Over at The Fiscal Times, Mark Thoma wrote a really interesting article, The Politics of Income Inequality. He noted that, “The calls to cut government spending to avoid disastrous, though largely imagined consequences, and the push to cut taxes to avoid harmful economic distortions that supposedly lower economic growth are, in the end, about the desire to reclaim income lost to taxes.” In other words, all the claims about improving the economy and balancing the budget are just about the rich wanting to lower their taxes. That should come as no surprise to anyone around here. By and large, the rich are rich because they don’t care about anyone but themselves.

But a really big question remains, “Why do so many non-rich people go along with this?” After all, there are very few people who are rich. Clearly they are not supporting these policies out of a sense of greed. One big way that we are seeing in the Republican presidential nomination is immigration. More immigration is certainly to the benefit of the rich. But it isn’t that big a deal. They can easily bypass it if they can use immigrants as the reason why this generation of American workers is not doing as well as the last. “It’s not that the rich are taking all the productivity gains; it’s that immigrants are mowing laws for cheap!”

Thoma put it well:

So people blame the poor and the immigrants. Of course, it is nonsense. The truth is that the middle class and the rich get huge largess from the government. It is just, as I have discussed many, many times before, that our system is set up so that the richer you are, the less the help you get looks like welfare. The poor get special cards that they use in public so that their government assistance comes with a big dose shaming. The rich get billions in bank bailouts, set up so that they can say they were forced to take them and didn’t actually need them. The middle class, of course, don’t see the thousands of dollars they get from the government to pay their mortgages as welfare — it is just a tax deduction! (Uber-conservative Milton Friedman would disagree.)

The question is whether conservative policy would actually improve the lots of the working class. “Republicans will close the borders, slash spending that requires the redistribution of income to the undeserving, and when all is said and done the belief is that there will be more income and opportunity available to hard-working, upstanding, moral households.” I think the answer to that should be obvious. This isn’t an ideological conclusion of mine. It is empirical. The Republicans made this claim under Reagan, and not only did the working class do no better — they ended up paying higher taxes. The same policies were pushed under George W Bush and again, the working class got nothing. It’s kind of funny, actually, because the Republicans run around saying the Democrats have no new ideas, but the Republicans are pushing the exact same policies they’ve been pushing for 40 years. But there is an extra irony: those policies clearly haven’t worked, but they still push them.

Thoma’s argument is that we must do something about income inequality. Currently, it is just getting worse. And the worse it gets, the more pressure builds to do something about it. It would be nice to think that the economists are busy working on solutions. And I know that the so called liberal economists are working on it. The conservative economists are too busy giving well paid talks to groups of hedge fund managers. But ultimately, I think we will need to reevaluate the entire idea of capitalism.

I just got Nicole Aschoff’s new book, The New Prophets of Capital. I haven’t had a chance to read it yet, but I just wanted to reflect on the subject for a moment. The book looks at four really rich people who see problems with our capitalist system and want to do something about it: Sheryl Sandberg (COO of Facebook), Bill Gates (you know), John Mackey (Whole Foods), and Oprah Winfrey (Oprah). But none of them actually want to fix capitalism, because, as Chico Escuela would say, capitalism been berry berry good to them. So Sandberg, for example, doesn’t think that capitalism ought to do anything to help the family, but that the family should be more accommodating to capitalism.

Of all these people, I’ve written the most about Bill Gates and all the money that he gives for education “reform.” It is supposedly done in the name of creating a more educated workforce. The idea is that a more educated workforce would make more money. This is a lie. All that a more educated workforce does is put downward pressure on wages. Companies have a huge selection of trained workers. At best, this ends with worker wages staying the same. The only difference is that workers are now swimming in educational debt they had to accumulate just to stay even.

Of course, Gates isn’t actually interested in a more educated workforce. He’s a sophisticated man. He understands that industry did just fine when it did its own training. What education “reform” is all about is getting rid of teachers unions. And that’s all about getting rid of one of the few remaining decent paying middle class jobs. I know this is a very negative view of Gates, but there are a lot of things that could be done to improve education in this country, and he chooses to do just those things that will enrich him and his children even more.

The main thing is that the rich are not going to solve our problems with inequality and stagnant wages. I’m not saying that they couldn’t. But their approach is to ignore the problem that stares them in the face, and nibble around the edges. As Matt Yglesias used to say, “If you want to help the poor, give them money.” But that’s the last thing that any of these people want to do. Each one of these people has more money than they could ever reasonably spend. That’s the one thing they know about: their money. And they have no interest in giving any of it up. But when it comes to the advice they give out, they have very little knowledge. But they are very generous in sharing it.

My biggest general problem with conservatives is that they refuse to approach a problem with the available solutions. They always start by casting aside the most obvious (and usually effective) solutions because they are not acceptable ideologically. It’s the same with these billionaires (and in Mackey’s case, close enough): they refuse to look at the obvious solutions to our problems — like allowing collective bargaining. So all they are left with are marginal and often harmful “solutions.” We need to rethink the whole system, not tinker with it.

Ted McLaughlin over at Job’s Anger wrote, Is Bernie Sanders Really a Democrat? In it, he speculates that for many Democrats, Sanders never having been a Democrat may be a big reason why they don’t support him. In general, I am very much in agreement with McLauglin. But on this, I think he’s wrong. Or maybe it would be more accurate to say that I hope that he’s wrong. There are a couple of reasons for this.

The first issue is just that I’m not a Democrat out of some sense of tribal loyalty. I’m a Democrat because it is the liberal party in the United States. If we had a parliamentary system, I would almost certainly be a member of a party that better reflected my beliefs. I have huge problems with the Democratic Party — mostly due to its right turn starting in the 1970s and really taking off in 1992. But there are two choices in the United States: the Democrats and the Republicans. The Republicans are hopeless. The Democrats have potential, and they have been moving in the right direction for the last decade.

But the name doesn’t mean anything. If the Republicans decided to push for a $15 minimum wage, universal healthcare, reproductive freedom, and an end to foreign wars, I would drop the Democratic Party faster than a hot frying pan. This isn’t a tribal thing for me. And I don’t think it is a tribal thing for most Democrats. That’s almost what defines us as a party. We aren’t authoritarian followers. What’s more, we have a long history of accepting new people who moved into our party. Even though I was none to thrilled with him, we had no problem accepting Arlen Specter back into the party.

We also need to look at Bernie Sanders’ voting record. He is a more consistent Democratic voter than many actual Democratic politicians. That is the kind of support that matters to me. If we want to take it to extremes, we could say that by this logic Joe Lieberman was more supportive of the Democratic Party than Sanders. But the truth is that Lieberman voted against the party often on really important issues. And then, the moment the party in his state said it didn’t want him to be its candidate for Senate, he dropped the party.

I understand that most Democrats don’t like Lieberman and don’t see him as a supporter of the Democratic Party. But he proudly claimed the name “Democrat” for 17 years. And what did it mean? Ultimately, nothing. So if calling yourself a Democrat means something, it is very little. And let’s not forget that support goes both ways. People run as Democrats and thus get various kinds of support — including money — from the party. In that regard, I would have to say that Sanders has given more to the Democratic Party than he has taken.

There may be Democrats around who won’t vote for Bernie Sanders because he hasn’t called himself a Democrat. And that’s fine. I don’t think it is very meaningful, however. And I want the Democratic presidential nomination to be about much more important issues than this. And I know that McLaughlin agrees with me. And I think that Sanders has already made Clinton a better candidate than she would have been without him. So we can add that to ways that Sanders supports the Democratic Party.

What’s in a name? That which we call a rose
By any other name would smell as sweet…

The brilliant Matt Bruenig has written another great article that expands the way that I look at economics, Nontax Revenue Accounts for 92% of Growth in “Taxpayer Money” Since 1970. The basic idea is one that I’m well aware of because I see it everywhere I go. Politicians are terrified to raising taxes. So they create fees and tickets and, as a last resort, sales taxes. The result of all this is to remove the tax burden from the rich and pile it onto the poor.

Think about traffic tickets. If a poor person is caught driving 35 in a 25 mph zone, the cost of the ticket is exactly the same as if a billionaire is caught doing the same thing. Think about that because it’s shocking. It means that the poor person is massively punished while the billionaire is effectively not punished at all. In fact, that billionaire might be able to fight the ticket and win in court. It really isn’t very hard when you have a lawyer since police officers have skimpy notes and no actual memory of the event. But even if they just pay the ticket, it is unfair. It is, in fact, what I’ve been arguing that the rich really want: each person paying the same amount in taxes — even a flat tax would be unacceptable to them.

Bruenig noted that we should stop discussing “taxpayer money.” For one thing, after people pay taxes, it is no longer theirs. But more important, discussing government money this way frames it in a deceptive way. This is how we get pundits on Fox News and CNBC talking about all the taxes that the rich are paying to the government — completely ignoring the taxes and all the other revenues that the poor pay. They just don’t count, even though as the title of the article indicated, since 1970, 92% of all government revenue increases have come from these sources. In 1970, roughly 12% of total government revenue came from these highly regressive sources. Now the number is almost 21%.

Another area of this is benefit cuts. The government doesn’t just take money and then go out to Las Vegas for a vacation. It gives that money back to the country and its people. This is an issue that Dean Baker has written about a lot. People want to cut Social Security, but they never think about the fact that voters will not be keen to continue to pay 15% of their paychecks if they aren’t getting anything back for it. Cuts are effectively just another form of tax.

As long as we continue to focus on taxes — which is what the power elite want us to do — we will see these revenues decrease. And we will see more and more of the cost of running the government and providing services fall on the backs of the poor and the middle class. So just looking at the tax burden on the rich, we see them paying less. And we see the overall tax burden reduced to be replaced by even more regressive fees, tickets, and reduced services. The power elite have been very clever. They’ve managed to make people living in an oligarchy think they live in a democracy.

Dan Diamond wrote a cheeky little article over at Vox, Donald Trump Says the “Real” Unemployment Rate Is 42%. He’s Really, Really Wrong. It’s about how Trump has been going around saying that the real unemployment rate is 18%, but then more recently 21%. Who knows what this is about? But his claim that the unemployment rate is 42% at least makes some sense. It is based upon the idea that only 58% of the people over the age of 16 have jobs. According this, school kids and retired people should all be working. What do you expect? It’s Donald Trump.

But it does raise an issue that is interesting. There are many ways to measure the unemployment rate. There are two that we standardly use here in the United States. The first is the one everyone knows: U-3. It does not include discouraged or involuntary part-time workers. It is currently 5.3%. The other measure is really more meaningful: U-6. It includes as unemployed, everyone who wants to work full-time but who isn’t. It is currently 10.4%. It doesn’t really matter which measure you use. The main thing is that you have to be consistent. And people aren’t — at all. It’s really sad to watch because it shows a total lack of intellectual integrity.

What Trump is doing is not at all unusual. I’ve been hearing conservatives — especially people on Fox News — saying that we should really use U-6. Like I said: that’s fine. But these same people didn’t want to use U-6 when George W Bush was in office. They just want to use it so they say, “Unemployment is over 10%! Obama is destroying the economy!” But you just can’t do that. This is just a way of saying that the unemployment rate was 7.8% (U-3) when Bush left office and is 10.4% after six and a half years of Obama. But the actual comparison looks like this:

None of this is to say that Bush was terrible for the economy and Obama was great. The truth is that the unemployment rate was bound to go down. But you can’t say that the economy has done horribly under Obama. The most you can do is make the argument that the economy hasn’t improved as much as it could have under Obama. And that’s an argument I do make, although the blame is not primarily Obama’s but rather our entire political system.

But what this does show is that you can’t just pull out a different way of measuring unemployment and claim that things are worse than anyone knows. Everyone understands that the unemployment rate is not a perfect reflection of the state of the job market. But including discouraging workers into the calculation doesn’t make the economy any worse. The economy is just the same as it is. And whether you want to use U-3 or U-6 or something else, we see that the economy is improving.