“The Show-Off Society”: In A Highly Unequal Society, The Wealthy Feel Obliged To Engage In ‘Conspicuous Consumption’
Liberals talk about circumstances; conservatives talk about character.
This intellectual divide is most obvious when the subject is the persistence of poverty in a wealthy nation. Liberals focus on the stagnation of real wages and the disappearance of jobs offering middle-class incomes, as well as the constant insecurity that comes with not having reliable jobs or assets. For conservatives, however, it’s all about not trying hard enough. The House speaker, John Boehner, says that people have gotten the idea that they “really don’t have to work.” Mitt Romney chides lower-income Americans as being unwilling to “take personal responsibility.” Even as he declares that he really does care about the poor, Representative Paul Ryan attributes persistent poverty to lack of “productive habits.”
Let us, however, be fair: some conservatives are willing to censure the rich, too. Running through much recent conservative writing is the theme that America’s elite has also fallen down on the job, that it has lost the seriousness and restraint of an earlier era. Peggy Noonan writes about our “decadent elites,” who make jokes about how they are profiting at the expense of the little people. Charles Murray, whose book “Coming Apart” is mainly about the alleged decay of values among the white working class, also denounces the “unseemliness” of the very rich, with their lavish lifestyles and gigantic houses.
But has there really been an explosion of elite ostentation? And, if there has, does it reflect moral decline, or a change in circumstances?
I’ve just reread a remarkable article titled “How top executives live,” originally published in Fortune in 1955 and reprinted a couple of years ago. It’s a portrait of America’s business elite two generations ago, and it turns out that the lives of an earlier generation’s elite were, indeed, far more restrained, more seemly if you like, than those of today’s Masters of the Universe.
“The executive’s home today,” the article tells us, “is likely to be unpretentious and relatively small — perhaps seven rooms and two and a half baths.” The top executive owns two cars and “gets along with one or two servants.” Life is restrained in other ways, too: “Extramarital relations in the top American business world are not important enough to discuss.” Actually, I’m sure there was plenty of hanky-panky, but people didn’t flaunt it. The elite of 1955 at least pretended to set a good example of responsible behavior.
But before you lament the decline in standards, there’s something you should know: In celebrating America’s sober, modest business elite, Fortune described this sobriety and modesty as something new. It contrasted the modest houses and motorboats of 1955 with the mansions and yachts of an earlier generation. And why had the elite moved away from the ostentation of the past? Because it could no longer afford to live that way. The large yacht, Fortune tells us, “has foundered in the sea of progressive taxation.”
But that sea has since receded. Giant yachts and enormous houses have made a comeback. In fact, in places like Greenwich, Conn., some of the “outsize mansions” Fortune described as relics of the past have been replaced with even bigger mansions.
And there’s no mystery about what happened to the good-old days of elite restraint. Just follow the money. Extreme income inequality and low taxes at the top are back. For example, in 1955 the 400 highest-earning Americans paid more than half their incomes in federal taxes, but these days that figure is less than a fifth. And the return of lightly taxed great wealth has, inevitably, brought a return to Gilded Age ostentation.
Is there any chance that moral exhortations, appeals to set a better example, might induce the wealthy to stop showing off so much? No.
It’s not just that people who can afford to live large tend to do just that. As Thorstein Veblen told us long ago, in a highly unequal society the wealthy feel obliged to engage in “conspicuous consumption,” spending in highly visible ways to demonstrate their wealth. And modern social science confirms his insight. For example, researchers at the Federal Reserve have shown that people living in highly unequal neighborhoods are more likely to buy luxury cars than those living in more homogeneous settings. Pretty clearly, high inequality brings a perceived need to spend money in ways that signal status.
The point is that while chiding the rich for their vulgarity may not be as offensive as lecturing the poor on their moral failings, it’s just as futile. Human nature being what it is, it’s silly to expect humility from a highly privileged elite. So if you think our society needs more humility, you should support policies that would reduce the elite’s privileges.
By: Paul Krugman, Op-Ed Columnist, The New York Times, September 25, 2014
“Those Lazy Jobless”: The Urge To Blame The Victims Of A Depressed Economy Has Proved Impervious To Logic And Evidence
Last week John Boehner, the speaker of the House, explained to an audience at the American Enterprise Institute what’s holding back employment in America: laziness. People, he said, have “this idea” that “I really don’t have to work. I don’t really want to do this. I think I’d rather just sit around.” Holy 47 percent, Batman!
It’s hardly the first time a prominent conservative has said something along these lines. Ever since a financial crisis plunged us into recession it has been a nonstop refrain on the right that the unemployed aren’t trying hard enough, that they are taking it easy thanks to generous unemployment benefits, which are constantly characterized as “paying people not to work.” And the urge to blame the victims of a depressed economy has proved impervious to logic and evidence.
But it’s still amazing — and revealing — to hear this line being repeated now. For the blame-the-victim crowd has gotten everything it wanted: Benefits, especially for the long-term unemployed, have been slashed or eliminated. So now we have rants against the bums on welfare when they aren’t bums — they never were — and there’s no welfare. Why?
First things first: I don’t know how many people realize just how successful the campaign against any kind of relief for those who can’t find jobs has been. But it’s a striking picture. The job market has improved lately, but there are still almost three million Americans who have been out of work for more than six months, the usual maximum duration of unemployment insurance. That’s nearly three times the pre-recession total. Yet extended benefits for the long-term unemployed have been eliminated — and in some states the duration of benefits has been slashed even further.
The result is that most of the unemployed have been cut off. Only 26 percent of jobless Americans are receiving any kind of unemployment benefit, the lowest level in many decades. The total value of unemployment benefits is less than 0.25 percent of G.D.P., half what it was in 2003, when the unemployment rate was roughly the same as it is now. It’s not hyperbole to say that America has abandoned its out-of-work citizens.
Strange to say, this outbreak of anti-compassionate conservatism hasn’t produced a job surge. In fact, the whole proposition that cruelty is the key to prosperity hasn’t been faring too well lately. Last week Nathan Deal, the Republican governor of Georgia, complained that many states with Republican governors have seen a rise in unemployment and suggested that the feds were cooking the books. But maybe the right’s preferred policies don’t work?
That is, however, a topic for another column. My question for today is instead one of psychology and politics: Why is there so much animus against the unemployed, such a strong conviction that they’re getting away with something, at a time when they’re actually being treated with unprecedented harshness?
Now, as anyone who has studied British policy during the Irish famine knows, self-righteous cruelty toward the victims of disaster, especially when the disaster goes on for an extended period, is common in history. Still, Republicans haven’t always been like this. In the 1930s they denounced the New Deal and called for free-market solutions — but when Alf Landon accepted the 1936 presidential nomination, he also emphasized the “plain duty” of “caring for the unemployed until recovery is attained.” Can you imagine hearing anything similar from today’s G.O.P.?
Is it race? That’s always a hypothesis worth considering in American politics. It’s true that most of the unemployed are white, and they make up an even larger share of those receiving unemployment benefits. But conservatives may not know this, treating the unemployed as part of a vaguely defined, dark-skinned crowd of “takers.”
My guess, however, is that it’s mainly about the closed information loop of the modern right. In a nation where the Republican base gets what it thinks are facts from Fox News and Rush Limbaugh, where the party’s elite gets what it imagines to be policy analysis from the American Enterprise Institute or the Heritage Foundation, the right lives in its own intellectual universe, aware of neither the reality of unemployment nor what life is like for the jobless. You might think that personal experience — almost everyone has acquaintances or relatives who can’t find work — would still break through, but apparently not.
Whatever the explanation, Mr. Boehner was clearly saying what he and everyone around him really thinks, what they say to each other when they don’t expect others to hear. Some conservatives have been trying to reinvent their image, professing sympathy for the less fortunate. But what their party really believes is that if you’re poor or unemployed, it’s your own fault.
By: Paul Krugman, Op-Ed Columnist, The New York Times, September 22, 2014
“Tax Cuts Don’t Increase Revenue”: This Is What Happens When Republicans Actually Enact Their Radical Agenda
A persistent elite Washington trope, embodied by folks like Ron Fournier, says that bipartisanship is the key missing ingredient in our system of government. The two parties just need to stop their partisan bickering and join hands to hammer out serious, substantive compromises (read: slash social insurance).
It’s certainly the case that because of U.S. constitutional design, compromise is necessary during times of divided government — and the ones who won’t do it are ultraconservative Republicans. But there’s another model of governance that gets short shrift among the lovers of bipartisanship: letting election winners implement their agenda. By providing clear lines of accountability and making clear who is responsible for which policy, allowing an election winner to govern makes democracy work.
We see this today in Kansas of all places, where Gov. Sam Brownback is in an unexpectedly tight re-election race:
Although every statewide elected official in Kansas is a Republican and President Obama lost the state by more than 20 points in the last election, Mr. Brownback’s proudly conservative policies have turned out to be so divisive and his tax cuts have generated such a drop in state revenue that they have caused even many Republicans to revolt. Projections put state budget shortfalls in the hundreds of millions of dollars annually, raising questions of whether the state can adequately fund education in particular. [The New York Times]
Brownback’s tax cuts were passed back in 2012 with the help of Arthur Laffer, the conservative policy hand who has made his career insisting in the teeth of contrary evidence that tax cuts increase revenue. Multiple experts warned that the Brownback-Laffer plan would actually crater the state revenue collection, but Brownback ignored them and did what he wanted. The results are in, and it turns out when you cut taxes, you decrease revenue:
Kansas has a problem. In April and May, the state planned to collect $651 million from personal income tax. But instead, it received only $369 million. [The New York Times]
Naturally, the cuts have required more cuts to critical government services, and most of the tax benefits have been vacuumed up by the rich. Worse still, the promised job-creating effects have also failed to appear. On the contrary, Kansas has actually been performing worse than its neighbors on the jobs front.
In short, movement conservatism produces garbage economic policy. But the beauty is, now that fact is obvious to almost everyone in Kansas, including a bunch of Republicans. To his credit, Brownback actually believed in his ideas and put them in place. He is now paying the price for taking that risk.
Contrast that to the elite D.C. idea of bipartisanship, in which the ancient grandees from both parties get together, and through the magic of high-minded civil discussion, iron out a compromise to cut Social Security and Medicare, preferably by enough to be called a “Grand Bargain.” This has the not-coincidental effect of making it impossible for most people to figure out who is responsible for what — and very easy for either side to spin negative consequences as the other side’s fault.
Now, Brownback may well pull out a victory in the end. But Kansas is a very conservative state, and he ought to be cruising to a huge reelection. Future Republicans may well try to jam through similar tax policies copy-pasted from a conservative think tank’s guide to enriching the wealthy, but the colossal failure of the Brownback cuts will surely give them pause.
Government by the permanent D.C. establishment used to at least keep the country on two legs, but with ideologically well-sorted parties, one of them increasingly extreme, it’s come perilously close to breaking down multiple times. When considering reforms to the structure of government, as I believe will be necessary sometime in the future, we should keep in mind stories like this one. Democracy works best when the voters have meaningful and comprehensible choices.
By: Ryan Cooper, The Week, September 17, 2014
“Not A Good Sign”: Wisconsin’s Walker, Struggling, Rolls Out New Platform
Wisconsin Gov. Scott Walker (R) had a plan: win a second term, take advantage of a good year for Republicans, and soon after prepare for a national campaign. The plan is looking a little shaky right now, with polls show him in the midst of a very competitive re-election campaign against Democratic businesswoman Mary Burke.
A month ago, the Republican incumbent and his allies tried moving to the left, blasting Burke as an “outsourcing one-percenter.”
That didn’t do much to improve Walker’s standing, so the governor is now moving back to the right, promising big tax cuts and drug testing for those receiving public aid in a second term.
With less than two months to go in a tight re-election race, the Republican governor put forward a 62-page plan that sums up the actions of his first term, defends them against the critique of his Democratic rival, former Trek Bicycle executive Mary Burke, and offers several new proposals.
“It’s our next wave of the Wisconsin comeback. It’s our plan to make sure that everyone who wants a job can find a job,” Walker said in a telephone interview.
As a rule, when an incumbent is still scrambling seven weeks before Election Day, looking for a platform while struggling to defend his record, it’s not a good sign.
Walker, referencing a one-page summary of his agenda, told the AP, “That’s our plan of action for the next four years. Tear it off. Hang it up. Put it next to your computer. Put it on your fridge.”
Part of the trouble is, Walker used similar rhetoric four years ago, when he promised Wisconsin he’d create 250,000 private sector jobs by the end of his first term – and said he should be judged according to that standard. Nearly four years later, the governor is less than halfway to his goal, and has yet to explain why he couldn’t keep his highest-profile promise.
But even putting that aside, the two key tenets of the Republican’s new agenda – tax cuts and drug testing – probably polled well, but they each come with one big flaw.
On the former, Walker already cut taxes in his first term, and it’s caused a mess for Wisconsin’s state finances. The Milwaukee Journal Sentinel editorialized last week:
Wisconsin’s state budget may be out of balance by nearly $1.8 billion when the new two-year cycle begins next July, and for that you can thank Gov. Scott Walker’s fiscal policies.
While the expected shortfall may end up being smaller – or larger – than it appears to be now, it’s clear that a combination of Walker policies and lagging growth in tax revenue blew a hole in the state’s finances.
The governor, facing this reality, is calling for more tax breaks. Perfect.
But the latter is arguably even more offensive. The plan would require “drug testing at an undisclosed cost for able-bodied adults receiving unemployment insurance payments or benefits under FoodShare, the successor to the food stamps program.” It’s part of a political phenomenon we discussed earlier this year: conservative policymakers keep targeting welfare recipients with drug tests, and the policies keep failing rather spectacularly.
We know exactly what drives these efforts. For many, especially on the right, it makes sense to assume those who are struggling are to blame for their plight. If you’re relying on TANF aid to help your family keep its head above water, maybe there’s something wrong with your lifestyle. Maybe the state should assume you have a drug problem.
But recent real-world evidence points in a different direction. Requiring those who are relying on the safety net to give the government their bodily fluids in exchange for benefits is not only legally dubious; it’s also ineffective and a waste of money.
If Walker doesn’t know these previous experiments have failed, he should. If he does know and chooses to push the idea anyway, it would seem the governor’s plan for the next seven weeks is built on little more than callous cynicism.
By: Steve Benen, The Maddow Blog, September 16, 2014
“How Not To Get Your Country Back”: Americans Who Want Their Country Back Should Follow Their Elders’ Example
The Tea Party mantra, “I want my country back,” resonates with many. The racial undertones can be ugly (as well as pointless). But the longing for an economically secure America centered on a strong middle class is on point and widely shared.
Older and mostly white members of the far right tend to see themselves as model Americans who worked hard, saved up and played by the rules. They may have done all the above, but many also have no idea of how easy they had it.
After World War II, Americans with no college could walk into a factory and obtain a job paying middle-class wages. Global competition was a future threat. Today’s retirees are among the last Americans to enjoy the most golden of benefits, including a defined pension check, guaranteed for the rest of their lives.
More troubling than the tunnel vision, though, is the right’s program for restoring the country it purports to miss. The ideological obsession with slashing taxes, shrinking government and keeping labor as cheap as possible is downright destructive.
The America of yore did not build its middle class that way.
When President Dwight Eisenhower backed the construction of the interstate highway system in 1956, the top marginal rate for individual income taxes was 91 percent. Older taxpayers bore their burdens more or less stoically (and there wasn’t Medicare to pay their parents’ doctor bills). Building America was the public-spirited thing to do.
Fast-forward to the economic crash of 2008. The infrastructure was in shambles and unemployment high. Robust stimulus spending was the ticket out of both dilemmas. But even though the top marginal rate was only 35 percent, fringe conservatives controlling the Republican Party fought against government intervention every inch of the way — lest Congress raise taxes one dime.
Kansas has become the patient on which to conduct this experiment at its most extreme, and the results are disastrous. Gov. Sam Brownback pushed through wild tax cuts, mainly benefiting the well-to-do, while placing Kansas classrooms, libraries and other public services on a starvation diet.
And what do Kansans have to show for it? The tax cuts drained their state of $300 million in expected revenues for the recent fiscal year. (Where’s that explosion of economic activity that the theorists said would make up the difference?) Meanwhile, earnings are falling faster and jobs growing more slowly than the national average.
The bond rating agencies remain unimpressed. Moody’s and Standard & Poor’s have lowered Kansas’ credit rating, making it more expensive for the state to borrow.
Study after economic study shows the 21st-century spoils going to the educated. And here we have Kansas cannibalizing its schools just as competing states are restoring their education spending.
One wishes older conservatives opposed to raising the minimum wage, now $7.25 an hour, took an honest look at the wages government guaranteed them back when. The minimum wage in 1968 was the equivalent of $10.90 in today’s dollars.
A new study of the 20 major economies finds the U.S. minimum wage among the lowest relative to the country’s average wage. China, Brazil and Turkey did better.
The minimum wage helps less skilled workers but also influences the pay levels higher up the scale. Putting more money in the pockets of those likeliest to spend it fuels economic demand.
Tax policy does matter, and there is such a thing as government waste. But in the end, a middle class is nurtured on good schools, roads and other public services. They cost money.
Americans who want their middle-class country back should follow their elders’ example. A little gratitude would be nice, too.
By: Froma Harrop, The National Memo, September 16, 2014
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