Very Good Chart on Inequality
https://www.nytimes.com/interactive/2017/08/07/opinion/leonhardt-income-...
Thank you.
4
How do the rich one percent get enough middle class and low income voters to vote against their own self interest? Answer - FOX News.
14
PK cites famous economist Piketty on U.S. productivity going to the top elites.
But Krugman bashed and insulted Bernie Sanders’ proposals in 2016 as too radical and not good for the Democratic party. What would he say to Piketty’s support for Sanders?
“Piketty had written a Guardian, UK op ed:
“Sanders’s success today shows that much of America is tired of rising inequality and these so-called political changes, and intends to revive both a progressive agenda and the American tradition of egalitarianism.
Hillary Clinton, who fought to the left of Barack Obama in 2008 on topics such as health insurance, appears today as if she is defending the status quo, just another heiress of the Reagan-Clinton-Obama political regime.”
Now some Democrats at least, are departing from the party's centrism---which had been 'liberal' only compared to the GOP rw extreme.
Please discuss, Mr. Krugman.
7
Piketty said that U.S. inequality is like old Europe.
NYT Business: "For Two Economists, the Buffett Rule Is Just a Start" April 16, 2012
Piketty and Saez say inequality among the middle class and the rich is nearly as acute as it was before the Great Depression.
A comparison that needs some concrete discussion with possible solutions that our politics puts off the table.
FDR's New Deal stepped in with the Great Depression. He passed banking regulations that both parties dismantled in the '90s and this gave a green light to bank crime leading to the worst crash since 1929 in 2008. Nobody prosecuted.
Do we need a new New Deal? What should the Dems propose? Neither party wants to restore and update those bank regulations now, or pass adequate tax and regulations for corporations to protect the middle/working class.
What do you say, PK?
5
Makes sense, so it won't happen with this White House, which prefers TV opinions to actual, verifiable facts. Besides, all the tax money has been given to the wealthy, so they have no money to give raises to federal employees (they say), let alone do anything new and worthwhile.
3
Everyone is better off than eight or ten years ago. In fact the quality of life in America is at an all time high. Never has any group of people had more of everything. The poorest in our society live better than the Kings of the 1800's. Only those on drugs or mentally ill live poorly in our society. Krugman as he says is a Progressive and wants distributional data for his own purposes, not to make us richer but as a take from anyone doing better than he thinks they should.
6
I hate to get into higher math but here is an equation:
If % GDP gain + % average wage increase + % inflation = 0, what's the point?
4
Last night I watched a discussion that took place in 2013 and involved three of the most brilliant people on Earth. Two of the world's most renowned economists and an economic journalist discussed Inequality. The participants were the Late Tony Atkinson, Paul Krugman and Chrystia Freeland.
I watched mesmerized as the love and respect between three of our economic intellectual giants owned the screen and discussed rather than debated how inequality is tearing us apart.
Piketty keeps Atkinson alive, Krugman keeps writing and Freeland is Canada's Minister of Global Affairs and helps keep Canada loyal to our morals and ethics.
I watched the conversation and left humbled and confused. Humbled by listening to giants and confused as to why gnomes are allowed to dominate the conversation. I watched giants listen to each other as our gnomes try to drown each other out.
https://www.youtube.com/watch?v=zAFCaDS4a6Q
3
You fail to mention the huge increases in income by affluent professionals making $150-400K. Unlike CEOs, who constitute .0003% of the workforce, this group is statistically significant.
4
"But here's the thing: knowledge is objectively better than ignorance."
That this is a controversial statement says a lot about where we are.
But anti-intellectualism is nothing new in American life. Hofstadter famously wrote about it roughly 60 years ago, and Tocqueville cautioned against the potential for it nearly two centuries ago. The uncomfortable truth is that this is the underbelly of a history rooted in a rejection of aristocracy. A thing rightfully rejected, to be sure, but any silver lining giving freer rein to imperfect beings like ourselves is going to have its clouds.
Those who forget the mistakes of the past are doomed to regard the errors of today as somehow new. Of course, that is not a reason to give up, i.e., to stop reading or voting. Rather, it is merely a recognition of reality. The great irony here is that a cult of intellectual mediocrity (that is, the celebration of "common sense conservatism" and the crass ignorance of a figure like Trump) serves to facilitate the rise of a different sort of aristocracy- one of obscene wealth rather than birth.
7
The Congress has ignored repeated appeals to stem the flow of American wealth and businesses over the past years. This includes Trump who changed the topics of discussion from repatriating businesses, instead ranting about tariffs and relying on protectionist leanings in the public to win their love and admiration. All the Republicans have conveniently forgotten to mention the wealthy campaign financiers who are exporting vast American wealth and business.
2
Getting some actual data would provided basis for informed policy-making. The problem is America is not really big on "informed policy-making."
7
This may not be news but it bears repeating: GDP is meaningless for many Americans.
GDP is basically a code word for stocks. Stron GDP = string stock markets. Obviously, if you're in the markets that's a good thing.
But GDP isn't an indicator for the two things which matter to the majority of Americans; jobs and real (inflation adjusted) income, which for most is a a product only of labor.
Tax cuts boost GDP. That's been proven by what happened after Coolidge, Kennedy/Johnson and Reagan cut taxes. Stocks go up as well.
But the Trump tax cuts have not translated into an increase in the growth of jobs or in real income. There were a few thousand more jobs created in the last 15 months of the Obama administration then in the first 15 of Trump's. Real incomes actually fell 0.2% in the year to August.
1
This same notion, that averages and medians don't tell the story, applies to immigration also. Trump and his advisors hate all immigration. The average unemployment rate is just below 4%. But there are some higher skill jobs that have an unemployment rate of 1-2%; effectively zero. Health practitioners and related technical professionals, for example, have an unemployment rate of 1.8%. You can't suddenly create these experienced workers by offering higher salaries. They take years to create. Rural communities will suffer without them even more than cities. The supply/demand rate for electrical engineers is 4/1. We need to allow more immigration of those who have skills the US needs. Otherwise multinationals will not hire in the US; they will be forced to hire abroad.
@Tim G - The average income of all US doctors is $218K. With that kind of money available, they have very effective lobbyists to keep foreign doctors out.
The problem with this is the same as with almost all such studies, they are money for nothing and no chicks for free either. If you ask enough people (which they never do), many won't give you accurate information. No matter what you do the data is highly flawed so the analysis (which is also flawed) is worthless.
If the BEA were to generate reports as Mr Krugman suggests, the studies should include longitudinal studies - so we can see how the economics of individuals change over 5, 10, 15, 20, 25 and 30 years.
The people living in the top or bottom 1% of households are not the same people every year, or even the following year. I have been in the top 1% and the bottom 1% at different times in my life.
When most people talk about different income ranges, most talk as if income ranges were static with identically the same people living in each income range after year. Income inequality becomes grossly misleading when the changes of who is in each income range is not factored.
This approach also highlights how much economic mobility we have which is essential in how just we see our society is.
There should also be more detailed studies on why some people may consistenly have low incomes including the impact of poor schools, broken families, competition for low wage jobs, drugs, high crime rates, poor job markets, etc..
The slow rise of incomes in low wage incomes is far more a problem than income inequality.
3
I would think such a regularly reported statistic would be a no brainer. Admittedly, it requires estimation techniques and inference, but that is what statistics is all about.
A key statistic would be modal income: the most common income, along with percentiles around the mode.
On another point, does "adjusting for inflation" really tell you that workers earn less now than in 1979? In so called adjusted dollars maybe. Cars are more expensive, but they are much better cars. TV's probably cost about the same, but they are much better TV's. Few could afford microwaves and CD players in 1979, but they are dirt cheap now. Frankly, I suspect the average worker is better off now in terms of the quality of life that can be bought than in 1979 (not so sure about the other aspects of quality of life). Of course, that's far more true for the CEO's than the people on the factory floor.
2
The American economy has too much social and income inequality to be a fair and just one.
Wealth is concentrated in the top 1 percent and most Americans acquire little if any wealth. Social and income
insecurity leads to perpetual anxiety and high levels of
depression and unhappiness.
We need drastic change in our economic distribution of wealth. The Republican Conservative model fails the needs of the average American drastically.
Democrats and progressives must change the rules of our economy if prosperity is going to be revived for the average citizen.
2
“Fair” and “just” are in the eye of the beholder. Communists, socialists and Democrats have a different from that of other folks.
1
“If the government cannot create happiness for its people, then there is no purpose for government to exist.” - Legal code of Bhutan (1729)
"Gross National Happiness is more important than Gross Domestic Product." - Jigme Singye Wangchuck, the Fourth King of Bhutan
Considerable work has been done internationally to define a "wellness index" to express the overall wellbeing of a country's people (for example by the University of Washington); the U.N. assesses developing countries' social wellness progress based on a comprehensive set of assessments (e.g. health, education, good governance, standard of living, community vitality, environment). For many decades the country of Bhutan has used its so-called "Gross National Happiness" index to target government policy initiatives (each piece of legislation must state what GNH criteria are addressed), measure policy success, and report the results to Bhutan's people.
It'd be great if instead of listening to a pile of political spin and party-based codswallop in our own State of the Union address, we'd instead hear a report of the most recent national wellbeing stats, what progress (or regressions) had occurred since the last assessment, and what specific improvements were currently being undertaken. Politicians who like to say that government should be run more like a business should be all for a periodic fact-based "continuous improvement" program, which any reputable big business depends on.
1
Income tax-cuts (mostly) for the rich and corporate tax-cuts again still more for the rich continue to widen income inequality. Though very many old fashioned Republicans are against president Trump, they're in about unison in going for the tax-cuts. Thus the progressives and Trumpistas who aren't rich remain in the same boat.
The newly emerged Trump supporters (Trumpistas) too many of whom were Obama voters don't understand tax-cuts are bad for them. The only tax-cuts that are good for them are payroll tax-cut, which is very regressive. If I take a wild guess, without solid evidence, somewhere in the neighborhood of 45% of US household income doesn't pay any payroll tax!
To fix calamity, Democrats should seek the support of Trump voters who aren't rich to have tax-hike on the RICHEST & tax-cut for the working poor by cutting payroll tax on the first $10K to 1% & on the second $10K to 2%. Lift (eliminate) the cap on it but to ward off "rebellion" from the rich cut it again to 1% beyond say, $150K.
And, have another higher marginal rate of 50% (or "49%") on the top 0.05% household incomes from all sources. This would cut the deficit significantly, and that's very good for the strength of US economy.
1
Some of us came to this country in the 60’s and worked our fingers to the bones and educated our children and now some us are in the 1%. It can still be done. Not apologizing.
2
How would you know? The conditions in the 60s were very different then they are today. Open your eyes
2
I heard an interview with Daniel Kahneman, a fellow Nobel laureate recently. He said that society may not be responsible for an individual's happiness, but it may be responsible for removing misery.
When we think, as many here do, about what is best for our (nation, society, culture, country???) collective well-being, I think there are some parameters to consider.
- Who is responsible? government, business, an invisible hand?
Should we:
- Assume that more money leads to more happiness (or less misery)
- Assume that society and government are closely related.
- Assume that wealth production is not the sole aim of our society.
- Assume that all members of society have an equal stake
- Assume that wealthy members of society don't have an a priori right to benefits over less wealthy
- Assume that wealth is dissociated from decision making and electing leaders.
Whew. I don't think any of those things are answered in our society.
3
So Bernie Sanders is basically right?
Is there not already a mountain of evidence about wealth and income disparity in the United States?
And is this not the result of basically bi-partisan policies - free trade and Wall St. deregulation agreed upon between the old center-right (the Bushes) and the now jettisoned center-left (the Clintons)?
And many NY Times columnist have not differentiated between questioning massive globalist economic systems and an acceptance of immigration. The two are not the same issues.
Democratic strategists do a great disservice when they crow about how immigration and changing demographics will give their party the long term advantage - as if political gain - and not the high moral ground - is the reason to support these policies. This only fuels the cynicism of many Americans that the Democrats are not really interested in helping them.
So as George Carlin once observed the only real difference (Sanders aside) is the Democrats care about people "a little more" which equates to a slightly better safety net.
Higher Wages. Higher Wages. Higher Wages!
5
The USA has brought democracy to Japan after WWII by enforcing policies like: rent controls, confiscatory taxation, expropriation, nationalization, unionization, aimed squarely at combating the extreme inequality of the Empire.
It's time to bring some of these policies back home!!
5
Professor, your economic thinking is shortsighted. The great French economist, Frederic Bastiat might say to you, "You see only what is seen. Look beyond the apparent and you may see what is not seen." http://bastiat.org/en/twisatwins.html
"If Jeff Bezos walks into a bar, the average wealth of the bar’s patrons suddenly shoots up to several billion dollars — but none of the non-Bezos drinkers have gotten any richer."
That none of the other bar patrons have gotten any richer is true, but dig deeper. Certainly he owner will be richer because Bezos imbibed in his bar. The barmaid who served him too. How about the lass in the bar in the midst of a job search who boldly gave Besos her resume and was subsequently hired as Jeff's assistant? Or the man from the Salvatiion Army who approached Jeff to tell him of the vitaal work SA does and solicited a contribution, which resulted in a check, to SA for $2 million? Rich people, by virtue of their wealth, invariable spread wealth to many others.
This entire article is sophist flacking for more government taxes and spending, which are the means by which progressives and socialists grow rich--as opposed to producing goods and service people want. Besoz spends his own money, whereas progressives and socialists spend OPM (re: sounds like opium, is equally addicting, stands for Other People's Money--forcibly extorted.
"Knowledge is objectively better than ignorance." Yes, but what you are proposing isn't knowledge. It's propaganda.
5
Any measure of income and wealth distribution should take into account the value of government-provided benefits (e.g., Social Security, Medicare, Medicaid, food stamps, free or subsidized housing, public schooling). Most of the statistical studies mentioned in the press don’t seem to take those economic considerations into their calculations.
The failure of unions is a natural result of their conduct and the perception among workers that the union dues aren’t worth it, which largely explains why right-to-work laws are the death knell of unions. Also, the transformation of our economy into a service-based one has hurt the unions. No need for government to put its thumb on the scale yet again. FDR did enough damage.
3
In the 80s when I was on the policy committee for Canada's mildly social democratic party I got a resolution through convention to establish a new bureau to report on the income distributional effects of all new policies. Sadly it wasn't implemented and NDP policies overall were not redistributional downwards.
1
Krugman is correct. We need to see where and to whom the GDP is distributed. It's not going to the middle class or its workers.
Statistics now available show that more than half of the income and the wealth are going to the top one percent.
The evaluation of the GDP and where it goes should have been done as early as the 1980s, when American corporations began not sharing their profits fairly with the workers. All of this started in the 1980s with the policy put in place by major corporations and the wealthy. It was called "starving the beast", which is diminishing the government's role in regulating big business.
In the 1980s, Reagan took the first steps by giving corporations and the wealthiest Americans a very large tax cut, followed by diminishing the powers of unions to strike for better wages and conditions.
In 1973, the corporations and wealthy Americans embraced a policy to diminish the workers' rights and incomes as evidenced by the Powell Memorandum, written for the United States Chamber of Commerce.
The memorandum said in essence that the corporations and their wealthy stockholders wanted power, which they could buy with their wealth. It enables today's CEO's to make 350 times the wages of the average worker. It also diminishes the workers' rights to be protected by unions.
The solution is to establish a progressive tax rate for corporatists and wealthy individuals, and to allow unions to represent the workers without impediments.
2
Let me make this simple.......OUTLAW CORPORATIONS....they are the robber barons of our time....just stop and think how that one thing would change the world......
2
"Thus C.E.O.s at the largest companies now make 270 times as much as the average worker, up from 27 times as much in 1980."
'Nuff said. Does today's CEO really do 10 times more for their companies than they did in 1980? Rubbish. In fact, I suspect that they actually do less.
I think the natural form of government in a capitalist society is oligarchy. As we see right here in the USA; oligarchy grafted onto the operation of our government under the Constitution, which itself somewhat favors oligarchy in its construction. Oligarchy as a kind of second order effect beneath the trappings of a democratic republic, the latter designed to enable the oligarchy to last and not cycle through peasant revolutions and the like as past oligarchies have when the top 1% get too insufferably greedy. The US Constitution curbs the oligarchy just enough to constantly let some of the steam out of the inequality boiler.
At least, it has up until now. Might be that the oligarchy has finally managed to subvert the Constitution enough to flip to de facto first order effect? We'll see.
@Barry Williams - However, the average CEO of ALL publicly held companies makes only $167K. The salaries are very high only at the largest companies.
Thanks, Professor Krugman. The more voices raised in support of nudging our economy in the direction of better wages, the better.
100x increase for CEO "compensation", and zilch for the rest of us.
Let's hear it, please: The din of inequity.
1
The US already has extensive data on income distribution from the Census Bureau's Current Population Survey. Unfortunately they are not compatible with national accounts household income due to significant differences in concepts, definitions and data sources. Reconciling them would require prodigious work to agree on commonalities, which neither agency involved has shown any signs of taking seriously, apart from ad hoc studies.
Knowing this is “really important” why? What do we do with it? I looked at Zucman’s table and it points out if I am in the top 10% I received approximately 2% in growth 1980-2014. However, if one were in the top 5% and higher, the upward distribution of income is astronomical. All that does is anger me. I guess being dumb keeps me happier.
1
As Brother Putin wistfully opined, the collapse of the Soviet Union was indeed a geopolitical disaster. Of course, he wasn't thinking so much about us over here but about the great and noble Russian empire. But, in a subtle way, we have suffered as well.
It turns out that for many years Soviet Communism was the main thing keeping American capitalists honest. America was engaged with Communism in a mortal battle for the souls of mankind. Given that context, it would hardly do for Wall Street to play the role assigned to it by Communist propaganda and be seen flagrantly promoting policies designed to steal food from the mouths of American workers.
But, hey, America won the Cold War way back in the late 1980s. The need for American capitalists to continue feigning concern for the common welfare thus disappeared long ago. Now after 25 years of slow erosion of workers' rights a moment of reckoning finally appears to be dawning. In the interest of a more accurate appraisal, upgrading the economic data to reflect the current rapacious reality is overdue.
4
For a second there, I thought Dr. Krugman was going to tell a 'Jeff Bezos walks into a bar' joke, but no such luck.
2
I'm pleased you've updated your joke. Back (I think) when the Bush tax cuts were the topic of discussion, it was Bill Gates who walked in the bar. Plus ca change ...
1
“And to be fair, progressives like the idea of distributional accounts in part because they believe that more knowledge in this area would help their own cause.” Come on, must the liberals be accused again of playing politics? Is that really fair? What do progressives have to gain by succeeding at their goals of making things better for the common man? Where one side is packed with fakes fronted by billionaires and groups who want to put Jesus in charge of our government, the other side is either selfless or a group of corrupt liars. That is why the rich always accuse politicians who have selfless goals of being corrupt. “Oh, yeah, all that sounds really nice for the average American, but the people who are proposing it are totally corrupt!” To be against the progressives you have to either be rich and/or privileged or you have to believe that American is so inimpugnably great with opportunity that those who struggle are either lazy or worthless. But who really believes that? Especially, who really believes that in 2018?
2
The answer to your surmising is that the Progressives would abridge the tax laws to effect a more egalitarian distribution of national income levels. The Progressive approach is our best hope to counteract the GOP screw job of the 2018 tax bill.
2
FDR’s New Deal & LBJ’s Great Society weren’t called "socialism" except by extreme rw. They were smart, regulated capitalism, and saved our democracy. Bernie Sanders’ aim is to restore/conserve that. While other capitalist democracies use govt to prevent downward mobility, our policies create it.
Until 80s Reaganism, we had rising wages, benefits, pensions—jobs stayed here. Businesses were profitable but they didn’t try to hog all our resources. Unions were strong, training new generations in apprenticeships. State universities with tax supported low tuition helped build the middle class who then repaid that support with taxes from higher paying occupations.
PK could comment on this:
“When the Rich Said No to Getting Richer”, David Leonhardt Sept. 5, 2017
Says “top auto exec George Romeny, Mitt’s father turned down several big annual bonuses....he believed that no executive should make more than $225,000 a year (almost $2 million today)…. so a culture of financial restraint was once more commonplace in this country."
Other capitalist democracies still use govt to help guard middle class security against corporate abuse.
Why is the US creating more financially insecure people in the 1st place, who then need govt assistance? This causes political polarization in a country once famous for a strong middle/working class and upward mobility.
That contrast should be vividly explained by Cable TV pundits and any liberal op ed columnist worthy of the name.
6
"Socialism" is indeed a red flag for most Americans. However, going back a couple of hundred years we can easily see that nobody fled from Europe or indeed anywhere else in order to escape socialism - because it did not exist. People came to the Americas to escape despotic or at best only moderately democratised governments. The very word "socialism" was largely unknown until Karl Marx made it famous among free thinking folk.
From my side of the Atlantic, having been born into a poor family, socialism was what enabled me to go to a good school and study for a degree - just as the children of the aristocracy had always been able to.
Now if that's socialism, why the blazes would any right-thinking American be against it? Do you prefer a society where you can get to the top, yes even become President, because you inherited a small fortune and then proceeded to make it a huge one by means which it is not my place to criticize? (But you are free to check up and see what you think ...)
Instead of crying "Wolf" when faced with social justice, why not cry "Shame!" when nations around the world are effectively turned into dictatorships? (China, Russia, Turkey, Hungary, even Poland). And watch your backs, because there's a guy in your wonderful country who seems to think God meant him to have sole charge of it.
So be socialists, stand up for "your tired, your poor, Your huddled masses yearning to breathe free..."
5
Not much would probably be accomplished, since we are informed by people like you every day in the media that the majority of Americans do not benefit from the big happy economy.
I guess it would just make the horrendous facts official, and make more cheated people aware of their plight, while the top earners just keep raking in the dough big time.
1
Functional income distribution, or personal income distribution?
In 1963 Chrystia Freeland told us 120% of the economic gains since the recovery of 2008 went to that tiny segment of society that least needed it. The GOP is committed to making sure this continues even if this means the continued erosion of the middle class. This was the focus of the discussion of the CUNY 2013 discussion with Krugman, Freeland and the late Tony Atkinson on Inequality and Growing the Economy where the facts told the story and everyone conceded to factual facts. I do not know how the USA now adapts to alternative facts being part of the discussion especially when their raison d’être is producing alternate facts..
1
@Memphrie et Moi
oops 2013 I have no idea where 1963 came from other than it was a time when I was young.
This is a standard right wing approach to a problem:
Forbid NIH from compiling firearm-related health statistics.
Try to remove study of earth from NASA's mandate to prevent gathering data on climate change.
Reduce monitoring of river flows and chemistry to hide pollution problems.
If we stop gathering data, the problem does not go away.
3
I like the new euphemism, "in the reasonable world" to remind of where we were versus where we are today " in the real world". Maybe that's also why I'm a member of "The Round Earth Society" !
1
A progressive model of minimum wage, that progressively raises the rate depending on the size of a company's minimum wage workforce makes sense. It's a fair and least disruptive way to insure that everyone shares in the economy's growing success as money is distributed more widely into the system. Why is such an idea never discussed?
2
You say: "But here’s the thing: Knowledge is objectively better than ignorance."
I hope you're also for obtaining data on a person's citizenship in the Census. I look forward to your Op-Ed on why having good data on that topic is objectively better than being ignorant about it.
And I'll throw some popcorn into the microwave to sit back and watch all the exploding heads here.
2
We know. Now, when will Krugman ever talk about reform of campaign finance? Is that 'too left wing"? The media ignores that We the People can't compete with big money to influence who benefits or loses in our politics/economy.
Per the GINI Index and a recent UN report, we lag other moderndemocracies in economic equality. They're capitalist, but they don't just hand over to their campaign funding to financial elites. Their political corruption is illegal, while ours is legal, just redefined as free speech by our S. Court.
Most EU countries ban privately financed campaign ads that here manipulate our voters and cost big $. It's our biggest expense. As candidates hustle mega donors, we see the ripple effects---the financiers call the shots, market their candidates, set the norms----democracy is undermined.
Ex Pres Jimmy Carter recently said big money in US politics "violates the essence of what made America a great country….Now it’s just an oligarchy with unlimited political bribery needed to get elected to any office.”
No discussion on the media of an ex president's important statement.
Princeton’s Martin Gilens’ -- “only the desires of the richest are reflected in lawmaking….the average American has a near zero impact on policy.”
NYTimes 2 Aug 2015: “Small Pool of Rich Donors Dominates Election Giving.”
What is the reason our liberal Nobel economist/Conscience of a Liberal ignores one of the biggest causes and solutions to the problems he continually laments?
3
@Meredith - Trump won without spending much. If you limit campaign financing, you may end up turning power over to loudmouth celebrities, whose every word is reported far and wide.
I get it. What? The importance of research and surveys and analyzing data, however once that is done (and that takes years or forever) then the debate starts on what to do about it and nothing gets done because the various experts can't agree on nuttin'; not even the validity of the results of the study. In the meantime ........... time ........ passes ....., and people's lives are still stuck in whatever precarious situation they were in before all the studies began. Point being, we can institute simple common sense things right now. Two are- Pay people more money. Get rid of health insurance companies.
The case on what to do about carbon dioxide is the same. Studies, then talk, then Don't Do Nothing, while the earth and its people suffer. The solution to this one is even easier. Get off fossil fuels. There is a whole world of jobs waiting for us in renewal energy.
Something that so annoys me- Often, people comment on issues like we are having a discussion in a classroom, with no intention of ever coming up with a suggestion as to what can be done. Let's have a study on that topic.
Good luck, everyone.
1
Every time you try to correct economic inequality in this country, you get the moral crusaders crying that you're trying to steal people's hard-earned money. Never mind that those with the money get to write the rules that enable them to get more and keep more. I guess they've earned the right to buy and keep favorable legislation as well.
4
thanks prof. Krugman, for more golden wisdom that, most probably, will fall on deaf ears ( or ignorant brains).
but still, " they" want to make America great again ?!( with falling middle class income; 270 % increase of income of c e o's; no universal health care; no attention to the marching on global warming and its apparent disastrous effects; etc, etc, etc).
how to do just that ( speaking of " something is fishy in Denmark")- lets have Prof. Krugman write an article about it.
1
The FRED data cited by Krugman shows a cyclic rise and fall of median income up to the Trump era, with no overall recovery since the 1979 drop. Since there is no data shown on this graph before 1979, I am curious as to how median incomes looked prior to this time. Of interest is a drop in median income during the end of the Reagan and Bush I Presidency, a steady recovery during the Clinton era, relative stagnation during Bush II, and a drop during the Great Recession during Obama's first term, with a recovery of median income up to the present time.
The cyclical nature of this data suggests to me, that median income is clearly affected by government policies. Wouldn't it be nice if we push this number higher for a sustained period of time. Better wages and health benefits for the American worker would make us a stronger nation, than dumping more money into defense programs, and tax cuts for the rich.
5
Information and knowledge, is anathema to the GOP!
4
The evolving logical contortions of Mr. Krugman are in some sick way quite enjoyable to watch albeit they are entirely predictable. So now that GDP is growing like it just won't quit (at a level many economists said was not possible in this most developed of economies) it's a useless stat? This follows a Krugman article several months ago that took the position that (now that the economy is booming while Mr. Trump is in office) the president doesn't even have an impact on the economy.
This of course follows his infamous article he published right after the 2016 election wherein he claimed that the election of Trump would cause markets to plunge and never recover. Right around the time Mr. Krugman was issuing these "educated" "predictions" (supposedly in his capacity as an economist), the investment community was considering for the first time what a Trump presidency actually entailed (i.e. lower taxes, less expensive government regulations and an administration focused on growth). The response, the so-called "Trump bump," was both pronounced and immediate: surging investment into US equities, surging confidence by the US consumer, and, in turn, surging economic growth. Next up, watch how Mr. Krugman deals with the pending fact of global trade deals that are more favorable to the US and the resulting GDP growth caused thereby. I could probably write the article for you in advance.
2
In the recent past, CEO's would not dare taking 200% more in pay than the line worker. Having a sense of shame for these types behaviors no longer exists.
Every empire in past has followed the same downward path. We are not immune. The phrase "what would your mother say" is no longer operative.
4
As an economist, I like this proposal.
The Census Bureau already produces an interesting annual report called "Income and Poverty in the United States," which documents changes in inequality of family income. It is definitely worth reading. However, as Piketty and many others have pointed out, this document is a little weak on top incomes because it is based only on the Current Population Survey. The Bureau of Economic Analysis could presumably use more data sources and get better estimates of top incomes.
2
Wouldn't the clarity that comes from such knowledge be wonderful? If all Americans had access to such a detailed examination of GDP stats, maybe we'd better understand why our 30 year old kids can't buy any piece of real estate or get out from under their education loans before they're middle aged, if then. In spite of the tax handouts the T Administration gave to buy our favor, I have been looking around for real improvements in the economic experience of the poor and middle class. I don't see them. I don't expect them. And I resent being kept in the dark about why this is the case.
8
Krugman posits that the Schumer bill would determine "where the money goes" i.e., where the growth in GDP goes -- as if a giant check in the amount of the annual GDP arrives at the beginning of the year and the government and or capitalist oligarchs or whoever Krugman's villain de jour is decides where it all goes -- as if the collective results of individual efforts to earn varying amounts of income have nothing to do with it.
2
It's time to look closely at the events that led to the Great Depression that lasted from 1929 to 1941. The thought of it should send a shutter through every American's body.
This administration is repeating the identical mistakes.
The tax rate on America's wealthiest individuals was reduced to 25 percent. The Smoot-Hawley Tariff Act of 1930 raised import taxes on some 20,000 foreign goods. The taxes were the some of the highest ever levied by the U.S government, and foreign nations began to take retaliatory measures. The amount of U.S. imports and exports was cut in half.
In 1929, the government began to increase interest rates. Interest rates rose from 3.5 percent to 5 percent, leading some historians to claim this as a reason for the recession of August 1929. The government also did not stabilize or increase the money supply during the Great Depression. The money supply fell by 30 percent between 1929 and 1933.
The roaring 20s.
http://great-depression-facts.com/cause-of-the-depression/103/
3
@sandcanyongal
Thanks; an apt reminder that those who fail to learn from history are doomed to repeat it. But, as usual there are others, US, who are doomed to feel the most pernicious effects.
3
Our “representatives” have simply sold us out to the highest bidders.
If our government was functioning correctly, those who do so would be charged with betraying their oath of office, and would receive a suitable sentence.
Our government is now control of the People, by the rich, and for the rich.
Can we please start calling a spade a spade?
Our “representatives” don’t represent us. They only represent the rich.
5
@Grove Oaths to God are as fake as the people who take them.
GOP socialism includes $800 million for Trump's corporations, fossil fuel subsidies, farm subsidies including the recent 12 billion bailout, corporate bailouts—remember 2008, huge tax relief for relocating headquarters or production lines, transferring tax revenues from blue states to red states…etc.
The GOP OK with those. At least with the Dems, everyone would have healthcare. And their base doesn't care as they are the beneficiaries in most cases.
5
The future of America, unfortunately, is pretty well set in stone.
The future belongs to corporations and the richest people in the country.
All policy is determined by their wants.
“You will have a Republic, if you can keep it.”
- Benjamin Franklin
Epitaph of America:
“I’m just not interested in politics”
- the American voter
11
Yes, you are an economist and you and your fellow economists have been spewing these numbers for a long long time. Something also indicates that you and your fellow economists have been handsomely compensated for spewing these numbers.
Maybe they can print the names.
Maybe they can print to methodology of government representatives net worth.
Maybe they can print the salaries and compensation of economists.
Maybe they can print the results of tax payer government grants to higher education professors or studies conducted by economists.
BTW-what is the tax exemption benefit for MIT-Harvard-Yale worth over the last 75-100 years? maybe that can be published also.
Dripping with sarcasm.
2
Krugman began his 8/2 Op-Ed with the quip about fascism as a natural path.
Within this, we can observe two trends. One is a trend in government. The other is popular support.
Throughout recorded history, the norm for nations is that power and wealth concentrate over time. Before it is powerful, a region doing something right and prospering grows in wealth and maybe size. The norm is that power concentrates over time, which eventually leads to unresponsiveness, instability, and then significant decline or collapse.
Our nation’s founders knew that. Today’s politicians take pride in knowing almost nothing. The Kochs and their allies have promoted the concentration by paving our nation over in Astroturf politics. Now our politicians are Koch-bots who speak only in Fox “News” talking points. It is Murdoch and the Kochs who hacked democracy. Putie is just following their lead.
Thus the majority are usually being shafted by the norm, which is concentration. They get tired of centrist leadership that muddles through. Occasionally they find a demagogue to support, so we observe a rise in support for fascism. The tyrant always makes things worse, but most don’t know that until it’s too late.
The Progressive and New Deal agenda brought an unprecedented period of stability and middle class and black middle class growth. What destroyed that was Reaganomics, part of global a neoliberal e-con-game. That is the current trend & inequality. Current popularity for tyrants is a consequence.
4
@Harry Thorn
Well said, @Harry Thorn. A lot of people who are potential voters should read this and take it to heart. Time to "care about politics."
2
Krugman began his 8/28 Op-Ed with the quip about fascism as a natural path.
Within this we can observe two trends. One is a trend in government. The other is popular support.
Throughout recorded history, the norm for nations is that power and wealth concentrate over time. Before it is powerful, a region doing something right and prospering grows in wealth and maybe size. The norm is that power concentrates over time, which eventually leads to unresponsiveness, instability, and then significant decline or collapse.
Our nation’s founders knew that. Today’s politicians take pride in knowing almost nothing. The Kochs and their allies have promoted the concentration by paving our nation over in Astroturf politics. Now our politicians are Koch-bots who speak only in Fox “News” talking points. It is Murdoch and the Kochs who hacked democracy. Putie is just following their lead.
Thus the majority are usually being shafted by the norm, which is concentration. They get tired of centrist leadership that muddles through. Occasionally they find a demagogue to support, so we observe a rise in support for fascism. The tyrant always makes things worse, but most don’t know that until it’s too late.
The Progressive & New Deal agenda brought an unprecedented period of stability and middle class and black middle class growth. What destroyed that was Reaganomics, part of a global neoliberal e-con-game.
That is the current trend & inequality. Current popularity for tyrants is a consequence.
A university classmate of South African citizenship made the point of this piece to a US State Department official at a public meeting in 1965.
1
Poor Mr. Krugman. He misses writing flowery columns praising Obama's stagnant 2% growth quarters. What's a socialist to do when he see more jobs than un-employed, with a robust 4% growth economy, increasing wages and a booming stock market? Time for a continuing education course in economics. Google "capitalism" on youtube, soak it in, and get back to us next week.
4
@Steve
Well Steve, what increasing wages are you seeing? And, while we are at it: who does the booming stock market benefit? Are the average workers getting any benefit? Are the average workers seeing any benefit from the so-called booming stock market; or, are the workers merely the lowest rung of the capitalism ladder and not expected to share in the booming stock market or economy. Perhaps you need a course in capitalism. What wage increases have some from the tax cut bill? The rich are getting richer; no one else is.
3
@Steve "increasing wages"
Not in real dollars.
With inflation ramping up again, real wages are down for the year...
...so says your "President" Trump's own BLS.
Or are they all "deep state" Democratic plants, out to destroy your fearless leader?
1
Again, thank you, PK. Clearly the message of Pikety’s book on Capital hasn’t moved far from places with bookshelves. The forging of lies is now high art. We have serious people all over the media telling us that what matters is public opinion. Major example: the Muller inquiry. As if justice and truth are the products of polls of dubious design and purpose. In greater detail: Trump told an interviewer, Lester Holt, certain things about the president’s attitudes to Mueller. Among other things, Trump said “You know, this Russia thing with Trump and Russia is a made-up story, it's an excuse by the Democrats for having lost an election that they should've won…" Now, wanting to disown that interview, Trump claims that he was misrepresented by the media who “fudged the tape.” Note, he didn’t say “I think…” or “I accuse…” In an attack on CNN and MSNBC, he slyly invoked unnamed third parties. He tweeted: “When Lester Holt got caught fudging my tape on Russia, they were hurt badly!” Got caught? By whom? But the faithful will not ask such questions. They will believe the father of lies to the bitter end, and Krugman, Pikety, Rhett, and Johnson might as well wear sandwich boards and walk across America.
3
While "knowledge is objectively better than ignorance" in 21st century America ignorance is politically better than knowledge.
Examples abound. You cite economics, I'll cite climate change.
People who don't work with numbers every day may not appreciate the notion that "numbers don't have to be perfect...to be useful". First-order estimates or "guess-timates" set you on the path to knowledge. You have to start somewhere.
2
The time comes now for my total v(or b)anishment. I’ve been recently banned by NYT with 50 % regarding my posting rate, I sensed. My seemingly incohent free style, which in fact has been holding an integrity at a very high degree for the purpose, obviously drew neither attention nor critical thoughts. Good bye, everyone. Mr. Krugman, I liked you and your columns.
@Ignorantia Asseraciones - Huh?
1
Mr. Krugman, do you realize that you are saying net changes of the Gross Domestic Product is insignificant. It’s like saying, a Corporation’s nets changes of total revenue is insignificant.
I forgot, you have zero idea what it means to run a corporation and you are passing judgment on the economy. Save your comments for your classrooms.
2
@ Mike K, do you realise that at no point in this piece does Mr Krugman says that "net changes to the GDP are insignificant"? He is actually saying he doesn't believe GDP is a useless measure.
(As an aside, the revenue of a company is a very well defined number, as any accountant will tell you, whereas GDP is a statistical measure derived from indicators, and is much less precise)
And "knowing what it means to run a corporation" has exactly no correlation with understanding the economics of a nation. To make a crude analogy, it would be like saying that you need to be a mechanics to understand road design and traffic optimisation.
So please save your comments for... well actually, don't save them. Thank you
3
Hey Paul...what ever happened to the big economic collapse you predicted after the 2016 election?
3
@NYcpol, if you had a minimum of honesty, you would acknowledge that Mr Krugman actually wrote a piece very shortly after the one where he predicted "economic collapse" where he recognised that his analysis was driven too much by emotions, and that the collapse may not come, even though he flagged some dangers that Trump may pose longer term. But of course you don't. Admitting one's mistakes is actually the mark of intellectual honesty, but that concept has been lost for so long on the republicans (and Trump has obviously never heard of it)
3
@Alexis Duvernay
There was no intellectual honesty whatsoever in Krugman's acknowledgment. He made a prediction, based on the market, which was at the time plunging, which in turn supported the notion that markets, in their infinite wisdom, knew that a president Trump was an economic disaster. Then the market realized it had things all wrong and started booming. At that time the narrative was proven false. It's like if I were to predict that a certain team will win a game and they lose it, and I admit that my prediction was wrong; is that what passes for intellectual honesty these days?
1
@Bill
Well, yes. Admitting you are wrong when you are wrong is intellectual honesty, and that is more than many are willing to do these days, particularly on the republican side (and Trump is the worse. has he ever admitted to being wrong about anything?). Secondly, Krugman is very much aware than the market's "infinite wisdom" is actually very much finite. It seems to me that he wrongly believed than "the market" (which let's remember it, is by nature very short sighted) would enter a panic mode after the election, based on the alarming statements made by the new POTUS and his obvious incompetence. (let's remember he questioned if the US should actually repay the national debt during the campaign). The fact is that "the market" realised, rightly until now, that the power of said POTUS was actually limited (maybe especially given his incompetence) and that he was most probably just going to implement an orthodox republican agenda (less tax for the rich) anyway and less regulation (good in the short term, and who cares about the long term). I hope this continues, but let's see what happens with trade going forward (and obviously about global warming, but since its a hoax by the Chinese, who cares?)
From what I can see by way of comments, leftists better start a) reading, reading, reading, and b) figuring out that Paul Krugman's on their side.
And real darn fast.
But I thought rising tides lifts all yachts?
2
you don't explain the new measures, nor does the linked article
Could such an index be calculated based on publicly available information? If so, why assign someone at the NYT to calculate this?
The study would be redundant, the conclusion predictable to anyone paying attention and it will be rebutted with a tweet that has three spelling errors. Knowledge in this area would normally be respected, absorbed and implemented. Knowledge was part of the government's criteria. now the criteria is where the smart people in the White House go to weep. Their is only one class in this White House and it's not "first" it's "low".
68
@Rick Gage I think Krugman is being optimistic: that knowledge will once again be valued in America. Of course, given the trajectory in recent decades and especially the last couple of years, it's optimism that I wouldn't bet on.
1
Krugman wrote:
"Since the 1970s, however, the link between overall growth and individual incomes seems to have been broken for many Americans."
Hmmm. What happened in 1971? Nixon took the USofA OFF of the final remnants of the Gold Standard.
And it has been the Federal Reserve Money Printing ever since.
The Rich have gotten richer and the poor, richer as well. Both the rich and the poor ARE better off. Compared to the rest of the globe.
The Chinese and the other Asian countries send us Real Products and we send them "printed up dollars."
What nonsense. These countries are already wising up. They are currently all trying to figure out how to get rid of transacting in $Dollars.
And then Krugman comes up with:
"we need “distributional national accounts” that track how growth is allocated among different segments of the population."
What Total Progressive Nonsense. What does that even mean? It means, nothing. It is some Progressive Fantasy.
Back in the Real World, people respond to incentives. Personal incentives. Just look at the Blue States response to the latest tax bill, capping the SALT deduction to $10,000. These Blue States are all scrambling around, trying to make state taxes as a "Charitable Contribution." Or whatever. Because you Progressives really DON'T want to pay any more taxes. You just want someone else to pay.
This is totally pathetic.
You Progressives are just hypocrites; how do you even live with yourselves.
1
@Frank
The hypocrisy is from people like you and the red states actually as they pay much less in taxes than they collect in general. So, the blue states fund the red states. If you actually look at the math:
“…Mississippi received $2.13 for every tax dollar the state sent to Washington in 2015, according to the Rockefeller study. West Virginia received $2.07, Kentucky got $1.90 and South Carolina got $1.71.
Meanwhile, New Jersey received 74 cents in federal spending for tax every dollar the state sent to Washington. New York received 81 cents, Connecticut received 82 cents and Massachusetts received 83 cents...”
https://apnews.com/2f83c72de1bd440d92cdbc0d3b6bc08c
And Trump got his $800 million socialist subsidies as well…
2
@Frank "Because you Progressives really DON'T want to pay any more taxes. You just want someone else to pay."
Nonsense.
We're perfectly happy to pay our taxes, in exchange for the services we get -- that's why we all CHOOSE to live in the high-tax, high-services blue states.
What we do NOT like -- and deeply resent -- is having to watch ever more of our taxes get hijacked by the failing low-tax, no-service red states, almost all of which are fed-tax takers.
The only reason many of those states aren't in even deeper penury than they already are (Kansas, Wisconsin, Louisiana, etcetc) is because of the federal revenue overpayments they enjoy, financed by those of us from the productive blue states, which are overwhelmingly fed-tax makers.
It's especially frustrating that what we get in return for our largesse is loathing and insults from those very same hypocrites who are unable and/or unwilling to cover their own costs -- thereby demonstrating that they are actually the biggest "socialist moochers" in our nation.
(And that's without even touching on their hypocritical overdependence on Social Security and Medicare -- but that's a whole 'nother rant.)
1
Last night I watched Paul Krugman discuss this very topic with Piketty's mentor in a discussion with the author of Plutocrats: The Rise of the new Global Super Rich and the Fall of Everyone Else . The discussion's title was Inequality and economic growth. It occurred in 2013 at CUNY.
The three participants made it obvious that they loved and respected each other and above all trusted each other.
I could feel the joy and felt very humble watching three wise and informed people try to understand facts with the help of people they respected. I saw something I had never thought I would ever see a joyous, animated and obviously entertained Paul Krugman.
https://www.youtube.com/watch?v=zAFCaDS4a6Q
2
For whom the economy grows?
For you, the 1%. It grows for thee.
3
I wonder if Dr. Krugman now realizes that people like Bernie Sanders make a lot of sense and that the neoliberalism of people like Hillary Clinton is poison.
4
"Knowledge is objectively better than ignorance." I don't think that you will find this principle either in Mein Kampf or in The Art of the Deal.
3
There are figures available now that show distribution of both household income and household net worth by inclusion percentage categories. More, as Dr. Krugman suggests, would be fine. There also are government-published figures that show projections of future earnings and job openings by vocational category. That includes information on educational and experience requirments.
In my opinion, these data sources are not widely enough explained and taught to high school and college students. Greater awareness of those numbers could both encourage more informed voting, but also affect how young people plan their futures. I fortunately was exposed (as an economics major) to such data. It very much affected my thinking. I wish others the same advantage.
We live -- and most likely shall continue to live --in a capitalist society in a predominantly capitalist world. Planning income is one part of the lifestyle equation. Planning how to acquire some net worth for later life matters very much as well. Some will not want to hear that, but they close their ears at their own peril!
2
Reality has a progressive slant. That's why conservatives don't want people to know what's really going on. If they did, nobody would ever vote Republican again.
3
@Walter "That's why conservatives don't want people to know what's really going on. If they did, nobody would ever vote Republican again."
Nonsense.
The Christianist extremists, our very own talibangelicals, would.
Oh, wait -- you said, "reality."
I withdraw my criticism.
1
When will the Democrats learn that dominating and framing political debates is the first step to winning the argument. In this generation and historically, when elections are the judge the Right has consistently shown that “a lie repeated often enough becomes truth”. The radical right in the United States does not need a “State Ministery of Truth” when the free press dutifully reports their conspiracy theories second hand. If you choose to wrestle an aligator you must play by the aligator’s rules.
2
I find it really interesting that since Donald Trump was elected president everything perceived to be wrong with our society is now a concern. Now we are concerned about inequality of income like it just happened over the last 20 months. Of coarse Chuck Schumer is now asking the question " who benefits from growth". He wasn't concerned during the 8 Obama years or any time during his tenure as a Senator. Only now under President Trump is he and the"esteemed social economist "Dr. K suddenly looking to make everyone equal under the umbrella of an all intrusive big government.
I am a Conservative Constitutionalist registered as an Independent but a small part of me says that maybe these complainers of Capitalism should try Socialism for a while just so we can get a comparison. Of coarse by that time it may be to late to return to Capitalism should you find that Socialism is not what you thought it would be.
Remember that economic equality is fine as long as there is enough money available to pay for all the programs and keep everything even. In other words until you run out of other people's money. The real rub comes into play when at some point you might become really financially successful yourself and you then become the enemy of the state.
Be careful what you ask for. Read Ronald B Duke's comment....Right on the money, and to Ryan the question is , "who pays the lion's share of taxes in America?" It is the top 10% they pay 70 % of the taxes....Bottom 50% pay only 3%.
2
@Fred
Fred, just one quibble: the bottom pay only 3% in taxes because their income/wages are kept so low. If you had a corresponding significant increase in wages and decrease in the wealth accumulation then the tax contribution who not be so imbalanced. This does not require that everyone be economically equal. The wealthy can still be wealthy.
3
It is hard to disagree with this excellent idea. I imagine that it will be roundly attacked as misleading by the high income crowd. Indeed it my require lots of thought so that individuals can use a simple app to find out how they themselves are doing (enter taxable income, state of residence and profession?)
1
The economic history of Socialism is very clear, and quite appalling. Venezuela is a real time experiment, that we can watch with horror and sadness. Capitalism is flawed, but much much better than any alternative system - this is very clear. Those living under the "poverty line" here, are much wealthier than 96% of humans on this planet, and their measured income in most studies does Not include entitlements and transfers and subsidies. Statistics can spin, and so can journalists. Beware of persuasive writing, and learn history.
2
Well, everyone knows that knowledge has a decidedly liberal bent.
I am one who is doing pretty well with some income producing investments in the market, but I'm not doing as well as those who are really benefiting.
If more Americans really knew how much information the republicans keep from them there would not be a republican dogcatcher anywhere in the Nation.
5
The ruling class is beyond any shame of greed and grotesque largesse. Kudlow was pulling the argument that Krugman stated. The economy grew 4% everybody did great.
Next step in the evolution of Krugman: recognizing that GDP growth is a threat to environmental protection, economic sustainability, national security, and international stability. See steadystate.org .
1
With this column, Professor K. is trying to "get ahead" of a momentus announcement coming in the last week of October. Yes, that is the week that the Bureau of Economic Analysis will release the first estimate of third quarter GDP. If this number has a "4" at the front of it, the Professor knows President Trump and the Republicans will be basking in the glow of the best U.S. economy in over a decade just one week before mid term elections. No wonder ol' Paul is nervous.
3
@c smith - but if you look at the Real GDP quarterly information (from Federal Reserve St. Louis) then the current situation isn't bad, but is nowhere near the peak between Q3-2014 and Q2-2015. Three of those quarters exceeded the Q2-2018 Real GDP of 2.9%. That's from data updated on the 29th.
https://fred.stlouisfed.org/graph/?g=8eiT&&utm_source=fred.stlou...
2
Maybe, but does that make his point any less valid? You seem to have missed it.
@John - Not sure if you refer to Krugman's point or C Smith's. If I were a Democrat (I'm not) and running for office, the point would be that the acceleration of money into the pockets of very few has again picked up.
That Paul Ryan boasted the GOP tax plan put and extra $1.50 into a secretary's weekly pay shows exactly how little his party cares about that kind of person.
Several Obama programs, notably Obamacare and the tax the wealthiest kicked in to help with that, had slowed how quickly the wealthiest were sucking up all the money. Our current leadership in the Congress and the White House will have none of that, and are working hard to erase those gains that 90% of the population derived.
I don't know enough about the distributional accounts idea to know if it's good or not, but what's clear is the Republican mantra of "less tax for the wealthy benefits all" is just more of what they've been trickling down on us since the days of Reagan.
2
Though all correct the scale of the suffering caused by inequity isn't communicated successfully here. The author falls prey to the same false equivalencies he has criticized before in this analogy — The worker who has seen his wages fall since 1979 (represents 90% of Americans) The CEO who has seen it rise (less than 3%). Without the constant reminders that ALMOST NO ONE AND CERTAINLY LIKELY NO ONE YOU KNOW has benefited significantly from the enormous economic growth since the neoliberal ascent in globalism began in 1980. This is social injustice on an unknown scale in history. The wages of 200 million highly productive workers for 30 years have been spirited away. Did slaves in the 18th century think of themselves as victims? or were they just so beaten down that they got on with it as best they could? One things for certain, they never got their wages back. If Corporations could find a way to not pay workers at all they certainly would. The new slavery is around the corner as a business model and this may very well be our last chance to revolt — by voting this November.
3
I happen to agree with Krugman; it would be useful to know how the GDP benefits various segments of the society, but it is not for greater knowledge that Krugman makes this suggestion. It is because the GDP is soaring and after saying under Obama that it could not go higher than 2% and after mocking Trump's campaign promise of 3-4%, Krugman now wants to find a way to make the increase seem irrelevant or discriminative. This is the strategy of Trump's enemies: undermine his accomplishments and deny him every success. Use fuzzy language and find double meanings to obscure important points. Krugman's pal in judicial journalism Mr. Toobin is today calling Trump a racist for denouncing Black Bloc Intifada terrorists by falsely claiming them as African-American freedom fighters. He deliberately confuses Black Bloc (black-hooded white anarchists) with BLM militants. Toobin and Krugman want to deny Trump every success and smear him at every turn as an uncaring elitist, an enemy of the proletariat and a racist. This is not journalism; this is yellow journalism.
@David
Before whining about how Trump "enemies" are mean, mean, mean, you might want to have a look at actual quarterly GDP numbers for the last few years. If you did (instead of repeating the talking points of Fox and co) you would see that Q2 14 was 5.1% and Q3 14 was 4.9%, so Trump's "performance" until now is nothing exceptional. Furthermore, if you actually read serious economists once in a while (very much including Mr K), you would realise that short term GDP numbers are not that meaningful and that it's not well understood what generates sustainable growth over the long run. So politicians who boast about short term numbers are mostly bragging about things they don't really control. This is obviously even more true with Trump since reality has no meaning for him. Before the election, unemployment numbers were "rigged" and actual unemployment was "over 35%" but now that he is "in charge", unemployment numbers have magically become real again. (The man lies so much that at this point, anyone rational should assume that what is say is a lie unless proven otherwise). And your comment makes no sense since Krugman talks about a trend that started in the 80's (when Trump was not a politician, but merely in the middle of it's "avoiding STD's is my personal Vietnam phase" (what a great human being) So please spare us the comments about "yellow journalism". Thank you
3
@David, not sure we read the same article. Where does Krugman trash Trump here? Seems like it might be useful for everyone concerned to know which groups are being helped by the economy and which aren't. Krugman even notes that more nuanced information shows that the middle class hasn't been punished quite as severely as is sometimes assumed by those on the left. And what if the data he's calling for shows that the wealthy aren't the only ones benefiting from the current economy? That's probably not what we'll see, but it would be worth finding out. I see Trump get smeared in the media all the time (often for what he brings on himself), but this article is about something else--namely, how we need a better account of the economy than the GDP gives us.
3
Republicans have been "Red baiting" for decades. It is one of their most effective tricks to manipulate the rubes who haven't a clue what "socialism" or "Communism" even means. They were simply taught that it was "bad" when they were ducking under their schoolroom desks. So any time the GOP doesn't like something, like opposition to tax cuts for billionaires, they just yell "socialist" and the masses fall in line in knee-jerk fashion.
Oh but wait. Isn't our beloved Trump friend Putin a Communist? Boing! The MAGA-heads might explode if they think too hard about this.
4
@William O, Beeman
Putin is actually a murderer who used to be a Communist , since he is effectively a dictator no party names or ideologies needed .
Page 904 of the CIA WORLD FACTBOOK 2017 states "Since 1975 practically all of the gains in household income have gone to the top 20% of households."
4
"Figures never lie, but liars figure." The Trump motto.
3
"Knowledge is objectively better than ignorance." Prove it. It seems to me that in Trump World, knowledge is the enemy: knowledge of conspiracy with Russian military intelligence to pervert free and fair elections, to launder money and commit bank fraud, to trump up trade surpluses and start tariff wars, to get a little butter on your tater with a working girl and then try to convince everybody that you were at bible study group.
Yup, that knowledge deal ain't lookin' too good these days: it gets the populace all riled up about global warming, stagnant wages (for people who work for wages instead of capital gains), about healthcare that they can't afford and don't got - hey, just think positive about your malignant melanoma and you'll be way OK...for a while. Then you won't have to worry about your stagnant wages.
1
Fascinating, that the same statistics Paul uses to justify his opinions become suspicious when they suggest he has it all wrong.....
1
First, the economy couldn’t ever grow more than 2% due to secular stagnation. Let’s give Obama a pass.
Next, Trump will tank the economy. We will enter into a depression forever. Sell, sell, sell!!!
Third, economy grows like it hasn’t in over a decade, but this is no good either.
It sure is hard to see the “logic” in a statist progs thinking!
@Steve MD But most Americans in the so-called Middle and Working Classes (90+% of the population) don't make enough money to pay for healthcare, daycare, college, and simultaneously save much for retirement. All those things are significantly subsidized in the other democracies. What's the statistic?...something like 75% of Americans have less that $3,000 in savings? But a nice made-in-China pitchfork costs only $39.95.
2
@Cowboy Marine
No offense, but as one in the middle class, working as two teachers in the south at the public school level. We have lived modestly, put away for retirement sent a kid to college and still have a rainy day fund. I have found its about priorities and the decisions we make.
1
GDP trickle down effect was laid bare by a recent letter I never saw:
From: White House
To: All wildland firefighters on the firelines this summer
No raise for you!
Oh, and snow has arrived so you're fired for the season. So go home, rest your bones, take care of those injuries, pay for your healthcare (if you can), buy new boots, and if you're fit and healthy in spring we might take you back to prostitute your bodies again for the national good; but only if you're good, though, and prostrate yourself to the great leader.
But no raise for you!
Thank you for your service.
Your wonderful, bestest ever president,
DT
3
I read today that your superman trump
with his divine power cancelled single handedly your federal civil servants future pay raise and cost of living adjustment. Also mr.superman trump is acting like a devine being ignoring the court order preserving union rights for your federal civil servants on the ground that your government could not afford it all the while affording the 1.5 trillion billionaires and billionaire bussiness tax cut. (Other miracles he worked today in addition to threatening Canada: take over running the FBI and the Federal Reserve...they are not cooperating...incited the murder of people engaged in the production of news.)
I have a message for mr.trump. Civil servants have families, friends, and neighbours who will not be getting a positive recommendation about republicans. Now some of these shafted civil servants could be evangelics however my bet is some of them may prioritise their pocket books over bible thumping, hymn singing, holy rolling, and listening to some smarmy crook telling them to vote for trump.
Now my experience is Canadian. My father was a federal civil servant...they were not well paid. He worked for the government from 1937...he was rejected from enlisting in WWII because he had a heart murmur...no bone spurs...until mandatory retirement at 65. I GREW UP WITH: THE COUNTRY DOES NOT DO WELL UNDER THE CONSERVATIVES=REPUBLICANS. Most of the Federal Civil Servants I have met vote Liberal=
Democrats. Hopefully yours follow suit.
1
I have two questions. First, Why wasn’t Professor Krugman’s proposed legislation introduced when President Obama enjoyed full political control of both houses of Congress, including a filibuster-proof majority in the senate? Why now, and not then? And second, what would we do with such information? Adopt further redistributionist strategies? Pass legal limits on CEO compensation? Tax capital gains even further and send a check to every individual who votes for Democrats? Hire President Maduro as a consultant? The mind reels.
3
At the root of the problem is the fact that 70% of senate is controlled by roughly 30% of population. Twelve states with 24 senators have a combined population of less than Ca.That is how we get Gorsch and Kavanaugh---which drives policy that rewards wealth instead of work and family. Until that changes we will continue to have a supreme court that thwarts the will of the majority at every turn---gun control; abortion; $$ in elections; on and on.
This is how North Dakota gets $1.40 back from DC for every $$$ sent and NYS gets .70.
The tax cuts---redistribution to states---all economic warfare versus the population states.
These 15 population states represent the vast economic output of the nation and therefore are funding this economic attack on themselves. Governors and senators---Cuomo / Schumer-- need to stand up and stop fighting over scraps. Stop compromising and demand a fair share---call out the welfare program for these states who bravely talk about conservative values. A good place to start----the $12B for farm industry to offset the administration's tariff mess. Yes we are asked to share their pain while they inflict pain on us. Nonsense. In return for $12B---give us SALT relief.
Impeachment sounds good but until the senate is reformed nothing will change.
The pro-life crowd doesn't support life when they cut EPA programs to provide the most basic human need---clean water.
236
@DB I could not agree more. You are so right on the redistribution to states. That has been driving me crazy for years. I do wish the NYTimes would do a column about how the taxes are broken-down and how unfair the distribution is. The successful (democratic) states have to beg for money for infrastructure, etc. while the conservative states do not contribute a thing and continually have their hands out for more! Enough.
4
@DB Unfortunately, it would require a constitutional amendment to fix the Senate. And what would result? The only thing that really makes sense along these lines is proportional representation in the Senate: every state gets at least one, California gets how many, 15? Given the nature of politics in this country these days, a const.'t convention would be a bad and possibly disastrous idea. Let the alt-right and Evangelicals get a hold of that, who knows. Maybe a Trump could be president for life and religion in schools would be mandatory.
@DB
Two major flaws in the US constitution that are discordant to democracy: The way US Supreme Court is structured - a single hypothetical justice, who's temperamental & not very balanced can decide one day such & such a law is unconstitutional, and on another day can decide an identical law or even the same law is not unconstitutional, leaving the entire nation confused with no easy way out. Amending the constitution or impeaching such a justice is extremely difficult.
The other one is how the US Senate is structured, as you describe.
To rectify these flaws, perhaps a constitutional convention may have to be convened to revise the constitution. But that maybe next to impossible.
1
I’d like to dispel a conventional notion that there are meaningful and substantial differences among the red and blue family members who are distinguished only by their particular methods they use farming. Down the river, one farmer likes to push for more milking and less hay. The other farmer thinks a bit more cud-chewing time and petting will make things run more smoothly. Despite these differences, we can tell what unites the family by what they do not debate or fight over: one way or the other, they are going to run the farm and milk the goats.
Chuck Schumer is not as reckless as his colleagues on the right, and wants to make sure he and his elites moderate the amount of capital they sluice off of our backs "so that each of us may live free of the trampling and the roar of a bewildered herd," as Walter Lippmann said.
1
"Knowledge is objectively better than ignorance." Not, of course, in the make-believe, "Truth is not truth" world of the current GOP dominated by You know Who (Think proud Ignoramus in Chief). We might get these new sources of information starting in January of 2019 but certainly not before.
3
"Knowledge is objectively better than ignorance"
The GOP, the Right and Trump do not agree with this idea. In fact, great efforts are made to obfuscate facts, erase distinctions that enable clear and critical thinking and denigrate expertise. And this is one of important ways the great totalitarian regimes of Stalin's USSR and Nazi Germany tried to control their people.
Remember Imhofe scoffing at global warming because it snowed in Washington DC while displaying a snowball on the floor of the Senate. It's winter somewhere so Earth can't be getting warmer. Either Imhofe is a stupid, obtuse man or he is trying to mislead. In either case, he is not interested in the truth. He is interested in maintaining and extending power.
This is the kind of thinking that culminates in Trump denying that he told Lester Holt why he fired Comey when we can all see it on video. People have been prepared to accept this sort of direction because their ability has been damaged (or never cultivated).
3
"Knowledge is objectively better than ignorance."
And you think you can convince "conservatives" of that? Paul, you are ADORABLE!
4
Good idea.
1
Well, for starters one already can readily look at real income for the Joe and Josephina right in the middle of the income distribution, at real household median income on at least on an annual basis -- and why not soon per quarter?
Here you are (with a comparison to real percapita prodict:
https://fredblog.stlouisfed.org/2016/12/the-puzzle-of-real-median-househ... income/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog
"Knowledge is objectively better than ignorance. "
Of course, it is. But try telling that to the information-free, willfully-ignorant Republicans.
6
Any federal workers who are trump supporters???Better have another look at your president.Because of the tax breaks for the rich, the deficit has blown up so now your promised increase in salary has been nullified by your corrupt president.This increase is years overdue and now you'll never see it..next time vote in your interest rather on the promises of a lowlife con man.
6
seems like you and your NY pal Schumer have been colluding. Have you?
There are two little dirty secrets that both sides think are right and want to fight for.
The right thinks that there must be fear and pressure to motivate us to want to get ahead - get that better education, that better job, and make more money. They wish to reward those who have jumped through the most hoops, and, by extension, damned be the rest of us. They argue that it is only fair to do things this way, in order to provide greater benefit for society, by strving to promote big rewards in terms of salaries and tax benefits, as in the recent tax law. It might sound reasonable, but it overlooks standards of decency in life quality. This side admires "greed is good" thinking.
The left thinks that one should be able to avoid being poor with all the resulting difficulties that come as a result of being on the edge. After all, that truck driver, that nursing home worker, that jackhammer operator, work hard and don't deserve to be poor. At least some tax progressiveness, at least some adjustment for fairness, is needed to achieve this. The capitalist argument that their skills, or lack thereof, bring about their lower pay overlooks the benefits they provide to society.
Trump claims he is a populist, representing the concerns the left has articulated, but in reality, he doesn't. He just stole their votes as he parlayed his outsider status with a faux populism and racist/anti-immigration rhetoric to salve the wounds of the struggling poor and middle class workers.
5
Please ignore this comment, I just love your comments section and just studying the UX / UI . Sorry for the hassle
1
Socialist!
sigh. why does this hack keep on writing about the trump economy? everything he has predicted so far has been utterly wrong. when the obama stimulus didnt work, he complained... it should have been double. in other words, the man can never be proven wrong. the man is not writing as an economics professor. he writes as a hack, and it's boring. krugman is like sean hannity. what a waste of talent. i havent read a brutally honest, unbiased economic analysis from this guy in many years.
2
To recycle a saying I read applying to Devin Nunes, nobody's asking Rick Santorum to bring the potato salad to the Mensa picnic. He's a bagman.
1
The better classification of data in published reports as distributional accounts, as you suggest, would just be another column of "alternative facts" to be wadded up and trashed, like so many others today.
The lack of fairness in our society (or inequality) is an old reality for the middle-class.
It is where we live and how we live every day.
Taxes seen as investment- not punishment- truly proportional to clear net income, are an anathema to most of the wealthy and the corporations.
We can spend our time more profitably searching for that oft described snowball in hell, than to expect change here.
Hell would have to be heaven, an heaven hell.
Like global warming, who believes in that stuff anyway?
But keep digging Mr. Krugman. You are in the right hole.
1
oh god Paul
havent you been shown to be ignorant enough?
40% dow gain
everyone working
everyone happy
MSM MELTS
1
@Loy
By focusing on the DOW as the sole measure of economic strength, you just proved Mr. Krugmans point. The stock market is a measure of how much excess wealth the oligarchs can sluice off of our backs, and is therefore a measure of how bad the economy is doing for those in the non-investment class, a huge population.
2
phenomenal article. At last the Silent (under Trump) Senator Schumer kicks into action. the Distributional bill is a GREAT idea. But take a look at piketty's latest final draft reasearch paper: as of 2014 the bottom 50% in America get only 19% of the GDP. This kind of info NEVER published by red state hubristic types. red states suck subsidies far in excess of their populations.
Economy grows for Top 1%.
Middle class pays higher taxes because of Trump.
Top 1% received a windfall by Trump tax cut.
Top 1% will inherit their vastly increased wealth to their heirs, generation after generation.
Idiots are we the middle class. We shall live a deprived and hard life through all generations.
American dream? What American dream?
111
@Ryan
Where is your info coming from?
Here is mine - about 65 percent of taxpayers will receive a tax cut in 2018, averaging $2,200 from the new law’s individual provisions, while 6 percent will receive an increase of about $2,800, according to estimates from the Tax Policy Center.
1
@Ryan, if there is no dream why why why so many moving the US? Because the dream is alive, despite the spin from skeptics, and it's much much better here than elsewhere.
1
@Ryan "Middle class pays higher taxes because of Trump."
Nonsense UNLESS you live n NY, CA and other Dem dominated states who can no longer deduct their outrageous state taxes.
We in Arizona got a very welcome pay increase
1
How did C.E.O. earnings grow at ten times the rate of the earnings of workers? Board members will argue that they had to pay more in order to hire the best leaders, but this accounts for only each individual hire. It was a system-wide phenomenon, with each company feeling forced to outbid competing offers in a dizzying upward spiral.
Rather there was a spirit abroad of the need for GROWTH at all costs, as each company tried to expand its market share, and to defeat its competition before it was itself defeated. The lust for bigness, even monopoly, was abroad, and paying C.E.O.'s who promised to deliver this was the order of the day. If a company already had a proven performer, then it sweetened his (almost always his) income to whatever it took to keep him.
Also, the fact that capital gains were taxed at half the rate of salary made it useful to compensate executives in stock futures. The C.E.O. was thereby rewarded for driving up the company's stock value, and the cost to the employer was off the books. The recent rash of stock buy-backs helps drive the value of stocks up further, and the C.E.O.'s income with it.
The problem is systemic. No one person or company is responsible, nor can any opt out of the system. It's a result of the capitalist ideology of deregulating business (except when regulation favors business) and can be cured only by reinstating anti-monopolistic laws and enforcing them, along with more realistic levels of taxation, especially on capital gains.
1
Non-Compete Clauses are I think a major reason for the failure of wages to rise and thus be shared more fairly. For example, in my town a local tire shop has a non-compete that prevents a mechanic from working or opening a mechanic business within 50 miles for 2 years. This let's the shop basically get a mechanic to do anything and accept any wage because losing their job would require them to move or drive at least an extra 100 miles a day to get another job as a mechanic or open their own shop.
2
Please correct the fundamental precept of this discourse. The Republican tax changes were not "TAX CUTS" but "TAX DEFERMENTS"! At some point in the near future we are going to have to pay for this and that will be sooner than later as the current increases to the national debt continue to increase we are left with borrowing more (and that will end soon as this debt issue will lower the value of the US dollar) and going back to the LBJ approach and simply having the Feds take the current Venezuelan approach and just print more money. Now, how would you feel if the US inflation rate were to be 1000%. Get ready for it will happen sooner if Trump keeps cutting special deals where the rich pay less in taxes than the poor.
2
I suppose an easy and easily understood way would be to publish a "99% GDP". That would be the national income without the 1% highest income earners.
It would thus not be a literal "GDP", but the designation could be chosen because of the way the GDP is interpreted by laymen (especially in the news media and political commentary).
A publication of a "99% GDP", complete with "99% GDP" growth figures and "99% GDP" of other OECD countries for comparison would be an eye-opener.
2
there should be little doubt that the vastly increased corporate concentration is responsible for unequal wealth and income distribution.
why has corporate concentration increased so much in the last generation? economists (many "for hire" by politicians) played a significant role in invalidating the policing of the free market--unwinding antitrust rules that for preceding generations had helped our country's middle class grow.
so, are economists generally "waking up" to the importance of antitrust policing? or are their concerns still much too narrowly focused?
if concentration to monopoly power tends to increase societal wealth in the aggregate, will economists now focus more on the distribution of that wealth and the relationship between equitable wealth/income distribution and future societal health?
1
To be honest I think we have to accept the fact that the economy is doing pretty well. Sure, the poor have been left behind more than other recessions and recoveries, but wages are increasing and things are generally improving.
I say this because rather than hedging all the good economic news headlines, the left should just accept the fact that it's possible to have the worst president ever and a generally corrupt political party in control, but not see the economy doing well.
2
Doesn't this data exist?
Each quarter, every business in America with a payroll submits a 941 form. It includes number of employees and payroll split out by total payroll, FICA payroll and Medicare payroll.
Tracking payroll increases should be pretty straight forward.
1
Tax cuts for the wealthy in recent history have never done anything for the economy. The top rate was 90 percent after two world wars. Yet the 50s and 60s were a golden age for average americans. Homes, cars and gas were cheap. Kennedy and johnson dropped the top rate to 70 percent. Reagan dropped it to 39. The gdp bounced up but back down to 2 percent within 5 years. Reagan and dubya cut taxes in 1986 and 2003. The gdp dropped to negative in a few years. Dubya’s tax cut caused the 2008 recession. The net effect of all the tax cuts since 1980 is the rich getting richer, the poor poorer, middle class stagnation and the ultrawealthy getting incredibly wealthier.
3
This op-ed underscores the fallacy of relying on GDP as a measure of economic health or sustainable growth. In the US, GDP includes the Disease Industry, a.k.a. Health Care--doctors and other "providers," hospitals, pharmaceutical, insurance, academia--is the fastest growing segment of our "economy" which accounts for a massive number of "jobs" and revenues. Yet simultaneously the growth of the Disease Industry is producing the most destructive wage-earning effects on the middle class through lack of affordability and suppression of wage growth as more payments to workers are diverted from wages to pay for more disease care 'benefits.'
As America continues to get fatter, sicker, lazier and stupider (not just the Trump base and the party of 'personal responsibility'), and as long as there is no personal financial incentive to be healthy, demand for Disease Care will continue to skyrocket out of control. As a result, either prices will continue to go up, or as ineffective price controls ("socialism" known as Medicare, VA, workers' comp) are legislated, the quality and value will go down. Meanwhile, the US government props up or depends on tax revenues from all the industries that create demand for Disease Care--cattle ranching, dairy, poultry, animal feed and other "agriculture"; tobacco and alcohol; Medicare, VA, Medicaid; etc.
Neither political party, and certainly not the Disease Industry, wants to shake up the status quo.
1
I await a 21st Century version off The Great Gatsby." OR Trollope's "The Way We Live Now" with the real tragedy being that it would not be satire. We are living in a nightmare.
2
The economy grows for the those that are lucky enough to have received a high quality education and know how to play the wealth accumulation game and their descendants who don’t have to know anything except how to maintain what they were given.
1
My humble suggestion: Our best economists, including Professor Krugman, construct a pie chart that divvies up all the factors responsible for wage stagnation since 1979. Then publish it on the front page of the NYT for the next 10 years so Republicans can't continue to mislead the American people about it.
1
"The G.O.P.'s basic position is that what you don't know can't hurt it."
Krugman's succinct line is true not only regarding the national distribution of income and wealth, but also data in other areas like gunshot injuries, environmental degradation, campaign spending...
For example, when the Republican congress forbids the Centers for Disease Control and Prevention (CDC) to gather data on gunshot injuries -- outlawing knowledge and mandating national ignorance, for the benefit of gun manufacturers and marketers.
You go, Paul!
3
For the republicans in Congress, ignorance is bliss.
Both for controlling how they legislate in Congress ( What’s global warming? ).
And for hoodwinking their voting constituents, who have so little sense that they keep putting republicans back in office.
Which is how the wealthy owners of the republican party like it.
1
The sudden faux interest and concern for "inequality" on the part of Chuck Schumer is laughable. The masses of working class citizens don't need confirmation from any bill of just how much their quality of life has been wiped out by both parties and their total acquiescence to corporations and the Billionaire Boys Club of America for the last 40 years.
3
aw, get real, doc: the reason a top CEO makes 270 times as much money as a typical employee is that he is 500 times more valuable to the organization and as a human being and therefore is vastly underpaid.
go to any country club, not only Mar-a-Largo, and just ask them. you'll get an earful of superiority, I'm sure.
by impoverishing the workfrce, they're helping to keep inflation down, which is just what you want if you already have a juicy nest egg and don't want it shrinking.
so, God bless them, every one.
"There was a time when asking who benefits from economic growth didn’t seem urgent.."
Yeah, it was called the Obama Administration.
Trump's "I am the only one who will fix your problems" president is an insult to his supporters and his foes and makes Americans look crazy. A self claimed billionaire con man is going to help middle class and poor benefit from his economic policies! The economic boom (more tax cuts, killing of Obamacare) is an example of the constant arrangement by the rich for the richest of the rich to protect them make them even richer. What America has wanted for more than 5 decades is universal healthcare, free education, living wages and a government that works in favor of the citizenry. The rich and corporations do not have the solutions the voters do.
3
Knowledge is objectively better than ignorance… knowing who actually benefits from economic growth is really, truly important. Beautifully said!
Common man is not interested in GDP, exchange rate, money supply etc but interested in index of happiness not something governments publish from time to time.
Tagore on fallacy of GDP " We have for over a century been dragged by the prosperous West behind its chariot, choked by the dust, deafened by the noise, humbled by our own helplessness, and overwhelmed by the speed. We agreed to acknowledge that this chariot-drive was progress, and the progress was civilization. If we ever ventured to ask, ‘progress towards what, and progress for whom’, it was considered to be peculiarly and ridiculously oriental to entertain such ideas about the absoluteness of progress. Of late a voice has come to us to take count not only of the scientific perfection of the chariot but the depth of the ditches lying on its path".
UNDP recognizes that GDP growth is meaningless, leading to:
• Jobless growth- the overall economy grows but does not expand opportunities for employment.
• Ruthless growth— fruits of economic growth mostly benefit the rich.
• Voiceless growth—where growth in the economy has not been accompanied by an extension of democracy or empowerment.
• Rootless growth—where growth causes people’s cultural identity to wither.
• Futureless growth—where the present generation squanders resources needed for the future generation.
Nothing will change until the party of Trump and its corrupt foreign and domestic billionaire funders and operatives are driven out of power. Call them kleptocrats, plutocrats, oligarchs or just plain thieves - they and the layer of fixers who serve them do not care one whit about those outside their tiny, destructive bubble of greed and self-dealing.
Democrats aren’t perfect, but at least they embrace policies that might help the vast majority of us. They want to preserve Social Security and Medicare and affordable health care, for starts.
Net net: November 6, 2018: Vote 100% for Democrats. Help push the pause button on the destructive reign of King Trump and his court of the corrupt.
1
The Right, except the elites, still holds onto the notion that through hard work and persistence, any man or woman can achieve success in America. And indeed, they have seen Jeff Bezos and Elon Musk come out of left field with their inventions/businesses. But they neglect to take into account the number of decades whereby legislation and lobbying have stripped them of any and all economic power. Somehow, they chose to ignore this salient fact and instead, share their wrath against the poor immigrants seeking a better life instead of the corporations who have stripped them of meaningful wages, locked them into hopeless arbitration, and saddled them with meaningless, dead-end jobs.
Trickle down you say? Yup, it’s the contempt you feel coming down from the one percent. They’re astonished at the sheer gullibility.
1
While distributional accounts would give a more realistic look at the economic situation, they would be called "fake" and "rigged" by Trump, and his followers would believe him. Even though they can see that their own income has been stagnant, they champion Trump's tax cuts because he tells them the cuts were good. They ignore the evidence of their own lives in favor of the lies he tells them. What can you do with people like that?
What an epiphany! Nobel laureate discovers GDP numbers don't tell you much about who benefits.
1
I have seen Paul Krugman at his best discussing inequality. I watched Paul Krugman discussing inequality with Tony Atkinson at CUNY with Chrystia Freeland moderating in 2013. The passion generated by three of the intellectual greats of our time was awesome. When not one word is uttered in anger and everyone respects and loves each other and love is not just a four letter word we are all made better. When a thing like Trump is not part of the conversation we have a possibility of understanding and positive dialogue.
The late Tony Atkinson was the go to expert on Inequality and Chrystia Freeland was there in the moment the oligarchs took over Russia and the two of them allowed Krugman to be Krugman the foremost expert on how a global economy should function. I will watch this video again and again. It it is more relevant now than it was in 2013 and will be possibly more relevant in 2023 whether or not there still is a USA.
https://www.youtube.com/watch?v=zAFCaDS4a6Q&t=235s
"Knowledge is objectively better than ignorance" unless you are a Republican! the U.S. under Republican control since Reagan has become increasingly an “Outlier” compared to other advanced countries across the spectrum of social/economic/civil issues of the metrics of a civilization as well described by Statement on Visit to the USA by Professor Philip Alston, United Nations Special Rapporteur on extreme poverty and human rights (In the U.S.). However, Republicans achieved repeated electoral success by appealing to Racism to have working-class whites to vote against their own self-interest, that of their families and communities so Republicans can provide massive tax cuts for rich 1% whites.
1
For the corporations, the coup is complete.
We are a corporatocracy.
We know that corporations are NOT people, but our government swears that they are.
We know that money is NOT speech, but our government says that is is.
And yet, Americans will keep voting in support of corporate rule.
Republicans feel confident in uninvolved and uninformed tribal voters.
It’s close to pitchfork time.
2
Big Business does not want Healthcare and other benefits for society. Then they would have to pay more for labor because more people could be picky about employment. The low paying, dirty jobs would go unfilled.
Big Business capitalism needs a needy workforce.
2
GDP is always a really big number. It impresses people and gives them a false sense of security. Increase in wages since 1980 is a really small number and depresses people.
Politicians are always talking up America but never talking up working class Americans.
As hopefully President Trump has revealed, politicians love to fool folks by getting them excited about making America great again, but rarely ever inspire them by talking about making Americans prosperous again.
The gap between America and Americans has been growing larger for decades.
1
For whom does the flower grow? It's a great question. Many a Zen Master has asked it, but when you own the garden, the answer is pretty clear, when it shouldn't be.
The phenomenal growth of wealth disparity in America has been well documented in Thomas Picketty's book "Capital in the Twenty-First Century".
The huge tax breaks for the wealthiest Americans that started with Ronald Reagan and were augmented by all Republican presidents through the current administration are part of the story. Tax breaks on income other than wages (low capital gains taxes, low corporate taxes, the ease to evade taxes via off shore corporations and banks accounts) have made the returns of capital investments for the few superrich incredibly lucrative, basically directing economic growth into their pockets. That is the Republican story of the past half century in a nut shell.
Republicans take great care to detract from this story by pretending that their politics is about family values, faith, love of country and decency. With Trump they have given all this up and are now on a path to undermine our democratic institutions and stacking the courts so that they can continue for decades making the rich even richer and keeping much of America ignorant, angry and fearful. They are not interested in highlighting into which pockets economic growth is flowing because that knowledge would create a public outcry. This is a sad story.
3
It might be useful for Mr. Krugman to compare economic indicators from Denmark and other "socialist" countries. Do these countries rely as heavily upon GDP as we do? Or are they doing something different that we might learn from?
2
There are three ways to measure economic inequality. Consumption, income, and wealth.
GDP is an estimate of consumption and therefore production. However, consumption is a bad measure for inequality. There's a consumption floor not matter what your economic status. Everyone needs to eat. Having high consumption rates doesn't mean you're finances are in good order.
Income is equally misleading because high income can mean a lot or very little. A venture capitalist might collect zero income on a tax return. Meanwhile, your white collared professional making $100k a year might be struggling to make ends meet with three kids in college.
That leaves wealth. Wealth is measured as a percentage of net worth by household. Positive means well-off. Negative means trouble. Consumption and income don't matter. This is the true measure of inequality. Trends in net worth are the most honest depiction of our economic divide.
For instance: The top 1% in 1962 held 33.4% of all wealth. In 2013, they held 36.7%. The top 4% did better, 21.2 & 28.2 percent. The bottom 40 percent were stuck between 1.5% and -0.9% over the same time period. One section of society is gradually moving up. The other is not.
Unfortunately, wealth on both sides will do anything to prevent their wealth from becoming public knowledge. Keep it hidden, keep it safe. Trump is the obvious example but tax reporting is more traditional. Socialists aren't lying when they say the deck is stacked against Americans.
2
"Now, I’m not one of those people who think G.D.P. is a terribly flawed or useless statistic. It’s a number we need for many purposes. But on its own it isn’t an adequate measure of economic success."
A small personal example: In the late 60s, my husband and I quit our mediocre jobs in small-town Alabama and moved to San Francisco where we did not know one person. We rented a cheap apartment in a bad section of The City, found better jobs, and five months later moved to an apartment in the Russian Hill area. We made friends, ate out, vacationed all over amazing California, enjoyed as many of the cultural offerings of The City as we could, and entertained visiting friends from home. We also saved enough money to finance a move back to the south to be close to family when thoughts of a baby grew strong. Today this would simply be a fairy tale.
Also want to mention that over my working years, every job I had came with health insurance options and at least some benefits. Now much of the workforce is subjected to a nightmare scenario from which there is no escape.
Sometimes I think the GOP wants to make the poor and middle class so powerless they can easily drown the ones they think they don't need or don't like in a bathtub...
2
you are, sadly, so right...
and this also extends to the now mythical possibility of some enterprising, hardworking go-getter"working" his way through college, earning a lifetime enconium. today, perhaps the surest way to earn enough to live and also matriculation woud be as a drug pusher, but if you're doing well at that, what do you need with college? working at the school libary on work study, or as a soda jerk, or nights in a warehouse, or as a cabdriver, are all now ridiculous fantasies.
and, yes, of course we still have legacies.
1
@[email protected] Yes, I agree. All those many years ago I knew several people who delayed college for a year or so, worked a minimum wage job, paid for a rathole apartment, drove a junker car, and saved enough money to pay for their college, usually working another minimum wage job on their summer 'vacation'. Also many did actually work their way through college, carrying a class load and a job all the way through. All now "ridiculous fantasies"...
The inequality of wealth distribution over the past four decades is no accident. It is a direct result of Republican policies begun under Reagan to kill unions, severely curtail the social safety net and eliminate taxes for the rich - in short, to direct as much wealth as possible to the top.
The recent trillion-dollar tax cut exclusively benefitting the largest corporations and richest individuals is only the latest and most egregious example.
Of course the GOP wants to obscure economic data and distract its base with racism and other scapegoating. Clearer understanding by the 99% of the real effects of economic policy would be very bad for the GOP at the ballot box.
10
@David Koppett So what's the matter with Kansas? Why does anyone vote for Republicans against their own economic interest?
1
@ej Kansas is an economic basket case. The hospital in my home town of Independence, Ks closed due to the stupidity of Gov. Brownback and the Republican state government.
I do not understand why Kansas is so intent on destroying their economy but always have been in the Republican corner.
Hopefully, their misery will finally bring them to their senses, but like most of the farm/bible belt, don't hold your breath.
This country hasn't changed how it deal with unemployment for decades. Retraining programs are useless if jobs in the area aren't available. Telling older workers to invest in expensive courses is ridiculous when the problem isn't their skills, it's their age and experience that employers are discriminating against.
I graduated college in 1980. It was hard enough then, as an newly minted graduate to find a job. I worked for a short time in a warehouse checking orders in. And then I found a job in biological research. I remained in that field for 18 years until the jobs dried up because of how expensive I'd become. I switched to IT. I worked in it for 20 years. I had to start at the bottom of the salary scale. I did take advantage of a retraining program that no longer exists to get into IT. As it was in research it was in IT: very little interest in training, investing in employees, retaining employees, or in ethical behavior.
It's been over a year since I worked. I've seen the same jobs advertised by multiple agencies or multiple times by the same companies. I've seen the most improbable skill sets wanted at entry level on up. Companies whine that they cannot find skilled people while the skilled people apply, get interviewed and are turned down.
The gig economy does not work for most of us. We need regular paychecks. A majority of CEOs are not worth their pay packages. The rank and file are worth every penny and more. We keep companies running.
7
And related to this is the fact that for so long there has been capture of the public interest by private interests (Coke, Goldman Sachs, Monsanto, Koch, the big corporate entities). So much that even the so-called philanthropic thought leaders have come from or have been co-opted by that elite club, ensuring that the "giving back" is on their terms. Meaning, not disturbing the current power distribution.
I'm repeating the ideas of Anand Giridharadas which he even admits has been the unspoken thoughts of many public interest workers for a long time, who were afraid to say it and offend the neoliberal elites that fund them.
Too important to not listen.
https://art19.com/shows/the-ezra-klein-show/episodes/ebd9109c-d765-43ab-...
2
"So why not do this?" In showing who benefits from our prosperity we would finally see who the real "takers" are. They are not the single parent living hand to mouth on welfare and minimum wage part time work. They are the super wealthy who have managed to engineer a body of thought that leads everyone else to envy and thank the wealthy while scorning the poor. The day that we realize that the third or fourth rich person's house comes at our expense will be a great day for American and a bad day for them.
3
The stable genius has decided to freeze Federal wages and give no raises this year. 30% or more of Federal workers are veterans that the Republicans are supposed to care so much about. More smoke and mirrors and gaslighting by the GOP. "On one side, wages have stagnated for many; adjusted for inflation, the median male worker earns less now than he did in 1979." What more do we need to study, it's obvious.
7
The distributional national accounts appear to be a wonderful option, at the very least, to slow down the current economic inequality or possibly halt it entirely. As a baby boomer I can attest that our economic options were abundant. America was truly the land of opportunity regardless of whether you were poor, middle class, upper middle class or wealthy. I don't believe we can sustain a true democracy unless and until we reverse corporate rule over our legislators. The distributional national accounts looks like most Americans can sink their teeth into it and understand what it means if presented properly. Everyone must vote because our democracy and economic well being are truly at stake.
2
When you throw around CEO versus "worker" numbers you need to correct them for operational scale of the larger corporations that exist today. There was nothing like the Goldman Sachs of today 40 years ago. There was nothing like Google 40 years ago (or Apple). Nothing. If you just compared like with like, then you might get different numbers.
Since the 1970s virtually all government policies have favored the wealthy at the expense of the middle class and poor. We don't need new numbers to tell us what is in front of us. We need new/old policies.
6
For Whom the Economy Grows? Thanks, "Earnest" Krugman, and I'll add my own : The Gun Also Rises.
By which I mean that willful ignorance as government policy isn't confined to the economic sphere. Studies of firearm violence are curtailed, despite (or because of?) the fact that they'd almost certainly prove hugely useful in determining a way out of our current firearms mess.
It's similar for climate change. But old men prefer dreaming, about lions or anything else, to facing reality.
3
Old men are marking time, hoping that they (and perhaps their children) will get through.
The exercise is futile, given that the core of every institution believes that distribution acts against the principles of capitalism. One cannot undo what decades of beliefs have embedded in the minds of people.
It would be much better if attention is given to the perverse incentives that politicians create for the donor class to perpetuate the collection of rent.
5
@Procyon Mukherjee Agreed, I'm not old enough to remember a time prior to Limbaugh, but I recall him turning redistribution into a moral argument. Fairly good strategy when dealing with socially conservative people. Tie morality not only to social norms, but also economic policy. They eat it up. In fact, someone in this comment section made that exact argument (most likely a middle classer trying to make ends meet).
When it comes to sharing the wealth it seems to me both the Republicans and mainstream Democrats tried with much success to keep the masses "sullen but not mutinous". All that changed in 2016 with Bernie and Trump. The left wing of the democratic party can succeed if they do not run on social issues.Gun control, immigration ,affirmative action, transgender rights etc all play to peoples fears and too many vote against their economic interest or not at all. Those issues cam be dealt with after they are in power but if part of the campaign they may never get the chance
4
Einstein said, "compound interest is the most powerful force in the universe." And a corollary to that is, the law of averages is a leveling force.
There's a steep hill in Northwestern CT named Bunker Hill, after the battle site in Massachusetts. Local math teachers illustrate averages by explaining to students that the average speed of cars travelling on Bunker Hill is 50 mph: in real terms that's 20 mph going up the hill, and 80 mph down.
Krugman's endorsement of the Schumer-Heinrich bill is important to add a rational way to reckon with gross disparities in incomes which are distorted in GDP measurements.
3
In economics there is the concept of “rent”. That is the money a recourse gets over and above what is necessary to employ it. Professional athletes are a typical example... most franchise owners know that if they didn’t have to compete they could cap salaries and get all those players out there to work for very little... it’s the competition that forces owners to pay... this bears on two sides of this, 1: that’s is what large corporations are doing now, colluding, through non raid agreements to hold down wages, on the other hand corporations are paying exorbitant amounts to executives that may or may not be worth squat...statistical there is little relationship between corporate success and ceo incomes. So who has the bargaining power? And why? Determines not if the economy will grow, or if the incentives exist, but rather how the market bears on the revenues payed out to recourses.
Then there’s tax theory
2
I don't think we can see a clearer example of this inequality than tRump going to Mar a Lago and telling his billionaire buddies that he "just made them alot richer" after the tax cuts, and then saying "We must maintain efforts to put our Nation on a fiscally sustainable course, and Federal agency budgets cannot sustain such increases," so he can deny federal workers a whopping 2.1% pay increase. And yet his base, many of whom are clearly outside of the 1%, still think tRump is working for them.
10
You are vague or incorrect in why people are learning about, and getting interested in socialism.
They are doing that because they are seeing the huge disparity in wealth in this country.
And they are learning about it due to people like the brilliant Dr. Richard Wolff, an economist who has fantastic videos on YouTube about socialism. He examines the weaknesses of capitalism and the logic of socialism with great clarity and the people are learning this. I wish you could and would do that yourself.
3
We also need a new metric for the ranking of advanced countries, which is still based on GDP per capita.
Most Americans don't travel outside the US, and have no idea how much better infrastructure, transport, public services, health care, etc. are in other countries. Going from Northern Europe to the US is in experience akin to going from the US to Panama, yet a lot of Americans still think the US is the greatest country on Earth. I'm not only talking about rural America, even people in the big cities can't see past their streets full of jammed noisy and stinky cars and think Uber and Lyft are the greatest invention in decades.
We need new development metrics that incorporate pollution, state of infrastructure, poverty etc. It's a small part of raising awareness that we're not the greatest country on Earth just because we have the largest military and GDP.
9
Here's how CEO:Worker income disparity stacks up since 1950.
In 1950 the multiple was 20:1.
In 1980 the multiple was 42:1.
It took 30 years to double.
In 2000 the multiple was 120:1
Only 20 years for it to triple.
In January, 2018 the multiple is 271:1.
By 2020, at this rate, it will have tripled yet again. That means that since 1950, the CEO has benefited 360 times more, financially than the people who actually make and do the things that American industry produces.
11
How many angels could dance on the head of a pin? Serious thinkers used to ask this question and try to find an answer.
And now we talk about a new methodology for determining how different segments of the population are doing. Good. New information helps. However it helps a lot more if you do something about it.
Anyone can see that middle-income Americans are stressed. You could see this coming in the '70s, and you can see that it is here now. So if we quantify it more accurately, will that change anything? If we don't use the information that we already have to make something change, we might as well keep talking about angels dancing on pins for all the good it will do us.
1
Another approach may be "GPP" - gross productive product. The GDP, includes money in circulation in financial services and financial engineering; which is money "cut off" from the general economy. It's money trading hands between wealthy investors until it lands in secret offshore bank accounts or overseas investments.
I suspect some of the "slow down in productivity" in the US economy is due to "non-productive uses" of GDP (national wealth). Less and less of it goes to building businesses and factories, and "infrastructure".
4
A number of years back I thought it would be good if we had measures of both mean and median income for our economic measures. I'd still love to see a chart showing how they track together by year, adjusted for inflation, preferably next to a chart showing adjusted GDP growth.
It's not the same as the distributional accounts, I know, but it would be a fairly easy representation of where the gains are going.
Republicans don't just not want people to understand how economic gains are inequitably distributed among different segments of the population. It's time to acknowledge that inequitable distribution of those gains has become an objective of Republican policy. Tax cuts skewed to the rich are only one example. The systematic assault on collective bargaining and workers rights is another, as are persistent and, thanks to the Supreme Court, successful efforts to give corporations and the wealthy ever greater influence over elected officials via the campaign finance system. Republicans understand that, bizarre as it seems, the trend toward greater inequality benefits them on both sides. Corporations and the wealthy love it like they always have, and express their gratitude with cold hard cash. But now the anger and worry of the working class over their declining economic fortunes seems to mainly benefit Republicans as well, as these people take out their frustrations on an imagined "liberal elite" that's holding them down. There is apparently no downside for Republicans in growing economic inequality. Why should they try to do anything about it?
1
@Richard The Democratic party could have siphoned off some of these "people taking out their frustrations on the liberal elite," but they play identity politics; the wrong kind of identity politics. Why not get rid of the race based identity politics and move towards class based? Democrats are dismissive of a very large portion of the electorate, and people despise that. Why vote for a party that consistently claims one is racist, bigoted, etc.?Democrats could dominate if they would drop this stuff. As a strategy, simply separate lower, middle, and upper class. Drop the race based nonsense.
Additionally, I like the ideas in this column, but why propose the bill now? Why not sometime in the past eight to forty years? People will always question hypocrisy. The truth is, Dems are in the pockets of big business too. Had this been proposed and approved during a Democratic presidency, the results would have been similar. Rich getting richer, middle class stagnating, poor getting poorer (the article agrees with that position, as that is what has been happening). We need someone to actually be slightly courageous and stand up to big business. Personally, I don't think either party has a single politician who truly cares about these things. It's about votes; always.
Information has a sneaky way of always getting out. Always! Whether the information about the distribution of growth in this country comes from the government, academia, research firms, or some kid with a computer and too much time on her hands, it will come out. And then there will be a accounting!
Let us hope that when it does come out, people will be gentle with those who have lied to them while picking their pockets.
"But on its own [GDP] isn’t an adequate measure of economic success."
But just last week, in trying to convince his readers that economic malaise wasn't what fueled Trump's success, Krugman implied that GDP WAS an adequate indicator:
"Don’t tell me about “economic anxiety.” That’s not what happened in Poland, which grew steadily through the financial crisis and its aftermath." (Krugman then provided a link to Poland GDP by year to support his claim)
Establishment economists are loathe to admit that economic malaise brought us Trump. To do so, would be to admit that the Republican AND Democratic stewardship of the economy has been lousy.
Instead, regarding the huge number of Obama 2012 voters who switched to Trump in 2016, they suddenly became racist.
3
@Ed Watters I think the Democrat's failure to reverse the Republican destruction of what guarantees an equal share of GDP growth to ordinary people, i.e. collective bargaining, rising minimum wages, minimum paid holidays, etc. has turned these voters into iconoclasts. The continued focus of moderate Democrats on social victories instead of on the giant and growing life quality rift only worsens the problem.
We need a more aggressive flavor of Democrats, who's not constantly afraid to alienate this or that type of voter, like so called independents, suburbans, etc. but people who believe in increasing wealth redistribution and are not afraid to call it what it is (taxes, socialism, etc.).
From the evolving topic picks in his columns, I think Dr. Krugman, although still very much a part of the liberal elite circles, is starting to see this and is slowly coming around.
2
OK, this bill sounds great. Now we need the senators "authors" to go out there, meaning TV, newspapers interviews, press conferences, and sell their bill to the public. Make a really big noise about it, talk a lot about it, make the general public know about it so that they start thinking about wanting this bill to pass. The "authors" must become good salesmen. Common, democrats in congress, become good sales people!
I hope if this data is collected it will take into account the effect welfare payments, subsidized housing, food stamps and so forth have on the disposable income comparisions for all Americans. It is disengenuous to claim that "the poor" don't benefit when they are receiving tax free subsidies, and in fact may be better off than they seem to be.
1
The poor, better off because of subsidies is on the surface laughable for those of us not poor. Those subsidies are not federally universal and nonexistent in many rural areas. In urban settings you will universally find insufficient subsidized housing, decreased means of obtaining food stamps or commodities and increased numbers of homeless. Social programs including Medicare/Medicaid are difficult to access for those who need them but are trapped working two substandard low wage jobs just too stay housed and fed.
What a myth it is that the poor's access to free benefits actually benefits them or that these benefits are coming equitably out of the pockets of all Americans. The tax cut for the Wealthy will hurt all of these already spottily funded programs and the homeless population will grow. But, hey, the homeless don't count because they don't show in the census, so it remains all good for the Ayn Rand loving Republican Elites like trump and his foxy friends.
Piketty will get his Nobel some day, Capital in the 21st Century was a brilliant book, but his nitty gritty stuff, like Distributional National Accounts is the kind of work economists can't ignore (for long).
The income growth of the poorest half of our population has stagnated for many years while that of the top 10% has exploded higher. Why? The amount of income over that needed to keep body and soul together is zero for the poor, the top 10% has enough excess to invest. Invested money is like having a second job for which no work is required. There is income generated while you sleep. Yes, you have to work to get that invested dollar but once you do it's all a downhill coast from there.
Amplifying invested income is that it is taxed at a lower rate than if you actually had to sweat to earn it. Investors will argue that their investments in the stock market build companies that create jobs. True, but more significantly, the labor of employees builds those companies. Yet labor pays higher ordinary income rates while investments pay lower capital gains rates. Why should the near effortless earnings of a dollar bill be taxed so lightly when earnings by human beings by sweat and intellect are taxed heavily?
Today I heard that President Trump thinks this advantage needs to be even larger. He is considering compensating the "cost" of an investment for inflation making the tax even less. Any wonder inequality accelerates?
2
It would be nice to see an income statement and balance sheet every year for Median American Inc.
Revenue = Income.
Expenses = Cost of living, education (amortized), taxes, interest on debt, Median American's share of the government's deficit that year.
Assets = Home, overfunded retirement savings, share of public assets.
Debt = All forms of debt, including Median American's share of the public debt and underfunded retirement savings.
Stockholder's equity = net savings = retained earnings and distributions = accumulated discretionary income minus spending on non-essentials.
Nobody ever asks some very important questions, including the good Professor. Is unalloyed income growth and an ever expanding economy really a good thing? After all it is always accompanied by increased consumption which continues to destroy our planetary environment. Do fast cars, fast music and fast electronics make people more happy? All the evidence is that they only serve to make people more hurried, anxious and alienated from their families, friends and communities. I do a lot of traveling in so-called developing countries where people live a much more relaxed life-style with richer social connections. The people don't have so much stuff, but the majority are well-fed and clothed and can rely on public transportation. Yes, there are plenty of desperately poor people. But they are here in the US too. Ignoring the effects of rampant and uncontrolled materialism is a problem that cuts across the entire political spectrum.
1
@Chuck Burton: Growth is the only way the US knows to stay ahead of rising debt.
Paul,
I like the analogy of Al Capone walking into a bar works better. The income of the patrons goes up because Capone is a wealthy man, but at the end of the night, everyone except him has nothing.
1
This is the same noble economist who predicted a depression if Trump were elected? while i am no fan of Trump, growth of over 4% and some of the lowest unemployment in history for all groups, especially minorities, shows that a de-regulated, lower taxed economy can still produce strong economic gains across all groups. Perhaps Mr Krugman should go back and check some of his modelling assumptions and he has been crying wolf for way too long
1
Your analysis is simply flawed. The economy was sound as early as 2014, and maybe even before that. Economic indicators have been rising on a steady trend for 9 years. Trump hasn’t altered that much, except for a single quarter. And Obama matched that too.
Trump entertains bad economic thinking because he misdiagnosed the cause. The problem from 2008 to 2014 or so wasn’t tax rates or regulations. It was a massive part of your population being upside down. And there was simply no easy or quick fix for that. In fact, policies that favor the rich and punish everyone else (trickle on economics) simply makes it harder for people to dig out.
2
@josh s More polluters just looks like a setback to me.
It is a good idea. No matter what the naysayers say, people will know who benefits from the economic growth if this set of numbers exists. Not only that, we should make this set of numbers available to everyday folks. Transparency alone is not enough. We need to find it easily accessible. Like in Texas especially in Houston, it is difficult to find an existing home's actual sold price and exact date. Hard to believe it, isn't it? Try it if you have a computer.
@Usok it is easy in Massachusetts. Law never protects everyone equally under the fractured squabbling states.
Prof. fell into the false equivalence web. He says "... progressives like the idea of distributional accounts in part because they believe that more knowledge in this area would help their own cause.". This implies that the "cause" of progressives is of the same value as the "cause" of conservatives. How can these 2 opposite causes have the same value when progressives' goal is to help all people, and conservatives' goal is to help themselves at the expense of others? The question answers itself.
Wealth since the start of the industrial revolution has come from mass production, mass marketing, and mass consumption. Economies don’t grow because some elite that controls more and more of the wealth gains more and more of it. They grow because more and more of those who consume, consume more, and in so doing demand that more be produced. A growing economy requires that all share in the returns on productivity to continue growing.
Now if any business can make good profit on steady sales, it can return a good profit for the owners without any increase in compensation for employees. In fact, the less sharing of profits, the more for the owners.
G.O.P. political policies towards economics is to focus upon directing more and more new wealth to those who own most of it, already. They claim that this will generate fantastic growth as these wizards of business and finance create new wealth and lucrative innovations. To who are these geniuses going to sell more and more things? Those who have more wealth. And who might they be when most people in this country are barely holding even?
3
Republicans are very good at distracting our clueless democrats into issues that do not affect our pocketbooks. So while democrats expend their energy on artificially created (by Republicans) conflicts such as gay rights, abortion etc., thus taking their eyes off pocket book issues like inequality, wealth distribution, wages, outsourcing and jobs, Republicans go merrily on their way in rigging the system to favor the corporations and investor class. You see, to make money, you have to have disposable income. Zero times anything is zero. The key to sharing our nation's wealth is to be able to invest, which the bottom half, struggling just to make ends meet cannot do. So one needs to increase wages for working people so that they can have some disposable income.
Democrats should have a laser-like focus on pocket book issues such as universal health care, assisted education, livable wages. The rest can wait. If they don't do that, inequality will keep increasing until catastrophic events will restore the balance.
First order of business: Wrest back control of the Senate, Congress and the Presidency. Get a veto-proof majority. Then, since constitutional amendment is impossible, legislate to get money out of our politics by instituting tax payer supported elections at all levels (a few billion dollars is a price worth paying to save our democracy). Remove built-in biases in the tax code so that rich and corporations cannot avoid paying taxes. Inequality will vanish.
2
In the Netherlands the distribution of income has been calculated for decades. what's more, politicians' proposals for chance are put through the meat grinder to compute the effects on income distribution. that is, before the elections, mostly. That's among the information that the electorate takes to the polls. And guess how the income distribution and/or income and/or growth is.
7
At the top of a bull market Democrats want statistics to show how well successful investors are doing as a stick with which to beat their opponents. All the talk about income maldistribution, presently so popular on the left, will come to a screeching halt when the next bear market gets going. Most income always goes to entrepreneurs and owners of assets. They save or borrow the money to invest, take the risks, work ungodly long hours, and reap the rewards; workers are hired hands. They can become owners by investing their savings in stocks or starting their own businesses, but when they do that they also take risks--that's capitalism for you, which, of course, the left would like to abolish.
22
@Thomas Zaslavsky: Now, Tom, I thought my comment was a fairly straightforward depiction of reality. I accept that rightist self-interest can sometimes look a little Scrooge-like, but I also never understand what always makes leftists want to give away the store.
@Joe Parrott
No one expects to return to a top rate of 86% but that is exactly what is wrong with our country. Given the huge debt run up by Republican after Republican (an by Obama to fix what Bush II broke) why shouldn't we be returning to a top rate of 86%, which was imposed to pay off the huge debt incurred to fight WWII?
The answer Of course we should and should have done this yesterday!
4
You forgot that for some, $200,000 a year also goes for a seat at the table with the President in Mar-a-Lago where they can run government agencies and shape policies that affect millions of those hired hands. All while shoveling cash into the pockets of our entrepreneurial President.
9
As a vegetable farmer who does not get subsidies on the crops I grow and makes way below the minimum wage in no small part due to current monopsonies, I favor the collection of this data. I hope that I will find a way to make a decent living again and unlike the commodity farmers being easily and quantifiably harmed by Trump's tariff scam, we too are being harmed. I knew about Donald Trump's scams since the 80s as they were covered even then and naturally I did not support his election.
I have yet to lose my faith that our country can recover in the future, but I have to do a lot of praying to keep the faith. I do not worry about whether I am speaking English of Spanish to my workers, knowing that they and their children learn English over time, but I do worry where the workers will come from in just a few years as we have propagandized our country out of the farmwork field and into the videogames and reality TV. Hard work is good for the soul and our ancestors understood that. Honorable work is what all of us need, not necessarily easy work. The CEOs of big corporations seem to feel they deserve so much more than I feel I deserve.....
478
@Organic Vegetable Farmer
See how the fates their gifts allot
A is happy, D is not
Yet D is worthy, I dare say,
of more prosperity than A.
5
@Organic Vegetable Farmer
For me, your comment is one of the absolute best, and I agree wholeheartedly with what you have to say. Sadly, an element also in the equation is that there are too many who are not willing to put in that "honorable work." And it's not unique to the manual labor cohort, it exists even in many levels of the rarified "white collar." Hard work IS good for the soul, and there is no greater satisfaction than a job well done, especially if it provides benefit to others.
3
@Organic Vegetable Farmer--Your farm is the reason I go to the Farmers Markets. Worth noting "about 39 percent of the nation's 2.1 million farms receive subsidies, with the lion's share of the handouts going to the LARGEST PRODUCERS of corn, soybeans, wheat, cotton, and rice. In the three largest farm subsidy programs — insurance, ARC, and PLC — more than 70 percent of the handouts go to farmers of just three crops — corn, soybeans, and wheat." Sadly food farmers get very little help.
https://www.downsizinggovernment.org/agriculture/subsidies
https://en.wikipedia.org/wiki/Agricultural_subsidy
4
Who benefits?
If Bezos walks into a bar, he might be inclined to buy the House a round or two. Maybe that's something many wouldn't do, save John McCain.
1
Agreed, Dr. Krugman. This is necessary, and the reason the GOP will fight against it is because it will lay out in clear, factual terms that their "trickle down" religion has been nothing but a massive scam they've been pulling since 1980.
3
The Bait and Switch is a favorite republican tactic: 'we are the masters of the economic universe, of course, but look! over there! those immigrants are stealing your jobs!' You can't play the same offense in football every play or the oppo will get wise to you. If you are a conman, you can't keep using the same lies, you have to stay one step ahead of the duped. The republicans have gotten entitled, and tired of running their scam, and now seem to feel that things would be so much better if the lesser classes would just keep their mouths shut, and keep shoveling the money upward. For the last fifteen or twenty years, they have said as much, more or less. And now they are shocked that voters might have a problem with this, and have been trying to end democracy, in all but name. We need a better iteration of the republican party, and we need it badly. The only way to get it is to defeat them roundly and repeatedly at the very ballot box they seek to desecrate. We desperately need a big blue tsunami to wash them away.
1
All I see around me is the lower middle class descending and the working class struggling to get by. Is this the recipe for a prosperous society or for disaster?
Let’s party on.
3
Finally Paul! Finally an editorial on economic policy that this "right wing" economist can agree wholeheartedly with.
1
"conservatives routinely yell “socialist!” whenever anyone proposes doing something to help less fortunate members of our society..."
This idea of socialism is flawed. "Fortune" has nothing to do with it. Socialism is about the community as a whole having a say in production and distribution. Unfortunately, it seems that most Americans, including liberals, align socialism with "helping the less fortunate".
Just because you didn't start a successful company, win at the stock market, become a pop star or inherit millions doesn't make you less fortunate. Working people, or healthy but unemployed people, are not less fortunate. Black and brown people are not less fortunate, and considering them so is an insult, even if well-intentioned. Sure, there are people who are chronically sick, disabled or otherwise incapable of functioning, but socialism shouldn't be oriented towards them; those are charity cases.
Maybe this is why the term gets so little traction (traditionally) here in the US. I don't think the average Dane, for example, thinks of him or herself as "less fortunate".
The current President is praising his "influence" on the economy, except there appears to be no money for raises for Government workers, why? Certainly, Wall Street is experiencing a sugar high, the unemployment numbers, that in the past were claimed to be a fraud, are quite low.
So where is the money? Are far too low few, such as Corporations and the wealthy, paying far too little in taxes, monies that actually run the Government and the Country? Can or why would you want to drown the Government in a bathtub? What is our responsibility to our citizens and ourselves, is it me first? What about Education, Healthcare. Clean air and water, as well as infrastructure? Do we need an educated, healthy workforce, with roads, electricity to produce and move product?
Is a fair answer, together we can, individually we can't.
3
Why does congress feel that they need a multi-million dollar to analyze if economic growth is finding it's way beyond the top 10% to the middle class and below? Pay me 100 bucks and I'll point you to the data for you.
- Wages are rising at a pace of 2.7% vs inflation of 2.9%, thus wages are down a bet -0.2%
- This trend (stagnant or down wages) has been consistent for most of the past few decades, especially if you incorporate the cuts/losses to benefits, and the ever rising cost of health insurance/care
There...I gave you the answer and insight, and I saved you millions of dollars at the same time.
3
"Senators Chuck Schumer and Martin Heinrich. This week they introduced a bill that would direct the Bureau of Economic Analysis, which produces estimates of gross domestic product, to produce estimates telling us who benefits from growth — for example, how much is going to the middle class."
Great idea.
It will never get past the Rs. They want to hide the truth, they don't want to set us free.
5
"Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armoured cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans" - Robert Kennedy 1968.
Most of our economic problems stem from the blinkered obsession with economic growth. It is a fixation that warps economic rationality.
What is really needed to right the economic ship is a transition from a perpetual growth economy to one based on stability and sustainability.
Growth is now just a guise for greed.
15
It has been said many times the goal of business is to make as much money possible. A large part of that formula is to keep labor costs as low as possible. Since the 80's "greed is good" became part of the lexicon and stagnant wages are part of that creed.
Plus, inflation fears are mostly only talked about and not acted upon until *gasp* wage "inflation" starts to rise. Then it's time to start seriously tightening. Why is that? Seems like the system is rigged against workers making more money.
5
The American consumer has been spoiled for years. Our addiction to cheap imported goods with the hidden costs (welfare, crime, community blight) of their "too good to be true" prices has made inflation, seemingly, but a ghost. Alas, we cheer on Trump with his "Made in America" mantra not recognizing that we are cheering on inflation as well. In a perfect world, American jobs should generate income, tax revenue, and social stability. American jobs will, at the same time, require us all to pay more for things. We can't have it both ways.
However, if those new American jobs were well paying, and we balanced our budgets (not deficits sustained by personal and governmental borrowing), and we saw the American fortune improved, one would say; "great". Instead, we say, "dream on" as we are seeing increased cash flow in our economy with little other improvement in the fundamental metrics (debt, poverty, crime, infrastructure improvement). Sadly, it seems, bad policies are making those much needed "made in America" jobs a net neutral.
3
I’ve tried for the analogy but I’ll have to go with what I have. Seems to me that the tree we have cultivated has a problem. The base of the tree was once stout and its root system supported the height . But over time the top, if broad enough, the crown of the tree creates a danger that can result in limbs falling and sometimes splitting the tree. We have an elite that has lush with green, but not sustainable. The base cannot support the crown and the crown becomes increasingly vulnerable. Didn’t this happen in France? And our country rebelled against England? Or, can we envision a building. What if someone decided to have the highest few floors are larger and larger over time like an inverted pyramid with the top being far larger than the bottom. You and I, no doubt, tried that with building blocks. Inevitably, the building falls. Get a grip. When you vote, support the roots and the base of the trees. As it is, the people at the top seem to be determined to hack away at the base.
To agree that workers should be part of profit sharing, loosely speaking, a person/company would have to have a sharing philosophy. They would have to believe that a company or country is better off for having citizens that earn living wages, have quality health insurance and education and sustainable retirement. This country has moved far from that ideal and the individual entrepreneur is rare. I remember as a child hearing about companies that were denied mergers because our nation didn't want mega conglomerates that suppressed small business. This was before our government was bought by business and stopped looking out for the average working class citizen. Imagine giving the rich a huge tax break and then the biased Supreme Court depriving the American worker of the only protection they have; unions. It is a deliberate attempt by the wealthy to finally return America to a slave working culture. That's how they made their money in the first place.
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Outstanding idea! But here's the rub.
How is it, that in year 2018, with all of our computer technology, this data is not already available? Have all of the experts been asleep at the wheel? Why haven't the folks at the FED been generating this data?
It appears then that the Trump people do have a point. They are hurting and no one has bothered to figure out how much they are hurting. If we need a law to generate this essential information, then that pretty much nails it that the powers that be aren't terribly concerned about the middle class. They still aren't.
The Republicans certainly don't. They just give them more guns and blame the Mexicans for their problems. The liberals have been absent from flyover country and pay far too much attention to the big money people.
So we end up in 2018 where the banks and Google know more about us than we ourselves do and there is no readily available database to reveal where the money is going. Now, we have to pass a law to find out. Funny thing though. Now that Trump has thoroughly destroyed trust in everything that comes from anything .gov, the most aggrieved won't believe how bad they have it and still vote Republican.
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@Bruce Rozenblit - These are deeply troubled times indeed, and as you wrote, Trump has thoroughly destroyed trust in everything that govt. does. As for where the money goes, we will likely never know where it's all hidden, but if the US govt. really wanted to know, they could trace it. This software was used to tie Wilbur Ross to 11 shell companies in the Caymans. I first read about it in an article about an investigation by the International Consortium of Investigative Journalists, who are also exposing thousands of predatory publishers and their pay-to-publish journals. https://neo4j.com/use-cases/fraud-detection/ Technology has been a lot more useful to oligarchs than to the common man, but if the political will existed, it could also be used to rein them in.
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@Bruce Rozenblit
I look for your comments in most of the articles that I read here, mostly because you respond to most of them, and I appreciate your commitment at attempting to inspire others to try to see a more diverse interpretation of them.
What most people fail to accept is that our national economy, at it's most basic definition, is founded on the same principles as the Confederacy. Extract wealth from the least fortunate citizens for the benefit of the most prosperous. We used to call it slavery, today we call it the stock market. When the 5 largest banks in America own 95% of the payday loan companies there is no other way to say it. When someone needs to be fronted a weeks pay to keep from being evicted, and is charged 30% or more interest on the loan, and another can borrow $100,000,000 to develop a high rise condominium that will reap $100,000,000 in profit at less than 3% interest, what else can you call it. When 10% of the population own 85% of the stock market, the other 90% are valued as no more than cattle. There is no sense of community between the upper 20% of wealth holders and the lower 80%, they live in completely different realities and have no understanding of vast the differences are.
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@Bruce Rozenblit
I watched the 2013 CUNY discussion with Tony Atkinson, Paul Krugman and Chrystia Freeland. The data was available. The late Tony Atkinson the voice of Inequality and its effects had mentored Piketty, Chrystia Freeland had written Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else which is data data and more data. Yet both these giants recognized that Paul Krugman was the voice of global economics and both knew how to listen when Paul Krugman spoke. It is an hour and a half worth celebrating.
https://www.youtube.com/watch?v=zAFCaDS4a6Q&t=235s
Interesting topic. David Rosenberg said yesterday that if you strip out the direct effect of the tax cuts, that second quarter GDP was actually 2.1%. That means that 83% of that 2% of GDP went directly to the wealthy!
7
Most of the statistics tracking the health and growth of the American macroeconomy overall originate with the Bureau of Economic Analysis, part of the U.S. Department of Commerce currently headed by Wilbur Ross.
The BEA is made up entirely of career civil servants, I too was once a civil servant for the U.S. Department of Justice who compiled and presented statistical reports to Congress. I had worked under Griffin Bell and Benjamin Civiletti before the election of Ronald Reagan, after which I worked for William French Smith. I had produced the same quarterly reports (involving crime by specific category of offense) for years., but when I completed my second one under the new regime, it came back from the office of Associate Attorney General with the notation, "Revise. Not good enough."
I was a bit puzzled by this so I asked for a meeting to explain what this meant. I was informed that they wanted to make the percentage of Federal offenses related to drug activity to appear to be more than 50%, a ridiculous figure (the true figure was more like 12%; most drug crimes are handled at the state and local level). I was told "Don't worry. No one can check."
I handed in my resignation instead. Perjury's not my thing.
But, given the Trump administrations propensity to prevaricate, distort, exaggerate and outright lie, particularly to make their performance appear better than it is, why are we so eager to trust stats coming out of the Commerce Department under Ross?
13
I’ve never understood why some people feel they have the right to determine how income is distributed. Take Bezos as an example—how did he get rich? It wasn’t by stealing money or using forced labor. He entered into a large number of voluntary agreements with customers and employees. Simply put, Bezos provides a service that millions of people willingly buy. Where is the injustice here? If somebody does not provide any useful services to the marketplace, how is it unjust for him to receive a wage consistent with his production? Unless someone is actually stealing or using coercion, income comes from voluntary cooperation with others. There is no justification for redistributing income.
@Anonymous. In a perfect economy you would be correct, but our economy is consolidating more and more at the top. There is no reasonable way for individuals to compete with Amazon anymore.
Amazon has access to political influence that no ordinary business can compete with. It is clearly in the best interest of our country to correct the markets where undo influence has impacted barriers to entry.
Secondly, we are competing against the major macro-economic trends of globalization, automation and immigration that are further enabling businesses of scale to have major impact on societies.
Bottom line we don't live in that world anymore. It's time for economic principles to be reevaluated in the context of the modern world.
@Anonymous
There is actually ample justification for redistributing income. We have together as a people built the infrastructure on which Bezos and all the other entrepreneurs (of which I am one) rely. We as a people maintain the commons and we do it to promote the common weal. In point of fact, corporations are instruments of the state; licenses and protections issued to stimulate the economy to the ultimate benefit of all.
Bezos and all the other businesspeople and entrepreneurs deserve to be rewarded for their efforts. But Bezos is neither 10,000 times smarter or harder working than the steelworker who builds a skyscraper or the electrician who wired your home. Winner-take-all economics do not serve the interests of the nation. Ultimately, this is still a nation governed of, by, and for the people.
3
@Anonymous - Wrong!
Corporate policy is made at the end of Manhattan Island on Wall Street. Enhanced profit is the goal at any cost for that is the marker that drives stock prices up.
What % increase is needed to drive stock prices up is the question and policy is worked backward from that figure, not from what is reasonable production and sales potential.
That means the squeeze is put on and on most expense form personnel is the biggest figure that attracts attention so wages are squeezed disproportionately to other expenses such as corporate officer benefits and salaries the results being that Bezos and the Waltons reap Billions (with a capital B) and their employees apply for food stamps, second jobs and can't send their children to college.
Fact: there is an inherent cruelty in capitalism that when identified is squelched with the ignorance of how it really works and stupid cries of socialism.
Redistributing the income of the billionaires who take the profit out of circulation and hoard it in stocks needs to be redistributed.
1
"Since the 1970s, however, the link between overall growth and individual incomes seems to have been broken for many Americans."
Then why haven't you raised this point before - like during the Obama Administration? Anything to discredit Trump.
Speaking of which, why not measure the benefits to the average worker with a 401k and/or an IRA, attributable to the Trump stock market? Same basic answer. Nothing in a Krugman column can be permitted to show anything positive about the Trump economy.
@HurryHarry. Krugman, for an educated man, has degenerated into the most intellectually dishonest columnist I know of. As a moderate I USED to respect his point of view.
@HurryHarry When the Trump recession hits, I would like to hear your thoughts.
@Gordon - Sure. In the meantime I'd like to hear YOUR thoughts!
The economy has grown by leaps and bounds for those who already had plenty. Those who were left holding the bag in 2009, are still barely holding on. Millions never got their careers back on track. Within a couple of years, they were deemed to old and their skills rusty. Never mind that the truth is that they were neither, just too expensive to hire.
Their kids, who were just starting out, sat out the recovery doing odd jobs and now can't get hired to do what they were trained for. Ageism begins at age 35 now.
Over a third of this nation is doing very badly. They're who we should talk about. This past week we again heard about the hardships so many millions of Americans are still experiencing, many, in the middle class and below, not being able to absorb an emergency.
Wall Street, the various industries, they got their backs covered.
My question is why we are still talking about that. Trump is in charge and boasting an economy that is doing phenomenally well. If that's really the case, then why aren't wages rising? Good jobs coming back?
Why aren't we reading more about the underclass that is still left from the Great Recession? After all, were it not for the GOP, Trump's GOP, no less, we might have had good stimulatory policy and a fairer recovery.
---
What Trump Is Doing While We Aren't Looking
https://wp.me/p2KJ3H-2ZW
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@Rima Regas: Unfortunately Rima Wall Street got bailed out while “our guys”(and women) were in office, that’s why there has been no attention paid to the complicity between the liberal elites and the Trump band of elites. Many other economists( other than Dr. Krugman have been pointing out the fact for years that both establishment Democrats and Republicans are to blame for the destruction of the Middle Class: Robert REICH, Joseph Stieglitz and Thomas Piketty, to name a few. We have essentially a one party system when it comes to who wins and who loses in the economy and in the support of continual war, there is no substantive difference other than rhetoric. Wage earners have been suffering since the late sixties and certainly since the abolishing of the gold standard and the voodoo economics of financial engineering introduced in the early seventies that has led to the steady erosion of the value of labor and the steady increase in the value of leveraged capital.
3
@Ted
Exactly. The House always wins.
On econ numbers, we've actually had a pretty good idea of what is going on. Only some of it is reported in full. For a clear picture, read the blogs of Mark Thoma (who curates everything of note), Jared Bernstein (who supplements his writing in WaPo) on his blog, etc. Dr. Krugman stopped doing any writing that is related to what I call the "precariat" circa 2014.
How we count the unemployed and who gets counted is a political hot potato. Jared Bernstein, in a blog post last week wrote that he thinks there is still slack and he doesn't think we're at full employment yet. I think he's right.
There is a reason voters have been disengaging from the process. They've figured out the same things you wrote.
https://www.rimaregas.com/page/2/?s=unemployment+long-term+unemployed
2
@Ted: Rima: I don’t know how to connect people as you do to other articles, sorry but: For a much more articulate and complete explanation than I can offer on the plight of the Middle Class in Europe and America please read Phillip Stephens compelling article in today’s F.T. The subject of which is what the financial crisis has really wrought, in a word Nationalism, and if the riots in Chemnitz and the votes in Sweden are any indication the result is something that should have been both anticipated and not the least surprising, you can’t continually kick people to the curb in the interest of lining your pockets without a backlash.
3
Some arithmetic and a good measuring tool to understand the economic impact of the Republican policies and talking points are excellent ideas.
For instance, the "tax reform" has added $1.5 trillion to the US debt, that is $1,500 billion If every household, including the super- rich, got $2,000 bonuses as their share, it amounts to about $254 billion given that there are about 127 million households in the US
That is about 1/6 of the tax cut impact, the remaining 5/6 is going to the super-rich who are far fewer in number. Do the math yourself, give each household more bonuses if you like. The real beneficiaries of the tax reform will remain as the rich.
And, the GDP and the good economic news is like measuring the dimensions of a room using a thermometer. The REAL measurement of how well the economy is doing will be the real increase in real wages and the improvements in the standard of living of all income classes.
Any economic gain that does not permeate the middle and lower income segments of the economy is a measure of how much better the super-rich is getting.
They should make money, oodles of money, pay progressive taxes, get incentives on investments in the US and increases in the wages of their workers.
Now, that will be REALLY GOOD economic news for all Think about that!
5
I fear the Democrats are too afraid of the economic data, but they shouldn't be. Most of the data points to anyone outside the top 10% basically falling further behind, and the same problems that have existed over the past few decades continuing. These should be plastered throughout every campaign in 2018 and 2020. Let's examine a few:
- Wages are up 2.7%, but inflation is up 2.9%, for a net negative 0.2%...thus wages are down in this economy.
- Health Inflation alone is still at 8-10%.
- The average health insurance premium cost for a family ranges from $25,000 - $30,000 per year, against measly median incomes ~$50-60k, and growing every year. And that's only the cost of the premium, excluding out of pocket, deductibles, etc. (Note, this topic and economic burden really should get more attention).
- Any economic growth is being financed by debt. The GOP and Trump actually grew government spending by +3.5%, while tax revenues have grown only 1%. We're on track for a 800 billion dollar deficit this year, and trillion dollar deficits over the next several years.
- The costs of entry (e.g. college tuition) are a massive burden for younger generations, which is and will continue to weigh on the economy (will weigh on housing in particular, but on consumer spending in general)
9
All I know is that the food I eat and the gas I buy costs about 20% more than 2 years ago. But the inflation rate is 2%. So some one, other than us low and middle income people are capable of driving up prices.
5
I listened on the radio today to two prominent economists, both who served in government. When asked what could bolster both the economy and wages, they said:
- bolster unions (countervailing power against corporations);
- support education, college education but also sub BA (community college) career training
Everything happening at Federal level actively undermines that.
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@Robert Kennedy
I agree. Education in particular is extremely important. In addition to "critical thinking," people need to be taught "correct facts."
@Robert Kennedy
Unions in a global economy have limited power when management can often threaten to move the business offshore. Even a powerful union is reduced to nothingness when the business no longer exists. The single biggest threat to management is free and universal healthcare. If workers had that, they have far more freedom to move around to better jobs, and wages would have to raise to keep good workers. True progressive taxation would be next, but the wealthy own the government and all the power. We live in a purely defined oligarchy. The middle glass and poor should pay little or no taxes and the wealthy upwards of 95%. As a society, what good is having some citizens harbor all the wealth? They can't spend it, but the entrenched human quality of unlimited financial security is overpowering to them. There is no upper limit to financial security. In fact, it's a myth, it doesn't exist. Like a dog chasing its tail it can never be reached but a human being will never give up trying.
@Robert Kennedy
Perhaps if your capital was moved back to America from Moscow you might again be come the America I grew up with.
I don't have a stock portfolio, so I don't care if the market soars and I don't care if it tanks -- which it may very well do if our Space Cadet destroys the world trading order and takes every other nation down with ours. Meanwhile, I do have to pay more for gasoline, health insurance and those products whose prices are rising because of the Space Cadet's tariffs. The tax cut he gave corporations has not raised my wages. And I still have to breathe the air and drink the water his coal-mining friends pollute.
22
We should track median discretionary income just like a corporation tracks profit. And we should amortize education costs like a corporation amortizes R&D. The cost of staying alive and acquiring skills is a cost of producing income. In other words, we should track the portion of income that can be saved for retirement or freely spent on non-essentials for the typical American.
5
The static measurement of complex dynamic system to understand the state of individual agent of the system is a scientific paradox. The science of statistics is one of the mysterious concept that talks about gain and loss in a casino that is true only for casino owner and not true for any casino patrons. Let us talk about individual in our society and see how the government policies changes their life. Technology can do it now and many technology companies are doing the same to sale their products to individuals, they are not trying to sale to a statistical "market". The question is will government will do that - most probably not, it will expose the whole game plan of the two "elite classes" - Democratic elites of technology club and Republican elites of commodity club. The best way to hide the state of the individual is to hide the truth behind fuzzy measurements - from national GDP to "middle class GDP. Who knows who is a middle class? I have yet to find a person who is not middle class in social gathering - it is a mental construct. Science of measurement is vey specific. Let us stop this "hide and seek" to maintain the democratic oligopoly.
I'm all for more measurements. However, we have troughs of data that show that the rich are getting richer and the poor are getting poorer. We have data all day long that shows this as the GDP goes up and unemployment goes down, and wages stay flat while spending power goes down.
What we lack is the will to do anything about it. More than anything, we look down on those with low incomes and refuse to believe that they can't change their circumstance. We assume the homeless and those on food stamps can't or won't work, while somehow not seeing that they are actually employed. When we see that they are employed, we blame them for having kids they can't afford.
Another number to measure this is great, but as long as our society just says "well, the poor people aren't contributing and thus deserve not to benefit", that number is useless.
Numbers and analysis without action is useless. We have the numbers and analysis that very graphically point this out; our politicians simply refuse to take action, because perhaps most of us don't want them too.
5
In 1950, when change was slow, CEOs were managers inside a walled economy, just keeping the train on the tracks, and one was pretty much like the other.
Today, global industries change overnight and CEOs must be leaders, charting new courses. So, in a giant global company, talented CEOs can offer returns that dwarf their multimillion dollar salaries.
1
We've been using outdated metrics for quite a while; it's long overdue for an overhaul. Thing is, even if new statistics were available would anyone in Washington believe them or act upon them?
In reality, there are at least 2 distinct economies in the US. One, the Economy (capital 'E') for Wall Street, hedge funds, corporations and owners of capital. The second economy (small 'e') for the remaining 99% based on the downstream effects and whims of the first. Washington (both parties) have become beholden to the first Economy with SCOTUS (e.g. Citizens United) helping to further push us off the cliff.
7
How about measuring growth (GDP) net of increases in national debt? Any monkey can juice the GDP by stimulation, including enormous tax cuts.
1
Donald Trump axed the pay increase for 2 million federal employees. He mentioned budgeting problems without addressing that the hole in the budget is directly related to the tax cuts. Unfortunately, Trump's midas touch is especially useful at distorting reality.
10
Best column I have read in years. Senators Chuck Schumer and Martin Heinrich deserve a Nobel prize in economics for innovating how communicating economic data that can have a huge economic and political impact.
Paul Krugman got a Nobel in economics for brilliant work predicting an economic catastrophe. His fellow Americans should get one for work that may help prevent an economic and political catastrophe by unmasking the BIG LIE that "a rising tide lifts all boats". In fact most people are on surfboards some are just floating in the water and do not have boats at all. They get drowned in debt or lose their retirement nest eggs, because economic tides unlike the ocean variety are turbulent and unpredictable.
5
@Eli As I remember it, Dr. Krugman pointed out in detail how the parameters of competitive advantage in international trade had changed. This has some implications for the future and some of them are unpleasant.
1
@shiboleth
yes of course BUT this has NOTHING to do with the BIG LIE
"a rising tide lifts all boats"
it does NOT.
Furthermore it is the fossil fuel economy with the gigantic concentration of wealth that it requires for it to exist that is the biggest threat. Searching for, extracting, and provide for the daily distribution of toxic, disease causing, energy requires enormous investment and tax breaks. Fortunately the destruction of the fossil fuel economy is well underway. Trump the moral weakling has been powerless to slow down the closing of coal mines and coal burning power plants. Clean renewable energies are exploding globally and in the US, daily wining market share. Loss of market share makes the disease causing fossil fuels more expensive every day.
Clean local energy will become a huge game changer, whether Trump is kicked out for his criminal activities or is boot out by the voters in 2018.
1
Economic--and other--pundits benefit from the self-destruct button built into any theory that relies upon people's willingness to self-educate. They can support their theories, as Mr. Krugman does here, with tautologies like "[k]nowledge is objectively better than ignorance" knowing that (1) nobody will disagree, (2) most people are and will remain contentedly ignorant; and (3) those same people believe themselves fully, if not better, informed. To be blissfully ignorant is to be unconcerned with what we don't already know because we've convinced ourselves we already know all we need to know. The proposed law sounds good, but the reality is it will not inform those who need it most. Words and data have no effect on the illiterati.
1
This is the economic equivalent of research on gun safety. Ignorance is bliss for big bucks donors and the GOP wants to keep it that way.
6
Do conservatives want to know? Some few may know the facts and want to hide them, many more can’t tell the difference between lie and truth. When talking to conservatives, sometimes, I get a feeling that they confuse “knowledge” with “believe”. They assert (know) something which is not provable when they actually should have said they believe. By using these two interchangeably, I think, they depreciate the objective value of knowledge and make it subjective and irrelevant. Then, when it comes to the right wing propaganda, it is that much easier to believe in even the craziest conspiracy theories.
5
Businesses of all kinds collect data on everything and measure everything; it's the least our government could do. "Knowledge IS objectively better than ignorance."
3
"If guaranteed health care is socialism, bring it on." Unless it means giving healthcare to minorities and brown people. Perhaps that's why Republicans hate socialism, as it is equally provided to all in all white Scandinavia. The idea of providing equal access to minorities is anathema to the GOP. So they lie about socialism, claiming we'd turn into Venezuela style socialism - where socialism was corrupted to the point where it is now dead. What we have in Venezuela is an authoritarian kleptocratic style economy - like the one trump is taking us to.
DeSantis insulted his black opponent for governor of FL, Mr. Gillum, further insulting our intelligence by claiming Mr. Gillum would bankrupt Florida with socialist policies. Give me a break!
DeSantis is more likely to bankrupt Florida with unpaid for tax cuts for the rich. Social programs aren't bankrupting the state or the nation. It's the unpaid for trillions in tax cuts to the wealthiest - who don't need it - in return for NOTHING - THAT is bankrupting us and stealing government services from all - healthcare, education, environmental & job protection, scientific research, law & order, etc.
Sanctimonious Rick has nothing useful to add to the discussion. To him the middle-class, the poor and indebted-masses are the same - they're the working class for the owners of everything class to do with as they want.
"knowing who actually benefits from economic growth" will remain as top secret as trump's taxes are by the Republicans
2
People who watch reality TV, get their world view from social media and elect Presidents accordingly do not have the capacity to understand distributional accounts. These people are herded like livestock. Therein lies the flaw.
2
"If guaranteed health care is socialism bring it on" Couldn't agree more but pay for it with lower defense spending and payments to countries like Egypt's $1,3 billion per year. Egypt shares none of our values. It is a military dictatorship that oppresses women. A total waste of taxpayer money.
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@Art We would have a lot more money if we restored the Eisenhower tax schedule. The rich have used their influence to turn our income tax into a regressive levy.
Twas the best of numbers, twas the worst of numbers. I support this bill because is will produces useful information that can be used for high level decision making. I condemn this bill because it will pile onto the cacophony of mutant statistics that flow out of statistical over kill. I support this bill because it will provide a more advanced look under the hood of our economic health. I condemn this bill because it will give senile schnooks like Jack the Leprechaun Welch more air time on CNBC to spew conspiracy theories about how the number is bent by career civil servants. So you get the idea. In a world gone mad with attempts to predict the future through data this may or may not be a good thing to do. So I can't finish with it is a far, far better thing than we have ever done before.
2
In any reasonable human being's playbook it is absolutely correct that knowledge is objectively better than ignorance, but the inclusion of the word reasonable eliminates the very people being asked to participate.
These are very frightened people who will continue to destroy before they will lift a hand to assist.
5
Krugman says “knowledge is objectively better than ignorance” but the problem is that one side has convinced its supporters that isn’t true.
5
When I read " still former senator Rick Santorum" I spit coffee. Having experienced his performances on CNN, I'm grateful for the "former" part. Thanks, Dr Krugman.
5
Under Obama the 1% ownership went from 22-29% of assets. People of color lost ground. So, this has been a problem for some time. Feel the Bern.
3
@Paul It will help to place the blame if you remember that Obama was burdened wit racist led minorities in Congress for all but 76 days of his administration. At least we weren't subjected to this daily horror show.
Paul, You finally wrote a column that makes some sense. I have long thought that top level corporate executives are grossly overpaid. The same can be said for University Presidents, College Professors, Mayors, Governors, Entertainers, Professional Sports Players, Opinion Columnists for Major Newspapers, T.V. Personalities and many others. Do you have a plan to correct this situation?
1
There is a relatively simple way to create a picture that will plainly show who is benefitting from recent economic growth. First, watch the video “Wealth Inequality in America” and take a screen shot of the 2009 graph that is displayed 4 minutes and 30 seconds in. Print out the graph and you will notice that percentiles 1 through 99 have one bar depicting their wealth, while the 1% has 10 bars. If you measure the length of one of those ten bars you can draw it straight up 10 times, adding additional sheets of paper as needed. While this graph shows proportional differences, you can find a value for the 1% by looking up the Forbes 400 list of richest Americans in 2009. The person at the top was worth 50 $ Billion, which equals 50,000 $ Million. In my particular printout each of the ten bars was 5 inches, so the graph of the 1% wealth was 50 inches tall. Dividing 50 (wealth) into 50 inches established the scale of 1 $ Billion = 1 inch. You can now look up the wealth of any year to plot the 1% wealth growth over time. On August 30, 2018 the Forbes Real Time wealth tab shows the Richest American to be worth approximately 163.9 $ Billion. 163.9 X 1 in. = 163.9 inches or 13 feet 7 7/8 inches and requires 20 sheets of paper. Everyone you are likely to know is probably still located on page one. It doesn’t appear that Trickle Down Theory has been working well at all and I really have to question how the recent tax cut; that mostly benefits the wealthy, can possibly be justified?
4
Since the ''Rich' make the rules, who do you think is benefiting?
1
So the new bill would generate numbers that the Trump and the Republicans will call 'Fake News'.
2
Seems I remember some partisan apologist using economic mumbo jumbo to prove that Obama’s low growth economy was the new normal.
And that it would be impossible to grow at over 3% ever again.
Know anyone like that?
Would you take their advice?
1
The more income disparity the more we become two Americas. Guess what happens when a big chunk of the population has no opportunities. No jobs, no education, no health care, no access to a grocery store? When life is hopeless, you do whatever it takes. What you do doesn't have to be rational if you see no hope for a better life. Why get a job flipping burgers when you still won't be able to pay the rent or have health coverage that you can actually use? Why go to school when it will only lead to more debt and another job that won't pay off the loans? Why play by the rules when you see people who steal millions of dollars get probation and keep millions of dollars in offshore accounts? Why participate in the regular economy when you see that it is obviously rigged for the stock-holder class? Why obey laws when it is clear that the laws were written by the robber barons?
I guess we had better arm ourselves.
2
I just love to hear the sage advice doled out by the self promoting, self coddling, gurus on Wall Street. How much of the nation's wealth was rolled up to those stock traffickers who encourage ceo's to cut their labor percentages, when we all know that the entire market is based on ZIRP! Any talk of rising rates causes them to burn incense, shiver and self flagellate.
There is more meritocracy in the former soviet republics, than this capitalist, (in name only) nation.
3
Fine idea! Of course, under a Trump administration that kind of audit will be performed by th CFO of Koch Industries or the Heritage Foundation, or perhaps Neil Cavuto and the staff at Fox Business.
Don’t expect this kind of audit to make any difference because “truth isn’t truth” as we all now know. Let’s just force the government to make the appropriate raw data available to all who are interested so we can at least see for ourselves and have a real debate about it.
2
This should remind us how Republicans, and now Trump, have systematically breached the Constitutional Separation of Church and State by imposing their brand of Old Testament religion on the rest of us.
Trump's panic button for "Democratic violence" this week when he met with Evangelical leaders and urged them to violate federal law by rallying their flock to vote GOP is a good example.
If evangelicals believe in preordination, the notion that everything is destined by god and the rich have been pre-selected for the VIP section in heaven (that's why they're rich) then Trump given his billions must be a saint.
The corollary is that the poor are poor because in the eyes of god they're bad and they better dress appropriately for where they're predestined to go. No one can help them so why bother?
Then there's the Old Testament of the wrathful god where knowledge is the forbidden fruit and Eve -- made from Adam's spare rib -- tricked him into deceiving god.
That's why women are inherently evil and weak (Catholic women wear veils in church for atonement and shame) and men are dominant. Women who bite the apple and gain knowledge perpetuate original sin, which got us evicted from the Garden of Eden. Women cook, clean and breed in obedience to men. Abortion empowers women and frees them from male domination. Equality for women is a threat to their most basic religious tenet. Inequality is by god's design.
They secretly believe the economy is god's way of keeping score.
3
If there were ever a theme song for the economically challenged but blissful Trump supporters it should be that 1920’s masterpiece of black humor “Ain’t We Got Fun.”
The only difference is that when the have-nots in the 20’s sang lines such as- “the rich get rich and the poor get poorer” and “no money, but honey -ain’t we got fun,” they got the irony. Nowadays you could write a song about stagnant wages and unaffordable healthcare, and if it had a catchy tune and was played on Fox, Trump supporters would sing it at the top of their lungs. Sigh.
1
Knowledge is truth and, thus, does not further the conservative cause.
2
>
Money begets money.
This is the GOP's theme song.
That is why the Adam Smith called for a progressive tax; why we needed the New Deal.
"Male and female are the distinctions of nature, good and bad the distinctions of heaven, but how a race of men came into the world so exalted above the rest, and distinguished like some new species, is worth inquiring into, and whether they are the means of happiness or of misery to mankind."
Tommy Paine
4
Two words tell the tale and tally: Shareholder Value.
There is no mystery whatsoever about what has happened - there are many measures which show how inequality has grown and wage-earners have been left behind. For example, just compare GDP/capita with real wages:
http://www.skeptometrics.org/BLSB8.PNG
(showing real BLS "production worker" wages). Before around 1970, wages kept up with GDP/capita. This was not just a post -WWII phenomenon - available data shows that this was true in the 19th century as well.
There are actually many specific reasons why things changed, as national economic policy became more conservative. We don't need any new measures, we need economists to be thinking about exactly what can be done to reverse the trend rather than defend the status quo and the failed theories of economists themselves. We need non-Republican politicians who will break away from their own dependence on big money donations from those who have been the beneficiaries of the inequality.
4
I think most people who vote Republican have succumbed to the jingoism and flag-waving that are another form of Republican dog whistle.
While they respond to the appeal of a simpler time, they fail to realize that the simpler time is not the 1940s or 1950s, but the Gilded Age of the 1890s. The Gilded Age was a time of a small number of very rich, a small number of middle class and a large number of very poor.
7
Next to global warming which threatens our very existence, income inequality is the single biggest problem we confront. It is socially destabilizing and desperately needs to be addressed. Any number that can easily be understood that highlights the problems should be pursued. We now are being governed by a Trumpublican Party that is of, for, and by the oligarchs from tax cuts that benefit them to anti-union actions that benefit them to cuts in health care that benefit them. So, we need not only a number, but one that is sensitive enough to reflect the impact of all such policies as those. A separate GDP may help, but may still be too broad to reflect the harmful effects of the tax cut, the health care cuts, and the cuts in union support. The rich benefit while the rest of us our economically dying by a thousand such cuts.
11
So why hasn’t family income tracked rising GDP?
It’s not about price indexes, nor about plutocrats. It’s about globalization. Capitalists and their CEO money managers profit from worldwide markets fed by low-cost worldwide labor. High-cost American workers suffer from it.
Political enlightenment in China and India, with their unquenchable numbers of workers, has combined with globalizing breakthroughs in communications and transportation to make capital international, not American. American capitalists and workers, once happily married because they needed each other, now live apart.
Those foreign workers are not to blame, nor are American workers. What about the greedy capitalists? Well the markets for their products are as unforgiving as labor markets. If their companies fail to optimize labor costs, price competition will grind them to dust.
It is the wheel of history that aligns American wages with those of poor countries. Protectionism or attempts to imprison American capital would probably make this even worse. There is no longer an American GDP. There is capitalist GDP and there is worker GDP, separate and unequal.
When it comes to two economically different Americas, you ain’t seen nothin’ yet.
6
@Charlierf and what of government regulation that could have slowed down and cushioned the changes wrought by globalism, instead of simply devastating parts of the American middle class. It's no good throwing up your hands and saying, 'It's Globalism, that's just the way it is.' These were political choices we made, and keep making, to socialize the losses of the upper classes and ignore the losses of the working classes, in the new global economy. Germany took a different path. Nothing about globalism was inevitable except the greed that drove it. The boneless and supine stance of the government was entirely gratuitous.
2
@Michele Underhill
No American wants to accept that roughly 100 million American workers have been thrust by history into labor competition with a billion low-wage Asian workers. No politician can tell you this and survive; instead they proffer villains and cures.
There are no villains, and all those tantalizing cures for our wage malady would have disastrous outcomes.
Certainly the unemployment numbers are flawed, even if you don't think the GDP is flawed. Unemployment is the only way that labor (that's me) measures an economy. Sadly, both parties have benefited from these flawed statistics.
1
If the democrats ever gain power, they need to pay attention to small details, like legislation and/or policies that change the vocabularies of how we talk about our real world experiences. We are continually barraged by the vocabularies created by the rich and powerful, where the stock market and GDP, in their words, signal economic well-being. The vocabularies that reveal a far different living experience for the middle class and poor are hidden from view. Bernie Sanders, et.al. are making valiant attempts at creating such vocabularies, but, any form of common good vocabularies so far have been branded as socialistic and thus, out of bounds for common usage.
7
Republicans would argue that direct benefits to the 1/4% are a positive for everybody, so this information supplemental to the GDP should incorporate the predicted trickle down to the rest of us.
3
@John Brews ..✅✅
You should be able to measure the changes to the middle class numbers quarter to quarter, year to year.
2
You know that Krugman and his crowd has lost the war against Trump's economic policies when they are reduced to nit-picking over the minutia of who is getting the most from the excellent economic conditions.
1
@Jack I think Professor Krugman's point is that most people are getting nothing at all from the excellent economic conditions.
29
@Jack A corporation can increase short term profits by cutting R&D. Similarly, gutting environmental, safety, and consumer protection regulations, and giving corporate tax cuts while the infrastructure crumbles can boost the stock market, but is not in the long term interest of the country.
9
@Jack This is definitely not nit-picking. Economic conditions may be excellent but they are not evenly distributed. Just like the tax cuts. Most went to those already making tons of money and to corporation. The cuts for the middle class were much less excellent; a mollification or distraction rather than something genuinely helpful.
The bottom line is that I'm not seeing more money.
And Trump is now proposing zero pay increases for federal workers. Why, if the economy is so good and corporations are making so much more, supposedly enough to offset the tax cuts and fill the federal coffers?
The Bezos example should have been enough to explain this, Jack.
2
This is spot on. If GDP is expected to grow (by the GOP, anyway), it's almost directly correlated to the asinine tax cut Trump rammed through his obedient Congress. The rich got their tax breaks (and are looking for more, with the proposal to kill capital gains taxes) but the incredible increase in debt makes for volatile markets. That, in turn, means all of us little people with IRAs or 401ks are being whipsawed with every burst of tweets in the wee hours of the day. You just know that they're going to "balance the budget" by going after Social Security, Medicare, Medicaid, ACA and any governmental program that helps the little people.
25
Aren't similar products already produced by the census bureau and the congressioal budget office? Why would the bea br any more authoratative than them?
The up coming Census should include the questions: What is your gross income? What is your hourly wage? What is your net income?
The disproportion would be staggering. Those low wages keep the corporations humming with little reward.
7
Deficits went up under Reagan and W Bush.
Deficits went down under Clinton and Obama.
Clinton had 50% more jobs than Reagan.
Obama had 400% more jobs than W Bush.
And 20 Million people got healthcare.
Republicans count on voters being ignorant.
And they have yet to be disappointed.
59
@Independent
While I agree with your final conclusion, your facts could use some work. Deficits rose sharply under Obama as we fought off the Great Recession. This was a legitimate reason for deficit spending - one of the few. That Republicans now goose deficits under the guise of tax relief (for the wealthy) runs contrary to anything that might be construed as rational policy.
3
@Independent I would say that a bare, carefully curated minimum of voters have been ignorant, a bare minimum to keep the reds in office. That minimum continues to shrink to a thinness that might not now be adequate to contain the big wave.
@Independent
Obamacare enrollment has been around 11M during 2017, so if your other "statistics" are as accurate as that one you need to work harder.
1
So when the narrative fails simply find new metrics to support it. Toward the end of the Obama era we learned that a 3% GDP was no longer possible given the demographics of the US population. Trump’s dream of 4% growth was just another lie, another stupid republican talking point. But then we hit 4.2% in Q2 and according to the Atlanta Fed are on track for 4.6% in Q3. Just a sugar high, but maybe not. Time to find a new metric.
1
@Michael James, I can't understand why you (and others) are willing to accept stats showing the economy is soaring, but not the stats showing middle class income is stagnant -- for decades. Or to question what is behind Trump's 4.2% GDP, or to not complain about his trillion dollar deficit.
Let's all stop retreating to our ideologue corners and be willing to dive deeply -- and accurately -- into what the numbers are telling us.
14
@Michael James
Sustained GDP growth > 3% is indeed difficult under current conditions. President Trump goosed an economy already running at essentially full employment with a tax cut. One presumes that you've had a bit of Econ in college: what happens when you stimulate an economy that is running at full employment? Can you spell inflation?
3
@Kathleen
THANK YOU!
Anyone who is working has experienced the benefit of tax cuts as they were appropriately made across all tax brackets. People who are not in the stock market are usually not educated in fiance or averse to risk; too bad for them. If you do not come to the party you can partake in eating the cake. This economy is thriving: all time record low unemployment in 50 years, lowest minority unemployment since records kept, consumer confidence highest since 2005 (yes Obama was no where near DC) and we could go on and on. It is the economy stupid and hopefully it guarantees the results most desire in the Midterms. And that is for republicans but they will never tell you who they voted for.
2
@Jan The best thing President Trump has done is to leave the economy alone, until recently, He has now meddled with the Federal Reserve, tariffs and banking regulations. Any benefit you received from the tax cuts will disappear shortly, but not for the wealthy. Just wait and see who will now be hurt.
6
@Jan - Why haven't products and services declined under the corporate tax break? If corporations really intended to "benefit the country" from these breaks like trumpeted, then large price sectors should be reduced, but they are not. It was a ruse and profit grab. Did I benefit as a risk taker, sure, but the strategic damage to the national debt will wipe out that benefit due to higher risk in the future. We should be raising taxes to pay off debt when the economy is chugging, not the opposite. If you were highly leveraged already and got a wage increase, would you pay off your credit card or buy a boat and lower your real income? The tax bill is a folly, but much more so that Bush's and Obama's.
2
@Jan
"Too bad for them." How horrible for you to say something so callous. The reason most people aren't "at the party" is because they can't afford to be, not because they are uneducated or risk averse. You have to have enough money to risk, to essentially play with, to invest in the stock market. Most Americans are "investing" their money in things like food, utilities, mortgage and education. Many very smart, well-educated and hardworking people are living paycheck to paycheck. Your comment reflects a profound disconnection with the lives of ordinary, working people.
He is like a dog with a bone. Why won't Paul Krugman let go of inequality?
I can understand obsessing about the poverty in America, but inequality? Of course, if we could make poor people richer by redistributing Jeff Bezos's wealth, that might give me pause, but I don't believe it for a moment. Any benefit would be ephemeral -- it would evaporate in a few years -- and the poor would wind up worse off because the policy would damage the economy.
But Krugman seems to believe that the poor are poor because the rich are rich. It's a great slogan, but where is the evidence or even argument to support it.
I seem to remember a while back that Krugman claimed that inequality made people sicker. That is to say, poorer people living in neighborhoods or SMSAs with greater inequality have higher morbidity and mortality. But that, too, seems to be a crock.
So why should Jeff Bezos's wealth bother us? Did he make his mega-bucks dishonestly? Has he used his wealth to harm Krugman? If the answer to these questions is no, then what is the fuss about? If inequality is immoral, should we make lotteries illegal?
Can we move on?
5
@Ian Maitland Amazon has a great many employees who don't earn enough money to live on. The result is tax payers make up the difference throught tax subsidies, food assistance programs, and emergency medical assistance.
Can Amazon not afford to pay more? Is it fair we have created a system where people are forced to take jobs that don't meet there needs? Does Amazon employee people educated in the public school system. Does Amazon use public roads and other tax payer supported infrastructure to move their products?
Please don't pretend that Jeff Bezo's and Amazon don't benefit immensely from doing business in the United States and that paying taxes is an undue burden. To those who much is given, much is expected. It is not redistribution of wealth to tax the most fortunate to the benefit of all!
@Ian Maitland
NO! Its the crux of all of our nation's woes, social and economic.
Paying a living wage to workers isn't a crock.
Are CEO's working 10X harder than they did to be getting such obscenely outsized rewards?
Coincidentally, the rise of income inequality is in an almost exactly inverse relation to the destruction of worker's bargaining power (UNIONS).
I actually think the words "income fairness" express the situation better.
1
@Ian Maitland wages flat for Forty years, or falling-- while the one percent grabs an ever-exponentially-larger share of the economy. Why should you care? Because it is a run-away train with no brakes; because the one percent has seized the government and is mindlessly intent only upon seizing the rest of the economy for themselves. Because if it goes on like this, the average American shortly won't be able to make enough money to adequately feed and shelter their children. When that happens, it will rock your world.
Lets toss out some numbers for 'Merica today:
40% of all 'Merican workers (39.6% to be precise) make less than $20,000 a yr.
1 out of every 4 'Merican workers, has a job that pays $10 an hr. or less.
According to the U.S. Census Bureau, the middle class is taking home a smaller share of the overall income pie than has ever been recorded before.
U.S. families that have a head of household that is under the age of 30, have a poverty rate of 37%.
Today, the U.S. actually has a higher % of workers doing low wage work than any other major industrialized nation does.
In the United States today, the wealthiest 1% have a greater net worth than the bottom 90% combined.
The median working-age couple has saved only $5,000 for their retirement, according to an analysis of the Federal Reserve’s 2013 Survey of Consumer Finances by economist Monique Morrissey of the Economic Policy Institute.
43% of working-age families have no retirement savings at all.
That makes median (50th %tile) values low for all age groups, ranging from $480 for families in their mid-30s to $17,000 for families approaching retirement in 2013.
56.3% have less than $1,000 in their checking and savings accounts combined.
46% of 'Mericans said they did not have enough money to cover a $400 emergency expense.
The wealthiest 10% of all 'Mericans own 81% of all shares of stock.
This is America.
You can't eat GDP.
55
@Dobby's sock
Perhaps a reference for these numbers being tossed out would lend more credence.
1
@kwb
also ....biggest stock buy backs in history
The way things are, inequality in America, like the accelerating expansion of the Universe, is getting worse at an exponentially faster pace. If allowed to continue, the CEOS after several years will be making not 270 times but 2700 times the income of the average worker. We'll have to call this phenomenon as antisocialism or using the old terminology -- feudalism.
Wealth will concentrate in a few hands.
The Constitution is silent on how the nation's wealth is to be distributed. The Constitution is also silent on what to do when our President tells lies day after day, belittles people whom he does not like, and is willing to pardon psychopaths.
There is an urgent need to call a new Constituent Assembly to formulate a new Constitution which will address the phenomenon dangerously growing inequality,
5
@ALM Who will make up this constitution assembly. One can be sure the Koch's, Adelson's, and Merser's voices will be heard. Finially they will have the opportunity to do away with that pesky "Bill of Rights". They can write the constitution that finally gives them what they crave, a government that reconizes the rights of the wealthy. After all the wealthy know what is best or God would not have blessed with such great wealth. The Constitution as written is just fine, it's activist Judge's on the right who interpret the word's written that creat it's weaknesses.
@C. R. Justice, Good arguments but defeatist in nature. I would not like to see the French revolution visit our shores and thousands of the powerful 'guillotined.'
A new Constitution Assembly, if it ever comes into exixstence, should be made up citizens representing the majority.
This is the difference between data and information which is usually blurred in common use. But here’s the thing, my phone number is data until it is tied to other data like my name to produce information, i.e. my phone number. By analogy, a GDP reading is useless until we associate it with real people participating in the economy. Unless we turn data into information it is useless and simply the last refuge of scoundrels.
12
No federal pay raise? What a surprise. That's what happens when the Republicans give huge tax cuts to their rich patrons and bankrupt the treasury. Medicare and Social Security are next but a lot of the old fools will keep on voting Republican.
11
The idea is good, but any thought or expectation that GOP dogma will change as the result ... is wishful thinking. These people would deny the existence of the sun .. as they go blind staring at it.
5
There is nothing wrong with the GDP number and with it all its flaws capitalism is the only viable economic system, but there is no doubt we're reaching a point where inequality is undermining the economy rather than being part of dynamic capitalist system. Affluent households who are capturing most of the real income growth simply spend less of their incremental income (the Krugman technical description would be their marginal propensity to consume).So with most real wealth gains going to this group it doesn't translate into a large increase in overall demand of the sort we've seen historically when middle incomes boomed. This is not politics it's economic reality.
15
Republicans have convinced many that the occasional unfairness resulting from economic benefits more widely shared is far more egregious than the inequality created when most economic benefits are realized by a select few. Republicans wage economic warfare and justify it as the natural order. Any push back is condemned by Republicans as class warfare. It is quite obvious that Republicans are only willing to share with us the misery created by wars and economic meltdowns. So long as Republicans control the message, they win and we lose.
5
If distributional accounting is to be done, government agencies should do it. Government has access and resources to do large scale sampling of data and that will yield more accurate results. A danger though is that the political side of government is interfering with the independence and function of government agencies. Take for example Trump's troika of Mar del Largo cronies who are running the VA. So maybe now is not the time to do this.
6
This bill sounds like a good idea.
But I would really like to see is a chart showing who puts money into the economy. Ex. people making less than $45K probably spend 100% of their money. People making $46-100K probably spend 96% of their money. The top 1%? probably spend 0.001% of their money and simply stockpile the money outside of the working economy. So who is the driver of the economy?
I would also really like to see the difference in money spent versus money 'invested' in stock or savings. I don't think the effect on the economy is the same at all. would like to see how it compares to supporting the economy at at local or national level.
25
"adjusted for inflation, the median male worker earns less now than he did in 1979"
Yet he produces much more. Productivity has doubled. Yet he gets less for twice as much.
The current issue isn't redistribution, it is the distribution shift that already happened.
The average male worker does not seek what he never had, he seeks what he used to have that was taken away.
Who took it? Start with those getting ten times as much as before, 270 times that worker instead of 27 times.
Then look at stratospheric corporate profits, where 10% per annum was considered good, but now 20% is considered marginal.
How did this happen? It was not/NOT/not the inevitable outcome of tech or some such. It was policy, politics, effected by massive tax breaks and union busting.
Why did the politicians do that? They were bought.
Which ones? All of them. Democrats betrayed their base as much as Republicans destroyed the Democratic base by design.
We were betrayed. Those who did it are in DC today, still, never left, still doing it.
24
The economy is roaring, and people of color are benefiting most.
Border security and immigration law enforcement is making poorer and working class communities, where most people of color reside, safer.
Foreign policy breakthroughs might prevent military interventions with boots on the ground, benefiting people of color, who are over-represented among front-line troops.
The supreme court will defend speech, assembly, gun, religious, property, and due process rights for a generation, benefiting people of color, who need such access the most.
What is motivating opposition to Trump and Conservatism?
4
@Philpy
Then why are wages rising less than inflation while executive compensation and share buybacks are soaring?
2
@Philpy --------------Philpy, perhaps it would help you to understand what is motivating opposition to Trump and Conservatism if you read Dr. Krugman's article again.
1
@Philpy
what an easy question. Opposition to Trump is based on opposition to: svage incme inequality based on vastly increased wealth for the already wealthy while everyone else stagnates at best (as explained in this post), the encouragement of bigotry, the destruction of the environment, especially the disregard of the climate but also the Trump war against natural areas and wildlife, the attacks against consumer protection, reproductive freedom, the free press and workers rights, the mistreatment of immigrant kids, the undermining of science and the arts, the disrespect for allies, the total lack of civility, the constant lying.... Trump supporters don't care about any of this, sad!
1
When an airline starts charging for checked baggage, without reducing their fares commensurately, that increases GDP even though nothing new has been created. When government sells off a road to the private sector, which then starts charging tolls, that increases GDP even though nothing new has been created.
Both the above examples involve transfers of income rather than creation of income. GDP does not distinguish between the two and counts both as equal.
We have created a society that incentivizes the powerful to capture wealth by any means. Our financial system is much bigger than needed to support the real economy. Its principal purpose is the capture of wealth. Our industries are turning into oligopolies that can charge premium prices without much threat of anti-trust enforcement. Is it any wonder that GDP is increasing, the richest get richer and no benefit is felt by the vast majority of citizens?
Measuring the benefits of growth is essential if we are to know how to deal with these issues.
44
@RAD61 How much is enough? CEO's now earn 270 times the average worker. We see where the wealth is going. Do CEO's need THAT much money? Or the financiers on Wall Street raking in millions ? I recall the Karl Marx quote,"to each according to their need; from each according to their ability." (or something like that) If people are starting to think that socialism may offer some help, what would they think of communism? Remember the scene in the movie of "Dr. Zivago" where he returns home to find his mansion divided into very small living spaces for the proletariat to enjoy the luxury of a roof over their heads? I entertain fantasies of the magnificent edifices owned by the CEO's and financiers, taken by eminent domain and given to people who have no home. I guess that is too much to hope for.
@Janet
there you go.." job creators "
armed guards !!!!
A few telling and easy to understand statistics that need to be widely publicized are the "share of aggregate income" going to each quintile and top 5% (and top 1%) of the population; the value of wages and the minimum wage in constant dollars; and median family income according to family structure. (Median family income is announced regularly, but in the breakdown by family structure it is very clear that only because women joined the workforce that median family income increased.) These were published annually by the Census Bureau in the Statistical Abstracts. I used them regularly in classes and watched students' eyes pop out. These numbers are hard to misinterpret. They need to be part of every candidate's vocabulary.
17
I could take more seriously the demand here to 'talk of economic class', if the article, like so much political rhetoric on both sides of the growing partisan divide in America, did not wave around some vague label of a 'Middle Class' unrecognizable to any serious analyst of social structure from Marx (and indeed before) onward.
Yes, 'socialists' (to use another vague rhetorical term also beloved of partisans on the American Right and even what passes over there for 'Left') and social scientists do talk of a 'Middle Class'.
But they mean the professional servants of the owners of the means of production, who 'manage' those elements, including the labour of the effectively disenfranchised Working Class, for those bosses.
Whether the classic pyramidal Marxist class hierarchy, developed to analyse the First Industrial Revolution two centuries ago, is still a useful analytic tool in the midst of our Third Industrial Revolution, is a good question.
But throwing around vague rhetorical terms like 'Middle Class', which often in aspirational America seems to mean 'everyone not in the 1% or the marginal underclass' is really not very useful in any serious discussion of economic, social and political structures and dynamics.
2
You may wish to actually read Marx at some point. Because his point is that class society has developed to the point that other classes have been largely swept away, leaving the powerful bourgeoisie--who once had occupied a "middle," between the proles and the kings--in direct contradiction to the workers, or proletariat.
Dialectical relation, dontcha know.
1
@Robert
Thank you. The evolving relations between Capital and Labour since the French and (First) Industrial revolutions two centuries ago are indeed dialectical, and Marx was writing during a period of increasing stratification of the 'bourgeois' class into an upper section, often allied with the old landowning feudal aristocracy in a new 'upper' class that directed the use and profited most from accumulating capital, a 'middle' section or 'middle class' (in common European usage) of new salaried professionals that often also had a stake through joint stock companies in the accumulation of capital, along with increasing political power, and a lower clerical section on the boundary of middle and working or 'lower' class.
Things are more complicated after the introduction of a universal franchise during the Second Industrial Revolution, then 401ks, and the vast reduction through automation of unskilled manual labour.
But that misses my main point: What on Earth do you Americans mean by 'Middle Class'? In particular, why are (aspirational?) Americans so unwilling to talk about a Lower Class that still numerically dominates the economy?
If the debate is about social justice, why not just talk about Equal American Citizens, or focus more directly and analytically on new forms of capital accumulation and disenfranchisement in the Third Industrial Revolution powered by ICT (rather than Electricity and Petrochemicals a century before, or Coal, Steam and Iron a century earlier)?
Instead of a vague term of “middle class”, just replace it quintiles or income ranges - something quantitatively defined.. There, problem solved.
1
The GOP and conservatives don't want to have this information available to the public. It would be the first step to redistribution of wealth, mostly gained by gaming the system, from the 1% to the rest of us. Sorry Betsy DeVos, but you don't need ten multimillion dollar yachts. One is more than enough.
10
@Jeffrey Davis
Income inequality is worst in blue states.
https://www.breitbart.com/big-government/2018/07/24/income-inequality-is...
Distribution of national income is just as important a social good as overall growth in national income from year to year. A fairly narrow band of top-most to lowest income across the national population is unquestionable public good. Of course the USA, through despicable, intentional actions of right-wing Congresses and Republican presidents since the Reagan election in 1980 have done their utmost year and year out to widen the disparity from highest income to lowest as much as possible. This realized through making tax laws, regulation and so on as favorable as possible to those with the very highest incomes.
As usual, Mr. Krugman at his best on the topic of political economy.
15
There's a very good macroeconomics book by Profs Krugman and Wells where they prove that soaring corporate profits have turn into soaring household's income. Perhaps we should introduce the Krugman economics professor to this other Krugman columunist, what do you think?
1
In the new gilded age those soaring profits go to obscene CEO and management pay, as the current Prof Krugman points out, and stock buybacks for that same group, as evidenced by the recent gratuitous tax breaks given to these corporations. In neither case did the excess profits benefit the workers of those companies. Corporate good citizenship is a dead concept in the boardroom. Higher taxes and stronger regulation are the only means to reining in corporate greed run wild and taming the casino market which benefits only the high corporate rollers. I'm pretty sure today's Krugman would agree.
3
@The economist And it's obviously happening now, right? Where do I go to get my share?
So your theory is what, Krugman just forgot? Or is this once of those goofball Trump Derangement Syndrome thingies?
1
Mr. Trump's latest economic decision, cancellation of the 2.1% annual COLA for civilian federal workers, continues the trend of hammering the middle class wage earners.
Anything which increases real information is always good. If we planned for local weather events using national averages, Oklahoma homes would not have tornado shelters and Louisiana cities and towns would not have levees.
We are also seeing record heat events this year with projections for higher and longer heat events to come while we are still only a few degrees of average temperature rise worldwide.
We can all do better planning but not with Mr. Trump's plans for willful blindness to real data.
13
Data alert: the probability of reaching the top quintile in family wealth depends on where you start. For those born in the bottom 40% of wealth, you have less than 1 in 4 chance of reaching the top 20%. For capital gains, 11% of households making less than 200,000 a year (131,000,000 filers) reported any capital gains and 51% of households making over 200,000 a year (less than 4 million filers) reported any capital gains. Add to that, inflation adjusted wages for the bottom 80% are flat since the 1980's. http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real... For us, the median income retiree with 50,000 a year in retirement income including social security, our increase in our "paycheck" was $30 per month from the Trump tax bill. Alas, the lower economic classes and the retirees that voted for Trump were fooled again and they just do not understand.
10
Americans by and large do not understand economics. That is why the quarterly jobs report is so important; for all its flaws, the report boils down several underlying economic trends to produce a single number everyone can claim they understand: jobs are up is good; jobs are down is bad.
Both parties run on this single bit of data and all but ignore other important numbers, such as wage growth. Same for the news media. In the current context, Trump heralds job growth, as would any President. What is unique about the Trump regime and the GOP Congress is the lengths they go to to NOT mention the obscenely impractical tax cut bill. Their silence on that monstrosity speaks volumes, and should be a focus of Democrats in the Fall.
Economic numbers generated by the government have become propaganda tools for both parties. But it is the GOP that has raised misleading, incomplete or sloppy economic reports to a robust form of dark mis-information.
8
What angry comments! Obviously, the best start at correcting these conditions will be to vote in November. That is to say, vote out as much of the Republican Party as possible. It is growing late and nothing is improving.
18
• Read "The Rate of Return on Everything, 1870–2015" by the Federal Reserve Bank of SF
• Read "Distribution of Wealth in the United States" on Wikipedia, or check out their cited sources if you think this is too simple.
• Burn these essential numbers into your heads.
The economy grows for the rich (the top 10%) because they own 100% of the capital assets of the country. The working and middle classes basically work to keep their heads above water, and if there is anything left, this often goes to emergency payments, small luxuries to feed the illusion that they are "living well," or to feed a nest egg towards the hope of retirement. The lion's share of economic growth goes to those who own the wealth, the property, and the money to invest.
Anyone watching the sad litany of Trump's excesses might be missing the behind-the-scenes hollowing out of the public sector in America, the reduction of taxes for the rich, the growing debt of the under-funded public sector, and the refusal of wages to budge more than a few bucks a week.
It's sort of like a patient running a 105-degree temperature, or a gas gauge reading near zero. These are not numbers to be ignored. These are numbers that need to be on the front page of every newspaper every day until people begin to realize where they are in the scheme of things.
We are serfs to the Capitalist economy.
66
@Al Mostonest As soon as I see the number 100% in your phrase "The economy grows for the rich (the top 10%) because they own 100% of the capital assets of the country." I see at once that you have more emotion and less arithmetic. When the economy grows then retirement plans grow and not all of these are owned by the rich.
To address our problems we need less emotion, less partisanship and more thought.
And, I AGREE with Krugman's basic message that the wealth is too unevenly divided.
6
@Ludwig
Thanks, and I will take your comment to heart. "Capital assets" is too broad a term for those major corporate and industrial assets that are necessary to create real wealth in our economy, those means that are controlled and owned by the top wealth-holders, perhaps the top 1%. I am open to a more precise term.
Perhaps I have too much "emotion" in this regard, as I am someone whose father worked in a shipyard, went to an inner-city public school (loved it!), and whose chance at education came with the GI Bill. I worked hard, found life and work interesting, and was lucky in marriage and family.
But the math is there for anyone to see. I, as an individual, may rise. Others may fall. But the imbalance is still extreme, and it is the kind of concentrated power that our Founding Fathers warned against in the Federalist Papers.
1
@Ludwig--------------------Thank you, Ludwig, for your thoughtful comment, but why do you dismiss Mostonest's statement "We are serfs to the Capitalist economy? "Is it because literally, there are no serfs in our culture, but how about the term "slaves?"
Even very honest humans easily fall prey to their prejudices and fears.
They need serious "help" to keep things real and rigorous, and as truthful as possible.
Not surprising! lots of our hard wiring was formed over millions of years of evolution when abilities to make snap judgements and use good common sense were most essential to our survival.
Not surprisingly sometimes there was a tasty deer rustling the bush and not a hungry lion - oh well - better safe than sorry.
More surprisingly is that reality often does NOT comport with good common sense either. Substantially reality defies our rational intuitions and honestly applied senses.
We tried to rise above our natures by developing rigorous systems of good logic and natural philosophy. A step in the right direction procedurally but still lacking what it takes all by itself to get to the truth of matters.
Enter the scientific method! Our eureka step to unlock mysteries and keep it real. A process that demands evidence, rigor, criticism, honesty, criteria to measure, measurement, and adjustment to fit reality not presuppositions or desires.
No matter how "truthy" Trump/GOP sound one can always tell they are self-serving and probably deceiving. Why?
They eschew viable models, facts, rigorous measurement criteria, real evidence, real problems, and/or real proven solution paradigms.
Latest example their shenanigans re: Clean Air - big clue - NO METRICS, NO MEASUREMENTS, POLITICAL OBJECTIVE WRITTEN ALL OVER IT!
10
It's confusing because the basic rules are being broken! The reality of things is being trashed!That includes economics—esp. wages, healthcare costs, education, and justice.
The GOP tells us security and income (taxes and defense) are driving prosperity, along with capital investment. That prosperity—an illusion from tax cuts and higher prices--continues to be swiftly absorbed by the 1%!
Obama's crowning achievement, securing healthcare coverage with no limits and including pre-conditions has made defending and expanding healthcare central. Wages and housing are too. Poverty and prosperity have created issues: We are bailing out farmers who were self-sufficient!
Tariffs and taxes have driven Trump's plein jeu, more noise than national success. Ask Wisconsin or Iowa soy farmers, Southern pork producers, small industrial manufacturers, or American icons like Honeywell, 3M, Harley-Davidson, investment and corporati will te[[ you Trump's numbers don't work—remember his casinos went bankrupt surrounded by money with rigged odds! His energy, tax, trade, consumer, and environmental policies, still rigs the odds so the corporati and wealthy win.
The VA, healthcare, education, housing are out of reach and opiate addiction is out of control. Banking rates and energy prices are going up.
Sadly, Trump has no trade goals after the fights. He embraces conflict for its own sake and invents hate-driven patriotism. Winning is his favorite illusion; it hides his desperation.
14
@Walter Rhett Thank you Mr Rhett, especially for your last line: "Winning is his illusion; it hides his desperation."
That's why we can't sleep.
Looking at that Dec. 2016 linked working paper by Piketty, Saez and Zucman, they analyzed pre- and post-tax income dating to 1913, and they highlight several points:
1. Since 1980 the average pre-tax income has increased 60% overall, but has stagnated for the bottom 50% (about $16K per year).
2. Because of tax deductible fringe benefits, the pre-tax income for the middle class (median to 90th percentile) has grown about 40% since 1980. This is dwarfed by growth for the upper 1%, who earned 27 times more than the bottom 50% in 1980, but 81 times as of 2016.
3. Those upsurges are now mostly related to capital income phenomena (i.e. not labor).
4. The higher women move up the labor income distribution, the worse their share (11% of the top 0.1% as of 2016).
9
GOP won't buy it. To measure it means it is worth understanding. Income distribution is an attribute of the common good, and Randian philosophy dictates that the common good and any pursuit to protect or enhance it is bad. Expect Paul Ryan to mock it sooner than later.
Warren Buffett said you can't make a good deal with a bad person, and this is one good deal the GOP won't make.
9
@WJL
"GOP won't buy it. To measure it means it is worth understanding. Income distribution is an attribute of the common good, and Randian philosophy dictates that the common good and any pursuit to protect or enhance it is bad."
But the GOP does not have to buy it - the Democrats just have to sell it.
Why haven't they done so already?
Have their donations from corporations made them Republicans?
1
President John F. Kennedy said "a rising tide lifts all boats." President Trump's sharply increasing GDP (at a rate Krugman and President Obama could only dream about in THEIR "new normal" just a few years ago) is doing exactly what JFK said it would. We have record employment in America for blacks, Hispanics, Asian Americans and women. There are four million less people on foodstamps and welfare, now earning and investing for their own futures.
For Krugman to imply that only CEOs like Bezos walk into a bar and raise the average income level is absurd to the extreme. Under Trump policies, almost anybody can walk into a bar and the net worth will be more than it was under President Obama.
This is definitely NOT the gloomy predicament Krugman predicted so harshly and desperately wants us to believe.
4
Then you should be in favor of this bill, as should Congressional Republicans.
If the "rising tide" still lifts all boats, then the kind of statistics that would be gathered under Schumer-Heinrich would confirm that.
If the "rising tide" only lifts a few boats while filling the rest with water, we need to know that.
7
@Micoz
The point about Bezos is just math. AVERAGE means total income divided by total people. If a billionaire walks into a bar, the total income (or wealth, whichever measure you choose) will most assuredly change dramatically, while the total people will only change by one. It's just math. Really basic, elementary school math. And you describe it as absurd. Math. Easy, easy math. Is absurd. Math.
1
@MicozI f the economy is doing so well, why did Trump stop the pay raise for government employees voted on by the Senate? Oh, right, he said the fiscal state is so bad we can't. for national security, afford the raise!
Headline news in today’s WSJ tells us American corporations reported record profits this quarter, with after-tax profits on the whole up a whopping 16%. The WSJ acknowledges this increase is largely the result of the huge corporate tax cut just enacted by the Republican Congress.
Meanwhile, back at the ranch, wages haven’t budged.
I’m not an economist by training, but I think I can put two and two together.
57
@chambolle: Right, and from the result of 2 + 2, subtract 2.5 for inflation.
3
@chambolle The trouble with your arithmetic is that, out of that four, the 1 percent have about 3.5 and are effectively using propaganda and fear to persuade too many among us in the 99 percent that our .5 is actually 2.
Averages. Gates and Bezos walk into a bar...
@chambolle Yes, and let's get down to brass tacks and call it plainly what it is - WAGE THEFT
One agrees that something like the Schumer-Heinrich bill is a good idea. One would also understand why Republicans would believe that this gathering of accurate detailed economic information idea has gone far enough, thank you very much.
I would like to see another economic statistic gathered by the government become more nuanced; the jobs number. We learn about the number of jobs, but very little about the economic character of them. The job of a highly educated, highly paid, say, nurse practitioner, is treated the same statistically as a no education, no future, minimum wage service worker, even though each impact on the economy is vastly different.
It can be easily demonstrated that the class A job of nurse practitioner, or aviation mechanic, by its own economic impact, generates any number of other class B and C jobs. Were the government to consentrate its efforts on encouraging the class A jobs, the other lesser jobs would pretty much take care of themselves.
Just a thought I think is unlikely to be embraced by any Republican any time soon.
17
This would improve on the reporting of data, but it would do nothing for the problem of wealth and income inequality, which needs a process of redistribution more than anything else. Someones's salary should not be 270 times more than the mean. I realize this is stating a moral imperative, but in this case it seems that there is something immoral, something quite decadent, and something quite dangerous, especially in a democracy.
What we have to admit is that government works for the wealthy and only the wealthy. That is wrong. If the Trump era produces in anything, it will be the awareness on the part of Americans that business needs to be reigned in and made to work for all the people. It needs regulations that benefit all, not just a small group of wealthy people.
23
@Reuben Ryder
If the economic crises of 07 and 08 didn't do raise awareness that business needs to be reigned in, then I'm afraid Trump won't either...
13
@Bret Why? You forgot to say. In my view, the earlier debacle was of an economic kind, while this one is of a moral kind. There is a difference. One needs an understanding of economics. The other only needs common sense. I realize that there is a bit of a wish here in that the awareness may occur among people, who have only been pressing on single issues, based on their beliefs, rather than something that is much more obvious and has been in front of our very eyes for decades now. It is not just Trump. It is the entire political process that includes the actions of both Republicans and Democrats for at least 3 decades. I guess the question is whether or not people can change. If not, then we will have to vote with our feet.
The trend is for the government to produce numbers that hide the decline of the middle class. Measured in the same way it was 40 years ago, unemployment is about 7%, and the Dow Jones mostly tells us that Google, Facebook, Amazon and a handful of others are doing great. If you want better numbers, start by looking at why we are seeing the numbers available now - it isn’t because nobody knows how to come up with something to accurately gauge the state of the middle class.
9
It's interesting that Krugman used GDP in his previous column to basically invalidate any fanciful notions that economic distress might have played a significant role in the rise of far-right politics in Poland.
Now he's saying it doesn't tell the whole picture. He might have mentioned this in his last column as well when it wasn't as convenient to his argument.
@TSK In this column he says it's useful. He's just calling for additional measures. Attacking the dismissal of the comprehensive value of the GDP is attacking a straw man. It does nothing to explain why additional measures are no good. Anyone who believes less knowledge is better can only be trying to sell an irrational faith or hide a swindle.
Gross Domestic Product does not really measure production directly.
It measures it indirectly by solving the following accounting equation:
Beginning inventory + Production – Ending inventory = Sales,
Production = Sales + Ending inventory - Beginning inventory
When a farmer…
(a) Sells a futures contract, or
(b) Contracts to export his crop in the future (at harvest time or some time thereafter)
That farmer has not produced anything, and…
…inventories have not changed.
Question for Dr. Krugman:
Is this counted as GDP anyway?
If so, would the increase in GDP be overstated?
1
There's plenty of writing in Prof Krugman's history in which you can find his thoughts on how GDP is or is not useful and the adequacy or inadequacy in its measurement. You should not expect him to spend precious column inches on that dissertation every time he mentions the measurement in his work.
1
@Keynes
I'll try to answer this one. In the context of GDP measurement, I think it is best to think of futures hedging as just a purchase of price insurance. A vanishingly small portion of futures contracts are settled by actual delivery. Instead the futures contract is liquidated with the exchange of money, and the actual commodity is delivered and sold the normal way. There are also forward sales to elevators, etc, but since such sales are contingent on harvest and delivery, these contracts should not show up in "sales" for GDP purposes before delivery, either.
1
Macro economics and macro analyses are useful and necessary for the economist and policy makers. However, the numbers are representational, and behind the numbers are certain definitions that represent reality which means that they can quickly become less accurate or erroneous at the micro level due to the inevitable complexity and diversity that marks real life. Krugman shows this in his assessment of the tax cut. And for example if Medicare for all is enacted in some form, the impact and consequences will be similarly uneven despite the appeal of the slogan. Humility and thoughtful inquiry which are in short supply these days are needed as we read and reflect on the macro numbers and policy proposals.
3
As anyone who has ever negotiated a union contract
knows. the most important info is the salary scatter
which shows who gets what in the negotiations.
here the uber rich got all the gravy. everyone else
got bubkes.
48
Soaring corporate profits that produce soaring corporate income tax revenues for our federal and state governments for education, health, roads & bridges, etc?
No, soaring corporate profits produces soaring tax avoidance that benefit the 1%. Who can we blame for the trillions of dollars in corporate profits that go untaxed every year?
No, it's not Canada. Blame Britain. Watch the documentary "The Spider's Web - Britain's Second Empire" and learn how the UK became the epicenter of tax avoidance after WWII.
11
@Nancy
"Soaring corporate profits that produce soaring corporate income tax revenues for our federal and state governments for education, health, roads & bridges, etc?"
Corporate taxes comprise only 9% of total tax revenues. And they probably get most back via corporate subsidies.
1
@Fourteen In the late 50's and 60's, corporate income tax revenues were 25% of federal tax revenues and most states tax corporate profits so the less they pay, the more the 99% pay or suffer from budget cuts to education, healthcare, etc. - the economy grows for the 1%.
2
The USA was founded by British tax evaders.
So, why is it that CEOs always receive the scorn in pieces from Krugman and all of the other inequality complainers? How come you never see Tom Brady's compensation so vindictively compared to that of the peanut vendor, or even one of his linemen. Might it be that in business there are superstars just as there are in sports? I'd say that in both cases people are paid according to their monetary value to the organization. While this may be unequal, it is often the best path to building a winning team rather than a losing one. Why is this truth so widely understood and accepted in professional sports, but so despised in business?
4
Because in sports you can tell who really has talent. And fans get to determine pricing by ticket sales. With CEOs they usually are hardly more talented than their workers. Look at the CEOs of the big health insurance companies. Do you think they have any clue about interpreting clinical outcomes for example? None of them have any advanced medical degrees yet they have the power to determine who gets what care based on nothing but paper pushing.
68
@Southern Man
Only when it is excepted that an individual's time, a portion of the lifetime, can be valued as low as $4.00 for an hours worth, or $4,000,000.00 for an hours worth, can we even talk about the examples that you offer.
What has happened to us as average citizens that the idea of moderation in all things has lost any meaning? We as a people are not so different from the movie "Elysium". Our wealthy citizens live lives so far removed from the rest of us that they might as well be living on an orbiting space station whose pampered existence is completely dependent on the services those on the exploited earth beneath them provide.
40
@Southern Man
Sports teams are owned by billionaire narcissist, egotists who are totally divorced from reality. The idea that someone should get $25 million dollars for throwing a football 16 days a year is crazy. But then, so is the idea that someone else makes/takes enough money to pay that.
I agree with Dr. Krugman that we need better reporting about distribution of income.
One statistical comment.
The mean or average of a set of numbers is calculated by adding up all the numbers and dividing by the total number of the individual numbers.
The median is found by ordering the individual numbers pending on size from top to bottom.
The median is the number at the midpoint.
The mean and median can be very different if the distribution of the numbers is badly skewed.
In Dr. Krugman's Bezos /bar example suppose there were 10 people in the bar. Bezos enters. The mean or average wealth will vastly increase but the median will change very little if at all..
What are needed are not only the mean and the median but the variance which is a measure of how spread out the distribution of numbers is.
Bezos entering the bar would yield a very large increase in the variance.
16
It has long been obvious that developed economy GDP growth has little to do with human welfare. It matters to those with significant investments, e.g., capital owners, but not to most people, and other than meaning that people work more hours for someone else's benefit, the selfsame capital owners, it has little effect, and certainly not much that could be considered positive.
That we obsess about work and the economy means that most people's lives would not be much improved, other than economically, even if the distribution was more evenly distributed. The nature of our society is such that the US would still have a much lower quality of life, especially for those that can't be used as fodder for wealth creation.
6
To paraphrase the classic Buddhist adage, if you see the Bezos on the road, kill 'im.
1
Unfortunately, workers are stereotyped to perform one function and keep quite about everything else. The Senior VP of human resources at Amazon does not participate in growth strategy but rather tries to hide people that will perform reliably without complaint. Amazon, have a tiny group of people that determines growth strategy and everyone else is relegated to perform redundant, repeatable function without a specific need for a liberal education. Workers are mostly unimportant, skill wise, but are necessarily needed if they are perfectly aligned with the company and perform without complaint. Worker are rated on alignment behavior solely. As such, there is an unlimited supply of workers that happily dummy down to alignment expectations and therefore are technically not wage demanding because they cannot distinguish themselves from other workers or demand wages beyond the human resource bracket. Thus wages are essentially frozen because cognitive skills are not helpful or needed for employment. Welcome to dystopia.
11
Why isn't Amazon required to obey OSHA rules like the rest of us? Isn't Amazon breaking every law in the books? And tax evasion … well, the rest of us are forced to pay taxes. The problem with the rich is they are now above the law. So do we have to have a revolution and use violence to restrain these people, since they won't obey the laws?
Dr. Krugman, this may be too micro for you, but you might consider addressing the issue of stock options in some future column, especially as a form of compensation.
Any form of compensation that’s highly leveraged is a potential source of extreme income inequality. Inequality that’s not justified. It seems to me that, as a form of compensation, they only make sense if they’re tied to long term stock appreciation—five or ten years. And only then in a limited way. Short term options are almost a vehicle for insider trading, or a reason to manipulate appearances to boost the price of a stock, cash out, and leave others holding the bag. Final average salary deferred compensation plans can have a similar leveraged effect.
How much should any one executive be rewarded for a general bull market?
16
Too many voters still believe that the rich get that way through their "hard work" and thus receive their reward, so it's OK. They still don't grasp that, particularly for the last few decades, it has more to do with how the economy and the laws have been structured to favor a few at the expense of the many. We have seen this movie before, for example in the gilded age with its robber barons, which ended only after society, through government, finally stepped in and put a stop to the abuses. We need to do that again. If only the Democrats could come up with a straightforward program and a simple slogan that really gets this message across to the voters.
102
@John Binkley
The problem is that the Gilded Age, which is part of the Industrial Age, needed labor. Our age has a big surplus of labor. There was a very good op-ed piece here just a few days ago that pointed out most of the jobs being created are temporary or part time.
17
The best measure of the financial health of working families is total wages as a percentage of GDP. In short, this measures a worker’s ability to purchase the fruits of their labor.
This book “Why Nation’s Fail” by Daron Acemoglu and James A. Robinson uses a similar measure to demonstrate empirically the need for a higher worker share to sustain democracy and human rights.
Since 1972, total wages/GDP has deteriorated from 50% to 43% despite the portion of women working and their pay relative to men doubling. Nevertheless, restoring working family income/GDP to 50% would require a pay raise of $10,000/yr for every full time worker. Such a change would put us back on course to the win-win economy of 1948-1972.
Most economists point to automation and off-shoring as the source of this decline, but loss of competition domestically and internationally respectively are the real culprits. Domestically, restoration of competition reduces corporate profits to a fixed percentage of sales. In that case, any labor reductions due to automation are reflected in an equal reduction in the price of goods and services, thereby preserving working family purchasing power.
Similarly, the effect of off-shoring is softened by reduced prices through competition and balanced through the application of sovereign wealth to compete internationally on emerging technologies such as electrified transportation and renewable energy generation and storage.
37
For many years the graph of productivity vs. wages featured a tight correlation. Then in 1971 Bretton Woods was cancelled and the lines began to diverge. The rich became greedy beyond all measure and had to have all the gains themselves.
Bring back that correlation again and it would begin to alleviate the horrid inequality that is tearing apart the US.
33
Any discussion of the financial health of this country needs to acknowledge that credit card debt passed the $1 trillion mark this spring. All of the millionaire CEO's who are happy about active consumers don't look past their own inflated compensation. This is not a sustainable model. And the chickens always do come home to roost.
52
Dear Mr. Krugman,
This is a great article. I wonder if you could also give us your thoughts about the effects of this kind of of income distribution. For example, when Bezos walked into the bar, you wrote the average income among patrons went up billions of dollars, but that didn’t mean that the regular patrons got any richer. If fact, it probably meant the opposite—they suddenly got a lot poorer. Especially if Bezos had a couple of friends with him and the bartender started serving more expensive drinks and the others on the bar were expected to keep up. This is a metaphor that is playing out across America. People all across the country are expected to keep up with soaring luxury at the top of the income bracket to feel like a legitimate member of society. (30,000 per year for college? 1,000,000 homes in previously non affluent suburbs, 25,000 cars, the newest iPhone, 50,000 weddings? You name it—to play the game as the American citizen has gone up. It’s important to keep in mind that if some people’s wages go way up, and the market responds, that will other people’s wages will have just gone down, even if the salary remains the same.
97
@Chris. Every one of those numbers you cite is actually on the low side. The faux-centrist, false-equivalence weekly compilation magazine The Week has a regular real estate feature of selected homes for sale. They seem to average $3-4 million, with the Bargain of the Week typically in the high six figures for lesser folks. A friend told me that his daughter and son-in-law, who work a few hardscrabble acres in neighboring county, just bought a new pickup truck for $60k.
This is not sustainable.
@Chris A valid point. It also used to be that within the more affluent circles, erudition was valued and looked up to. Now, prestige seems to be all about money, stuff and gadgetry, discussions about sports etc. I'm sure there's a link there with the decline of the humanities as college admissions increasingly favor raw analytical power.
Statistics are nice for people who make their living producing and interpreting them, but when it comes to governing, politicians will take the numbers they like and leave the rest. What we really need is elected representatives who listen to the people they represent. Not to the polls, but the people. They should get out of Washington and into the neighborhoods, homes and workplaces of their constituents. Sit down at a few kitchen tables and go through the bills they have to pay. Ask them what they worry about and what they want for their children. Ask, "When was the last time you got a raise and how much?" Ask how many jobs or how many hours they work to earn what they earn. Ask how much they have saved for retirement, how much debt they have, how much in savings for a rainy day. In others, get real with the people they represent. There is no "average American." Some are doing very well, some are struggling and insecure, and others are out in the cold altogether. A politician's job is to do what he or she can to maintain or improve the circumstances of every person they represent.
16
@abigail49
Most elected representatives listen to the people who really count--the ones who are their friends or give their campaign or their party's coffers money, or influence the companies they work for to encourage them to contribute to PACs supporting the politician and the causes near and dear to them.
7
FWIW, I think a better source for median income of workers is the Census Bureau's Table P-36. Full-Time, Year-Round Workers by Median Income and Sex. It shows that median money income of men has not changed since 1974, a staggering fact. On a hopeful note, women's earning are up almost 40% since that time.
7
@gregc Women's earnings need to be up much more than 40% (100%?) to have closed the unequal with men pay gap.
6
Given the fact that inflation adjusted income has been mostly flat for average Americans since 1979 , let’s see how many citizens will vote against this administration, whose tax cut law favored only the top earners , this coming November.
28
@Inter nos
A lot of voters aren't smart enough to get past the dog whistle. They'll chew their own foot off and eat it before acknowledging it's been caught in the GOP trap.
The Gross Domestic Product -- is Gross.
Long before Piketty, one could have simply used median, rather than mean, family income to track our economic progress.
The wealthy seem convinced that the least amount of sharing possible -- just enough to avoid the guillotine -- is all they need. Gated estates and armored limousines will suffice. The wider the income inequality the better.
A case needs to be made that more equitable distribution of economic growth is the most stable and sustainable approach -- so today's billionaires don't need to worry about their grandchildren going the way of the czars'.
20
GDP growth in the U.S. is a political tool to emphasize progress, as is the heralding of flagship enterprises like Alphabet (Google), Microsoft and Amazon as proof that the economy is booming. (The aforementioned companies prospered even during the 2008-9 recession while most other companies suffered).
Professor Krugman's examples of disparity are logical. Growth is often uneven, and the unevenness is hidden by the headline growth figure. Lend me one billion dollars and I will buy one billion of assets, borrow again against those assets and have a massive balance sheet ....... until the time to repay principal plus debt shows I have been swimming naked (as Trump probably is).
GDP growth? What about wages? Infrastructure? Education? Healthcare? Have any of these improved as a result of the headline figure?
One final point: I wonder how many Republicans were cheering Obama's GDP quarterly growth rates of 4.7 % in QIV/2011, 5.1 % in QII/2014 and 4.9 % in QIII/2014?
32
Why does Paul hate the rich people so much? What have we ever done to you or anyone else? My Dad, for one, invested millions of dollars in the US in the early 2000s and thanks to Trump's tax cuts I now get 3.5 million dollars a year from my US holdings, up from 3.1 million dollars before tax cuts, which makes me a lot more likely to invest in the US once again. I mean, I am not going to be investing in Russia, that is for sure...
1
@Stas
The article is not about hating the rich, it's about fairness to those down the ladder. The extra $400 K to you due to tax cuts makes little difference in the quality of your fortunate life but it does increase the burden for those less fortunate. The difference has to get made up and obviously not by you.
13
So you didn't have to accomplish squat on your own but still live exceeding well off your father's investments? That is the definition of gilded age. Conservatives who think individual merit should determine a person's value should take note. Maybe a 100% inheritance tax would be more in line with Republican ideals. Then freeloaders like Trump and Paris Hilton would have to make their own way in the Libertarian brave New world.
@Stas
Let's see...'Stas' from 'Russia.' Daddy's an oligarch, maybe?
Look, do me a favor: take your gazillions, start a nice, reasonably honest, capitalist-style business, and help create a freedom loving middle class in your country that respects rule of law. Next, hold some real democratic elections instead of your sham system run by a handful of oligarchs. Then, someday, you might have some businesses in your own country that are worth a damn, and I might be interested in investing my millions in your country!
I'm glad your daddy has the common sense to understand that your country isn't worth squat. One of the reasons we are worth squat is because we have a strong middle class, democratic elections, and, until recently, we expected our wealthiest to pay some taxes so our middle class could continue to thrive. The way I see it, every day, we become more and more like you.
Then what's your daddy going to invest in?
1
"...adjusted for inflation, the median male worker earns less now than he did in 1979."
So much for male privilege. I notice that over the same period, real median female wages have gone up by 24.4%:
https://fred.stlouisfed.org/series/LES1252882800Q
5
Yes, female wages have increased by a quarter and are still not nearly on par with male wages. So much for social and economic equality. White men seem to be on top again, despite your complaints to the contrary. Sorry you feel so unloved. In a fair and equitable society their would be no need to differentiate between men's and women's wage rates, or between white and black wage rates; there would only one rate. But our current unbalanced system has maintained imbalances and thus discrimination.
@tanstaafl a sad statement for women.
Yes, statistics tracking the middle class would be useful, but there are forces greater than politics working here. There is a growing wealth distribution because wealth in a global information technology economy is generated by cheap human labor and even cheaper robots and AI. Sure, it would be illuminating to be able to statistically witness this shift of wealth, but do we have the stomach to demand the technology titans share their booty?
Humans have been around a long time and we've figured out a multitude of ways to tax their incomes and even their existence. Robots and computer programs are new and, although they can efficiently replace human labor, we lag in our ability to shift the tax burden from human labor to machine labor. Perhaps we need a reliable statistic to track how many manhours are represented by each manufacturing robot or AI algorithm. Human labor is destined to decline in value and the shortfall must be calculated to balance the economic power shift.
8
"But there’s a big difference between estimates produced by independent economists and regular reports from the U.S. government, both because the government has the resources to do the job more easily, and because people (and politicians) will pay more attention."
Really? Republicans under Trump are realizing they don't have to listen to the gov't experts if they don't want to. And I suspect that Trump's decision to take away the wage hike for federal workers is part of a strategy (used by Gingrich as well) to weaken gov't expertise and resources as well. So good luck with that.
Democrats should not wait for a gov't study to act. It's not as though Trump supporters would care about the gov't analysis anyhow. They just need to explain it to the public in a way they can understand.
But if Democrats take control of the Senate, the first order of business should be to get rid of the carried interest loophole.
16
The problem is that the colloquial word "average" stands for the statistical term "mean", when it would have been more helpful for it to stand for "median".
5
Senators Schumer and Heinrich are focused only on the distribution of wealth within our nation, but what about the loss of wealth to other nations as Globalization moves investment billions and businesses out of the country and no longer contributing to all Americans, not just by economic class?
4
When I was a kid, my father would tell me all the time when it came to income and taxes that the middle class always gets it in the neck. The rich and the poor somehow made out. He didn't need any statistics to tell him that.
Although I favored the new tax legislation because it would help the overall economy, I'll wind up paying more in taxes because of the changes. We're still getting it in the neck.
4
The poor don't make out. They are on the streets. But at this rate, the middle class will soon be poor. Fact is, we let the gov't sell out the working class, so now they are after us.
1
@Stephanie Wood
I'm not referring to the homeless although they have many support systems if they choose to take advantage of them. The low income people have many government support systems, even more today than when my father was alive. The middle class pays most of the taxes.
If the largely ill gotten fortunes controlled by the wealthiest and passed down from generation to generation were ever possible to quantify and that number divided by the immediate beneficiaries, and the lives of those immediate beneficiaries down through the ages examined for their utility to others or even to themselves today's wealthiest would be more than anxious to be relieved of their oversized burdens in favour of simpler lives and happier destinies for themselves and their loved ones.
4
One of the things about global warming/climate change is that CO2 ppm is directly tied in to overall production--the energy with fossil fuel emissions that are required to make it. And roughly half these products are unnecessary, especially in the wealthier countries, where most of the GH gases are produced. This means if GDP fell 50% tomorrow the planet and future generations of humans would all breathe a sigh of relief. (A better outcome would be a zero emissions grid and transportation, which can be done in a very short time, if there is the political will to do this, as the technology is already available.) Another way to put this, in order to satisfy Trumpsters and Putin, and Saudi princes and Americans who drive oversized vehicles. we are endangering life on the planet as we know it every day.
On walking into a bar with Jeff Bezos, when I did that everyone's median income immediately came down, because he insisted we all buy him a drink, though he did offer us free shipping at Amazon if we would just give him $99.
12
The simpler parts of economics make sense to me, for example, the law of supply and demand. I understand how complex deductions can be used to make money---thus the Black-Scholes equation can be used to value derivatives if one makes the right assumptions about the random fluctuations in prices of a commodity.
But macroeonomics seems quasi-fraudulent to me. The first problem is that it hides an implicit value system that many would find repugnant if they thought about it.
It is based upon the notion that the value of an object depends on how much one is willing to pay for it. It assumes that people are rational when they bid for objects they want, an assumption that seems wrong.
A painting by Picasso recently sold for $106.5 million dollars. Presumably if the price of the painting doubles, the GDP represented by the painting also doubles. But doubling the price of art does not double the number of autos that the US can produce.
One can imagine a world in which everybody has an iphone but the vast majority of people starve because there is not enough food. Who among us would make such a choice?
Focusing on GDP makes us try to solve the wrong problems. We try to produce more material goods, when we might be better off at a lower population density which preserves the natural environment.
Population growth drives the inequity between rich and poor and makes lives of the poor wretched.
Before standard macro makes sense we need to achieve zero population growth.
6
I support the development and use of better statistics to depict how well the US economy is serving the American people. While we consider this, recall Ghandi's suggestion: "The true measure of any society can be found in how it treats its most vulnerable." Perhaps we need to look at the bottom 1 percent, not just the top 1 percent.
24
in addition we need information on living wage unemployment, i.e., count how many people are not earning a living wage.
13
Krugman's headline is correct, even if most of the rest will be wrong. The four week moving average for new unemployment claims reached its lowest level today since 1969. Unemployment rate is 3.9%. Q2 productivity growth was nearly 3%. Job openings now stand at 6.7 million unfilled positions. Job quit levels (people voluntarily leaving current jobs for better ones) is rising, meaning, people are finding better employment. The employment cost index thru June was up nearly 3% year over year. Private sector wages are up over 5% over the past year and consumer spending is up over 5% year over year with gains in hotel, restaurant and prescription drug spending leading the way.
I'm typing this before reading Mr. Krugman's article. But I can already guess that I'll read how GDP growth alone just does not paint the complete picture of our still struggling economy. It makes for an appropriate op-ed here but see this for what it is - campaign fodder to try to discredit Trump before November. Unfortunately, a lot of very relevant non-GDP data makes clear that liberals, including Mr. Krugman, are just not correct.
1
@Keith
Private sector wages up 5% in last year? Not according to Trump's department of labor. DOL break down by category is downright depressing. Please cite a credible source to back up your assertions.
29
@Keith
I'd really like a source for that 5% wage increase. I'm also laughing at how prescription drug spending is a highlight of our economy, especially since our health metrics compared to the rest of the civilized world decrease every year. I guess people that buy all those high-priced drugs are the only healthy people we have now.
This is an article about who benefits from our thriving economy. Maybe you should try reading the article first, next time.
"I'm typing this before reading Mr (sic) Krugman's article," pretty much says it all, inasmuch as it "Dr.," and "TL:DR" is perfectly available to you.
Otherwise, us commies hardly need to "discredit," Donald J. Trump. He's pretty much got that handled all on his tubby lonesome. Why just today, he moved to hand the top 0. 06 another $10 bil/yr. by way of indexing capital gains taxes to inflation.
I don't mind theft; I do object to the suckers lecturing their betters on why theft is nifty.
When I saw media report of the Shumer-Heinrich bill, I hoped that you would do a column on the concept. National distributional accounts are needed to help educate the economic press and public. This report can't come too soon.
Capitalism works but if a government doesn't step in to give labor more power, the concentration of wealth and poor distribution of income in the U.S., which has persisted for nearly 40 years, will only persist becoming more unfair as each year passes.
The concentration of wealth and the outrageous income gap for American households in the bottom 80th percentile harms the economy.
I want to use this information to support government investments in projects with broadly shared economic benefits: transportation, infrastructure, and R&D in new non-fossil sources of energy and provide for the retraining of our fossil energy fueled industrial base,
Subway and bus riders that are required to take very long bus rides are typically at the bottom half of the income distribution but they are required to pay higher prices for their food and consumer goods that travel over our congested highways and much higher healthcare costs from highway fatalities and injuries. In addition, most of the lower priced homes are near or commuters use polluted corridors that are known to harm human health including causing retardation of brain and lung development of children. These are well-known facts but the Congress has not acted aggressively to improve our commons.
20
Trump supporters who contribute to these NYT comments sections may well be a meaningful sample of his base, precisely because they're likely to include more well-off Trumpists than economically pressed ones.
At any rate, they generally seem confident that Trump will receive the gratitude of most Americans as long as the economy remains good; "the economy" meaning the levels of GDP, employment, and, of all things, stock-market indices. However, even good employment numbers don't mean that people with jobs are being adequately paid or well treated, much less congratulating themselves on having bought Apple at only $150 a share.
I know that some of Trump's working-class supporters are liable to be tempted away from their economic interests by unrelated appeals, but I wonder how many will actually respond to box-score economic indicators while watching their own economic condition continue to stagnate.
6
If they're that well-off,mit seems odd that they're so often semi-literate and poorly-informed.
1
@Robert
Thanks for your reply. That's a zinger, but I can't resist the temptation to top it:
Who do we know that is semi-literate, poorly informed, and notoriously well off? (Hint: He's shy about releasing his tax returns.)
Schumer and Heinrich rightly want to inform Americans of who is benefiting from American growth and who is not, and a reality check is sorely needed since the stock market has never been an accurate indicator of how average Americans are faring overall. One thing we can all be sure of is that the people benefiting from the recent highs in the market are mainly a lot of multimillionaires with more money than brains, who are especially abundant in money to burn after receiving an additional trillion dollars in largesse from Trump and Republicans' tax bill.
As is always the case when their bets go wrong, we can all be sure who they'll call for bailouts, and as the record has shown time and again, it won't be ghost busters.
6
Why not make all salaries and incomes of everyone in the country public knowledge? Let's make all contracts, even private ones public knowledge. Let's open the books of every entity in America to public scrutiny.
You want an honest economy, give everyone equal information. Afraid your co-worker is making more than you (woman or man)? Look it up. Afraid your work isn't valued honestly, take a look at the company books.
It works in professional sports, it can work for all of us.
10
My income before taxes is a princely $69,000, after taxes, it's about $30,000.
@Edward P Smith I fully support this idea. Economic theory is based on the idea that full information is necessary for a market economy to operate. Secrets are generally bad for the economy. It would also impact political life as well. Imagine a world with no non-disclosure agreements!
1
@Edward P Smith
Sounds good Edward.
Since you care so much about honesty and transparency you go first.
How much money did you make last year?
I need to post , here, for readers unaware of how much Paul Krugman contributed to to stagnant wages of US worker, what he wrote in 1997, in praise of outsourcing
"" I guess I should have expected that this (Pro Outsourcing) comment would generate letters along the lines of, "Well, if you lose your comfortable position as an American professor you can always find another job--as long as you are 12 years old and willing to work for 40 cents an hour."
Such moral outrage is common among the opponents of globalization--of the transfer of technology and capital from high-wage to low-wage countries and the resulting growth of labor-intensive Third World exports."
a) Read the entire article and you will find nowhere that Mr. Krugman realizes that the complaint of readers refers to falling wages.
b) Read the entire article and you will find that Mr. Krugman has not only zero sympathy for US workers losing their jobs to outsourcing, but that he does not realize, that in the global economy he advertises, the wages of US workers exposed to global competition must fall to the global average
Read the NY Times "IBM now has more employees in India than in the US" to understand that this includes high skilled IT labour
Read Cummins company letter that it its largest R&D center is now in India - 2 500 jobs in India - in India
NOT in the US that this applies to engineering jobs
https://www.cummins.com/news/releases/2018/03/01/cummins-opens-new-state...
18
Nice try, bot-boy. Okay, not actually that great a try. Maybe try something that don't boil down to the same old attacks on pointy-head intellectuals who may very well be, you know, jews and stuff?
Really a shameful post.
@Woof
Global economy - global misery.
The current economic relationship between extremely wealthy Americans and average Americans is something like heads we win tails you lose. When the economy is strong most of the gains go to the wealthiest. When the economy is week it’s an opportunity for wealthy investors to scoop up assets at bargain prices from weak hands. Republican/Trumpian economic policy creates, accelerates and exaggerates this vicious cycle. If the long term goal of Republicans is to make American labor price competitive with third world labor, these policies may just work.
25
No one fights back, in France, people would be rioting.
Chuck Schumer has been a defender of hedge fund profits being taxed as capital gains. Not obvious to me that his bill is not just window dressing to show concern without actually taking any action that would reduce inequality: like taxing all income equallyno matter what the source and raising the ridiculous cap on Social Security taxes. Until that happens I will not think of Schumer as a friend of the little guys, Nevertheless, having to chose between him and Republican Trump lackey I will still vote for him.
11
@serban
When President Obama proposed to close the carried interest loop hole, Senator Schumer blocked it, which is somewhat understandable considering majority of his funding comes from Wall Street, law firms and real estate companies. And under the 2018 tax reform, the loop hole lives on with some restrictions, so President Trump didn't close it either even though he promised to do so. And "real estate Trump" contributed thousands of $ to Senator Schumer. They're all the same.
34
In 1979 rule 10b-18 didn't exist and so stock buy backs could not be used to artificially inflate stock prices. Back then the method of increasing the value of a stock required that you increase the dividend or expand the company.
To increase these corporate values productivity has to increase and executives work find ways to do this without jeopardizing the future growth of their company, i.e. just slashing costs was understood to be a short term fix.
Recent calls to modify the rule would go a long way toward restoring the balance that would be determined by the reporting of where GDP growth occurs in the economy.
We already know there's a problem. we should start to take some actions now as well as creating better ways to focus what is causing that problem - rising income and wealth inequality.
14
@Kim
This, more than anything else, has lead to our current state of oligarchy. A typical CEO "compensation package" includes a 7-figure salary, but an 8/9-figure stock grant. Announcing a huge stock buyback artificially inflates the share price, making it the easiest form of insider trading.
And given the massive market consolidation, most huge conglomerates operate without much viable competition, meaning there is no need to innovate, invest or expand. So all profits can be dumped into stock buybacks.
11
@Kim Except the evidence that buybacks automatically boosts share price is scant. The evidence is quite clear that dividend increases do a better job of promoting share price growth because the return goes directly to the shareholder's pocket. So I don't believe buybacks are the share price growth problem you worry about although I agree that dividend growth is far more preferable.
I don't think having yet another economic statistic would be helpful here. Even if the proposed bill passed and BEA managed to calculate meaningful and accurate distributional national accounts, all that would do is to confirm what we already know - that the Great Gatsby curve and the Great Divergence are still very relevant and prominent now and has been since the 1970s. We should be directing our energy in figuring out the causes of stagnant employee earnings in light of historical low unemployment, record corporate profits and one of the highest consumer sentiments. And just blaming it all on the Republicans is facile and incorrect since this has been happening even when the Democrats were in power too. The economists (preferably one handed ones) really need to figure this out and explain it to us so we can put our efforts in the remedy, not another static to confirm what we already know and have known for some time now. And honestly, would we be calling for a distributional national accounts if we had 4.2% GDP while Mr. Obama was still President?
3
@Integra Casey Confirming with facts what we think we know can be very valuable. It is one thing to argue that the US suffers from growing economic inequality; it is quite another to buttress that claim with reliable statistics, which will enable us to measure how much inequality has increased.
11
@James Lee
There are voluminous amount of statistical data points, charts, graphs that quantify income inequalities, CEO/employee income ratio, economic mobility, and various permutations therein on pre- and after-tax basis for many periods, some going back to the 1940s. Maybe the government can disclose the DINA for the top 1% and bottom 50% (already being calculated) along with the GDP.
4
My economic concern as an American remains the same as before.
We borrow more and more money in curing more debt which is now in the trillions in order to keep the economy moving forward.
My fear is that at any moment the world, including Americans, will suddenly decide they no longer have any confidence in the dollar behind the debt causing the whole thing to collapse.
If that happens our currency becomes worthless and our lives come to a grinding halt!
4
@michael kittle
If that were to happen, the entire world economy would be destroyed within the span of an afternoon. All currency is backed by debt and no nation can realistically pay down all of that debt. If the dollar collapsed, the yuan would tumble and the euro would be next. There would be widespread panic, bank runs and a massive worldwide depression (or global nuclear war) would follow.
4
@michael kittle A worry with some legitimacy except for one fact - whose currency is strong enough to replace the Dollar? Not the Euro. Not the Yuan. No currency in South America can do this and Japan is fading. Probably one of the strongest currencies in the world beside the Dollar is the Swiss Franc - but the country is too small to be the world's reserve currency. I think your fears should be more rightly focused on inflation.
3
@Keith
Inflation is what will lead to the devaluation of the dollar to make it more worthless. Between 1970 and 1982 the dollar decreased in value by 55%. So if you had $100,000 in 1970, it purchasing power was only worth $45,000 in 1982 leaving aside interest.
1
"If Jeff Bezos walks into a bar, the average wealth of the bar’s patrons suddenly shoots up to several billion dollars — but none of the non-Bezos drinkers have gotten any richer."
Keep that in mind the next time you talk about the average crime rate in the US decreasing and how your jogs through the park show that all is well with the world.
"adjusted for inflation, the median male worker earns less now than he did in 1979."
Another meaningless number - without looking at how the incomes are distributed above and below the median. The top 10% has seen their wealth grow nicely, thank you. You expected something different from a nation of burger flippers and gig workers? Both of which drove the Obama employment numbers upwards.
3
@Jp
Median is a much better indication than average.
Look up what a median defines. Your critique is meaningless.
“What’s in a name?” It's all trickle down, haven't you heard? That's just another name for the people above trickling down on us. And it doesn't smell so sweet.
So many of us have fought and died to preserve democracy in this country. Humans inherently want to be free. We look at totalitarian regimes, like Russia and China, and we want no part of that life.
We now have Trump as our president, and we are poor. We are poor allies. We are poor stewards of our planet. We are poor souls, following a poor excuse for a human being.
We have obvious problems with wealth and income inequality. We have obvious problems with xenophobia and racism and gender inequality. We have obvious problems with gerrymandering, voter suppression, and electronic voting.
We need to work on these problems, and we need to keep working on them. Maintaining a democracy is hard work, and it never stops.
But we also need to stop constantly harping on external factors and look inward to ourselves. Voter turnout in 2016 was abysmal. Apathy ruled the day, and look where that got us.
I believe in our country. We still have a free press. We still have the right to vote. We still are a nation of laws.
Tactics by others to undermine our democratic ideals will be shoved right back where they came from, with a vengeance. We remain strong. We will not stand for it.
Dictators will learn to follow our lead, never the other way around. Democracy is the true path. We will never let it die.
9
All of this started long before Trump, and liberal blue states are the extreme of have/have not, so we basically have a one party system. Don't be fooled. It's divide and rule.
2
A little knowledge is a dangerous thing.
Especially, currently, if you're a Republican.
Ah, if people only knew. Actually, a lot of them do know, but there's nothing like putting that knowledge down in black and white on a ledger to make it harder to ignore. People could point to that ledger and say "Look at those nice big economic gains that we don't see any of", followed by "Hey, what do you mean you won't share any?"
Can't have that, can we. Disrupts the yacht parties and the ostrich coat buying.
9
"So let’s make finding that out, and disseminating the results, part of the government’s job."
What government? In which country? On what planet? In which epoch?
Unless the United States spawns a political party that combines integrity with virulent fangs, the epoch will not overlap the lives of any human being living on Planet Earth today.
5
@John LeBaron
We need to elect Democrats, right down the ballot. They're not perfect, but they're a lot better than the alternative.
We need robust Democratic voter turnout. The good news is we can control that as individuals. Vote -- and help others to vote. Massive turnout effectively combats gerrymandering, voter suppression, and problems with electronic voting.
It all comes down to one thing. We just need to get it done.
8
@Blue Moon
Wonderful ideas, but does it counter hacked voting machines controlled by corporate criminals promising Republican victories. That is what I am afraid of.
I have been electing democrats almost since I could vote, and it hasn't done me a scrap of good. Basically they just keep cutting my pay and raising my taxes. When are we going to get a third party?
Rick Santorum was widely and soundly rejected by the voters.
Having sad that, it boggles my mind that he’s a paid Trump apologist.
6
When you are charging a extra trillion a year to pay for Billionaire tax cuts what do you expect the economy to do. My worry, in year or two we will see another Bush depression and even be deeper in debt when we need to spend money. Everyone loves the feast but hates the bill and as usual the waiter is stiffed a tip. GOP economics.
13
@GUANNA
"we will see another Bush depression and even be deeper in debt when we need to spend money."
Depressions are like candy stores for the rich, they turn millionaires into billionaires.
Depressions are fire sales for the rich.
They make money going down with short sales, then get a massive transfer of wealth when they buy up assets for pennies.
The government bails out the economy using money from the not-rich, and up it goes again!
The billionaires and their friends sell at the top and smash the piggy bank back down.
Income inequality is not just a steady upward trickle, but massive upward tides that flood the rich with money.
4
"Knowledge is objectively better than ignorance," except if you are a Republican.
If you are Republican, ignorance is heavenly, knowledge is an elitist, educated Liberal's path to atheism, socialism, communism, worst of all truthism.
But here's the problem. If Republicans, who control the Congress, Supreme Court and state and national elections ever permitted the government to investigate and produce GDP reports on distributional national accounts, Republicans and their propaganda outlets would tell the dwindling number of aging, white, Christian Republican voters that the reports are fake...and this smaller number of ignorance-is-heavenly voters would march to the polls, defeat the educated majority and demand their representatives outlaw education and end all government reports.
Joe the Republican Plumber doesn't know or care to know that Rev. Smith, the owner of the plumbing company he works for, pockets 95 percent of the business profits. Joe doesn't care that he has no sick leave, no retirement benefits, no chance of advancement, no financial security for his family, while Rev. Smith has just bought his third yacht and fourth vacation home. Joe trusts in god who supports Republicans and blesses the wealthy.
So Professor Krugman, don't hold your breath waiting for Republicans to support this proposal of Senators Chuck Schumer and Martin Heinrich. It may be "a really good idea," but good ideas are elitist Liberal's class warfare in the world according to Republicans.
4
It sure aint growing for me; I don't get paid a multimillion dollar salary, plus bonus; and haven't stolen or absquatulated large sums. Guess I'm of trump's losers. Do you think I could borrow several million bucks? I don't want be Secretary of the Army, but Secretary of the navy has a nice ring to it.. more prestige, too!
4
I want to see President Trump’s tax returns.
44
So why waste so much print on a "...proposal will go nowhere..."? Since day 1 of Trump's presidency, our democracy is being systematically dismantled. Charles Schumer has displayed an amazing INABILITY to counter the damage Trump is doing to our country. When Obamacare was being dismembered, Schumer's feckless campaign consisted of a cardboard sign with the words "A BETTER WAY" scribbled across it. Pathetic!
Mr. Krugman, you are held in high acclaim so do us all a favor. Offer solutions to ridding America of this stage 4 cancer, not useless articles on how NOT to succeed.
3
@Henry J,
I totally agree with you about Schumer. He's feckless.
But I'd like to thank Dr Krugman for telling me that he (a respectable expert, in my opinion) sees merit in the proposed bill because, when the Dem House member from my district or either or both of the Dem Senators from my state send(s) out a questionnaire about what concerns me, I can mention it among the things I want to be pushed.
If we don't listen to and share the ideas/thoughts from respectable experts that we want to see supported, we're no better than Trump's supporters.
@Henry J
"Schumer has displayed an amazing INABILITY to counter the damage Trump is doing to our country."
The DNC and the Democrat leadership are all Republicans in Democrat clothing.
They all take corporate donations so they can't oppose corporate rule. Why would they, for example, want to save the unions?
Trumpsters willingly believe the lies of their leaders - but the Democrats do exactly the same regarding theirs.
1
We could call this the TDER, the Trickle Down Effect Ratio and find out if Trickle Down actually exists or is it really just a very slow drip. Let us prove that the Trickle Down zoombie is a myth.
4
So helping the poor is “socialism,” and helping the middle class is “Marxism”? Know I’m beginning to understand why Jesus was crucified. The law said to give people what they deserve, and Jesus said to love them and give them what they need. And the crowd said, “Lock him up! Crucify him!”
10
@Jeremy Mott
Yes, Jeremy, you've got it figured out. I hope there will be a few million more voters in Nov. who can see it the same way.
Capitalism success where socialism, Marxism abs communism fail because like nature, it is often cold, cruel and heartless. As in nature, those best suited to compete will go the farthest the fastest. As in nature, severe environments will product sone who don’t survive. That’s life.
Mr. Trump isn’t a racist. How come? Nobody in the world knows it! I don’t know it and neither you!
We can make a case that he made a thousand of mistakes but we have no ability te figure out who among us is the racist.
The humans are very often stupid and make many mistakes, but the racism is determined by something else. Being mean is a prerequisite for it and the people aren’t entitled to make such a call because they lack the ability to determine it correctly.
Let’s start with something less controversial. Is Mr. Trump a smart person? Are you sure? Would such an individual spend seven decades of his life on proving every single day how smart and great he was?
Would the smart person engage in the endless series of conflicts and waste his life on it instead of enjoying his time of this planet and using his abilities to help the entire humanity?
If I claimed Trump was a racist, then I should declare the entire population of the USA as such, all of us!
I could prove that making mistakes is not equal to the racism in less than 60 seconds.
How do you officially call about forty million residents? The African-Americans?! Why? It implies that those people don’t belong here but in Africa!
How to you call the Caucasians? Just the Americans?! Why don’t you call them the European Americans? Do such a choice implies they are the real Americans?
Making the mistakes doesn’t mean you are a racist but that you don’t understand what you are doing…
@Kenan Porobic: does anyone understand what Mr Porobic is saying? Ever?
@Blun
No problem. Just tell me what portion you don't understand to repackage it. Let me ask you a question. Don't you understand it's not an equal treatment for the European Americans to be just the Americans and for somebody whose predecessors coming here several centuries ago still to be the African Americans? So you have the Latin Americans the Asian Americans and the African Americans but the European Americans are just the Americans?! That's an equal treatment for you? No wonder you can't understand me...
"...If Jeff Bezos walks into a bar, the average wealth of the bar’s patrons suddenly shoots up to several billion dollars — but none of the non-Bezos drinkers have gotten any richer...
On the other hand, if Jeff Bezos walks into a town and stands up an HQ2 – many of the non-Bezos drinkers (sober folk and teetotalers, too) will do quite well...
In a way that no downtown-revitalizing public-sector courthouse/civic center/car park ever will...
And why...
If Michael Bloomberg were to walk into certain NYC bars, the average wealth of the bar’s patrons would suddenly shoot up by several billion more dollars...
PS
Hear Bill De Blasio might let you guys site a campus for your economics school on Riker’s Island – if you say nice things about him more often...
1
We did this to ourselves. After all the gains our grandparents made thanks to collective bargaining the American people cheered Reagan when he fired the air traffic controllers during their strike. Corporate America realized that the American people had bought into the greed is good mantra.
I remember when my call center was making noise about going union pre recession. Our HR manager had us give a presentation on all the gains that unions had achieved that were now protected by the federal government so unions were no longer needed to protect employee rights. If that hadn't worked our call center would have been closed and moved to a state that was anti-union.
Economic inequality isn't healthy long term. Even Henry Ford recognized that he needed to pay his employees enough to afford to buy his products. We need to get off this trickle down nonsense that Reagan sold us on and accept that paying people and giving them benefits isn't socialism it's what healthy countries do to ensure that their citizens are happy and productive.
73
But after Reagan failed, why did people vote for Bush Jr? It could have stopped with Reagan. And some of the Reagan era crooks went to jail. None of the Bush Jr crooks or war criminals even went to court.
@Ami
Stop saying WE. NO, I had nothing to do with any of this. I supported Anderson against Reagan, even changed my registration to vote in the Republican primary, but the Reagan Democrats put their guns in their mouths and pulled the trigger for the union buster Reagan and sent Reagan, the original drooling deplorable god, to the White House to blow up our debt and wreck our environment. He was just racist enough for them.
I also voted against Bush I, twice, and Bush II, twice.
So lay the blame on where it belongs, the idiots who have voted Republican time and time again. They did this to us. I am not part of that "we".
The underclass, or those in the lower income percentage seem to have just enough income to keep them from from organizing to make their lives better.
We see those who get the least benefits, giving away their opportunity to do better. The income levels i so called right to work states lag well behind those with strong unions, But they seem to believe they are better off that way. Boards of directors pay themselves and the companies they serve yearly wages, benefits, and bonuses that would be a enough for the average worker to retire on comfortably,
While it is true a companies fortunes are directed from the top, it needs to have employees to generate those profits, but the idea is to pay as little as possible and pay the top as much as possible. But, those low pay employees keep voting out the union, or vote for some GOP rep who calls them Socialists, which seems to scare them.
The Socialists charge implies Communist or even Marxist, even though non of them are like that, but any worker friendly acts, or limits on business is call that. The Right Wing can get away with this due to the ignorance of the "Working Class" to what such systems really are. To the authoritarian, Democracy is a form of Socialism because it surmises an equality among all, not just those in Mahogany Row.
2
Trump doing to the country, the nation what he did to his bankrupted business partners. He sucked their blood, their money, and walked away. The nation, actually, the whole world is his piggy bank.
11
Why raising wealth has not been shared with ordinary workers
Mr. Krugman leaves out his own crucial contribution how this came about
Here is what he wrote 1995 about the effects of outsourcing (that he promoted, read his ”In Praise of Cheap Labor”) and globalizaiton
"An extreme view would be that growing international trade will lead to full factor price equalization: that wages for unskilled labor in OECD countries will be driven down toward their average levels in the world as a whole. Indeed, it might seem that this is precisely what conventional trade theory would predict: in the absence of any barriers to trade, isn't trade a substitute for factor mobility?”
Brookings Papers on Economic Activity,
Vol. 1995, No. 1, 25th Anniversary Issue
(1995), pp. 327-377
Turns out the conventional trade theory was EXACTLY right. Wages of those in the US exposed to global competition are stagnant, even moving down in constant dollars. And this, increasingly, applies to high skilled workers. Read Cummins Opens New R&D center in India (its LARGEST , 2 500 engineering jobs) , read NYT's IBM Has Now More Employees in India than in the US.
Alas , Paul Krugman’s wrong model was eagerly adopted by the financial elite that profited from moving factories to Mexico and China.
Rarely has an economist more wrong, and never has an economist done more damage to American workers
5
@Woof
Businesses are making record profits. Jeff Bezos is a multi billionaire, as are the Walton family of Wal-mart fame, yet their workers rely on government subsidies because their wages are too low to provide for life's necessities of food, clothing, shelter and medical care.
Outsourcing has nothing to do with this. It is uncontrolled greed and a complicit government willing to continually turn a blind eye to the ever growing wage inequality in this country. Teachers now, in many states, qualify for food stamps. Their wages are *that* low. Teachers! Bank employees now qualify for assistance, their wages are that low. Skilled laborers are earning lower wages adjusted for inflation than their 1970's counterparts. Nurses work per diem instead of getting a guaranteed 40 hours a week as do many now in trades that used to guaranty minimum 40 hour work weeks. But now? No work, go home. trump has abolished Obama's overtime law pertaining to salaried workers and what the minimum salary could be for being considered a salaried employee instead of an hourly waged employee. How do you account for this phenomenon? It can't be laid at the feet of big, bad outsourcing but is the direct result of the power of unmitigated insatiable greed. That is what is driving the wage disparity in this country and without some kind of government oversight it will only get worse.
As they say sunlight is the best disinfectant. What are you so afraid of?
Professor Krugman - Is this bill really necessary on the day President Trump cancels Federal pay raises?
Tonight MSNBC echoed your concerns that if Republicans keep control of Congress they will institute austerity programs...to cut the social safety net and foundation programs like Social Security and Medicare. Why? To pay for even MORE tax cuts for the 1% of course.
One contributor used the phrase "Katie bar the door" to describe what will happen if Democrats don't regain control of the House. Your Op-Eds on the emerging totalitarian threat should not be casually dismissed.
18
I think the measures that could be used for the kind of analysis Mr. Krugman suggests are simply not up to the task, and economists like him need urgently to rethink the way to view the current economic/social models now in use.
How can you say a person is poor when they make, like me upwards of $80k a year? And yet, I cannot put money in to retirement funds, or save a dime. I lose money each year, but that's absurd with that sort of income.
But here's the thing, the ubiquity of international profit driven capitalism has created a society and economy where I have to spend thousands of dollars a year just to communicate with other humans. This was never an expense in the models Mr. Krugman wishes to use. prices of goods are nowhere near their costs with everyone from grocers to fashion boutiques inflating prices from 100-400% regularly. there is no benefit to society from this, but these false prices depress my income still further.
How do you do an economic analyses that takes into account overt and unnecessary (over 3%) profit taking as not "what the market might bear" but as a wage depressing, kleptocratic system? Of course wages aren't going up, the very rich corporations can pay whatever they want, but they will likewise (as they have been doing) raise the prices on goods to the point of impoverishment for middle class people like me.
there are chalk boards at the graduate center at CUNY, go back to work mr. krugman. Maybe read a poem to give new thoughts.
2
There are only a few numbers that I (and anyone else should for that matter) pay attention to and that is how many people live below the poverty line. (or globally what people overall are living on per day)
All of the numbers are artificially low (as well as tax rates on the wealthy and corporations), and one could argue, that even if you are above the line, that you are not really living, but just existing. (another argument)
The next numbers one could could look at are the amount of people on food stamps, snap or social benefits that are working, and STILL may be above that line. How can that be ?
- again, the numbers are artificially low, whereas there should be no businesses that should have their workforce on subsidies from you, the taxpayer.
Even if one has ''made it'' and gotten above all of those numbers and seems to be comfy in their way of life, then there are numbers from the ''happy index''.
The United States is woeful with those numbers too.
13
As commonly cited, "Middle Class" is an economic status misnomer if one considers that the "middle" or true average of wages and wealth in this country far exceeds what is commonly otherwise falsely ascribed to people making about $150,000 a year. This is especially true given the richest top "20 percent" has a mean household income of $257,200 and a mean household net worth of $2,260, 300.
1
@Logic: Your sentiments are appreciated, but your statistics might merit a second look. The household net worth that you quote would apply to the upper 5%, and, I do believe, the income figures mght fall in the same category.
CNN is carrying a story were according to Trump federal workers will not see a cost of living raise because the “budget” can not afford it this January 1st. Military personnel will still get their 2.6% raise. The military gets theirs, the 1% get theirs and the rest of us will see higher taxes on April 15. He’s is coming for SS and Medicare.
142
@Sailorgirl Trump says the budget cannot afford pay raises for federal workers, but the budget can apparently afford to pay several million dollars almost every weekend for Trump to fly off and play golf.
29
@Sailorgirl You're correct on the taxes - and people won't see it until after the mid-terms. According to an article I read, 30 million more taxpayers could owe taxes for 2018. Like Trump says, we'll see. It won't be pretty, though.
1
If our country actually had an honest conversation regarding our national wealth disparity, which primarily exists to benefit a few dozen families or so, the wage gap would close pretty quickly.
Because no one that works for a living would accept otherwise.
8
Distributional GDP is a simple idea that should have happened long before income inequality was allowed to take over the economy.
Without this measure inequality is covered up.
So why did the so-called Democrat (what's in a name?, indeed) leadership not make it happen? Is it because they're actually Republicans?
And what happened to the unions? Did the Democrat leadership sell out the unions while taking corporate donations?
I'd suggest Progressives champion both a state by state distributional GDP and a Red State, Blue State distributional GDP.
Let's compete by the numbers to see how fast we can turn around income inequality. Let's rank the politicians on their ability to get the People's money back.
We need to measure and monitor, rate and rank politicians on how well they perform - like we do with sports stars.
Now that's something even a Trumpster would vote for.
6
If, as Sir Francis Bacon first noted, 'knowledge is power', then the knowledge the bill Senators Schumer and Heinrich have introduced, if competently prepared and intelligently communicated, has the potential to unleash quite a bit of power. There should be no concerns over the competently prepared part; the Bureau of Economic Analysis (BEA) does amazing work. The intelligently communicated part also should not be a concern if that data are put in the hands of those who have been trained to both interpret economic data and convert it into an easily understood format; economists such as Dr. Krugman.
But should this bill miraculously get through a Congress whose majority does NOT want this kind of knowledge to be disseminated, there still would be a good likelihood that the data behind it would be purposefully spun to tell a story that is counter to what the data actually show and aligns with those who want to hide what is there. This places a burden of sorts on the reader to not be afraid to question what they are hearing or reading, regardless the source, until they are satisfied. It is by doing this that what this bill would produce really would give power to the knowledge it generates.
3
Worker wage and benefits growth in the past came from organization and solidarity. But Nixon, Reagan and every GOP President since has shattered that solidarity with divisive social issues. Nixon pealed off the "hard hats" who confronted anti-war protesters in the Vietnam era. Reagan also reaped key Midwestern support from the blue collar Reagan Democrats, with his campaign of "freedom" from social programs by demonizing the poor.
The GOP has campaigned tirelessly against minimum wage laws, labor protections, family leave, health care insurance access and starting with W Bush, even very popular Social Security.
And workers in former union occupations continue to put them in office, while waiting for wage growth to return, as promised by Trump through corporate tax cuts and so-called "right to work" laws.
There were problems with the post-WWII US labor movement that some other countries successfully avoided, especially productivity. But UAW and other unions are more interested today in engaging with management on productivity improvements as a way to increase wages.
Its possible that making union dues optional, as recent SCOTUS decisions have favored, may actually cause labor unions to refocus on core worker issues to maintain support, understanding that compelling someone to support a broader social agenda might alienate many workers.
The teachers seem to be leading the way for fair wages lately, with significant successes.
9
Research to get definitive answers on who actually gets how much of economic growth is a great idea, but it won't change anything. The people who really need to understand it will ignore it and still vote GOP. Trump has proved they can ignore anything. As such, the cult of trickle down economics won't go away either because it's packaged with other elements of white-Christian-conservative identity that is being bolstered by manufactured threats intended to galvanize them through fear (some courtesy of hostile foreign powers).
That said, there are already plenty of wage studies that show that raises and profit go basically only to the top, more so when inflation is factored in. They have not changed any behavior.
At the same time the market is no different where at one point today about 65 of the top 100 companies in the NASDAQ were down (called the NASDAQ 100), but Apple was up 2% so the overall NASDAQ 100 was positive (at least before Trump Tariff tweets tanked everything today). In other words, even corporate gains in the market are going disproportionately to the top one percenter companies just like wages do to the top one percenter wage earners.
Sadly - the oligarchs are winning because they packaged economic voodoo with white-identity fear politics. The self-defeating economic lies are swallowed whole and unquestioned with the rest of the package. More studies to confirm they are being fed lies will just get labeled fake news and nothing will change.
9
Does Schumer really need an official estimate of where the benefits of growth go? His Wall Street friends should have given him an idea.
6
An uninformed/disinformed consumer is the Republican Party's best customer.
The last thing that Greed Over Power wants is transparency and information for the American voter.
These are the same Guns Over People shysters who preach that guns makes you safer even though statistics and reality prove the opposite as 300 million guns have turned America into a national shooting gallery.
Republicans achieved this Down Is Up insanity by banning gun research by the NIH, CDC and ATF to ensure no one would find out that guns kill and injure a lot of people; ignorance, denial and lack of information is a critical part of the Republican intellectual, moral, economic and physical assault on America.
The same goes for healthcare; Republicans don't want Americans to know that other countries citizens get better healthcare for half the price: "socialism ! FREE-DUMB !"....as America maintains the greediest, most inefficient healthcare rip-off in the world.
Republicans don't want Americans to know that the three richest Americans have as much wealth as the poorest 160 million Americans because to Republicans, that sociopathic math is perfect.
The decades long, right-wing, Randian, Reverse Robin Hood Republican shafting of America continues greedily with reckless abandon as Republicans work hard at increasing 1% welfare by gutting worker rights, healthcare, and voting rights of average Americans.
The Republican God of Mammon demands that American workers drop dead from Grand Old Poverty.
396
The sad thing is that 40% of the voting public does not see this. Maybe that is why we have a plutocracy and not a democracy.
2
@Socrates,
Man, the more I read your commentary the more poetic it seems to me. That's a fantastic gift for language you have sir...Bravo many times over!
2
@Socrates -- It did not reverse course, or even slow, for the 16 years of Clinton and Obama.
It isn't just Republicans at work. It is the donor money at work, that bought the whole "center" of both parties and took it far off to the right.
What is the growth?
It the middle class wages and standard of living are frozen or stagnant and the entire accumulation of the wealth going to the 1 percenters is financed by the colossal national debt, then there is no growth.
If the impression of the rapid growth stems from the skyrocketing stock values, but there is no guarantee that our retirement funds based on the overinflated stock indexes couldn’t nosedive overnight and wipe out our imaginary national wealth, then again there is no real growth (just read carefully the fine print)…
If we have the dozens millions college graduates that gained their degrees by accruing the colossal debt only to face the labor market without the well paying jobs because those were exported overseas, then again there is no growth.
Pay off the national debt and we will prove the growth is real.
If paying off the national debt would push the entire world economy into the Great Depression, then our growth isn’t more real than Pinocchio’s alleged money-growing tree into which he invested Giuseppe’s life saving…
3
Not adequately addressed are the many metrics of economic social welfare that have been credibly proposed the last 30 years beginning with Herman Daly and John Cobb, and via Redefining Progress. But what America really needs to out in front of economic stats, besides measures of our sustainability on the planet, is a simple tracking of average people's income against their expenses. If your income increases 5% but your expenses 7%, you are worse off, and GDP doesn't capture this whatsoever, nor necessarily would the distributional stats mentioned in this oped. And I'd like to see this: are the four pillars of economic advancement for people - namely higher education, health care, transportation and housing - affordable to people below 50% of income? If not, we're going the wrong direction.
10
Once we verify that non-wealthy employees are getting a smaller and smaller share of corporate income, then we'll have to figure out what to do about it.
At that point, having economists stick with the image of "labor" measured in hours as the representation of what employees mean to firms, and of "capital" that includes everything from structures to patents to "goodwill" (i.e., the prospect of monopoly profits) and that is measured by using the rate of return (which in turn is measured by using the amount of capital), and then more or less assuming that each is paid its marginal revenue product, is -- umm -- not going to be very useful. Someone is going to have to start getting real.
2
@Joe Ryan, I like your explanation of "good will". I finally understand it. For example, this is what Apple's market capitalization is largely based on.
1
Get a textbook. Goodwill is the difference between the book value of acquired assets and the price actually paid. It results from mergers and acquisitions and basically up values those assets to purchased prices. Accounting principles require that an annual charge against goodwill reduces the income of the firm. Goodwill is not a good thing to have since, unlike depreciation, it is not tax deductible. It lowers your income, but not your taxes. Since Apple is well-known for eschewing acquisitions for organic growth, I doubt it has a lot of goodwill on the books. In any case, it has nothing to do with monopoly profits.
@Michael Blazin - the term is used differently in economics and in general business than among accountants. Joe Ryan's definition might be slightly too restrictive, but it sounds closer to the meaning of the term in a general or economic sense than the accounting definition. https://en.wiktionary.org/wiki/goodwill
2
More data are better than fewer. The federal government had held the job of collecting many of them for decades with no complaints.
The current regime however has demonstrated active hostility toward such governmental work. For example, the National Guideline Clearinghouse database was defunded, as reported in this paper.
This bill is an admirable effort toward a beneficial outcome. It should be reconsidered again later if the current political climate makes its passage infeasible for now.
7
Historically, the engine for economic growth, measured in terms of increases in the standard of living for most people, is primarily the percentage of a population that has discretionary income and secondarily the amount of that discretionary income. (The operational definition of discretionary income will vary across different societies and time periods.)
Increasingly, GDP in the US is unrelated to this measure. Indeed, the concentration of wealth at the top means that the benefits of economic activity are not driving economic growth but rather are driving the concentration of both wealth and power. The rise in GDP unaccompanied by a rise in the standard of living for those earning less than the median income should be considered a danger signal.
9
Thank you, Dr. Krugman. Your observation of the “spin” gap between the left and the right is always on point.
Liberals are up late into the night brainstorming on ways to make life better for the most people. Conservatives get a good night sleep, only concerned with spinning the appearance of things. At least now we have the extreme example in the WH, who possesses no restrictions on spin. He sees no reason to “color” the truth, he simply creates his own.
The metrics used to measure the economy are designed by the haves for the haves, for the consumption of the have-nots. What is so scared is that a large chunk of people really don’t know how good, or bad they have it, but merely buy into what they are told.
10
Economics is a subject that frightens ordinary people. Republicans, sly foxes that they are, shield any attempt at getting citizens to understand it. They simply don’t want people to know where their money goes and what the government does with it. It’s all part and parcel of the “Socialism” scarecrow that sits atop Capitol Hill.
I’m already greedily rubbing my hands in anticipation of a Bureau of Economic Analysis. And Mitch McConnell will never allow a floor vote. He doesn’t want (the taxpayers’) money to be analyzed. He’s too busy stuffing the federal judiciary with reactionary ideologues dressed in judges’ robes. And even if Paul Ryan weren’t blessing us with his leave-taking, please be sure that he would be preaching about “an-already bloated bureaucracy.”
Republicans have much to hide about money. They have effectively socialized the Treasury but not for poor people. Ordinary people, once known as the “middle class,” have been squeezed by “trickle-down” nonsense and still buy into Reaganomics; that is, “it’s on the way.”
The GOP zealously guards the nation’s money and determines where it goes: to the 1%. They don’t want Joe or Jane Paycheck to inquire too deeply into how their own money is spent or invested. Republicans think: “the less they know, the better off we/ours are. Because it’s our money.
83
"But here’s the thing: Knowledge is objectively better than ignorance." Yes it is, Dr. Krugman, but Trump and his rabid supporters don't think so.
You set forth an excellent case for the Schumer/Heinrich bill (or something similar). And many of us in this country do take the time to try to educate ourselves, and understand how much information like this would help us as citizens and as voters. We've known instinctively that real wages have stagnated for decades in this country, and yet it is just in the past few years that we've seen documentation that confirms this.
But these facts are anathema to Trump voters. They are just more pesky aspects of reality that his base ignores. After all, they really don't want better jobs, affordable healthcare or affordable higher education for the children, like the rest of us do.
So what do Trump voters want? Certainly not facts. All they want is to practice their racism against their darker skinned neighbors in this country. This is what motivates them. This is what will propel one of the most mentally unstable, unfit man into a second presidential term. Because Trump tells them what they want to hear, and it isn't facts. It's white supremacy.
Trump voters would gladly go bankrupt after a layoff, or see their family members die because they couldn't afford health care, if what they get in return is a "president" who tells them that as whites, they're the "real" Americans. This is all they want. This is all they've ever wanted.
11
“Distributional national accounts that track how growth is allocated among different segments of the population is a great idea
But who would listen? Would it change any votes?
From today's NYT:
"Mr. Trump said the government would forgo an automatic 2.1 percent pay increase for federal workers scheduled for Jan. 1 and specified that there would be no across-the-board increase for 2019. "
The reason why the federal workers could not get a modest pay increase?
“We must maintain efforts to put our nation on a fiscally sustainable course, and federal agency budgets cannot sustain such increases,” the president wrote.
Cut taxes on the wealthy and corporations, run the deficit up to a trillion plus, cut pay for government workers. Medicare and Social Security up next. Rinse and repeat for as long as you can get away with it.
Utterly predicable.
"Knowledge is objectively better than ignorance. "
Not if you're a Trump supporter in the 99%. Knowing how much Trump.is going to cost you takes all the fun out of those "Build that Wall" and "Lock Her Up" chants.
Ignorance isn't just bliss for Trump supporters, it's required.
219
@LT: Utterly predictable. Exactly. And how many blind dogs does it take to elect a "President"? (I refer to no person, of course.)
"But here’s the thing: Knowledge is objectively better than ignorance."
Sadly, this is absolutely not a guiding principle in America. For Republicans, the Orwellian opposite is true: ignorance is strength. Freedom is slavery and truth isn't truth.
You know this country is doomed when 45% of the population no longer accepts that "objective facts" of any kind exist.
36
This is similar to the conservative's view on gun violence. If we prevent the government from studying gun violence the conservatives can just deny there is any problem.
Mark Twain said there are lies, damnable lies and statistics. Conservatives prefer to ignore the statistics and just stick with the lies.
36
@Ronny: Just for the record: "damned lies", and probably not due to Twain, though no one knows (see Wikipedia). Of course that doesn't vitiate your comment.
@Thomas Zaslavsky
It was most likely British Prime Minister Benjamin Disraeli, but more Americans know Mark Twain, so I went with the home town hero.
2
To sum things up, Rick Santorum and other Republicans oppose enlightening Americans with facts about how much and exactly who has been gaining from growth in America because they don't believe in a level playing field; rather, they believe in flattening everyone other than a few oligarchs who are still left standing on the field after four decades of Republican dominance of American politics.
13
@Gary Henscheid: I can put it more succinctly yet: "Ask not for whom the economy grows - it's not for thee."
1
@Gary Henscheid: "Ask not for whom the economy grows - it grows not for thee."
1
@Thomas Zaslavsky - ok, it is in slightly better form your way. I omitted the auxiliary "are" between the words "scheme" and "condoned" in my first comment as well. I nearly always notice something like that only after posting, so I've finally given up on editing myself, but thanks for doing the job for me.
1
So what if we have 4% GDP growth, when real wage growth was actually negative in June and July? Never mind that about half that growth was driven by higher deficits and exports brought forward by phony trade wars. We're doing dumb things to goose a meaningless number.
Here are some great stats on the wealth and income distribution, courtesy of the CBO, Fed, and others:
1. U.S. household net worth in aggregate hit $100 trillion recently, which is about $800,000 per household if split evenly. However, the Fed reported that in 2016, the median (50th percentile) household had $100,000 in net worth.
2. At 1979 inequality, the bottom 99% of families would be getting about $7,000 more per year in income. If instead we shifted the money from the 1% to the bottom 80%, that figure would be around $11,000.
3. The government gives about $1.7 trillion per year in tax expenditures, basically breaks from applying the rate tables only. The top 1% get 17% of these breaks, about $300 billion per year. The next 19% get about 33%, or about $550 billion. For scale, our deficit this year is expected to be $900 billion.
That's the great news about inequality I suppose, in that we don't have to tax many to get our deficit under control, put people through college, and pay for healthcare subsidies.
7
@David Doney, you could add: the fact that "we don't have to tax many to get our deficit under control" is proved in the negative by the recent tax deform (sic) law, which demonstrated that we don't have to give away tax money to many to get our deficit out of control.
2
Numerous sources had long ago reported that nearly all of the gains have gone to the top 10% for the past four decades, and that the top tenth and hundredth of a percent are benefiting in absurdly great disproportion to everyone else. Kudos nonetheless to Schumer and Heinrich for making the case as strong as possible, since far too many Americans still haven't noticed that they're actually sucking eggs financially
This is an uplifting follow-up to last week's depressing piece, “Why It Can Happen Here”, which should have been titled, “How It's Already Happening Here”. Rick Santorum naturally deplores the prospect of poor folks awakening to their plight, because once they do, billionaires like the president and his cabinet will no longer be making off like bandits: Commerce Secretary Wilbur Ross, for example, has been tied to 11 shell companies in the Cayman Islands, and despite similarly egregious cases surrounding all but one or two of them, such tax avoidance schemes condoned by Republicans, mainly since many of the elites bankrolling their campaigns are hiding money abroad as well
Bringing tax dodgers in line can be done – just ask Swiss bankers, who the German government forced to release names of its citizens sheltering money in Swiss banks – it only requires the political will to do so. If enough Americans figure out by November that billionaires and not other working stiffs are the only true leeches, what's left of democracy in the US can still be revived.
83
@Gary Henscheid "far too many Americans still haven't noticed that they're actually sucking eggs financially"
Respectfully disagree -- they've most certainly noticed that the rent, and the costs of food, education, and healthcare (pretty much everything except clothing, electronics, and cheap tchotchkes from the far east, basically) have gone up far faster than their stagnating (or actually dropping) incomes.
The problem is, they're blaming the wrong parties, all scapegoats.
The Publicans -- supported by the corporate media, which are also owned and operated by the Publicans (looking at you, too, NYT) -- have been telling them to blame foreigners -- immigrants (documented and otherwise), perfidious Asians and other countries, and of course the elitist liberals of the coastal cities.
And, hearing no countervailing narratives or even facts, they're buying it.
The result is the Publican hegemony you see in our federal government -- all three branches -- and over 30 of the states... The very characters who gave us the Reaganomics and insane deregulatory regimes that created this situation.
That's going to break sooner or later -- we're already seeing over 50% of the 19-34 cohort polling more favorably for "socialism" (unqualified) than for "capitalism" (unqualified).
But the damage -- two generations' worth now -- has already been done, and is not going to be undone at this point.
1
@Johannes von Galt - We'll have to take your word for it that many Americans haven't noticed that they aren't doing well financially. They keep electing to office Republicans who work so hard to keep them poor, so any way you look at them, they come out not looking very bright.
3
@Gary Henscheid. Ross is an especially eggregious example. What is an octogenarian billionaire doing in a cabinet post in the first place? Was he the most qualified expert for such a demanding full-time job, or did Trump put him there precisely because he's up to his greedy old ears in the Cyprus banking corruption that's all tied up with the Putin- Trump Axis of Oligarchy?
1
In the case that what is being done can be undone, with time and an increase in taxes on principal high earners and their favorite gambits for increasing their wealth, the government should be able to at least try to promote a more equitable society. Whether it will or not is dependent upon the proclivity to reduce defense spending and increase social safety net spending. Show me people in either party who have such inclinations, and then calculate the odds that what is being done can be undone.
2
Even though we know His Unhinged Unraveling Unfitness detests government, government workers, and unions, it's still shocking to see what new depths of parsimony he can plunge.
It's all another chapter of the Vultures picking over the middle class:
https://www.washingtonpost.com/politics/the-trump-administration-just-ch...
usually timed to occur after elections, or in the case of the Trumpster Tower Tax Cuts, to happen in as much darkness as possible - again, typical of the tactics of Vulturedom.
And remember: things are never so bad that they can't get worse.
Wait until after the new Congress is sworn in, and the 2018 tax tables show up, remembering that there was under-withholding for many during this year:
https://www.npr.org/2018/08/01/634474267/more-taxpayers-will-owe-the-irs...
Combined with a predicted Q3 GDP of about 2.5%, all the little Trumpster MAGA chickadees are coming home to roost.
37
@R. Law, all you say here is completely predictable; but it's necessary for someone, such as you, to write it down.
Note: I see your URL's are often truncated, which makes them useless.
2
@R. Law - I wouldn't take Zavlavsky's comment seriously; in case you haven't noticed, he has something 'smart' to say to just about everybody.
2
@Thomas - Glad you agree someone has to 'write it down'; otherwise, perspective just gets lost in each following news cycle's effluent stream from Pres. Mayhem - and the news cycles get shorter and shorter.
As for the hyperlinks, they usually work, except for the last 2 or 3 days they have indeed truncated (some critical techie at the NYT or at their 'comments' vendor on vacay ?), though that has not made the links useless - simply copy the link as it appears into your browser, then open a new browser page and paste in that link, then press enter - Voila !
A tad more cumbersome than the usual convenience of being able to just click on a highlighted link (whatever techie glitch the NYT or its vendor has will hopefully soon right itself so this doesn't become the new normal) but the alternative is to not reference sources, which makes the reading experience a little more shallow and subjective.
We like transparency when making an argument, and 'showing our work'; we're loathe to subsume the foundations of our argument.
Have you contacted the NYTimes to complain about their loss of functionality re: hyperlinks not correctly highlighting in the comments section ?
9
Even if the Schumer-Heinrich measure passes, the information will be a footnote to quarterly GDP figures, which themselves barely get a mention in the media; and the corporate-owned mass media will have no interest in mentioning the small print.
We need more than the mere tokenism of Schumer-Heinrich. Their bill is very similar to the idea of requiring disclosure of mammoth campaign donations without doing anything to limit them and their poisonous effects. That said, I think the public is getting ahead of the Democratic Party establishment and pulling it in a more progressive direction. We are seeing that in the campaigns of Democratic candidates around the nation - whether they are described by themselves and the media as "socialist" or "moderate".
16
@mancuroc
I will get excited about the Bernie backed that won their primaries when they win their generals and start changing this country, not before. Right now they look like a bunch of Bernie bros and babes to me, ready to hand over more local elections to Republicans with inane positions like getting rid of ICE instead of concentrating on single payer and other more sensible ideas that everyone can buy into.
1
Captured markets maximize profit. Monopsony power hold wages to a standstill. I took my dogs to the vet, and was surprised to find 2 healthy young dogs in an annual checkup with no difficulties cost $750. My auto insurance of 4 years had doubled, with no accidents and no changes. The government gets privatized so no one sees where the money goes. A private prison? let them eat sawdust so the board and shareholders get their bonus. In Santa Fe, they are worried about the heat bringing down quality of living, crashing the housing market. But there's money to make today, so my friend, that signed a paper indicating he may not have public water when buying a house, did so. Precariousness of everybody's position is what brings down community. .
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@4Average Joe
Of course your car insurance has doubled. Who else did you think was going to pay Flo and the Gecko, etal. for making those endless mind numbing commercials?
1
I’d support the Schumer/Heinrich bill, despite the likelihood that it’s already DOA.
While the reporting it would mandate, at its outset, would show much of the economic benefits of Trump’s deregulation efforts and Congress’s tax reform accruing to the wealthier, incrementally and eventually it would show more and more of the benefits of a super-charged economy accruing to middle- and working-class earners. The very intentional efforts by Republicans to jump-start substantial economic growth are new, will require time to fully bite, but they will happen.
You don’t achieve 4.2% GDP growth (as promised by Trump and pooh-poohed as impossible by some analysts) and 3.9% unemployment and not create intense competition among employers for skills and bodies to exploit that growth. It’s happening now, and it might not be sustainable at 3.9% unemployment if not for the large number of workers who gave up on employment but who are returning to the work force (and who are not counted in “unemployment” numbers) to exploit higher demand and higher wages.
With that intense competition will come even higher wages, and reporting showing that progression will be equivalent to votes handed on silver platters to Republican candidates.
It benefits Dr. Krugman in the run-up to an important election to take a snapshot of results very early in a progression and present them as a strategic outcome of what he argues to be bankrupt policies; but people aren’t dumb – not with money in their pockets.
3
@Richard Luettgen "You don’t achieve 4.2% GDP growth (as promised by Trump and pooh-poohed as impossible by some analysts) and 3.9% unemployment and not create intense competition among employers for skills and bodies to exploit that growth."
Yes, that's one possibility.
Here's another: between the trade wars that your so-called President is instituting, and the inevitable effects of undertaking the very same deregulatory insanities that made the Crash of '08 not just predictable but inevitable, the probability of a significant "correction" (what the rest of us call a crash) -- already overdue, according to some -- in the markets has been significantly heightened.
Before the election of '16, economists of all political stripes were already predicting a 60%+ probability of a recession within the next two years.
It will be interesting to see which of these visions arrives first -- and which will have the last laugh.
And isn't it also interesting to note that Spanky is already preparing his excuses, and laying the groundwork for blaming any reversals on the Democrats, even before they've won anything, let alone been seated, let alone had a chance to undertake any policy moves?
It's almost as if he knows he's going to be needing those excuses... and soon.
21
@Richard Luettgen, already your past predictions are failing.
18
@Richard Luettgen: Didn't you say pretty much the same things during the Dubya years and before the crash of 2008? I don't see that the Republicans in D.C. are doing very much different now than they did then- other than lying more. If the GOP manages to hold on to Congress this year it's very likely that they (and Trump) will be finished in 2020 given that the deficit is growing more each day and that a 3.9% unemployment rate would be simply unsustainable even if the President and his men knew what they were doing.
10
This bill is important and valuable. In Dr. Krugman's example, I would like to see the median income of that bar. That's actually the more important number, and the median tax break of the Republican tax bill is something the public needs to see. I have a Congressional representative in my district (R, of course) that's touting the average tax break in this district of the effect supplied by the tax break. He doesn't ever, anywhere, mention the median break. The GOP is running yet another con, and they need to be called on it.
90
words, words, words……..Hamlet
The GDP is just dandy
The Dow Jones number is like candy,
The average income
Is lousy for some
But life's great for a POTUS that's randy.
Rudy and the Don are well suited,
The twosome is tetched, it is bruited,
Words that go astray,
Meaning, changes each day,
As the pockets of poor folk are looted.
They both say crimes aren’t a crime,
Not ethical maybe, sheer slime,
Perhaps in bad taste,
In effort sheer waste,
But carrying no slammer time.
Collusion is only collusive,
The meaning of course is elusive,
What you feel is rude
Others call collude,
Mueller should stop being intrusive.
48
You know, I try to read all of this economic theory and I thank you for trying to water it down for me. But the bottom line for me is that if you do nothing (including nothing to try to measure it) then you are still at zero. Some type of measurement is better than nothing. If the journey of a 1000 miles starts with one step did anyone ever say that step had to be in the precisely correct direction? I don't think so. So please, let's cut the rhetoric and methodology and just take the first step.
8
@Crystal, "We the People" can do all three at the same time. "We the People" are many and multifaceted.
1
I'm sure it would be good to have another statistic confirming what just about everyone knows: the economic gains of the last 20 to 30 years have defied gravity and concentrated at the top.
But what are the reasons for this? I would suggest at least two:
The weakness of labor to bargain for its rightful share of the gains, primarily as a result of their inability to bargain collectively.
A regressive tax system (taking into account all imposts, not just income taxes), which facilitates the virtually tax-free transfer of inherited wealth from generation to generation.
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@Likely Voter
You left out the deliberate choices of "our" government not to strongly enforce the antitrust and other pro-competition laws on the books. The concentration of market (and political) power -- and these are clearly not just co-incidental -- is another major contributor to the massive upward redistribution of wealth and incomes that we've suffered over the last 45+ years.
There are others, of course, some of which (automation, globalization) are not easy to regulate or mitigate, but these three are among the greatest in impact.
7
@Likely Voter, I hate to say this, but to an awful lot of people your suggestions have been obvious facts for years. The federal government, including the National Labor Relations Board, have been largely complicit in undermining unions, including winking at companies that violate labor law. The income tax system has been steadily turned from progressivity since JFK. I also thank "Johannes von Galt" for his observation about non-antitrust. It's good that you're catching up -- or perhaps you're simply being modest about what you knew all along.
5
@Likely Voter - Let's add that when the federal government wants to stimulate the economy, too often it does it with tax cuts rather than deficit spending.
Suppose we cut poor Joe's taxes $1,000. That gets $1,000 into the private sector because Joe will spend it, and it will go to help producing jobs for others. But suppose we pay Joe, $1,000 to cut the White House lawn. We still get the $1,000 into the economy, but we ALSO get the lawn cut.
That is why federal spending is always a better way to get money into the private sector than tax cuts.
To make matters worse, too frequently the tax cuts go mainly to the Rich who spend a small percentage and use the rest to speculate.
11
A note regarding the future of our economy;
Today, the federal government penalized the Citgo oil company, a Venezuela company, 1.4 Billion dollars, threatening to destroy the company. Citgo is responsible for about 750,000 barrels of oil per day, or about 4 percent of our supply, that will result in a big escalation of oil prices that have gone up about four dollars per barrel just in recent days. High oil prices result in recession and low oil prices allow more consumer and business dollars to build the economy. We always have growth with low oil prices. I remind you the price of a barrel of oil peaked at 147 dollars in July 2008, I believe, draining the economy and resulting in the great recession later that fall.
4
@Shakinspear While the peaking oil prices probably did not help in 2008, but that did not precipitate the financial collapse. Citgo has revenue in excess of 8 billion dollars. The penalty is not $1.4 billion, but $81 million. You also don't mention the reason for the penalty. The company released 53,000 barrels of oil into some Louisiana rivers in 2006.
11
@Shakinspear
My husband and I were driving through Vt/NH and saw a sign at an oil company listing heating oil at $2.74 a gallon. This when demand is low. How much is it going to cost New Englanders to heat their homes this winter and how will they be able to afford this coupled with some of the highest electricity rates in the country? The paltry $10 per week in tax "savings", wink wink, will not make a dent in these increases. Not to mention the little discussed fact that many will be rudely awakened when filing taxes next April that the tax cut wasn't really a tax cut at all but just a sham loan to be paid in full come April 15, 2019. We are fortunate. We can also heat our home with a pellet boiler so if oil reaches $2.45, the break even price, we have pellets as an alternative. Most are not this fortunate. But the trump supporters will not be curtailed or persuaded. In their fevered brains trump is their savior. And no amount of economic stress will dissuade them from their brainwashed beliefs. As rudy said "Truth isn't the truth". The masses believe him. That is all that matters. I'm pessimistic of the coming "blue wave". Every person I know who voted for trump is still in fervent support of him. I truly believe there is no point too low for him, no revelation too egregious, to dissuade these beliefs. Reality is dead. Fantasy now reigns. Truth isn't truth. It's all fake news. Don't believe your eyes and ears. The manipulation is complete. Will American democracy survive?
2
@Shakinspear
In concert with the latest report from the "Nightly Business Report" for us elementary followers;
https://www.nytimes.com/reuters/2018/08/23/business/23reuters-venezuela-...
And now we enter the 'Trump Acting Fiscally Responsible' mode: Freezing the 2019 incomes of 2 million Federal workers in order to “maintain efforts to put our Nation on a sustainable fiscal course.”.
Fortunately for the President, many of those affected are his voters who will understand, support and accept the reduction in their purchasing power without protest and perhaps even with a fist-pumping 'Yeah!' when he next preaches to the choir.
The emerging Trump/GOP campaign slogan for 2020 is - 'Poorer but Happier under Trump'. Who knew?
170
@Tom Storm
Vote Republican, live poor.
6
@Tom Storm
But on the upside they get to continue screaming "lock her up" like zombies with Russian agents leading the chant.
Tom, Jesus will get them through their troubles. Read "Strangers In Their Own Land" by Arlie Russell Hochschild. She lived among the people of the Louisiana Delta, a place made a toxic waste dump by Corporate pollution where cancer is rampant a very little wildlife survives yet the people consistently vote for the Repulican party, which brings in these toxic industries because it knows the people tolerate them because their Republican representatives have "Christian values." They all say faith gets them through their problems. How do you argue with that?
This extraction of wealth from the larger system by the wealthy cannot continue and keep a viable, open & functioning democracy. After they've consumed the best 90% of the generated wealth, too little is left for the other 300 million American souls.
Trump's presidency and possibility of the end of the rule of law in this country are already at our doorstep - an indirect and misguided reaction by the body politic to the turmoil and injustices of the current economy. It may be already too late to fix American capitalism. I hope not. But after 40 yrs of this wealth extraction, its unclear there's a way forward this late in the game.
61
I read that consumer confidence is at a decades long high, while at the same time so is consumer debt. Seems hard to reconcile. Since most consumers have not seen their financial situation improve in years, my guess is that they, despite all evidence, believe the GOP hyperbole, or at least want to and are willing to bankrupt themselves to prove it. This is why Dems must ask voters to perform a reality check and actually examine their financial status. Does it accord with the GOP rhetoric and if not, who do they think is getting richer at their expense. It would be nice to have some simple, eye-opening statistics ready for such a discussion because you can be sure there will be pushback from the usual flacks.
56
@stan continople: Perhaps those who buy things using consumer debt do so more readily when their confidence is high. That seems to correlate to me.
Besides the Distributional accounts, there needs to be more restrictions on foreign exports of business and wealth. The current trade deficit is not the entire story as much wealth is lost to global investing, instead of here at home, and the export of business will mean enduring losses of wealth, both investments and the engines of our economy. We also need a measure of that wealth and business loss. I would enjoy learning the gross amount of wealth loss to global investing and the moments loss of businesses and their future gross economic gain losses. Unfortunately, in service to the wealthy, the Tax Cuts Bill passed in December still promotes the export of business and wealth because it made the new foreign holdings tax rate lower than the national Corporate tax rate and any profit driven business people absent a sense of duty to our nation will continue to move to foreign lands.
5
@Shakinspear: Very important. The "tax deform" is actively undermining American worker income. That is certainly part of its purpose. Trump's attempt to cut federal worker pay (by not raising it while inflation continues) is another way to cut American incomes.
5
@Shakinspear - I must admit that I get confused about the various terms for the flow of money in and out of the country, but I believe the current account deficit measures loses due to both trade and investment. You can look that up in lots of places
3
@Len Charlap
Hi Len, of greater concern is the loss of businesses and production to foreign lands and what the decades of loss of business here amounts to, which may be a more important measure of wealth loss over long duration.
4
A party that governs abysmally, as the Republicans do, can only achieve large majorities by pulling out all the stops: voter suppression, gerrymandering, and manipulation of voting machines.
Victoria Collier points out that “Election Day is dominated by a handful of secretive corporations with interlocking ownership, strong partisan ties to the far right, and executives who revolve among them like beans in a shell game.”
The Emmy nominated HBO documentary: Hacking Democracy https://tinyurl.com/y7mydv7z
In 2000, Al Gore received “negative 16,022 votes” in Volusia County, Florida.
Susan Berniker, a Republican candidate in Louisiana, tested 15 touchscreen voting machines after her race. When she selected her name, the name of another candidate appeared on the screen.
California banned Diebold’s touchscreen machines before the 2004 election for flaws that the company failed to disclose.
After the 2004 presidential election, the Green Party and Libertarian Party candidates requested an audit of the machines in Ohio. The ballots arrived in two groups: Kerry and Bush. Two Board of Elections employees were convicted of “pre-counting the ballots.”
Computer expert Harri Hursti hacked a Diebold machine without leaving a trace.
Victoria Collier interview regarding her Harper’s cover story “How to Rig an Election” https://tinyurl.com/y8jg6a2e
“Democratic elections require a transparent vote-counting process. If we don’t have transparency, we don’t have democratic elections.”
440
@RLS
"A party that governs abysmally, as the Republicans do, can only achieve large majorities by pulling out all the stops: voter suppression, gerrymandering, and manipulation of voting machines."
We cannot solve all these problems overnight. So what can we do? We can turn out in massive numbers. Democrats need to vote themselves back in. There is no other way. If exit polls show that a Democrat should have won by 25 points and he or she loses, it will be obvious to all that our electoral system is corrupt.
Trump and the GOP "fixing" electronic voting machines is a lot of smoke. We need to deal with it, absolutely we do, but they won't get away with it. We still have a free press which continues to report diligently on the issues. And Trump will not get away with his continued absurd attacks on it. What about Trump violence if he and his GOP lose? Law enforcement will take care of it. There certainly are Trump supporters in the police and the military, but we are still very far away from losing respect for the results of our elections.
Franklin told us that we will have a republic if we can keep it. If we want to continue living in a democracy, then we must vote, and we must also convince every voter that it is vital that they critically research candidates and ensure that their ballots are properly counted.
Apathy and the resulting voter turnout in 2016 were abysmal.
Vote. And make sure everyone else does, too. It really is as simple as that.
All is not lost.
12
Blue Moon: “If exit polls show that a Democrat should have won by 25 points and he or she loses, it will be obvious to all that our electoral system is corrupt.”
Election integrity expert Jonathan Simon explains that the purpose of rigging is not to win every election. The goal of riggers is to maximize winnings and minimize losses "within the bounds of acceptable risk." So, no, they will not manipulate an election where the candidate they want to win is 25 points behind.
Blue Moon: “...we must convince every voter that it is vital that they...ensure that their ballots are properly counted.”
Vote counting has been outsourced to a handful of rightwing companies that tabulate votes in secret. The ballots, memory cards and software code have been ruled a trade secret, and off limits to the public, candidates and election administrators. That’s undemocratic when elections are a public trust. Other democracies count their ballots by hand. It’s the gold standard.
Josh Mitteldorf: Intro to Election Theft in America (part 1 of 4)
https://tinyurl.com/yanc473c
“Are votes in American elections being counted fairly and accurately?...There is stiff resistance to looking at the ballots with human eyes. So we are left looking at statistics and anecdotes, trying to determine whether vote counts are honest and reliable. The evidence does not inspire confidence. But whatever you think of the evidence there is no justification for a system without the possibility of public verification.”
9
@RLS
Paper and pencil might work...
5
Schumer has certainly picked a convenient time to "measure" just how badly people are getting shafted. It is all too typical: pre-election season, Wall Street-beholden politician feigns interest, introduces a bill to merely study the problem until it either dies in committee or is whittled down to nothingness by the corporate lobbyists.
All he needs to do is pick up any newspaper or even search Google to learn that Jeff Bezos makes the median Amazon salary every nine seconds. or put another way, raked in $6 billion in just nine seconds. That was in April 2016, so it's probably even worse now.
We don't need another stinkin' study by some group of economists to know that wealth inequality is the worst it's been since the last deregulated Gilded Age - which by the way, came to a temporary screeching halt when FDR came to power and legislation like Glass-Steagall was enacted.
So I'll believe Chuck Schumer is concerned on the day he introduces legislation reinstating Glass-Steagall, and gives full-throated support to Elizabeth Warren's Accountable Capitalism Act, which would give more power back to workers, rather than dividing the spoils of growth among CEOs and shareholders.
Meanwhile, Trump is suddenly concerned about the deficit, and just decreed that federal workers will get no pay raises. Would he be Trump if he didn't create yet another scapegoat from the depths of human anguish in this country?
It's the corruption, stupid, and it goes way beyond Trump.
718
@Karen Garcia
Hear, hear!
Not only are federal workers not getting a raise, but Trump is completely redesigning their retirement benefits.
https://wp.me/p2KJ3H-2ZW
The Trump administration should be likened to plecostomus in a fish tank. They're cleaning everything out!
105
@Karen Garcia Mostly agreed. However, the unfortunate fact is that WWII provided the economic kick that allowed the US to escape the great depression. Glass-Steagall helped it from occurring again. On the other hand, perhaps the Dear Leader has WWIII in his plans to make America great again.
5
@Karen Garcia, Trump is not so suddenly concerned. Not paying government workers is part of the Republican plan. Aside from the short-term tax benefits for the billionaire class, there's the virtue of driving down the general level of wages and salaries
10