An old Krugman column…

…with great content to mull over for the econ. Chapters…


All true, Professor, just as you can see that the high-tax, society-minded governments of Germany and Scandanavia continue to flourish economically and socially while America’s infrastructure rots to its core from voodoo economics.

But how do we reach the folks who have been Joseph Goebbelized with trickle-down dementia bloviating the success of trickle-down economics even though no evidence exists that tax cuts are a good idea when rates are low, as in fact they have been since the 1980s.

We have some hope, as the GOP facade has begun to crack and the GOPers are exposed as the economic fraudsters they are, shilling for corporate, red state and 1% welfare while the masses rot on minimum wages.

And we have much reason to be hopeless, too, as Democratic Senator Chuck Schumer protects his hedge fund friends by refusing to advance any reform of the carried interest exemption for millionaires and billionaires. Schumer pledges that he is ‘representing his constituents’ while assisting the few obscenely rich.

Alan Greenspan famously said we ‘can’t regulate greed’, but that is exactly what needs to be regulated by government; that is in fact one of its central functions.

There’s nothing wrong with being rich, but being obscenely rich usually entails serious exploitation of labor, government and/or the environment.

The CEO;worker pay ration in the 1960″s was about 25:1.

Today, the ratio is about 250:1.

The difference between then and now is unregulated, sociopathic greed.

The symbolism of the bipartisan bigwigs meeting in the Roosevelt Room of the White House last week to begin the dismantling of the New Deal should not be lost on us. The stock market soared as “liberal” politicians promised that if we cut back on our retirements and medical care, then the plutocrats will pay a relative pittance to call it even. The tycoons will grudgingly see their tax rates increase by a centimeter, while Grandma slaves till she drops for a Wal-mart minimum wage. This is their ludicrous definition of everybody doing their fair share, and playing by the same rules.

Meanwhile, the Census Bureau just came out with new figures showing that the plight of regular people is actually getting worse. One out of every six workers is officially poor. One of every three unemployed people is officially poor. The situation will no doubt deteriorate come January, when millions more people are expected to lose their long-term jobless benefits. They are, of course, expected to bear in stoic silence the whips and chains of the plutocrats, and the politicians who serve them.

The economic changes that have occurred since the period of the 1950s – 1970s that you describe have had three bad impacts on our society. The first is the growing economic inequality that is well described in this column.

The second is the drastic decline in economic security for middle class families and their children. In the 1950s – 1970s era, there were not only jobs that paid well and provided good benefits. There was also an expectation that a worker would be able to stay in such job for decades and, through such job, accrue enough assets to send his or her children off to a decent college, likely in the better funded, high quality public university systems in states like California, Michigan, etc.

The third change is that our political system is far less responsive to the needs to average Americans. Instead, wealthy folks who are obsessed with deficits that their own policies created largely set the agenda, and President Obama and progressives have to fight like heck to get relatively modest economic progress like mildly higher taxes on the wealthy or Wall Street reform.

As we’ve moved away from the economic system of the 1950s – 1970s, a small wealthy elite have benefited greatly. But the rest of us, and our society, has not. Instead, we’re left with great inequality, less security, and a decaying public sphere.

  • phillygirl
  • philadelphia, PA


There’s another big plus in leveling income distribution, and that has to do with the distribution of talent. Among graduates of elite schools, gobsmacking numbers head for Wall Street, the most swollen and useless sector of the economy, while in the 50’s this human capital went into teaching, science, engineering and other productive pursuits.

As a lawyer, I’d love to be transported to the 50’s and 60’s, when the federal government and white-shoe law firms started new lawyers at roughly the same salary. In my law school class, not even that recent, most of the people who started with a commitment to good government and social justice (how quaint) ended up at Manhattan megafirms, designing tax-avoidance and labor-crushing strategies for five times what they’d make in government or nonprofit jobs. Gotta repay all that student-loan debt, of course. Any society pays for what it values, and our values are appalling. Not sure how much you can correct this with tax policy, but it’s worth trying.

  • Jacob Sommer
  • Medford, MA


It’s also instructive to look at countries that still have high top marginal tax rates and high levels of unionized workers. Sweden’s just chugging along, even though they provide full universal healthcare, free public education through the university level, generous parental leave, more vacation time, and a multi-party system of government.

Anybody who says we shouldn’t look at socialists doesn’t know how strong the capitalist system is in Sweden–and also doesn’t know how well it is moderated by government. They may have some flaws, but they have far better education outcomes, better health outcomes, and a less frantic population. Besides, anybody who has municipal police, fire departments, public schools, public sewer and water, or even power companies is already in a socialist system. The question isn’t, “Are we capitalist?” The question is, “What mix of capitalism and socialism do we want?” And yes, they do work together when properly planned and given the chance.

  • Doug Broome
  • Vancouver


In the midst of the great egalitarian surge from the mid-30’s to the mid-70s, John Kenneth Galbraith still decried the contrast between private affluence and public squalor. (The Affluent Society, 1958) However the contours of wealth and income distribution, the surest measures of a society’s fundamental justice, were steadily becoming fairer. Unlike now, the proceeds from great advances in technology and productivity were shared with workers getting a sizeable slice.

And in that long ago liberal era, government had the confidence to assert the public good over the private interest. Taxes were the price of civilization. Mid-century conservatives such as Eisenhower, Diefenbaker (Canada), and MacMillan were well to the left of today’s liberals in governmental activism; and redistribution was accepted as a fundamental role of government, as was job creation.

In Canada, income was redistributed from the healthy to the ill, from the childless to children, from the younger to the retired, from the employed to the unemployed, and from richer regions to poorer. And the programs worked. Regional disparities fell; elderly poverty almost eliminated. Demand was sustained. In the earthy expression, the muck was spread.

The general prosperity rested on the legitmacy of taxes, and was undone by an increasingly strident, confident and dishonest attack on all taxes as parasitical to the point where all parties tremble before the tax hysterics. The result is the new feudalism.

  • Scott
  • Illinois


For all the jingoistic rhetoric that spews from the party of the exploitative class, the real dilemma is the profound lack of patriotism in people who borrow money to buy companies, strip them of assets, take their plunder, hide it offshore or in any other convoluted scheme in order to avoid the taxes that would otherwise be due,and salaries and pensions they would otherwise pay. The removal of these assets invokes a downward spiral of economic stagnation and needless poverty.

Love of country does not just mean loving the mountains, or the seashore, or your own big house with a car elevator and a dancing horse. It means having an appreciation and even an affection for the whole mighty engine of interaction that teaches, invents, builds, breaks, and rebuilds, exploring and discovering new worlds together as all of us are brought into the active improvement of this nation.

Government is a tool to implement our common goals. It must be used wisely and effectively, but those who would undermine it for their own purposes already have the idea of this nation in the rear view mirror on their ride of exploitation for its own sake, wherever in the world that takes them.

  • Siobhan
  • New York


Ayn Rand was not an economist. She was a story teller. Her stories, applied to reality, make as much sense as running this country based on fairy stories where the beautiful are good people and the ugly are bad.

Her “utopian” vision is the basis for any class warfare we’re witnessing, because she gave rise to the legend of the Deserving Rich. This is a sick twist on the Deserving Poor of Victorian times–which gave rise to things like poor houses, and justified child labor.

The argument is that to be rich, you have to work hard. Therefore all rich people work hard. Therefore all hard working people are rich. Therefore all poor people are lazy.

So taking from the rich (taxes) means punishing hard work and rewarding laziness.

This idiotic argument ignores the fact that rich people might get that way by paying people less than they can live on, so they require help in the way of food stamps, for example.

It has created an economy where a presidential candidate can say he doesn’t care about the 47% that are “takers” as he put it.

It’s a sick, stupid theory. But citing facts will do nothing to alter the mind set. The only thing is another story. Hopefully someone will come up with one they will listen to.

  • Mark Thomason
  • Clawson, MI
  • Verified


“America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.”

Far more than just “we can do that again.” It is the only way it can be done. No nation has had that sort of prosperity we had then except with those standards of income and wealth equality. Not totally equal, but not the gross inequalities established by the Republicans and those triangulating Republican ideas.

As our inequality reaches record levels, we sink. The only nations not sinking have far more equality.

A key point is that most Americans don’t know how unequal we are. When asked, they think we have the levels of equality of those places that are now doing well. We did, once, but we don’t now.

We must go back to what worked. It is the only thing that does work. The rich get this rich at the expense of the health of the whole national economy. They poison us all with their greed.

Posted in Money Coup; Political Economy; Grotesque Inequality; New Gilded Age

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