and wealth only yields when they are physically threatened. We've got a long way to go.
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@Eric
This is the Southern sharecropper mentality that has now migrated North. The same mindset that inspired hundreds of thousands of poor whites to fight and die defending a system that pauperized them has infiltrated workers at large. A couple of weeks ago, VW workers in Tennessee again voted down union membership. Wouldn't want to upset the bossman!
20
@Eric: Maybe they're all high on opiates. Maybe that's why the opiates are so available. But no, I suppose I'm being paranoid.
7
@Eric like your comment but can we please stop using the word warriors - it demeans the brave now that it is Trump's favorite word !
4
Thank you, Dr. Krugman, very timely article, especially on Sen.Warren's birthday.
7
I find this tedious, gently-handed review of what progressives have been absolutely railing about for ten years insulting. The term "wisdom" shouldn't even be in the conversation, the judgements of the wealth are based on rugged, bold, self interest, not "greater wisdom." The top .1% is slaughtering the Middle Class, they are wrecking the country they are taking the complete attention our lawmakers. And they direct entities like this paper, CNN and Fox like an English Baron directs his household help.
A factor not mentioned herein is how the wealthy gain more control by using the media to stuff our lives full of distraction. This is where the working class is lured away from demanding the fundamental: more social benefits. labor organization, and no war, by the shiny objects of identity politics and currently Trump derangement syndrome. As Thomas Pynchon said, "If you can get people asking the wrong questions you don't have to worry about coming up with useful answers."
33
@CK - 'the wealthy gain more control by using the media to stuff our lives full of distraction'
'bread and circuses' ? - in the last days of an empire ?
let me see - images of the last days of Rome replaced the muscular torsos of early Caesars' statues with bulging bellies obesity on their way to the next all-day feast and vomitorium.
what happened next - a new virile influence from the East swept through - Visigoths and Vandals - 'Economic troubles and overreliance on slave labor' - 'The rise of the Eastern Empire' - 'Overexpansion and military overspending' - 'Government corruption and political instability' - 'The arrival of the Huns and the migration of the Barbarian tribes' - 'Christianity and the loss of traditional values' - 'Weakening of the Roman legions' - https://www.history.com/news/8-reasons-why-rome-fell - hey, sound familiar ?
'And so one of the greatest Empire’s in history ended not with a fearsome battle, but with a sorry capitulation' - https://historycollection.co/last-days-rome-great-empire-fell-barely-whimper/2/
What do they say about Trump ? - 'he usually folds'
there you go - wave the flag as you go ... !
Thank you Dr. Krugman. This article will definitely be required reading in all of the economics courses I teach.
9
Thank you for this highly relevant and important analysis. I totally agree that it is absurd to allow people to amass multiple billions of dollars. I mainly leads to corruption. Just as absolute power corrupts absolutely, maximizing money leads to maximum corruption.
And before people write to tell me it is "their money" or "they earned it" remember that hedge fund managers who earn close to $1 billion per year and who are charging fees to manage their client's money only pay a 23.8% tax rate rather than the 37% rate they should pay on the "income" earned from management fees payed to them by third parties. That amounts to around $130 million dollars a year of lower taxes.
Do you really believe this money is not earned income?
An Side Note: I do not know if others thought this but my first reaction to the photo in this column was - What is Jeff Bezos doing on line at a job fair?
14
Money has always been a way people evaluate the success of themselves and others. In our supposedly egalitarian ethic we try to deny this, but it has always been so. And the poor have often fallen into this trap. During the '30's the poor flocked to see Ginger Rogers and Fred Astair dance around in their top hats and rich firs. Congressmen who want to be rich call their rich patrons first, because they envy what they consider success and this imparts weight to their opinions that people without money do not possess.
Why is it that Congress is not flocking to overturn the Citizens United decision favoring the vastly rich? I wish i could be hopeful about changing attitudes deeply ingrained in our culture of greed, but it seems even the poor as people just trying to get by often do not see the injustice in their 2nd class citizenship. The first step would be not to elect con men like Trump who pretend to be on the side of the poor, but only seek to advance their own greedy self interest.
7
Step One - Raise the capital gains tax rate to the rate for ordinary income. There are a lot smart people who get paid big bucks to classify their income as a capital gain. Put them to work to make something that we all can enjoy.
16
These facts seem relevant here:
"The top 10 percent pays 53.3 percent of all federal taxes. When looking at just federal income taxes, they pay 68 percent of the burden. The top 1 percent pays 24 percent of all federal taxes compared to 35 percent of all federal income taxes. The data for total federal taxes comes from the Congressional Budget Office."
www.dailysignal.com/2015/04/15/how-much-do-the...
And need I point out that it is also illegal for the rich to sleep under bridges?
But somewhat more seriously, is it fair for 10 percent of Americans to pay 68 percent of our total income taxes?
No, but we're desperate; in fact, we're ethically bound to take it: If 40 percent of Americans don't have $400 to pay for an emergency, something is rotten in Denmark and Denver.
Extraordinary times call for extraordinary measures. In this case, the end justifies the means: It's unfair to the ultra-rich, but it's ethically necessary to do so. Donald Trump doesn't need a golden toilet, but many Americans need a free school lunch program. E pluribus unum. We're all in this together.
8
@Jim Muncy I’m fascinated by the fact that you list these data showing that the top 10% of earners pay more than ~50%-68% of all taxes (depending on the metric) but then reach the conclusion that they should pay even more. It seems that the more reasonable proposal would be that tax rates should be increased on at least the next two deciles.
It’s become very obvious over the past few years that Mr. Krugman objects to wealth in the abstract. He wants to force income equality by punitively taxing the wealthy. The reasons for such punitive taxation keep shifting as Mr. Krugman keeps finding new semi-plausible reasons for penalizing wealth. His most recent one is that rich people define the agenda. That one falls apart in the face of populism and the rise of socialism.
There was a time when economics was called the most objective/scientific of the social sciences. Dogmatic thinkers like Mr. Krugman further highlight how flawed that belief was.
4
@Shiv
Well, in cold, rigid objectivity, you are correct, as I stated, it's unfair.
But humanistic ethics, I think, override logic. People in need before people with way, way more than enough.
If some 40 percent of Americans are food insecure, surely the 1 percent can get by with less. I'm going with the old "He ain't heavy; he's my brother" concept. Maybe I'm a dirty Commie after all.
Why are the wealthy successful in this particular arena?
I would propose it's because there is no natural "off" switch for the liberal plan to spend more, and even Republicans spend more than they said they would. I wouldn't understate the corruption involved in the spending either.
There's definitely a false equivalence being assumed here. Here's the truth: We the people can't stop gov't overspending as easily as we can start it.
1
@scott365, the assumption is always that Democrats spend more than Republicans, but the opposite has been true in my lifetime. The last two Democratic administrations have been significantly more fiscally responsible than the last four GOP administrations. I've heard arguments from some conservative policy makers that the point of overspending is to force eventual cuts to popular entitlement programs like Social Security and Medicare.
You're mistaken if you don't think there's a conservative plan to spend more. There's a well-developed plan. There is no such thing as a fiscally conservative GOP member of Congress, as the 2017 tax cut ($1.9 trillion and counting) and the Iraq and Afghanistan wars ($6 trillion and counting) show us.
50
There are reasons to think the wealthy know more than the average person, but they are also more likely to voice opinions that coincide with their own or their enablers' interests.
4
@Alan, but what do they know more ABOUT? I'd contend it's more about how to game the system, how to stiff employees and creditors, how to keep corruption secret, how to buy off politicians to thwart regulators trying to enforce reasonable rules, that kind of thing.
In other words, nothing useful to society at large, and in many ways, destructive to society.
46
I speak from over fifty years as a lawyer and activist running and owning one of the largest human rights NGOs, that we have suspended some four years ago our "normal" way of operating.Reason ?Well, the disparity between rich and poor had gotten too big so our NGO actions were less and less effective for all the reasons mentioned in this article. What did we do and what are we doing? Well, let me say, the disparity is growing astronomically fast;therefore, I will not yet publicly say what we are doing for too much money (and therefore influence) would be thrown against us.
I have followed and read most of Mr. Krugman's career economic works. I know increasingly he will face being defaced by elite interests. I know how now this can be lessened and I hope he knows how for we can't write about it for that is how bad it is already.I share this all in the interest of saying what can be said. I say this in support of Mr. Krugman. I ask everyone to continue the dialogue, not that the world will disappear, just to humbly lessen suffering now and into the future. If one wants some further help in the dialogue, listening to AOC helps. Reading and listening a lot to Mr. Krugman can be hard unless one is definitely hugely interested into understanding the very scientific and phenomenally psychoeconomic logic that leads to the conclusions. Mr. Krugman, if I may humbly say, now that I started, is a professional economist not just of today but already one in the future.
56
@Stanley I want to give you 10x commendations, but the system doesn't allow it. My heart breaks for whichever people you signed up to help, and all the others falling into the same hole.
There are many indicia of a capture of the government's regulatory functions by the financial elite:
(1) A recent massive example is that the financial crisis last decade led the government (run by a Democratic president) to pump tens of trillions of dollars directly and indirectly in total to support the large banks and other financial companies - and thus in essence protected and even rewarded their executives and investors for massive failures in business judgment and operations - while the common man and women were mainly unprotected.
(2) Moreover, Eric Holder's DOJ failed to vigorously go after the corruption on Wall Street and in the mortgage markets.
(3) In my view, as a former federal public corruption prosecutor, the failure of the DOJ/FBI to identify and prosecute what was clearly an extensive 20-plus year criminal scheme by Donald Trump and his family business to evade taxes, commit real estate and bank fraud, etc., can be seen as part of this same elite capture.
Put simply, there is a mountain of evidence that as to the elites in our society, particularly the financial elite, they are significantly shielded from criminal and civil regulatory scrutiny. There is a deep vein of corruption in the US at the top, and by all information is is broadening and entrancing itself in a structural sense.
We need a strong, truly democratic president (such as Elizabeth Warren) who will oppose this trend.
224
@William M. Palmer, Esq., I agree with all of your points, except that the bank bailout was signed by President Bush (the Emergency Economic Stabilization Act of 2008). I also believe this legislation was necessary to prevent a catastrophic depression, so I hope President Obama would have signed it too. However, credit goes to Bush.
18
@SandraH., I have heard competent economists (including bankers) argue that the EESA2008 was the biggest possible policy error under those circumstances.
All the money went in all the wrong directions. But, yes indeed, the credit goes to Bush.
18
@William M. Palmer, Esq.
How many of our self-inflicted catastrophes over the last several decades have been cause by "the best and the brightest", who never suffer any penalty for their incompetence, or malfeasance? They just move on to the next, higher-paying gig, because there exists among them a tacit, mutual protection society. Obama was no less complicit because he felt a greater allegiance to the Ivy Leaguers on Wall Street, than to the people who elected him.
6
Great column today. Thank you.
How to get the Dems to develop clear, concise arguments is key. Many of our friends are against the very programs that help them and their family members. This is completely baffling to us. The GOP reduces their points to "socialism". What does that leave the Dems? Benefits to the people? You deserve help...vote Democrat? Equality for all? I don't know but somewhere is a very smart politico that needs to figure it out. Pronto.
28
By coincidence, I happened to be on West 57th Street, "Billionaires Row" in Manhattan yesterday. It was never a terribly bright thoroughfare anyway, but the forest of mega-towers that are still rising there have turned it into a dusty, crowded warren. Of course, these people who live in them, if they ever actually do, never spend any time on the street; they just rocket up to their aerie via private elevator, and peer down at us ants.
Seeing how these monuments to greed continue to go up, uncontested, unsettling the landscape, casting long shadows over Central Park, and eviscerating the middle class, involves all four of Dr. Krugman's points. It is a textbook case of the public good being thwarted by a handful of inbred families to line their pockets. And this is in a city that proudly considers itself progressive! Unfortunately it's "Bloomberg liberal", where any policy that's socially progressive is readily considered, but any program that might cost the wealthy a dime in additional wages or taxes is verboten. As a result, NYC will have a minute overclass, a sprawling, uneducated underclass, heavily subsidized to keep them at bay, and no remaining middle class to provide actual services. It's not even worth eating these superwealthy, because there's so few of them and they can afford to have little excess body fat.
124
Eusocial societies (those divided into classes such as worker and queen bees) have shown that it is the hardest working who become the workers because they put their shoulder to the grindstone and get on with the job.
What happens in a society if the queen bees decide to take all the honey? Effectively, we are there in the US, where psychopaths, concerned only with their enrichment, are grabbing all the wealth created. 100% of productivity has gone to the 1% over the past 30 years.
Studies have shown that our financial system is twice the size of the real economy, when we need a financial system only equal to the size of the real economy to function well. That means that half our financial system are thieves, looking to pick off riches from the productive economy, basically psychopathic queen bees. Hedge funds and private equity lead the pack. They are thieves, plain and simple, usually identifiable when you see the word "efficiency" that they use to justify their robbery.
Unfortunately, corporate America has followed, focusing on wealth redistribution rather than wealth creation. They are willing to starve the worker bees. Time for us to rise up and replace our thieving overlords with those who are willing to work for the good of society.
23
@RAD61, yes agree 100%. Thank you.
1
It looks like Hayek had it just backwards. It's not creeping Socialism that society should fear as a stepping stone to totalitarianism. It is creeping Capitalism.
208
@L F File
Of course. Thousands of progressive people have known that for decades, but no one listened until a catastrophe almost happened before our eyes. (The Bush recession was catastrophic for many Americans, but we escaped full-blown catastrophe by the hair on Obama's head.)
45
@Thomas Zaslavsky
"a catastrophe almost happened before our eyes"
Are you serious? A catastrophe?
How about persistent failure of all the known attempts to build socialism with the most noble proclaimed goals? Soviet Union, Eastern Europe under Soviet Union, Cuba and currently Venezuela, with millions of people perished in dust of GULAG. And yes, anybody who witnessed socialism in practice of daily life and not in liberal daydreaming should and does fear it.
@Neta Your examples were the result of violent revolutions with populist authoritarian regimes.
Success stories done democratically generally avoid those pitfalls. Successful mixed economies socialist/capitalist include most of our allies.
What we don't need is a authoritarian faux populist revolution centered on a cult of personality financed by a rich corporate culture . I'll leave the examples both historical and current to you.
5
Sounds like social democracy to me. Isn't that communist? And aren't communists bad? If social democracy is the thin edge of the wedge leading to communism, then it, too must be bad. Far better to have a handful with more wealth than anybody can spend while the rest struggle to stay healthy and alive.
This is America!
14
@John LeBaron Social democracy and communism are nothing alike and one is absolutely not the mechanism that leads to the other. Communism is a collectivist ideology that always puts the interests of the group above the individual and becomes dangerous if co-opted by a charismatic individual who can corrupt the positive benefits for themselves and then leaves the members of the group to suffer due to their powerlessness, which is inherent in such a system. Social democracy still believes in the rights of the individual and advocates continually for individual freedoms. Its socialist aspect creates some restraints on individual action based on the realistic recognition not everyone will act according to their “better angels” and that others sometimes need help. I would love to live in a perfect world where the wealthy don’t exploit the poor, where people deal with their differences without murder. But that is not reality. Some checks and balances are just necessary.
4
@DMarieK. I agree with each one of your points, but my tongue is stuck irretrievably in my cheek.
6
The best definition of capitalism is what it is not versus what it is. Capitalism is not socialism, communism, collectivism, Marxism, fascism, etc. Capitalism is the antithesis of all of these. It must eschew every tenet of each of those systems. If socialists allow unions to exist, capitalists must refuse to acknowledge them. If communists believe that labor and capital are equals, capitalists must prevent labor from gaining any power. The dangers of communism and its influence on the takers in society are an ever present danger.
1
When too much money is concentrated in too few hands, and their income is taxed at rates lower than middle class Americans, and they own everything they want and can only manage to spend a fraction of their wealth, it means normal economic models fail. The Great Depression favored low inflation rates going forward to protect the value of the dollars paid to debt holders while debtors were left to fail and the economy suffer. A good dose of inflation would help many people owing debt, but it won't happen because demand is reduced with a downsized middle class.
28
It might free progressives from deficit scolds if they emphasize how smart fiscal policies are actually investments in the future -- in education, infrastructure, green jobs, etc.
A problem with Keynesian theory is that brilliant ideas have been winnowed down to the oversimplified idea of deficit spending. Which sounds like a bad thing. Even when it's not.
17
You can understand the "common man" thinking deficits ALWAYS matter, because they have to balance their checkbooks every month or go bankrupt.
The 1%, or even the 10%? They have accountants who know that the way to REAL riches is to cheat: all the things that Paul lays out. But of course, if you're rich enough, or you can convince yourself that you might become rich, then you can also convince yourself that upward income redistribution is for the greater good. Anything else is SOCIALISM. Wealth tax? Child care, deficit spending inrastructure? No matter what Trump says, the Republicans are the oligarch party.
Now, Dems are the question. Uncle Joe tries to convince the bankers that nothing needs to change. WRONG. Warren tries to convince the capitalists they need to be saved from their own contradictions. Maybe.
The alternatives are fascism or the tumbrels.
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@Bob Hagan
The other alternative is Bernie who wants to tax wealth and lift up the rest of us. It is a velvet revolution, if you will, but revolutionary enough to make them try to bury his candidacy. They just haven't figured out how to do that without leaving any fingerprints.
2
What is interesting about the very wealthy is that they depend on the "poor" to work for them, care for their homes and children, and basically do everything for them. Where are the "poor" to live, eat, buy groceries, or exist when the wealthy have polluted, destroyed the earth, poisoned all the animals and water. Do the wealthy think there will still be someone out there to look after them? Fellatious thinking on their part.
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@Heysus
And they don't want to pay the "poor" a living wage to clean their homes and golden toilets.
Fifteen dollars an hour....really? Try to live on that.
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@Heysus, While I guess someone to "look after them" could euphemistically be "fellatious thinking," I think you mean "fallacious" thinking ;-)
10
@Heysus You mean "fallacious" thinking, not the other.
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Larry Figdill below points out that many merely well to do professionals would like to join the extremely wealthy, and so sympathize with them. Remote as their chances are of having something like Jeff Bezos' or Mark Zuckerberg's money, they do have an example before them of the bare possibility. At the same time they know that they will never be Einstein, or Lincoln, or Bach. And so they accept multibillionaires as some sort of sign that there is a better state of individual life and a way to get there.
We need better ambitions in our society. And at the same time we need wealth taxes and restrictions on such distorted circumstances as Mark Zuckerberg's holding of a majority of the voting shares in Facebook. Encourage sounder purposes, discourage mere piling up of money as a substitute for any better ambition.
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@stevemerlan There are those who would argue that the underlying cause of the mere piling up of money is not ambition, but a profound fear of death.
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@stevemerlan, there are many Americans who imagine that they will be wealthy one day, regardless of their prospects. Well-educated professionals tend to vote Democrat.
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"While we don’t want to romanticize the wisdom of the common man, there’s absolutely no reason to believe that the policy preferences of the wealthy are based on any superior understanding of how the world works."
Pretty much. As a doc who did his residency at UCLA, I have had more experience with the rich than I would have cared to. Some are nice folks, but altruism was not their main characteristic. Aggression yes, sweetness no. I also did not sense an overwhelming amount of brain-power, at least compared with those of us in medicine.
I now work in a college town and see a lot of professors. They are much smarter than the rich business types, in a different cognitive class altogether.
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@vbering, as a social worker would venture to guess those richest are rather clueless. And how many of the richest of the richest simply inherited their wealth? I loved college and all my professors as they were all so down to earth and enlightened to humanity and truth as they saw it. Could have stayed in school forever if there was not a student loan to pay back, lol.
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@vbering
In my experience, counter-intuitive thinking is far more valuable in solving problems than common sense.
Learning to apply root cause analysis quickly reveals that most common sense solves the symptom, but completely ignores the disease.
I've been fortunate to have worked around people who were brilliant but few were sociopaths measuring their insecurity in dollars. However, I was of the age when "tech" meant silicon and physical devices. These days advertising and manipulation are "tech" and we're all the worse for it. The quest for a billion is not what inspired Bill and Dave or Bob and Gordon.
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@vbering
Thanks for helping to instill realism. Brains don't necessarily go into and aren't necessarily required for the money trades.
--A professor, as it happens
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Dr. Krugman, re you comment "I suspect that raw corruption is a bigger deal than most of us can imagine":
Years ago, Toshiba was caught redhanded selling technology that they had developed for our nuclear subs to the Russians. It caused a flap in Washington for a few minutes, before it somehow magically went away. At the time, a Toshiba official was quoted as saying, "Washington is just like Kuala Lumpur, if you spread enough money around, you can get away with anything."
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@Livie Not true. Toshiba was banned from government contracts after that episode, for how long, I forget. They had a superior laptop computer at the time, but missed out on several large military acquisitions due to the ban.
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@Livie-Yes and no and then yes again.
Senate Votes to Ban All Sales by Toshiba in U.S.
https://www.latimes.com/archives/la-xpm-1987-07-01-mn-674-story.html
https://www.nytimes.com/1988/03/14/business/us-changes-its-stance-on-damage-by-toshiba.html
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I remain a cynic when it comes to the possibility of a more equitable income distribution. In the headlines of the NYT today we can read about billionaires buying up all of the large tracts of land in the west, freezing out the common people even seeking to deny them historical water rights.The deck is so severely stacked against the 90% with a painfully low minimum wage, no pensions, no improvements in Social Security or Medicare, student loan debt, Citizens United, amd threats to Obamacare. The rich have all the grenades and the rest of us the water pistols.
History shows us that whenever a group of people become so oppressed and powerless there is an uprising. At first those in power are able to deny it and quell it but sooner or later that fails. Unless there is a fairly fast political turn about in the US we are headed for a revolution. We are already at war with the .01% we just don't speak in those terms as yet.
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@Steve
Of particular concern to your founding father', I think noted in the Federalist Papers, is a fear of allowing the development of a landed gentry (land equalling wealth/money)... they heavily advocated for inheritance tax to prevent it. They had no issue of acquiring, but the did with passing it down.
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@Steve it’s tragic but many Americans would rather watch ESPN, porn, go shopping and buy Lottery tickets then join a Revolution. I hope I’m wrong.
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@Mike
One would think that the vote would be the revolution, but no.
I had said years ago to someone from a fairly affluent family who was working for me in the summer: People are too busy for a revolution.
2
I am so glad that there is someone with sufficient command of the facts to write a piece like this. Since about 2000 and the deceptive Bush tax cuts, it's become more and more obvious that something other than the will of the American people is guiding our politics. There are structural political problems (gerrymandering, voter suppression, electoral college, campaign contributions) which greatly contribute. It is easy to understand how these things impact our democracy.
But the more subtle groupthink about "the wisdom of the rich" is harder to spot. As PK notes, even the press falls for it. As for the mental state of the rich deficit hawks, "It is difficult to get a man to understand something when his salary depends upon his not understanding it." --Upton Sinclair
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@Suzy K probably since St. Ronald
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@Suzy K
Next time use your "command of the facts" to describe the City of Chicago around the time Upton Sinclair wrote these words, especially the stock yards and slaughterhouses where men were literally driven insane by not being able to tell their blood from animals they butchered.
Listening to young adults today, I am not sure that our more ugly or graphic history is taught at any grade level. We all need your help with really good submissions like this one.
retired attorney F/70
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@Suzy K
The press does not fall for it. The press was bought up by the rich to control our conversation about wealth and government.
Controlling shares in all mass media are controlled by global conglomerates or directly by the many billionaires that own news outlets outright, like Murdoch, Bezos, Bloomberg, etc. (Notice that Murdoch is Australian, but controls the most watched news outlet.)
The shareholders hire the CEO who hires the executives who hire the producers and publishers who hire the editors who hire the talent. The talent may or may not vote for Democrats but they are hired for their neo-liberal worldview, which is that corporations make the world go round and nothing is more important than corporate tax cuts.
Yes, they let markets drive much coverage, especially when the public demands celebrity gossip and and local crime stories, but everyone knows that certain topics are off limits or are to be approached using the assumptions of billionaires.
Supply Side Economics never ever worked, not even once. Tax cuts for the rich have never increased revenue, never trickled down to the average person, and never created economic growth that was more than a short bubble. But global corporate mass media always greets every suggestion that tax cuts for the rich will grow the economy with renewed optimism that it may work this time.
Meanwhile programs that require taxation are derided even if they work well in other countries.
It all depends on who you hire.
7
The coporate tax should be sufficient to pay the defense budget.
The rich should pay a "surtax" sufficient to pay for the poverty programs like Medicaid, etc. Capital gains should be taxed at same rate as earned income with an exclusion for inflation on long term gains (stuff held longer than 3 years, say).
The "payroll tax " (shared by employers and employees) should be a flat tax on all income (now it is a flat tax on income up to a certain level after which the rich are given welfare to pay their share) and should include basic medical insurance for all, social security, unemployment, disability.
There is something else we can do about excessive wealth: Increase competition or do something about monopolies like the cable companies. That's a complicated question. However, instead of giving tax cuts all the time, how about reducing my cable bill? I don't care if I get a $20/month tax cut or a $20/month reduction in my cable bill.
How about making the drug companies manufacture pills in the good ol' USA so I can trust the medicine I'm getting because it was inspected by a US agency rather than some functionary somewhere in Asia? The companies would make less but Americans would get jobs and the product would be better.
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@Excellency
Why do you want to exclude inflation? You're undermining your own proposals.
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@Thomas Zaslavsky
Because only real gains should be taxed, not illusory gains that are really inflation.
@White Buffalo
Thanks for the answer. Then all taxation should be automatically indexed to inflation.
Lets suppose you won a 100 million dollars in a multi-state lottery, Would that fact alone entitle you to start making recommendations on public policy, such as deficit reduction & cutting Social Security benefits? Or is it merely a rant of some extremely fortunate person? And what about those professors on state pensions?
7
Dr. Krugman, I notice universal healthcare is not on your "anything but crazy" list, though it is the rule in most developed countries. I mean, is the ACA really that great? Are Americans so special we do not get to have a normal, modern, efficient, fair, effective and sane healthcare system?
I agree with you about most things, but your position on single-payer, universal healthcare for Americans is really weird.
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@David in Le Marche: My belief is that Krugman is in favor of universal health care but not committed to a single-payer system. There are numerous countries that have effectively achieved universal healthcare by other approaches, and some of those other approaches may be more practical or politically feasible in the U. S. than single-payer.
I suspect, though, that universal healthcare is not on Krugman's list here because, for a large and growing number of Americans, that question is already settled. Opposition to it will sound increasingly crazy. Of course, that doesn't mean that it won't be opposed and we should still be prepared to fight for it.
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@David in Le Marche
Why are you conflating universal healthcare with ACA?
1
@Bill
Am I? ACA is Obama's modest improvement of our profit-based healthcare system which continues to be mediocre and absurdly overpriced. It is better than what we had, so it is better than nothing.
Status quo Democrats tend to favor improving the ACA, as does Krugman, unless he has recently changed his mind.
Universal healthcare, be it government-run, single payer or simply strong regulation of some scheme involving insurance companies, is what most advanced countries have, and it amounts to healthcare being paid for by government. This makes it available for all citizens and it is financed through progressive taxation. It is considered a right, not a business. It's what we have here in Italy.
So, ACA is a band-aid on a rotten system, while universal healthcare is the real deal. I don't think I have conflated anything.
1
A 2% tax on Jeff Bezos' never taxed $130B would produce $2.6B in revenue and he would not even miss it. Meanwhile working stiff pay 2% tax on their homes that they don't even really own-the bank does. Let's just be even and fair!
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I can hear the chants now. "Socialism." Strangely, from the mouths of folk who wouldn't be paying 70% on their federal taxes. And the moves to crush Medicare, Social Security, and the Affordable Care Act will damage their standing much more than the ones urging them on.
Pied Piper all over again.
31
Control of enough of the media and the wealth/assets to hire the best media spinners are so much more of a big deal than it was 40 years ago. Murdoch & Ailes knew/know what they've done.
Leaving aside the rise of fascism, American Style, they moved The Center far to the right, as we all know. A consequence is that reporters/editors looking to advance their careers know very well which stories get promoted and which do not; which stories get the powerful calling publishers to complain. Operating daily the slant becomes unconscious as well as conscious.
Authoritarians know they must control major stories' slant. And do they ever know how to do it & who to call to run/oversee the program.
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@joel
Is there anything more basic than a real national opposition press? We had CNN when Ted Turner owned it.
Please step up, Tom Steyer and others!
Progressives need a national platform.
The voices on or near the left, even on MSNBC, are in the minority. The so- called Centrists there regularly disparage
the “extreme left”, the Democratic Wing of the Democratic
party. That is how we got Trump. No serious journalistic
scrutiny of him and his history with the Russian mafia before the election.
Timothy Snyder, Luke Harding and Craig Unger need to be heard on TV because they are our best authorities on those subjects and take what we are facing seriously.
I do appreciate seeing Malcolm, Natasha, Jill, Sheryl, David, Glen,Wendy, Jason, Joyce, et. al when they appear.
2
"This episode is receding into the past, but it was extraordinary and shocking"
As a liberal, I would say this is how Mr Obama with much help from Mr Geithner made Donald Trump president.
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@GeorgeX, I think rightwing populism (nativism, racism, etc.) has always been with us, although it emerged with a vengeance during the Obama administration. I don't blame Obama since his policies put people back to work. The ground work for social unrest was laid by deregulation under Bush, followed by the collapse of the housing market (although I agree that the Obama administration should have prosecuted more bankers.)
Tax policy has been squeezing the middle class since Reagan's "reforms," which eliminated interest deductions. The GOP's goal is to eliminate all middle class tax deductions over time while they lower top marginal rates. In fact all GOP members of Congress take a pledge to Grover Norquist to do just that. The 2017 GOP tax bill is framed as a middle-class tax cut, so people don't notice that their taxes will go up in a few years.
It's very clever marketing because understanding the trend requires people to focus on the long-term. By the time their taxes go up, it may be a Democratic administration in power, and Fox News will successfully lay the blame on the Democratic president.
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@SandraH.
I agree that decades of conservative ideology and corresponding policies set the ground for the profound disaster of 2008.
But the tipping point for Trump came when the government's efforts were more to set Wall Street bankers right (instead of sending them to jail). Only token steps were taken to help victims of the foreclosure crisis. I blame President Obama for not seting the priorities right his Treasury Secretary (and Wall St lackey) Timothy Geithner. Mr Geithner's current employment might be a clue to where his priorities lay.
11
@GeorgeX
Although we are encouraged to adore Obama as a savior, he was a weak, compromised president. He was another Wall Street toadie brought to us by Third Way and DNC. I watched the 2006 debates. They were a joke. Only Hillary and Obama got airtime. The rest were marginalized.
Watch to see if that happens this week. The chosen one is Biden with Buttiegieg as his running mate. The elder statesman and the cute, bright new thing who would be the first gay guy in the Vice Presidential office meet the needs of the overlords - socially savvy, economically DINOs.
4
Professor Krugman appears to be ignoring the long list of billionaires tripping over themselves to advocate higher taxes (Buffet, Gates, et al), more regulation and redistribution (Soros, Cook, et al), and the near universal alignment of media, academics and tech/social media giants in favor of the Democrats/Socialists desires.
The reason the ideas advanced by Krugman and the Democrats are not more popular is because working Americans have an gut aversion to endless taxing and regulating success/wealth in order to give free stuff to the lazy and irresponsible.
It is sickening to most people what we already do. Doing more "redistribution" is abhorrent to most tax paying Americans. Yes, it can pass every now end then (FDR in the great depression), (Johnson in the 60s), but then very quickly after we get a Reagan elected to fix it.
7
@Baron95
As you can't distinguish between Democrats and Socialists, and your "long list" stops with 2 (for good reason; I know, you could add a few and get to 10), I think you're proving Krugman is right about the effect of the propaganda of wealth.
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@Baron95
We suffer because of what we have given to the undeserving Rich. We have taken away what we were giving to the deserving Poor.
Individuals who earn over a Billion managing money pay $150 million LESS federal taxes because they pay 24% instead of 37%. That's our gift to the Rich.
Here's just one punishment for the Poor.
Children who are fed via SNAP payments to mom and dad (food stamps) have had their benefits reduced twice in the past decade -- inflation adjusted from about $1.50 per child per meal to a $1 per child per meal.
Republicans in Congress say that's much too much. $3 a day per child should be reduced to $1.50 a day -- $.50 a meal. At less than 50 cents a meal, mom and dad could give a child oatmeal and an egg at breakfast, a two slice baloney sandwich at lunch, and a baked potato at dinner. Some Republicans think that's still too generous --they want SNAP for kids to be a maximum of $1 per child per day.
PER DAY the top 1/100th of 1% get $500,000+ more.
Kids on SNAP get $3 a day for food. Republicans want to reduce that to a $1.
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@Baron95
Redistribution happens. The only debate is which direction it goes.
4