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“Isolated From The Rest Of The Public”: The Tea Party And The Hammock Theory Of Poverty

The increased focus on inequality has shifted the conversation away from deficit/austerity mania and towards a discussion of what government should be doing to boost the economy and protect people from economic harm. And it’s also prompted good new polling that goes deep into public views of the economy, the safety net, inequality, and what government should do about it.

On these topics, this week brought two new polls from Pew Research and CBS News.

I’ve asked both firms for a detailed breakdown of their data, and here’s a striking finding: The ideas and assumptions underlying the GOP economic and poverty agenda are far and away more reflective of the preoccupations of Tea Party Republicans. Meanwhile, non-Tea Party Republicans are much more in line with the rest of the public on these matters.

In short, the Tea Party economic worldview, if such a thing exists, is isolated from the rest of the public, and even to some degree from non-Tea Party Republicans – yet it has an outsized role in shaping the GOP’s overall agenda.

Both the Pew and CBS polls find large majorities believe the income gap is growing, and both find that more Americans want government to do something about it. Both also find solid majority support for raising the minimum wage, extending unemployment benefits, and (in Pew’s case) taxing the rich to help the poor.

Both polls also find that far larger numbers of Republicans don’t think government should act to reduce inequality. This is reflected in the GOP economic agenda. As Jonathan Chait explains, this agenda continues to be premised on the ideas that there is, if anything, too much downward redistribution of wealth, that government shouldn’t interfere in the market by, say, raising the minimum wage, and that safety net programs lull people into dependency (Paul Ryan’s Hammock Theory of Poverty).

But here’s the thing. That basic set of assumptions — and the resulting positions on some of the individual policies being discussed – are held overwhelmingly by Tea Party Republicans; and not nearly as much by non-tea party Republicans. Key findings:

On government action to combat inequality:

* The Pew poll finds Republicans divided on whether government should do a lot or some to reduce inequality, versus doing little or nothing, by 49-46. But tea party Republicans overwhelmingly tilt against  government doing something by 66-28, while non-tea party Republicans overwhelmingly favor doing something by 60-35.

* The CBS poll is less pronounced, but even here, Tea Party Republicans overwhelmingly oppose government acting to reduce the gap between rich and poor by 82-17, while non-Tea Party Republicans believe this by 66-29 (so nearly a third of non-Tea party Republicans believe it).

On unemployment benefits:

* The Pew poll finds Republicans oppose extending unemployment benefits by 53-44. But Tea Party Republicans overwhelmingly oppose this by 70-29, while non-Tea Party Republicans support it by 52-44.

* Similarly, the CBS poll finds that Republicans oppose extending unemployment benefits by 49-40. But Tea Party Republicans overwhelmingly oppose it by 58-31. Non-Tea Party Republicans favor extending them by 46-43.

On the Hammock Theory of Poverty:

* The CBS poll finds that Republicans believe unemployment benefits make people less motivated to look for a job by 57-40. But Tea Party Republicans overwhelmingly believe this by 67-32. By contrast, only a minority of non-tea party Republicans believe this (47-51).

* The Pew poll has a similar finding: Republicans believe government aid to the poor does more harm than good by making people dependent on government, rather than doing more good than harm, by 67-27. But Tea Party Republicans overwhelmingly believe this by 84-11, while non-tea party Republicans are somewhat more closely divided, 59-35.

On the minimum wage:

* The Pew poll finds that Republicans favor raising the minimum wage to $10.10 an hour by 54-44. But Tea Party Republicans overwhelmingly oppose this by 65-33. Non-Tea Party Republicans overwhelmingly support it by 65-33. (All the above Pew numbers include Republicans and GOP-leaners).

* The CBS poll is less pronounced, but even here, Tea Party Republicans tilt against a minimum wage hike by 52-47, while non-tea party Republicans favor it by 50-48.

A number of conservative reform types, such as Michael Gerson and Peter Wehner, and Michael Strain, have written at length about the need to break from tea party orthodoxy on economic matters, and to begin to envision an affirmative government role when it comes to strengthening (and reforming) the safety net, and even spending government money to combat the near term jobs emergency. I don’t know if non-tea party Republicans can be reached and split off from the tea party on these matters or not, but it does seem at least plausible, if the above numbers are an accurate picture of things.

Meanwhile, some Republican lawmakers do seem sincere about charting a new course on poverty. But the party agenda remains in thrall to a set of ideas that remain largely the province of a small tea party minority, and are not nearly as widely held among Republicans overall.

 

By: Greg Sargent, The Plum Line, The Washington Post, January 24, 2014

January 25, 2014 Posted by | Economic Inequality, Income Gap, Tea Party | , , , , , , | Leave a comment

“The Vicious Circle Of Income Inequality”: New Forces Are Causing Inequality To Feed On Itself

Almost every culture has some variation on the saying, “rags to rags in three generations.” Whether it’s “clogs to clogs” or “rice paddy to rice paddy,” the message is essentially the same: Starting with nothing, the first generation builds a successful enterprise, which its profligate offspring then manage poorly, so that by the time the grandchildren take over, little value remains.

Much of society’s wealth is created by new enterprises, so the apparent implication of this folk wisdom is that economic inequality should be self-limiting. And for most of the early history of industrial society, it was.

But no longer. Inequality in the United States has been increasing sharply for more than four decades and shows no signs of retreat. In varying degrees, it’s been the same pattern in other countries.

The economy has been changing, and new forces are causing inequality to feed on itself.

One is that the higher incomes of top earners have been shifting consumer demand in favor of goods whose value stems from the talents of other top earners. Because the wealthy have just about every possession anyone might need, they tend to spend their extra income in pursuit of something special. And, often, what makes goods special today is that they’re produced by people or organizations whose talents can’t be duplicated easily.

Wealthy people don’t choose just any architects, artists, lawyers, plastic surgeons, heart specialists or cosmetic dentists. They seek out the best, and the most expensive, practitioners in each category. The information revolution has greatly increased their ability to find those practitioners and transact with them. So as the rich get richer, the talented people they patronize get richer, too. Their spending, in turn, increases the incomes of other elite practitioners, and so on.

More recently, rising inequality has had much impact on the political process. Greater income and wealth in the hands of top earners gives them greater access to legislators. And it confers more ability to influence public opinion through contributions to research organizations and political action committees. The results have included long-term reductions in income and estate taxes, as well as relaxed business regulation. Those changes, in turn, have caused further concentrations of income and wealth at the top, creating even more political influence.

By enabling the best performers in almost every arena to extend their reach, technology has also been a major driver of income inequality. The best athletes and musicians once entertained hundreds, sometimes thousands of people at one time, but they can now serve audiences of hundreds of millions. In other fields, it was once enough to be the best producer in a relatively small region. But because of falling transportation costs and trade barriers in the information economy, many fields are now dominated by only a handful of the best suppliers worldwide.

Income concentration has changed spending patterns in other ways that widen the income gap. The wealthy have been spending more on gifts, clothing, housing, celebrations and other things simply because they have more money. Their extra spending has shifted the frames of reference that shape demand by others just below them, so these less wealthy people have been spending more, and so on, all the way down the income ladder. But because incomes below the top have been stagnant, the resulting expenditure cascades have made it harder for middle- and low-income families to make ends meet. Despite taking on huge amounts of debt, they’ve been unable to keep pace with community standards. Interest payments impoverish them while enriching their wealthy creditors.

But perhaps the most important new feedback loop shows up in higher education. Tighter budgets in middle-class families make it harder for them to afford the special tutors and other environmental advantages that help more affluent students win admission to elite universities. Financial aid helps alleviate these problems, but the children of affluent families graduate debt-free and move quickly into top-paying jobs, while the children of other families face lesser job prospects and heavy loads of student debt. All too often, the less affluent experience the miracle of compound interest in reverse.

More than anything else, what’s transformed the “rags to rags in three generations” story is the reduced importance of inherited wealth relative to other forms of inherited advantage. Monetary bequests are far more easily squandered than early childhood advantage and elite educational credentials. As Americans, we once pointed with pride to our country’s high level of economic and social mobility, but we’ve now become one of the world’s most rigidly stratified industrial democracies.

Given the grave threats to the social order that extreme inequality has posed in other countries, it’s easy to see why the growing income gap is poised to become the signature political issue of 2014. Low- and middle-income Americans don’t appear to be on the threshold of revolt. But the middle-class squeeze continues to tighten, and it would be imprudent to consider ourselves immune. So if growing inequality has become a self-reinforcing process, we’ll want to think more creatively about public policies that might contain it.

In the meantime, the proportion of our citizens who never make it out of rags will continue to grow.

 

By: Robert H. Frank, Economics Professor, The Johnson Graduate School of Management at Cornell University; The New York Times, January 11, 2014

January 13, 2014 Posted by | Economic Inequality, Income Gap | , , , , , , , | 2 Comments

“The Meaning Of A Decent Society”: What Do We Owe One Another As Members Of The Same Society?

It’s the season to show concern for the less fortunate among us. We should also be concerned about the widening gap between the most fortunate and everyone else.

Although it’s still possible to win the lottery (your chance of winning $648 million in the recent Mega Millions sweepstakes was one in 259 million), the biggest lottery of all is what family we’re born into. Our life chances are now determined to an unprecedented degree by the wealth of our parents.

That’s not always been the case. The faith that anyone could move from rags to riches – with enough guts and gumption, hard work and nose to the grindstone – was once at the core of the American Dream.

And equal opportunity was the heart of the American creed. Although imperfectly achieved, that ideal eventually propelled us to overcome legalized segregation by race, and to guarantee civil rights. It fueled efforts to improve all our schools and widen access to higher education. It pushed the nation to help the unemployed, raise the minimum wage, and provide pathways to good jobs. Much of this was financed by taxes on the most fortunate.

But for more than three decades we’ve been going backwards. It’s far more difficult today for a child from a poor family to become a middle-class or wealthy adult. Or even for a middle-class child to become wealthy.

The major reason is widening inequality. The longer the ladder, the harder the climb. America is now more unequal that it’s been for eighty or more years, with the most unequal distribution of income and wealth of all developed nations. Equal opportunity has become a pipe dream.

Rather than respond with policies to reverse the trend and get us back on the road to equal opportunity and widely-shared prosperity, we’ve spent much of the last three decades doing the opposite.

Taxes have been cut on the rich, public schools have deteriorated, higher education has become unaffordable for many, safety nets have been shredded, and the minimum wage has been allowed to drop 30 percent below where it was in 1968, adjusted for inflation.

Congress has just passed a tiny bipartisan budget agreement, and the Federal Reserve has decided to wean the economy off artificially low interest rates. Both decisions reflect Washington’s (and Wall Street’s) assumption that the economy is almost back on track.

But it’s not at all back on the track it was on more than three decades ago.

It’s certainly not on track for the record 4 million Americans now unemployed for more than six months, or for the unprecedented 20 million American children in poverty (we now have the highest rate of child poverty of all developed nations other than Romania), or for the third of all working Americans whose jobs are now part-time or temporary, or for the majority of Americans whose real wages continue to drop.

How can the economy be back on track when 95 percent of the economic gains since the recovery began in 2009 have gone to the richest 1 percent?

The underlying issue is a moral one: What do we owe one another as members of the same society?

Conservatives answer that question by saying it’s a matter of personal choice – of charitable works, philanthropy, and individual acts of kindness joined in “a thousand points of light.”

But that leaves out what we could and should seek to accomplish together as a society. It neglects the organization of our economy, and its social consequences. It minimizes the potential role of democracy in determining the rules of the game, as well as the corruption of democracy by big money. It overlooks our strivings for social justice.

In short, it ducks the meaning of a decent society.

Last month Pope Francis wondered aloud whether “trickle-down theories, which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness…”. Rush Limbaugh accused the Pope of being a Marxist for merely raising the issue.

But the question of how to bring about greater justice and inclusiveness is as American as apple pie. It has animated our efforts for more than a century – during the Progressive Era, the New Deal, the Great Society, and beyond — to make capitalism work for the betterment of all rather merely than the enrichment of a few.

The supply-side, trickle-down, market-fundamentalist views that took root in America in the early 1980s got us fundamentally off track.

To get back to the kind of shared prosperity and upward mobility we once considered normal will require another era of fundamental reform, of both our economy and our democracy.

 

By: Robert Reich, The Robert Reich Blog, December 19, 2013

December 22, 2013 Posted by | Economic Inequality, Income Gap | , , , , , , , | 1 Comment

“Obama Gets Real”: A Growing Deficit Of Opportunity Is A Bigger Threat To Our Future Than Our Rapidly Shrinking Fiscal Deficit

Much of the media commentary on President Obama’s big inequality speech was cynical. You know the drill: it’s yet another “reboot” that will go nowhere; none of it will have any effect on policy, and so on. But before we talk about the speech’s possible political impact or lack thereof, shouldn’t we look at the substance? Was what the president said true? Was it new? If the answer to these questions is yes — and it is — then what he said deserves a serious hearing.

And once you realize that, you also realize that the speech may matter a lot more than the cynics imagine.

First, about those truths: Mr. Obama laid out a disturbing — and, unfortunately, all too accurate — vision of an America losing touch with its own ideals, an erstwhile land of opportunity becoming a class-ridden society. Not only do we have an ever-growing gap between a wealthy minority and the rest of the nation; we also, he declared, have declining mobility, as it becomes harder and harder for the poor and even the middle class to move up the economic ladder. And he linked rising inequality with falling mobility, asserting that Horatio Alger stories are becoming rare precisely because the rich and the rest are now so far apart.

This isn’t entirely new terrain for Mr. Obama. What struck me about this speech, however, was what he had to say about the sources of rising inequality. Much of our political and pundit class remains devoted to the notion that rising inequality, to the extent that it’s an issue at all, is all about workers lacking the right skills and education. But the president now seems to accept progressive arguments that education is at best one of a number of concerns, that America’s growing class inequality largely reflects political choices, like the failure to raise the minimum wage along with inflation and productivity.

And because the president was willing to assign much of the blame for rising inequality to bad policy, he was also more forthcoming than in the past about ways to change the nation’s trajectory, including a rise in the minimum wage, restoring labor’s bargaining power, and strengthening, not weakening, the safety net.

And there was this: “When it comes to our budget, we should not be stuck in a stale debate from two years ago or three years ago.  A relentlessly growing deficit of opportunity is a bigger threat to our future than our rapidly shrinking fiscal deficit.” Finally! Our political class has spent years obsessed with a fake problem — worrying about debt and deficits that never posed any threat to the nation’s future — while showing no interest in unemployment and stagnating wages. Mr. Obama, I’m sorry to say, bought into that diversion. Now, however, he’s moving on.

Still, does any of this matter? The conventional pundit wisdom of the moment is that Mr. Obama’s presidency has run aground, even that he has become irrelevant. But this is silly. In fact, it’s silly in at least three ways.

First, much of the current conventional wisdom involves extrapolating from Obamacare’s shambolic start, and assuming that things will be like that for the next three years. They won’t. HealthCare.gov is working much better, people are signing up in growing numbers, and the whole mess is already receding in the rear-view mirror.

Second, Mr. Obama isn’t running for re-election. At this point, he needs to be measured not by his poll numbers but by his achievements, and his health reform, which represents a major strengthening of America’s social safety net, is a huge achievement. He’ll be considered one of our most important presidents as long as he can defend that achievement and fend off attempts to tear down other parts of the safety net, like food stamps. And by making a powerful, cogent case that we need a stronger safety net to preserve opportunity in an age of soaring inequality, he’s setting himself up for exactly such a defense.

Finally, ideas matter, even if they can’t be turned into legislation overnight. The wrong turn we’ve taken in economic policy — our obsession with debt and “entitlements,” when we should have been focused on jobs and opportunity — was, of course, driven in part by the power of wealthy vested interests. But it wasn’t just raw power. The fiscal scolds also benefited from a sort of ideological monopoly: for several years you just weren’t considered serious in Washington unless you worshipped at the altar of Simpson and Bowles.

Now, however, we have the president of the United States breaking ranks, finally sounding like the progressive many of his supporters thought they were backing in 2008. This is going to change the discourse — and, eventually, I believe, actual policy.

So don’t believe the cynics. This was an important speech by a president who can still make a very big difference.

By: Paul Krugman, Op-Ed Columnist, The New York Times, December 5, 2013

December 7, 2013 Posted by | Economic Inequality, Income Gap | , , , , , , , | 1 Comment

“The Deal With Rich People”: America Has A Long Standing Bad Deal With The Wealthy

Americans aren’t so sure about rich people.

For every revered Steve Jobs, there’s a reviled Bernie Madoff; for every folksy Warren Buffett, there’s a tone-deaf Mitt Romney. The pursuit of happiness is patriotic, but the pursuit of riches can come off as greedy. This ambivalence toward the wealthy is embedded in American democracy, and no one knows how to yank it out.

Even Alexis de Tocqueville agreed — a good thing, too, because discussing democracy in America without quoting “Democracy in America” is forbidden. “Men are there seen on a greater equality in point of fortune . . . than in any other country in the world, or in any age of which history has preserved the remembrance,” Tocqueville wrote of his travels in the United States. But then, the dagger: “I do not mean that there is any lack of wealthy individuals in the United States. I know of no country, indeed, where the love of money has taken stronger hold.”

So Americans dislike inequality but crave wealth — and this paradox propels our mixed feelings about the rich. Oppressors or job creators? Ambitious go-getters or rapacious 1 percenters?

Robert F. Dalzell, a historian at Williams College, believes he has an answer. America has a long-standing deal with the rich, he explains, one that allows the country to “forge an accommodation between wealth and democracy.” It’s simple: Yes, rich people, you can exploit workers and natural resources and lord your wealth over everyone if you like, and we’ll resent you for it. But if, along the way, you give a chunk of your fortune to charity, all will be forgiven, old sport. History won’t judge you as a capitalist; it will hail you as a philanthropist.

This uneasy bargain is the premise of Dalzell’s “The Good Rich and What They Cost Us,” which chronicles the deal from before the revolution through the recent financial crisis. Of course, just because the deal has lasted this long doesn’t mean that it will endure. Or that it is a particularly good one. Or that the rich aren’t constantly trying to rewrite the terms.

Early on, the wealthy waited until their deaths to strike the deal. Dalzell writes of Robert Keayne, a prominent 17th-century Boston merchant who sought to cleanse his price-gouging reputation by devoting his posthumous riches to college scholarships, improvements in his city’s water supply and defense, and construction of a town hall where important men like him could discuss weighty things. His will became a unilateral contract with town leaders; if anyone tried to sue his estate for past misdeeds, Keayne stipulated, all his giving would “utterly cease and become void.” Boston took the deal.

John D. Rockefeller saw no reason to wait. His Standard Oil empire — whose ruthless business tactics Ida Tarbell exposed and whose interlocking parts the Supreme Court split up — became the basis for the greatest philanthropic enterprise the world had ever seen. From major financial commitments to Spellman College and the University of Chicago, to support for medical research that developed the yellow-fever vaccine, to the financing of the Cloisters museum in Upper Manhattan and the restoration of Colonial Williamsburg, to list just a few initiatives, Rockefeller and his descendants set the model for modern, large-scale philanthropy. And they did so in a way that preserved the family’s influence and wealth over multiple generations.

“There was something Medici-like about the whole effort,” Dalzell writes, “for within the soul of that great Renaissance family there lay an urge to combine what many might have thought uncombinable — vast wealth and dedicated public service.”

But he also sees a more prosaic motivation: Billionaires want to polish their reputations for posterity. Wealth does not dull their sensitivity to what we think of them; it heightens it. Dalzell thinks it is no coincidence, for example, that the Giving Pledge — a public commitment by the world’s richest individuals, led by Buffett and Bill Gates, to donate most of their fortunes — coincided with the Great Recession’s backlash against the wealthy.

So, the rich just want to be loved. Is that so wrong? If more than 100 of the planet’s wealthiest families and individuals are promising to give away unfathomable amounts of money, why quibble?

Well, there’s at least one reason: The deal gets worse as the price paid for the rich’s charity — the inequality between the affluent and the rest — keeps rising. From 1979 to 2007, the real, after-tax income of the top 1 percent of the U.S. population grew by 275 percent, compared with 18 percent for the bottom fifth, according to the Congressional Budget Office. Social mobility has become more stunted in the United States than in Europe. And Americans see themselves falling further behind: A Washington Post-ABC News poll last year found that 57 percent of registered voters believed that the gap between the rich and rest was larger than it had been historically; only 5 percent thought it was smaller.

The deal will get even worse if efforts to push laws and policies that benefit wealthier Americans succeed. In “Rich People’s Movements,” Isaac William Martin, a sociologist at the University of California at San Diego, says today’s tea party is just the latest manifestation of another American tradition: the mobilization of wealthy and middle-class citizens in an effort to cut their taxes and contributions to the state.

Before the tea party, Martin tells us, there were tax clubs — groups of bankers throughout the South that agitated for tax cuts and helped bring about the Revenue Act of 1926, which “cut the tax rates on the richest Americans more deeply than any other tax law in history.” Before we had Grover Norquist and Americans for Tax Reform, we had J.A. Arnold and the American Taxpayers’ League, and Vivien Kellems and the Liberty Belles, a 1950s women’s movement that campaigned to repeal the income tax. And before Arthur Laffer and supply-side economics, there was Andrew Mellon, the banker, philanthropist and Treasury secretary whose 1924 book, “Taxation: The People’s Business,” argued that cutting income tax rates would create more revenue through greater economic growth.

Rich people’s movements respond to perceived threats, such as the New Deal, President Franklin Roosevelt’s effort to cap incomes during World War II (because “all excess income should go to win the war,” FDR explained) or, now, the policies of the Obama administration. But these movements sell their efforts not as benefiting the rich alone — that would be too transparent, too tacky. Instead, they claim to protect freedom, promote growth, safeguard the Constitution or fend off an ever-more-intrusive government. Martin calls this “strategic policy crafting,” and it brings more allies to the fight.

In fact, it is not just the wealthy, but often the middle class or the slightly-richer-than-average who have campaigned for lower taxes on affluent Americans. “People need not be dupes in order to protest on behalf of others who are richer than they are,” Martin argues. “The activists and supporters of rich people’s movements were defending their own real interests, as they saw them. A tax increase on the richest 1 percent may be perceived by many upper-middle-income property owners as the first step in a broader assault on property rights.” In other words, there’s nothing the matter with Kansas.

Shortly before the Republican National Convention gathered last year to nominate a man who could have become one of the richest presidents in U.S. history, the Pew Research Center conducted a survey on American attitudes toward the wealthy. The chronic ambivalence was there: Forty-three percent of respondents said rich people are more likely than the average American to be intelligent, and 42 percent believed that the rich worked harder than everyone else. The good rich! But 55 percent said wealthy people were more likely to be greedy, and 34 percent thought they were less likely to be honest. The bad rich.

Can “giving pledges” and foundation grants sustain America’s deal with the wealthy in a time of increasing inequality and falling social mobility? In his conclusion, Dalzell worries that the belief in the generosity of the good rich leads us to “tolerate, even celebrate, the violation of some of our most cherished ideals” of fairness and egalitarianism.

Perhaps the dilemma of extreme wealth and disparities in a democracy is that noblesse oblige becomes necessary. These two books show that the wealthy give much with one hand but seek to contribute far less with the other. That makes the giving they choose to do all the more critical but all the less accountable.

And that doesn’t sound like such a good deal.

 

By: Carlos Lozada, Outlook Editor, The Washington Post, November 27, 2013

December 1, 2013 Posted by | Economic Inequality, Income Gap | , , , , , , , | Leave a comment

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