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“The Piketty Panic”: Out Of Ideas, Conservatives Are Terrified

“Capital in the Twenty-First Century,” the new book by the French economist Thomas Piketty, is a bona fide phenomenon. Other books on economics have been best sellers, but Mr. Piketty’s contribution is serious, discourse-changing scholarship in a way most best sellers aren’t. And conservatives are terrified. Thus James Pethokoukis of the American Enterprise Institute warns in National Review that Mr. Piketty’s work must be refuted, because otherwise it “will spread among the clerisy and reshape the political economic landscape on which all future policy battles will be waged.”

Well, good luck with that. The really striking thing about the debate so far is that the right seems unable to mount any kind of substantive counterattack to Mr. Piketty’s thesis. Instead, the response has been all about name-calling — in particular, claims that Mr. Piketty is a Marxist, and so is anyone who considers inequality of income and wealth an important issue.

I’ll come back to the name-calling in a moment. First, let’s talk about why “Capital” is having such an impact.

Mr. Piketty is hardly the first economist to point out that we are experiencing a sharp rise in inequality, or even to emphasize the contrast between slow income growth for most of the population and soaring incomes at the top. It’s true that Mr. Piketty and his colleagues have added a great deal of historical depth to our knowledge, demonstrating that we really are living in a new Gilded Age. But we’ve known that for a while.

No, what’s really new about “Capital” is the way it demolishes that most cherished of conservative myths, the insistence that we’re living in a meritocracy in which great wealth is earned and deserved.

For the past couple of decades, the conservative response to attempts to make soaring incomes at the top into a political issue has involved two lines of defense: first, denial that the rich are actually doing as well and the rest as badly as they are, but when denial fails, claims that those soaring incomes at the top are a justified reward for services rendered. Don’t call them the 1 percent, or the wealthy; call them “job creators.”

But how do you make that defense if the rich derive much of their income not from the work they do but from the assets they own? And what if great wealth comes increasingly not from enterprise but from inheritance?

What Mr. Piketty shows is that these are not idle questions. Western societies before World War I were indeed dominated by an oligarchy of inherited wealth — and his book makes a compelling case that we’re well on our way back toward that state.

So what’s a conservative, fearing that this diagnosis might be used to justify higher taxes on the wealthy, to do? He could try to refute Mr. Piketty in a substantive way, but, so far, I’ve seen no sign of that happening. Instead, as I said, it has been all about name-calling.

I guess this shouldn’t be surprising. I’ve been involved in debates over inequality for more than two decades, and have yet to see conservative “experts” manage to dispute the numbers without tripping over their own intellectual shoelaces. Why, it’s almost as if the facts are fundamentally not on their side. At the same time, red-baiting anyone who questions any aspect of free-market dogma has been standard right-wing operating procedure ever since the likes of William F. Buckley tried to block the teaching of Keynesian economics, not by showing that it was wrong, but by denouncing it as “collectivist.”

Still, it has been amazing to watch conservatives, one after another, denounce Mr. Piketty as a Marxist. Even Mr. Pethokoukis, who is more sophisticated than the rest, calls “Capital” a work of “soft Marxism,” which only makes sense if the mere mention of unequal wealth makes you a Marxist. (And maybe that’s how they see it: recently former Senator Rick Santorum denounced the term “middle class” as “Marxism talk,” because, you see, we don’t have classes in America.)

And The Wall Street Journal’s review, predictably, goes the whole distance, somehow segueing from Mr. Piketty’s call for progressive taxation as a way to limit the concentration of wealth — a remedy as American as apple pie, once advocated not just by leading economists but by mainstream politicians, up to and including Teddy Roosevelt — to the evils of Stalinism. Is that really the best The Journal can do? The answer, apparently, is yes.

Now, the fact that apologists for America’s oligarchs are evidently at a loss for coherent arguments doesn’t mean that they are on the run politically. Money still talks — indeed, thanks in part to the Roberts court, it talks louder than ever. Still, ideas matter too, shaping both how we talk about society and, eventually, what we do. And the Piketty panic shows that the right has run out of ideas.

By: Paul Krugman, Op-Ed Columnist, The New York Times, April 24, 2014

April 26, 2014 Posted by | Economic Inequality, Income Gap | , , , , , , , , | Leave a comment

“Meet The American Oligarchy”: “Americans For Self-Prosperity”, Grasping Barbarians Exercising Crude Political Power

Let’s put it this way: If the Koch Brothers were Russians, we’d call them oligarchs: grasping barbarians exercising crude political power.

But this is America, where tycoons can buy respectability by throwing money at their wives’ favorite ballet companies and museums. Also by funding “think tanks” staffed by “resident scholars” keen to enhance the boss’s fondest delusion: that great wealth invariably conveys great wisdom.

Hence “Americans for Prosperity,” the group funded by billionaire brothers David H. and Charles G. Koch that’s spending untold millions in 2014 on TV commercials attacking the Affordable Care Act as a government boondoggle that “just doesn’t work.”

The deeper strategy, AFP president Tim Philips told the New York Times, is to present the law as “a broader cautionary tale” crafted “to change the way voters think about the role of government for years to come.”

Or as the sloganeering sheep in Orwell’s Animal Farm might have put it, “Big government bad, big business good!”

Elsewhere, however, big business hasn’t been looking entirely benign of late. Consider three episodes currently in the news: General Motors, the Toyota Motor Corporation, and Duke Energy, the nation’s largest electrical utility.

As so often happens with corporate malfeasance, the details can be hard to believe. Documents turned over to the National Highway Traffic Safety Administration by General Motors show that company engineers knew about problems with an ignition switch in Chevy Cobalts as long ago as 2001.

That it could be a fatal flaw wasn’t immediately recognized.

The problem appears to have been a defective part manufactured by a GM supplier. Sometimes triggered by a too-heavy keychain swinging from the ignition, it caused the engine to shut off while driving — resulting in immediate loss of power steering, power brakes, and the failure of the vehicle’s air bags to deploy.

By 2009, however engineers concluded that the faulty switch played a causal role in several fatal accidents — although some drivers had been drinking, texting or otherwise distracted — and that while Cobalts were going out of production, hundreds of thousands were still rolling.

Nevertheless, GM did nothing, while company lawyers fought off or stonewalled lawsuits alleging product liability.

Twenty-three fatal accidents and 26 deaths later, GM finally issued a recall notice for 1.6 million vehicles last month. The company’s recently-appointed CEO Mary Barra has been doing public penance and vowing to do everything possible to restore consumer confidence in the GM brand, which will definitely take some doing.

Published accounts of how separate divisions of GM’s giant bureaucracy communicate badly or not at all read like episodes of Catch-22. Customer complaints and warranty claims aren’t shared with safety engineers, who in turn have no communication with company lawyers. Meanwhile, nobody was talking to the National Highway Traffic Safety Administration, the federal agency that belatedly promises a criminal investigation.

Meanwhile, the auto industry press contrasts GM’s “unusually proactive and candid approach” to Toyota’s, which last week admitted criminal guilt and paid a $1.2 billion fine—the largest against an automaker in U.S. history.

Announcing a settlement, Attorney General Eric Holder said the company had “intentionally concealed information and misled the public” and shamefully showed “blatant disregard for systems and laws.”

At issue were faulty accelerator pedals which caused the cars to rocket out of control. Toyota has recalled as many as 10 million vehicles worldwide, and has been forced to pay tens of millions in fines and lawsuit settlements. Hundreds more civil lawsuits await litigation. What the settlement makes clear is that Toyota’s top management deliberately lied to government investigators both about the mechanical issue and their knowledge of it.

Which brings us to the Tea Party paradise of North Carolina and Duke Energy’s massive coal ash spill into the Dan River—spreading as many as 82,000 tons of toxic sludge along 70 miles of scenic river bottom. According to the Associated Press, “coal ash contains arsenic, lead, mercury and other heavy metals highly toxic to humans and wildlife.”

In addition to the “accidental” spill, caused by a collapsed corrugated pipe seemingly uninspected since 1986, environmental activists photographed Duke employees pumping an estimated was 61 million gallons of coal ash-contaminated water into the Cape Fear River further east.

The resulting uproar has persuaded GOP governor Pat McCrory, a 28-year Duke Energy employee (and recipient of some $1.1 million in Duke-sponsored campaign donations) to change his mind about burdensome federal regulation. His state’s toothless regulators will now “partner” with the U.S. Environmental Protection Agency to pursue joint enforcement against the utility.

Previously, McCrory had scorned the feds as an impediment to efficient business practices, and made a great show of turning down EPA grant money. Meanwhile, arguing strenuously against stricter regulation of coal ash has been an industry front group called ALEC (the American Legislative Exchange Council) largely financed by — you guessed it — those well-known philanthropists, David and Charles Koch.

Americans for Prosperity, indeed.

 

By: Gene Lyons, The National Memo, March 26, 2014

March 27, 2014 Posted by | Big Business, Corporations, Koch Brothers | , , , , , , , | Leave a comment

   

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