Paul Krugman, ‘Voodoo Time Machine’

Krugman on Republicans' reaction to "the sharp increase in American economic growth that, we now know, began last spring":

...

... So what would [Republicans] say?

Well, I didn’t see that one coming: They’re claiming credit. Never mind the fact that all of the good data refer to a period before the midterm elections. Mitch McConnell, the new Senate majority leader, says that he did it, that growth reflected “the expectation of a new Republican Congress.”

The response of the Democratic National Committee — “Hahahahahahaha” — seems appropriate. I mean, talk about voodoo economics: Mr. McConnell is claiming not just that he can create prosperity without, you know, actually passing any legislation, but that he can reach back in time and create prosperity before even taking power. But while Mr. McConnell’s self-aggrandizement is funny, it’s also scary, because it’s a symptom of his party’s epistemic closure. Republicans know many things that aren’t so, and no amount of contrary evidence will get them to change their minds.

At least Mr. McConnell didn’t do what many of his colleagues have done when faced with inconvenient facts: resort to conspiracy theories.

...

(Bolds mine. - SB)

Things Republicans Know

This is a fundamental difference between the D's and the R's. D's may occasionally claim a GOP policy is worse than in fact it is (an error that is more and more difficult to commit as the GOP evolves into a virtually dictatorial organization); R's, on the other hand, are absolutely certain that anything good that happens in America is a direct consequence of, and only of, their radical policies. "Epistemic closure" indeed... and on the whole, disgusting.

Study: State Laws To Enhance Business Growth Widen Wealth Inequality

I suppose the results presented by DSWright at FDL should not be surprising:

Who beggars whom?

When state governments try to create a better business climate they run the risk of encouraging a more stratified society, according to a new study by David Neumark and Jennifer Muz of the University of California. The study compares two different policy approaches to improve the business climate of a state – those that attempt to increase growth by lowering business costs and those that work to improve the quality of life.

There was little exacerbation of wealth inequality when states enacted policies to improve their quality of life to create a better business climate, but when the method was lowering business costs to augment growth the wealth gap widened.

...

(NOTE: the "new study" link above is to a summary of the study. If you want more, downloading the full paper will cost you $5 unless your receiving email address is connected with an "appropriate" institution. Oh, irony! The CityLab link is free, and has more general info about the relationship of business climate to wealth inequality.)

This suggests to me that when business conditions improve, the businesses that benefit do not use any significant portion of their enhanced profits to pay their employees more, let alone to hire more people. This indifference to including employees in the gains reflects what I saw over my working life: my own increased productivity never significantly increased my salary. This result is part of what led to my becoming a full-time contractor (a solution which had its own set of problems for the worker who chooses it).

As far as I can see, there is no simple modification of what passes for capitalism in America that would benefit both employers and employees. All the "job creation" that Mitt Rmoney bragged about is exclusively at the discretion of, and largely to the benefit of, the employer. And states and cities that try to buy into the benefits on behalf of their working citizens by lavishing expensive benefits on the business community are wasting their time... and to a large extent their money.

‘There's Nothing Surer: The Rich Get Rich...’

Stiglitz

"... and the poor get poorer," goes the increasingly accurate but abominably titled song, "Ain't we got fun." Well-known economist Joseph E. Stiglitz, whom the New York Times describes as "a Nobel laureate in economics, a Columbia professor and a former chairman of the Council of Economic Advisers and chief economist for the World Bank," may as well have quoted that song (omitting the "fun" part) to describe the growth in economic inequality among individuals within developed nations: since the 1980s, individual inequality has grown, using as a basis a paper by World Bank economist Branko Milanović, The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality:

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... While the gap between some regions has markedly narrowed — namely, between Asia and the advanced economies of the West — huge gaps remain. Average global incomes, by country, have moved closer together over the last several decades, particularly on the strength of the growth of China and India. But overall equality across humanity, considered as individuals, has improved very little. ...

So while nations in Asia, the Middle East and Latin America, as a whole, might be catching up with the West, the poor everywhere are left behind, even in places like China where they’ve benefited somewhat from rising living standards.

From 1988 to 2008, Mr. Milanovic found, people in the world’s top 1 percent saw their incomes increase by 60 percent, while those in the bottom 5 percent had no change in their income. And while median incomes have greatly improved in recent decades, there are still enormous imbalances: 8 percent of humanity takes home 50 percent of global income; the top 1 percent alone takes home 15 percent. ...

The United States provides a particularly grim example for the world. ...

On the one hand, widening income and wealth inequality in America is part of a trend seen across the Western world. A 2011 study by the Organization for Economic Cooperation and Development found that income inequality first started to rise in the late ’70s and early ’80s in America and Britain (and also in Israel). The trend became more widespread starting in the late ’80s. ...

Of the advanced economies, America has some of the worst disparities in incomes and opportunities, with devastating macroeconomic consequences. The gross domestic product of the United States has more than quadrupled in the last 40 years and nearly doubled in the last 25, but as is now well known, the benefits have gone to the top — and increasingly to the very, very top.

Last year, the top 1 percent of Americans took home 22 percent of the nation’s income; the top 0.1 percent, 11 percent. Ninety-five percent of all income gains since 2009 have gone to the top 1 percent. ...

...

(Bolds mine. - SB)

Please note that this 30-odd-year decline in the economic wellbeing of the lower and lower-middle classes in America spans three Republican presidencies and parts of three Democratic presidencies. It spans vast improvements in technology, especially information technology. It also spans historically unprecedented growth in productivity.

Much good that has done the 99% of us. It doesn't seem to matter whom we elect to the presidency or to Congress. It doesn't seem to matter what we do... only the top 1% are able to get ahead, while the rest of us scrape for what we get, and get a portion of all that average economic growth that never really increases. (Beware any author who praises average incomes. Unless you are wealthy or at least well-off, averages have little meaning. The average— the mean— of your income and that of Bill Gates is probably in the billions of dollars; averages are used mostly by Republicans to paper over bad news for the lower and middle classes.)

And poverty... please see this chart for the US and Texas from 1980 to 2007. Note that poverty goes up and down, but never really descends below 11% in "the greatest nation on Earth."

Welcome to our brave new world.

Stiglitz concludes:

...

Inequality and poverty among children are a special moral disgrace. They flout right-wing suggestions that poverty is a result of laziness and poor choices; children can’t choose their parents. In America, nearly one in four children lives in poverty; in Spain and Greece, about one in six; in Australia, Britain and Canada, more than one in 10. None of this is inevitable. ...

For these reasons, I see us entering a world divided not just between the haves and have-nots, but also between those countries that do nothing about it, and those that do. Some countries will be successful in creating shared prosperity — the only kind of prosperity that I believe is truly sustainable. Others will let inequality run amok. ...

Stiglitz does not explicitly say which category includes the United States. What do you think?

Tax Rates And Job Creation

Here's a conversational tidbit for you, via ThinkProgress. The next time your Republican friend or colleague (or, heaven preserve you, close relative) brings up the "fact" that raising taxes on the "job creators" (i.e., the wealthy bastards and the corporations they control) is a "job killer," remind them that during the Bill Clinton presidency, which was our most recent era of substantial economic and job growth, the top marginal tax rate was 39.6 percent... and small businesses grew twice as fast during Clinton's term as during the Dubya Bush years. In other words, Reaganomics and Bushonomics just plain didn't work, despite all the GOP's fancy arithmetic.

On the other hand, the numbers that DO add up, those from Clinton's presidency, reveal that a moderately high top marginal tax rate (39.6 percent is by no means the highest individual tax rate ever; that was 90 percent, under... sorry, GOPers... Eisenhower) leads to lower unemployment, greater productivity and yes, solid economic growth.

There is one other reason I know this is true. I experienced it firsthand. I am a living, breathing example. The Bill Clinton years were the golden age for my one-man self-employed contract IT business: I seldom lacked for work during those eight years, and my income grew steadily. Momentum carried my little shop through the first couple of years of GeeDubya Bush, but after eight years of economic "malfeeance" (Bush-speak for "malfeasance"), the bottom dropped out, and I had no choice but to close the doors. Leave it to a Republican president... an unelected Republican president... to kill "job creation" for fun and profit, while preserving the privileged class untouched. That's what Republicans do. That's who Republicans are.