“America’s ‘We’ Problem”: Being Rich In Today’s America Means Not Having To Come Across Anyone Who Isn’t
America has a serious “We” problem — as in “Why should we pay for them?”
The question is popping up all over the place. It underlies the debate over extending unemployment benefits to the long-term unemployed and providing food stamps to the poor.
It’s found in the resistance of some young and healthy people to being required to buy health insurance in order to help pay for people with preexisting health problems.
It can be heard among the residents of upscale neighborhoods who don’t want their tax dollars going to the inhabitants of poorer neighborhoods nearby.
The pronouns “we” and “they” are the most important of all political words. They demarcate who’s within the sphere of mutual responsibility, and who’s not. Someone within that sphere who’s needy is one of “us” — an extension of our family, friends, community, tribe – and deserving of help. But needy people outside that sphere are “them,” presumed undeserving unless proved otherwise.
The central political question faced by any nation or group is where the borders of this sphere of mutual responsibility are drawn.
Why in recent years have so many middle-class and wealthy Americans pulled the borders in closer?
The middle-class and wealthy citizens of East Baton Rouge Parish, Louisiana, for example, are trying to secede from the school district they now share with poorer residents of town, and set up their own district funded by property taxes from their higher-valued homes.
Similar efforts are underway in Memphis, Atlanta, and Dallas. Over the past two years, two wealthy suburbs of Birmingham, Alabama, have left the countywide school system in order to set up their own.
Elsewhere, upscale school districts are voting down state plans to raise their taxes in order to provide more money to poor districts, as they did recently in Colorado.
“Why should we pay for them?” is also reverberating in wealthy places like Oakland County, Michigan, that border devastatingly poor places like Detroit.
“Now, all of a sudden, they’re having problems and they want to give part of the responsibility to the suburbs?” says L. Brooks Paterson, the Oakland County executive. “They’re not gonna talk me into being the good guy. ‘Pick up your share?’ Ha ha.”
But had the official boundary been drawn differently so that it encompassed both Oakland County and Detroit – say, to create a Greater Detroit region – the two places would form a “we” whose problems Oakland’s more affluent citizens would have some responsibility to address.
What’s going on?
One obvious explanation involves race. Detroit is mostly black; Oakland County, mostly white. The secessionist school districts in the South are almost entirely white; the neighborhoods they’re leaving behind, mostly black.
But racisim has been with us from the start. Although some southern school districts are seceding in the wake of the ending of court-ordered desegregation, race alone can’t explain the broader national pattern. According to Census Bureau numbers, two-thirds of Americans below the poverty line at any given point identify themselves as white.
Another culprit is the increasing economic stress felt by most middle-class Americans. Median household incomes are dropping and over three-quarters of Americans report they’re living paycheck to paycheck.
It’s easier to be generous and expansive about the sphere of ”we” when incomes are rising and future prospects seem even better, as during the first three decades after World War II when America declared war on poverty and expanded civil rights. But since the late 1970s, as most paychecks have flattened or declined, adjusted for inflation, many in the stressed middle no longer want to pay for “them.”
Yet this doesn’t explain why so many wealthy America’s are also exiting. They’ve never been richer. Surely they can afford a larger “we.” But most of today’s rich adamantly refuse to pay anything close to the tax rate America’s wealthy accepted forty years ago.
Perhaps it’s because, as inequality has widened and class divisions have hardened, America’s wealthy no longer have any idea how the other half lives.
Being rich in today’s America means not having to come across anyone who isn’t. Exclusive prep schools, elite colleges, private jets, gated communities, tony resorts, symphony halls and opera houses, and vacation homes in the Hamptons and other exclusive vacation sites all insulate them from the rabble.
America’s wealthy increasingly inhabit a different country from the one “they” inhabit, and America’s less fortunate seem as foreign as do the needy inhabitants of another country.
The first step in widening the sphere of “we” is to break down the barriers — not just of race, but also, increasingly, of class, and of geographical segregation by income — that are pushing “we Americans” further and further apart.
By: Robert Reich, The Robert Reich Blog, February 14, 2014
“Something Is The Matter With Kansas”: When Does The Madness End?
Kansas State Representative Keith Esau has introduced a bill that would eliminate no-fault divorce in the Sunflower State. He has some interesting ideas on matrimony:
“No-fault divorce gives people an easy out instead of working at it,” Esau told The Wichita Eagle on Friday. “It would be my hope that they could work out their incompatibilities and learn to work together on things.”
…Esau disputed the suggestion that bill was an example of government overreach. He said the state gives benefits to married couples, such as tax breaks, so couples shouldn’t enter into the institution of marriage lightly.
Moreover, he said, the state has a vested interest in supporting “strong families,” and divorce undermines that.
“I think we’ve made divorce way too easy in this country,” he said. “If we really want to respect marriage it needs to be a commitment that people work at and don’t find arbitrary reasons to give up.”
Of course, one of the immediate effects of this law would be that couples seeking a divorce would have to face-off in court and point fingers at each other. Either that, or one of them would have to accept the blame for their failed relationship.
Divorce is tough on kids, but nasty divorces are toxic.
But this isn’t even the worst bill that was considered in the Kansas House this week.
On Tuesday, the Kansas House of Representatives overwhelmingly approved a measure designed to bring anti-gay segregation—under the guise of “religious liberty”—to the already deep-red state. The bill, written out of fear that the state may soon face an Oklahoma-style gay marriage ruling, will now easily pass the Republican Senate and be signed into law by the Republican governor. The result will mark Kansas as the first state, though certainly not the last, to legalize segregation of gay and straight people in virtually every arena of life.
If that sounds overblown, consider the bill itself. When passed, the new law will allow any individual, group, or private business to refuse to serve gay couples if “it would be contrary to their sincerely held religious beliefs.” Private employers can continue to fire gay employees on account of their sexuality. Stores may deny gay couples goods and services because they are gay. Hotels can eject gay couples or deny them entry in the first place. Businesses that provide public accommodations—movie theaters, restaurants—can turn away gay couples at the door. And if a gay couple sues for discrimination, they won’t just lose; they’ll be forced to pay their opponent’s attorney’s fees.
Unlike Rep. Esau’s idiotic no-divorce bill, the anti-gay measure will actually become law. Most likely, the federal courts will strike it down as unconstitutional, but that won’t prevent Republicans in Kansas from wasting money defending it.
By: Martin Longman, Washington Monthly Political Animal, February 15, 2014
“Let The Public Beware”: Is Fracking Causing Earthquakes?
In Texas, Oklahoma, Ohio and other states, people who have rarely experienced earthquakes in the past are getting used to them as a fairly common phenomenon. This dramatic uptick in tremors is related to drilling for oil and natural gas, several reports find. And the growing popularity of hydraulic fracturing, or fracking, is in part to blame.
Between 1970 and 2000, there was an average of 20 earthquakes per year within the central and eastern United States. Between 2010 and 2013, there was an average of more than 100 earthquakes annually. A United States Geological Survey released last month summarized research on man-made earthquakes conducted by one of the agency’s geophysicists:
USGS scientists have found that at some locations the increase in seismicity coincides with the injection of wastewater in deep disposal wells. Much of this wastewater is a byproduct of oil and gas production and is routinely disposed of by injection into wells specifically designed for this purpose.
So, the actual hydraulic fracturing process itself is not to blame in these cases; instead, it’s the injection of wastewater into deep wells that accompanies it.
Hydraulic fracturing produces a higher volume of wastewater than traditional drilling — as the name implies, drillers use millions of gallons of high-pressure water, sand and chemicals to break apart rock and release gas trapped in pockets in the earth. The wastewater generated is often contaminated with salt or poisonous chemicals, and environmental regulations bar drilling companies from allowing it to mix with drinking water; oftentimes, the most economical way for these companies to dispose of it is to sequester it deep in the ground, below aquifers. Once there, it changes pressure underground and lubricates fault lines, with the potential effect of causing earthquakes.
In both Texas and Oklahoma, the number of earthquakes per year has increased ten-fold. And wells storing wastewater from fracking have also been linked to hundreds of earthquakes near Youngstown, Ohio.
Studies last year found that the largest quake ever recorded in Oklahoma — which was felt 800 miles away in Milwaukee, Wis., damaged 14 homes, injured two people and buckled a highway — could be linked to wastewater injection. Damage from the quake, which measured 5.6 on the Richter scale, “would be much worse if it were to happen in a more densely populated area,” the USGS wrote.
And as quakes increase in frequency, residents of Oklahoma and Texas are taking notice. More noticeable than the shaking, for many, is the noise these quakes make: a loud boom, like artillery fire.
In the Netherlands, where the Groningen gas field lies, quakes have also become more frequent, increasing from about 20 each year before 2011 to an average of one per week. Shell and Exxon Mobile, active in the gas field, set aside $130 million to strengthen buildings as the quakes increased in severity. But residents of the area worried that a 4-or-5 magnitude earthquake –the likelihood of which, experts warned, is increasing — would threaten the integrity of the country’s dikes, which protect the low-lying northern Netherlands.
Last month, the country’s government decided to scale back production of natural gas on the Groningen field, foregoing one billion euros a year by 2016, even as the country struggles to cope with the European Union’s deficit reduction targets.
But similar reductions in the US are unlikely. The oil and gas industry employs hundreds of thousands of people in both Texas and Oklahoma, and natural gas has become widely popular among electric utilities for its low cost.
By: John Light, Bill Moyers Blog, February 14, 2014
“Misrepresenting The Facts”: Obamacare Critics Still Tell Just One Side Of The Jobs Story
The economics profession is famous for its balance—as the joke goes, we always need more hands to express all the caveats to our conclusions. (“On the other hand … and on the other hand … and on the other hand…”) That is why arguments about last week’s report from the Congressional Budget Office have become so frustrating, even when accomplished scholars are the ones doing the arguing. Instead of addressing a subtle and complicated issue with (at least!) two sides, the law’s critics keep turning it into a single-sided moral diatribe about the work ethic and the supposed damage Obamacare is doing to it. A perfect illustration is a recent New York Times Economix column by Casey Mulligan, a University of Chicago economist whose own research has become part of the debate — and who, in the course of dismissing the Affordable Care Act’s virtues, took a swipe at me, as well.
The genesis of Mulligan’s article is the surprisingly famous appendix to that CBO report—the part where the agency predicts that the Affordable Care Act will be associated with a reduction in the workforce of the U.S. The bottom line of that report is that the ACA will result in 2 million fewer jobs by 2017. And, as is typical of the generally excellent CBO studies, this report is careful in describing the genesis of this conclusion. The CBO highlights that there are essentially two different sources of the reduced labor supply. The first is voluntary job leaving by those who have been “locked” into their jobs by fear of losing health insurance. Some of these individuals would happily turn down their wage to be retired or caring for children, but were previously unable to do so because they had no other insurance options; now they are able to pursue those preferred approaches. The second is those who are deterred from working by higher marginal tax rates. In particular, since the Affordable Care Act’s financial assistance phases out as income rises, the incentive to work more also declines at higher incomes. In other words, the law’s financial assistance is an implicit tax on earnings—and the tax gets higher as people earn more.
Mulligan’s article, and a number of his recent papers, are focused on the effects of these tax rates. He performs detailed computations which show that, for some individuals, that the tax rates can be quite high. In his recent post, Mulligan implies that these high tax rates are the reason for the CBO conclusions on reduced labor market participation. He dismisses the job lock effects as “a completely different issue…and far less prevalent.” He even cites the sentence on page 119-120 which ends with a footnote citing his work as evidence that CBO’s report is focused on high tax rates.
But Mulligan doesn’t mention that, in the very next paragraph, CBO dismisses his argument. According to the report, his suggested effect doesn’t impact labor supply, but rather health insurance offering (which they model elsewhere). Mulligan claims that CBO was “aware of instances of 100% tax rates,” which may be true, but the entire Appendix doesn’t mention this fact even once. It is not surprising that, unlike Mulligan, CBO economists did not harp on examples of 100% tax rates. They are uninterested in calculations that highlight extreme cases. They are more interested in modeling the overall impact on the workforce. Showing that tax rates might be high for a small number of workers is not as important as assessing what happens to aggregate labor supply.
More important, though, is Mulligan’s casual dismissal of the other reason why the labor market is shrinking, which was highlighted by a broad array of analysts. The CBO explicitly states that at least some of the labor supply reduction that they measure is from loosening “job lock,” and they never say anything which would lead the reader to conclude that job lock concerns are “far less prevalent” as an issue. That is simply Mulligan’s editorializing with no substantive basis.
Moreover, the CBO also includes a lengthy discussion of the potential positive productivity effects of loosening job lock. Since the CBO is cautious, and there is no consensus evidence on the productivity effects of job lock, they do not provide any estimates of the countervailing benefits of loosening job lock in their labor supply modeling. But at least they don’t ignore the topic, as Mulligan’s article would lead you to believe.
Mulligan says that the Obama administration “spun the high marginal tax rates as a policy achievement,” when, in fact, the post he cites is about job lock—not implicit marginal tax rates. Mulligan then goes on to misuse a quote of mine (as well as of Paul Krugman’s) that implies that we applaud the reduction in labor supply due to high marginal tax rates. Nothing could be further from the truth. My quote came from a Los Angeles Times opinion column. In it, I laid out clearly both of the effects documented by the CBO. Since this was, after all, an opinion piece, I also offered my view that—on balance—the CBO report was positive, because the benefits of the first labor supply effect (ending job lock) would be larger than the costs of the second (the implicit marginal rates). But I don’t claim that I know for sure that this is the case. Krugman’s quote came as part of a series of posts he wrote, describing the economics case for allowing those who are better off not working to leave their jobs rather than to continue to work just to get health insurance. Krugman also gave a more balanced view, acknowledging the downside of implicit marginal tax rates but arguing that, in the end, the upsides were greater.
Mulligan—like so many of the law’s critics, in and out of the economics profession—gives a more one-sided view. He talks only about the marginal tax rates. A reader who relied exclusively on his column would have no idea the CBO cited multiple reasons for the shrinking workforce—and that some of these reasons were utterly defensible. Ironically, while making a surprisingly moral case against examples of 100% tax rates, he ignores the moral case for leveling the playing field by breaking the link between work and insurance, so that workers are not chained to jobs where the value of their compensation is well below their disutility of working.
The Affordable Care Act, like any major reform, has its virtues and its flaws. The best economists, like the best public officials, are the ones who deal with both.
By: Jonathan Gruber, The New Republic, February 13, 2014
“Inequality, Dignity And Freedom”: People Least Inclined To Respect Efforts Of Ordinary Workers Are Winners Of The Wealth Lottery
Now that the Congressional Budget Office has explicitly denied saying that Obamacare destroys jobs, some (though by no means all) Republicans have stopped lying about that issue and turned to a different argument. O.K., they concede, any reduction in working hours because of health reform will be a voluntary choice by the workers themselves — but it’s still a bad thing because, as Representative Paul Ryan puts it, they’ll lose “the dignity of work.”
So let’s talk about what that means in 21st-century America.
It’s all very well to talk in the abstract about the dignity of work, but to suggest that workers can have equal dignity despite huge inequality in pay is just silly. In 2012, the top 40 hedge fund managers and traders were paid a combined $16.7 billion, equivalent to the wages of 400,000 ordinary workers. Given that kind of disparity, can anyone really believe in the equal dignity of work?
In fact, the people who seem least inclined to respect the efforts of ordinary workers are the winners of the wealth lottery. Over the past few months, we’ve been harangued by a procession of angry billionaires, furious that they’re not receiving the deference, the acknowledgment of their superiority, that they believe is their due. For example, last week the investor Sam Zell went on CNN Money to defend the 1 percent against “envy,” and he asserted that “the 1 percent work harder. The 1 percent are much bigger factors in all forms of our society.” Dignity for all!
And there’s another group that doesn’t respect workers: Republican politicians. In 2012, Representative Eric Cantor, the House majority leader, infamously marked Labor Day with a Twitter post celebrating … people who start their own businesses. Perhaps Mr. Cantor was chastened by the backlash to that post; at a recent G.O.P. retreat, he reportedly urged his colleagues to show some respect for Americans who don’t own businesses, who work for someone else. The clear implication was that they haven’t shown that kind of respect in the past.
On the whole, working Americans are better at appreciating their own worth than either the wealthy or conservative politicians are at showing them even minimal respect. Still, tens of millions of Americans know from experience that hard work isn’t enough to provide financial security or a decent education for their children, and many either couldn’t get health insurance or were desperately afraid of losing jobs that came with insurance until the Affordable Care Act kicked in last month. In the face of that kind of everyday struggle, talk about the dignity of work rings hollow.
So what would give working Americans more dignity in their lives, despite huge income disparities? How about assuring them that the essentials — health care, opportunity for their children, a minimal income — will be there even if their boss fires them or their jobs are shipped overseas?
Think about it: Has anything done as much to enhance the dignity of American seniors, to rescue them from the penury and dependence that were once so common among the elderly, as Social Security and Medicare? Inside the Beltway, fiscal scolds have turned “entitlements” into a bad word, but it’s precisely the fact that Americans are entitled to collect Social Security and be covered by Medicare, no questions asked, that makes these programs so empowering and liberating.
Conversely, the drive by conservatives to dismantle much of the social safety net, to replace it with minimal programs and private charity, is, in effect, an effort to strip away the dignity of lower-income workers.
And it’s something else: an assault on their freedom.
Modern American conservatives talk a lot about freedom, and deride liberals for advocating a “nanny state.” But when it comes to Americans down on their luck, conservatives become insultingly paternalistic, as comfortable congressmen lecture struggling families on the dignity of work. And they also become advocates of highly intrusive government. For example, House Republicans tried to introduce a provision into the farm bill that would have allowed states to mandate drug testing for food stamp recipients. (A commenter on my blog suggested mandatory drug tests for employees of too-big-to-fail financial institutions, which receive large implicit subsidies. Now that would really cause a panic.)
The truth is that if you really care about the dignity and freedom of American workers, you should favor more, not fewer, entitlements, a stronger, not weaker, social safety net.
And you should, in particular, support and celebrate health reform. Never mind all those claims that Obamacare is slavery; the reality is that the Affordable Care Act will empower millions of Americans, giving them exactly the kind of dignity and freedom politicians only pretend to love.
By: Paul Krugman, Op-Ed Columnist, The New York Times, February 13, 2014
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