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So, I finished reading Paul Krugman's The Conscience of a Liberal (2007). It's about economic (in)equality in America, how it's changed over time, and why -- in particular, about the political interventions that have reduced or increased it, from the New Deal to movement conservatism, and why those political movements succeeded.
Right before it I read his Pop Internationalism (1997), on the ubiquitous myths regarding international trade and the ill-founded notion of "competitiveness". In that he argued that "countries are not corporations", and not in competition with each other, especially for a country like the US where 90% of GDP is Americans producing for and selling to other Americans. Wages are generally driven by the average level of productivity, with little evidence or mechanism for trade driving them down, especially in general but even in cases like American unskilled labor.
This book doesn't challenge any of his earlier statements on trade, but it's rather more interventionist on wages; the economy generates wealth, but politics and social norms can control how much of that labor gets. We start with what he calls the Long Gilded Age, the Gilded Age proper and the years following, up to the Great Depression in 1929. Income increased at all levels, following the rapid technological development, but inequality stayed high, and politics were highly polarized between populist Democrats and big business Republicans. Then we got the Depression and the New Deal reaction, with Social Security, progressive income tax, estate tax, government supporting unions instead of breaking them, and government work programs, followed by WWII and outright controls on prices and wages. Eisenhower in 1952 brought the GOP to accept the New Deal consensus, and we had 30-ish years of 70-90% top tax bracket, 2.7% growth in the median income (doubling it), relatively low inequality between top and bottom brackets, a minimum wage that was half the average income, and 'bipartisan' politics since the parties basically agreed on major issues, competing on running the government.
One fly in the ointment: unlike every other wealthy country, we didn't have guaranteed health care. Truman tried in 1946, proposing something much like Medicare for all, but was blocked by a combination of the AMA and Southern Democrats, afraid they'd have to desegregate hospitals.
After the 1970s, this began to change. Inequality has soared, minimum wage in 2006 was 30% of average income, and adjusting for hours worked (and women working), median income has stagnated for the past 30 years. Much of the country is poorer than it used to be. Some would suggest technological or economic changes: competition from trade, or technological change from automation. But political changes lead the economic ones, and other countries haven't gone through what we had. Apart from Britain, inequality in other countries hasn't soard. In 1960 both Canada and the US were 30% union; in 1999 the US was 13% union, and Canada was... still 30%.
What changed? Movement conservatism, and the GOP abandoning the New Deal to return to Gilded Age policies, carried on a platform of racism and social conservatism. Goldwater was the first breath, but he got crushed by LBJ. After the civil rights movement, Nixon started turning the South Republican, but his actual policies weren't much different; he even made his own attempt at universal health care. Reagan was doing better for conservatism, campaigning for governor by opposing the fair housing act and the Voting Act and talking about welfare queens, then campainging in 1980 from Philadelphia MS, site of civil rights murders, while talking about "states' rights". Reagan broke the air traffic controllers' union, cut taxes (top rate went down... to 50%, compared to 35% today), doubted acid rain and put James Watt in charge of the environment (Nixon had signed the EPA into being.) Social norms had kept CEO pay relatively moderate, but the 1980s was the decade of greed, seeing compensation start to soar, followed by 'innovations' such as stock options. And we've seen an increasingly Gilded GOP, with talk of privatising Social Security and Medicare, a constant drum of tax-cutting, even in wartime. All driven largely by race: the electoral shift can be largely summed up as "Southern whites started voting Republican", which more than made up for a shift to the Democrats outside the south.
In the beginning, race wasn't so well hidden. Movement conservatism really starts in the 1950s with William Buckley's founding of National Review. In 1957 an editorial celebrated a Senate vote to help continue the disenfranchisement of blacks. "The sobering answer is Yes -- the White community is so entitled because, for the time being, it is the advanced race." In the same year Buckley's "Letter from Spain" extolled General Franco for wresting Spain from the hands of "...a regime so grotesque as to do violence to the Sanish soul, to deny, even, Spain's historical identity." That would be Spain's democratically elected government he's talking about, and his hero used mass murder and concentration camps to defend Spain's "soul".
There's a lot more to the book: detailed history of the Great Compression and the rise of the middle class, more on movement conservatism and the wealthy power funding it, Reagan's callousness, statistics and citations, the issue of health care. Why care is so expensive: one reason is the lack of incentive for insurance companies to pay for preventive care; given how people move, and Medicare taking over for the elderly, such care costs them money to save someone else money. Why the system works as well as it does: the most needy people, elderly, are on a government program -- Medicare. (Almost all hip replacements are paid for by Medicare; recall that the next time that's invoked in a cross-country comparison.)
There's also the importance of getting universal health care, to reduce inequality, save lives and money, and pave the way for more progressive reforms. Ideally we'd get a system like France, Medicare for all, with room for supplemental insurance. More politically feasible is probably a complicated system sort of like Germany's, with community rating (insurance companies having to offer the same rates in a area, not evaluating individuals), mandated and subsidized coverage, and competition with a government plan. Ironically this is more government intrusion into a market than just having Medicare, for the purpose of simulating a single-player system, but wouldn't disturb people happy with their insurers, or require raising taxes as much (even though that'd be offset by falling premiums.)
...that'll have to be all for now.
Right before it I read his Pop Internationalism (1997), on the ubiquitous myths regarding international trade and the ill-founded notion of "competitiveness". In that he argued that "countries are not corporations", and not in competition with each other, especially for a country like the US where 90% of GDP is Americans producing for and selling to other Americans. Wages are generally driven by the average level of productivity, with little evidence or mechanism for trade driving them down, especially in general but even in cases like American unskilled labor.
This book doesn't challenge any of his earlier statements on trade, but it's rather more interventionist on wages; the economy generates wealth, but politics and social norms can control how much of that labor gets. We start with what he calls the Long Gilded Age, the Gilded Age proper and the years following, up to the Great Depression in 1929. Income increased at all levels, following the rapid technological development, but inequality stayed high, and politics were highly polarized between populist Democrats and big business Republicans. Then we got the Depression and the New Deal reaction, with Social Security, progressive income tax, estate tax, government supporting unions instead of breaking them, and government work programs, followed by WWII and outright controls on prices and wages. Eisenhower in 1952 brought the GOP to accept the New Deal consensus, and we had 30-ish years of 70-90% top tax bracket, 2.7% growth in the median income (doubling it), relatively low inequality between top and bottom brackets, a minimum wage that was half the average income, and 'bipartisan' politics since the parties basically agreed on major issues, competing on running the government.
One fly in the ointment: unlike every other wealthy country, we didn't have guaranteed health care. Truman tried in 1946, proposing something much like Medicare for all, but was blocked by a combination of the AMA and Southern Democrats, afraid they'd have to desegregate hospitals.
After the 1970s, this began to change. Inequality has soared, minimum wage in 2006 was 30% of average income, and adjusting for hours worked (and women working), median income has stagnated for the past 30 years. Much of the country is poorer than it used to be. Some would suggest technological or economic changes: competition from trade, or technological change from automation. But political changes lead the economic ones, and other countries haven't gone through what we had. Apart from Britain, inequality in other countries hasn't soard. In 1960 both Canada and the US were 30% union; in 1999 the US was 13% union, and Canada was... still 30%.
What changed? Movement conservatism, and the GOP abandoning the New Deal to return to Gilded Age policies, carried on a platform of racism and social conservatism. Goldwater was the first breath, but he got crushed by LBJ. After the civil rights movement, Nixon started turning the South Republican, but his actual policies weren't much different; he even made his own attempt at universal health care. Reagan was doing better for conservatism, campaigning for governor by opposing the fair housing act and the Voting Act and talking about welfare queens, then campainging in 1980 from Philadelphia MS, site of civil rights murders, while talking about "states' rights". Reagan broke the air traffic controllers' union, cut taxes (top rate went down... to 50%, compared to 35% today), doubted acid rain and put James Watt in charge of the environment (Nixon had signed the EPA into being.) Social norms had kept CEO pay relatively moderate, but the 1980s was the decade of greed, seeing compensation start to soar, followed by 'innovations' such as stock options. And we've seen an increasingly Gilded GOP, with talk of privatising Social Security and Medicare, a constant drum of tax-cutting, even in wartime. All driven largely by race: the electoral shift can be largely summed up as "Southern whites started voting Republican", which more than made up for a shift to the Democrats outside the south.
In the beginning, race wasn't so well hidden. Movement conservatism really starts in the 1950s with William Buckley's founding of National Review. In 1957 an editorial celebrated a Senate vote to help continue the disenfranchisement of blacks. "The sobering answer is Yes -- the White community is so entitled because, for the time being, it is the advanced race." In the same year Buckley's "Letter from Spain" extolled General Franco for wresting Spain from the hands of "...a regime so grotesque as to do violence to the Sanish soul, to deny, even, Spain's historical identity." That would be Spain's democratically elected government he's talking about, and his hero used mass murder and concentration camps to defend Spain's "soul".
There's a lot more to the book: detailed history of the Great Compression and the rise of the middle class, more on movement conservatism and the wealthy power funding it, Reagan's callousness, statistics and citations, the issue of health care. Why care is so expensive: one reason is the lack of incentive for insurance companies to pay for preventive care; given how people move, and Medicare taking over for the elderly, such care costs them money to save someone else money. Why the system works as well as it does: the most needy people, elderly, are on a government program -- Medicare. (Almost all hip replacements are paid for by Medicare; recall that the next time that's invoked in a cross-country comparison.)
There's also the importance of getting universal health care, to reduce inequality, save lives and money, and pave the way for more progressive reforms. Ideally we'd get a system like France, Medicare for all, with room for supplemental insurance. More politically feasible is probably a complicated system sort of like Germany's, with community rating (insurance companies having to offer the same rates in a area, not evaluating individuals), mandated and subsidized coverage, and competition with a government plan. Ironically this is more government intrusion into a market than just having Medicare, for the purpose of simulating a single-player system, but wouldn't disturb people happy with their insurers, or require raising taxes as much (even though that'd be offset by falling premiums.)
...that'll have to be all for now.