Bush admits income gap

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? Read more!