Conservatives Apologize Inequality Away

David DayenIf you listen to economists and politicians — especially those on the right — you will hear them talk excessively about economic growth. Jeb Bush recently got a lot of attention by claiming that he would increase growth to 4% — partly by making people work longer hours. That was silly, but not any more so than the standard argument about economic growth. When Republicans are asked how they will reduce inequality, they cast aside things like the minimum wage and labor unions. Instead, they push one thing and one thing only, “We need to increase economic growth so that everyone does better!” The problem is that this just isn’t the way the economy has worked for the past 40 years.

I wrote about this issue quite explicitly recently, No Trade Deals Until Our Economy Is Fixed. From the end of World War II to the mid-1970s, wages increased right along with productivity. But since that time, the two things have become uncoupled. Wages have been basically stagnant, while productivity has continued upward. My point was and still is that productivity doesn’t matter in the least so long as we have an economy in which all the gains go to the people at the top. But the truth is that conservatives refuse to engage with this fact.

Last week at The Fiscal Times, David Dayen wrote about another side of this issue, Why Conservatives Are So Desperate to Debunk One Hillary Clinton Chart. What he is talking about is a concerted effort among conservative economists to claim that, “If only you look at the data correctly, you will see that workers have done great!” But they haven’t. And many mainstream economists have been all over this. Mark Thoma has highlighted a lot of them over at his blog, Economist’s View. But here is the chart — it ain’t complicated:

Wages and Productivity

A good example of how conservatives are trying to deny this reality comes from Harvard economist Robert Lawrence. He argued that you couldn’t just look at workers. So they threw in the management class. Obviously, this is begging the question. Why not throw in every person? Then, by definition, there would be no inequality. What Lawrence has done is to get rid of the median income and replace it with an average income. The difference is huge. And as Dayen pointed out: the fact that the average and median are so different is itself an indication of a large amount of inequality, “Using average rather than median compensation is like taking the average salary of five workers in a room when one of them is Bill Gates. The average salary will look pretty robust even if the other four workers in that room are struggling.”

But even with that adjustment, Lawrence only managed to make up part of the difference. So he was forced to look at total compensation and fiddle with different inflation indices — all in a totally disingenuous way. This is just what Christian apologist William Lane Craig does: start with the conclusion and work backwards. I’ve written about this a lot. Lawrence started with the idea that workers are doing just great and he cobbled together an argument to prove it.

Dayen’s article started with a anecdote, that I thought was very telling:

In 1994, economists Larry Mishel and Jared Bernstein of the liberal Economic Policy Institute (EPI) met with the head of President Clinton’s National Economic Council, Robert Rubin. Mishel told [me?] that they asked Rubin how the administration planned to increase median wages, a critical failing in the Reagan/Bush years. Rubin replied, “deficit reduction.” He explained how this would reduce interest rates and boost productivity, and that wages would naturally follow.

Mishel and Bernstein pulled out a chart. It showed that, for the prior two decades, increases in productivity had not translated into wage gains for the typical worker. This productivity/wage gap showed that something had changed within the economy, with the benefits of growth concentrating in fewer hands. Rubin looked at the chart and said, “I didn’t know that.”

Pretty much everything that was wrong with Clinton economics was the result of Robert Rubin. Still, he was ostensibly a liberal economist. But he “didn’t know” that wages and productivity had been decoupled. Economists are lost in their own models. American workers don’t need the chart to know that their lives as workers are not turning out the same as their parents’. But economists are locked into assumptions like “a rising tide lifts all boats.” Well, maybe in the mythical free market — but not in our political environment where the rich can buy special privileges. Luckily, a lot of economists are waking up. But the conservatives will hold onto this ideology forever — or at least until the economy falls apart.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

2 thoughts on “Conservatives Apologize Inequality Away

  1. For some reason, the conservative worldview needs other people to do poorly so the winners can feel strong. The suffering of others is very aesthetically pleasing to them. I don’t know why.

    • I think it is because they have turned their backs on real meaning. They don’t believe in collective action. So the only way they have to gain meaning is by “winning” the game.

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