From the Wall St. Journal: "This isn't a sudden change in Mr. Bush's economic philosophy, but rather a change in tactics." Why doesn't Bush see the income gap as a problem?
As the graph shows, most of the workforce got left behind during the last five years of recovery. This fits with two other pieces of the jobs puzzle. (1) Outsourcing has been growing, and (2) about 7 million jobs failed to materialize after the recession. These jobs were predicted year after year by the Bush economists, but they never materialized.
Outsourcing helps explain the missing jobs, and fewer jobs per worker means workers will settle for lower pay. And that's one big reason wages have not kept up.
But why doesn't Bush think that's a problem? The Wall St. Journal tells us: "Top White House economic officials still don't consider today's inequality -- the growing share of income going to those at the top -- an inherently bad thing; they believe it simply reflects the rising rewards accruing to society's most skilled and productive members." The reason: Bush's economists tell him it's not a bad thing.
Where did they get this idea? It's half the standard economic theory--the half conservatives like. Economics says every one gets paid their "marginal product." So if you get paid more, it means your marginal product is higher, and if you don't it's lower. It's sounds fair because it sounds like "your marginal" product is all your doing: you're lazy or you're good.
But, real economics doesn't say that. It's say it's only part you and it's part the market. If lots of jobs go overseas, or foreign workers come in, then there are too many workers per job. Adding one more worker is worth less when there are too many already--so by economic definitions they all have lower marginal products even though they are just as good as they ever were. Skilled economists like those it the White House know this, but they will never, ever, say it in public. Conservatives like to pretend the individual is 100% responsible, and the market is 100% fair.
What will happen in the next recession? We lose another 7 million jobs?
Saturday, March 31, 2007
Bush admits income gap
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8 comments:
Oh, this is really some big news.
Many people laughed at Ross Perot,
But that big Sucking sound is the jobs being outsourced and your wages going down the toilet. See, He told you so.
Steve,
Your web site is long overdue! Many thanks for your good efforts. I've had these "gut" feelings for years about oil, debt, etc....your facts match the guts!
Bravo!
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Kevin
Steve,
Can you change this chart to show GDP per person versus median wage? I think the U.S. population grew by about 4.9% during the 5 years on your graph. That suggests the median wage has fallen behind the per-capita GDP by about 11% over those 5 years.
Still quite bad, of course, and doesn't change your original point.
I was on your site zFacts.com and found the Cato article: 'ACHIEVING A “LENINIST” STRATEGY' which you pulled various sentence fragments out to portray the effort to reform Social Security as a sinister plot. I read the whole article (thanks for posting it) and found it to be quite transparent about the plans to reform what is clearly a failing program.
We all would like to think of ourselves as unbiased, but your highlighting of certain phrases leaves a bad taste in my mouth.
Regarding this post, the wage gap. How do you factor the failure of our public education system into this problem? The public education system monopoly has been churning out an underclass for decades. We spend more on education, yet our students rank among the lowest of developed nations.
It seems we can continue to blame the loathsome rich for this wage gap, but if we don't address our public education disaster, we'll be whining about a wage gap for generations.
I agree our education system is atrocious.
That may or may not have much to do with the wage gap, but I think it should be one of our highest priorities.
In case you know some economics consider this puzzle.
Model the economy as capital an labor.
Model labor as something like typing.
Now train all the workers to be twice a productive = type twice as fast.
What happens to their wage?
It falls drastically due to the increased supply of labor.
Is this because of the loathsome rich? No.
Is it the fault of workers? No.
That's just one way markets work. Market do not guarantee that more productive workers will earn more,
when you train lots of them. Train one and it works.
Sorry you don't agree with my reading of Cato, I'm sure I would feel the same about yours.
But, unless I thought you were trying to help yourself at someone else's expense,
I'd just figure that was what you believed to be unbiased.
Steve
Steve,
As an economists, I'm sure you understand that the blame for what happened with out latest economic meltdown,dates back to Carter, Reagan, Bush (GHW), Clinton, and Bush (GW), and of course our good friends in Congress. On Z facts you seemed to lay it all at the feet of Bush 43. Bush played his part, but the bubble was in place, when got into office.
If you need a clearer understanding of what happened, from an objective source, I suggest you read "A Stacked Deck - The Financial Collapse of 2008 by Nora Boyd Vincent. Ms. Vincent does a great job of laying out the timeline. Unfortunately for all of us, it is clearly bi-partisan bafoonery.
C R Bennett
Clinton with a Republican Congress added $537 million/day.
G.W.Bush $1.6 billion/day.
OBAMA $4.1 BILLION/DAY.
So what do you think now?
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