Paul Krugman makes a great point in a blog post today, The Myth of the Deserving Rich. But then he commits an error (which he does all the time) that drives me crazy. But first, let’s talk about the article generally.

His point is that just as we try to justify the poverty of the poor, we try to justify the wealth of the rich. Well, we don’t. But pretty much the entirety of the mainstream press and pretty much any politician with high aspirations. Of course, Krugman doesn’t go into it, but there is a big reason for this: social unrest. I think it is the biggest issue that society will have to face over the next couple hundred years if we manage to keep civilization going that long. If we all admit that our society is hopelessly unjust, how will we deal with this? We want to create a society that encourages people to do good things with their lives. But it isn’t a stupid person’s fault that he is stupid.

Krugman, of course, is more interested in the injustice and social waste of not providing real opportunity to the children of the poor. I’m interested in that too. But I think the problem is much deeper than that and eventually we need to solve it if we are going to make progress as a society. Personally, I believe in guaranteed incomes. But that discussion can wait for another day. What’s more, I’m sure there are other solutions that have not occurred to me.

On the other side of things—apologizing for the wealth of the rich—is at least as absurd. A canard I used to hear a lot is, “If the rich didn’t deserve their money, they would have lost it by now.” No. There are several reasons this is wrong. One is that the children of the rich get educated in how to manage money. Another is that the rich don’t really manage their own money; they pay experts to manage their money. And don’t forget: inheritance in the primary way people get rich. This Forbes article is a good example of what Krugman talks about in his article: using the well off but not rich to make the rich look better. (A half-million in wealth including your home is the definition of rich? Right!)

What Krugman keeps doing that bugs me, however, is saying that only the top 1% is upper class and that the 19% below them are the upper-middle class. Look, if the bottom 20% is the lower class, the middle 20% is the middle class, then the top 20% is the upper class. I admit, someone barely in that class is not rich at all. (My sister would fit into that category, although by the Forbes article, she would be rich just based upon her house.) I’ll even admit that the 19% are not rich. But they are by definition in the upper class.

The reason this bothers me is that it tilts the field against the lower class. By this way of thinking, the bottom 20% somehow balance the upper 1%. But that isn’t what’s really going on. People living on the streets might balance the 1%, but not the bottom 20% generally. They really are the contrast to the management class (and those few people who still have decent unions). I’m in no way against the upper class—I have family and friends in this class. Sadly, however, not one of them will admit to being in the upper class. And seeing reality is a prerequisite for improving it.

I know that I have sworn off MSNBC, but I got a tip that this morning there was real news coming on Up with Steve Kornacki. So I watched it. This is amazing. Really, you’ve got to see it. The description of this segment sums it up pretty well, “Top officials in Chris Christie’s administration appear to be linked to an effort to use Sandy relief funds to force the city of Hoboken to expedite a project that also happens to involve the law firm of the Port Authority chairman.” There were three blocks that The Rockefeller Group owned in Hoboken that the Christie administration really wanted to be rezoned in such a way as to make a development there very profitable. About most things, I’m pretty skeptical—even things I want to believe. But the more I hear about the widening Chris Christie scandal, the more it seems true.

This is just the first segment, but it lays out the whole narrative:

Update (18 January 2014 12:46 pm)

One thing that was very interesting in the discussion that followed on the show was how at least two people there were minimizing it. For example, Josh Barro noted, “People nationally will not obsess that long about a story about a traffic jam.” He was saying that as the outlook of the people in the Christie administration, but it’s clear that he more or less agrees with that view. What is fascinating is that these are exactly the kinds of things people said about Watergate, “Why are you guys obsessing over this little burglary?” That misses the main point. It’s a thread. And the more it is pulled on, the more the entire Christie administration seems to be unraveling. Like the story today: it is only big news in the context of the larger story that Christie’s administration seems to be every bit as big a bully as Christie himself. And bullies usually end up breaking the law at some point. They are people who don’t accept social norms so they aren’t real clear on how to act generally. People will not soon get tired of this story.

This is a slightly different take on income inequality than I normally propose. I say that the rich should want more equality because great inequality breads revolution. In this clip, Bill Maher makes a more immediate argument. If people are desperate enough, they will kidnap the rich. Of course, I suspect most rich people will look at that bit and say, “Well, I’ll just get one of those flaming cars.” Or, “I’ll hire a private army to surround me.” Sadly, one thing that history shows us is that the rich never learn. I’m not saying they are different than anyone else. Everyone thinks things will just continue to be the way they have been. And in fact, that’s a good way to predict the weather. You will be almost 50% accurate predicting that tomorrow will be just like today. But eventually, the clouds roll in. Eventually there is a hurricane. And the rich have far more to lose than the rest of us.

One of the first things that Obama did that angered me was to keep Robert Gates on as Defense Secretary. Of all the cabinet positions to put a Republican in, that is the worst. The Republicans have been (wrongly) hammering Democrats for being soft on the military for decades. So what was Obama saying other than, “I can’t find a Democrat as good for this job as this almost random (just happens to be the current office holder) Republican.” Now, I’m not an idiot. I know what Obama was trying to do; he was trying to “reach across the isle”; he was trying to show that he was open-minded. As I’ve pointed out, he was (and in many ways still is) a very naive politician.

But the thing is, I didn’t like Robert Gates under Bush and I didn’t like him under Obama. And now, he is out with a tell-all book about his time under those two presidents. I am not going to read Duty, of course. These kinds of books are always the most tired and useless things. Life is too short. But I have been really interested to hear what Gates had to say about Harry Reid because it is really unfair.

The biggest thing is that Harry Reid said that the surge in Iraq was a bad idea because the war was already lost. Gates thought this was treasonous. Well, this kind of thinking is exactly what I expect from a man like Gates. Yes, no one should ever be allowed to express a negative opinion about a war. But someone should be allowed to make a bunch of money writing a book that takes potshots at a sitting president and vice-president. I’ve got it: IOKIYAR.

The other thing is that Gates is mad at Reid because Reid asked him to put a study of “irritable bowel syndrome” into a military appropriations request. But this is how politics works. If Gates thinks that the Secretary of Defense is not a politician, then he is an idiot. In fact, anyone who claims that the top tier generals in the military are not politicians are totally ignorant of what they do.

Bret Stephens at the Wall Street Journal takes Gates to task, summing up the book, “Now he wants you to know he was offended, irritated, enraged, scandalized, ‘too old for this $%*&,’ and just plain itching to quit nearly every day he spent at the top.” But as he notes again and again, Gates didn’t step down. It isn’t like he needed the money; he’s valued at $5 million. As Stephens also notes, “Serving as secretary of defense, after all, isn’t really a duty; it’s an honor and a privilege.”

The only duty I see in Robert Gates is his duty to cash in even more on his government work.

As many in America get excited about the French sex reports that are only scandalous in America, there is actual very bad news out of France. But first up, the sex scandal.

French President Francois Hollande was caught having an affair with actor Julie Gayet. And it may indeed be the case as Joshua Keating says that, The French Merely Pretend to be Blase About Sex Scandals. But while he may be right that they are as interested in the sex lives of famous people as anyone else, they are not puritanical about it the way we are here in the United States. Here it is not news that a politician cut food stamps for millions of poor children, but it is news that he had a one-night stand during some conference. What’s more, the French media don’t treat Hollande’s sexual affairs as political matters.

Meanwhile, Hollande has moved over to the dark side politically speaking. The supposed socialist has decided that the best way to get France’s economy going is to do what the conservatives want: cut social spending and cut taxes! Sound familiar? Sound like exactly what the Republican Party in our own county always wants to do? Sound like what every person who ever passed Econ 101 would tell you is exactly the opposite thing to do?

Francesco Saraceno quotes Hollande saying Tuesday, “L’offre cree meme la demande.” This means more or less, “Supply creates its own demand.” That is, the old conservative canard that by making more stuff there will suddenly be people there to buy it. In economics, this is Say’s law. (Actually Say’s law is a bit more complex than this but it is basically the idea that all economic downturns are the result of businesses not producing the right stuff.) I call it the “Field of Dreams” fallacy: if you build it they will buy. It’s pretty simple to disprove. Assume you have an economy like ours: there are 100 people, 99 of them have no money and one has a huge amount of money. If some great low cost innovation comes along, only the one person will be able to afford it. Of course, the real economy is more complex than that but the principle is the same. Here is a great graph from Saraceno’s article:

The graph shows year by year what French businesses claim to be their biggest problems. The graph is kind of hard to read (go over to Saraceno’s article for a better copy), but the blue line is “demand” and the yellow line is “supply.” So roughly 50% of firms are suffering from lack of demand and 15% are suffering from supply problems. Roughly 10% (purple) are suffering from both. But as Saraceno points out, “Firms move from demand difficulties to no difficulties and back, but in the past six years they did not substantially change opinion on red tape, regulation, labor costs.” Do you see any evidence there for cutting the taxes of the rich?

This morning, Paul Krugman wrote a great response to Hollande’s new claim, France by the Numbers. He shows that while France is not doing great, they are actually doing fairly well. And much more important, the nonsense that Hollande is now pushing will only make things worse, not better. Currently, France’s GDP is going up. It’s budget deficit is going down. It’s debt-to-GDP ratio is on its way down. And France can borrow money at reasonable rates. So why the sudden turn to the right? Is it just another case of Lord Acton’s observation that power corrupts and that, “Great men are almost always bad men.”

I am especially upset, because I’ve been a big Hollande booster. He was the “moderate socialist” who would do the right things, but incrementally and not upset the nation. Well, I guess this is just more evidence moderates of all stripes are useless because when it comes right down to it, they all come running back to the power elite like a lonely dog desperate for a pleasant pet.

Of course, when Hollande’s new found conservative economics turns out to only make things worse, I doubt very seriously that the people of France will blame it on the fuck-the-poor and give-to-the-rich policies he now favors. They will understandably think that getting fucked for the benefit of the rich is just the socialist way. I think Hollande needs to spend more time hitting the economics books and less time hitting the lovely Ms Gayet.

I haven’t written much if anything about the West Virginia chemical spill. That isn’t because I’m not interested in it. I haven’t been covering much politics for the last couple of weeks. Or much of anything else. But Reed Richardson wrote a great article on the coverage of the spill, or lack thereof, Let Them Drink Coke: The Mainstream Media’s Casual Incuriosity of the West Virginia Chemical Spill. In it, he explains the main reasons that the story hasn’t gotten more attention is the laziness of the national media.

Rather than report the story, they just report the political reactions to the story. But in West Virginia, even the Democrats are afraid of saying anything that might upset the coal industry. If the Democrats and Republicans agree on this spill, it must just be an unfortunate accident like a tornado. Sure, you cover it, but there’s no long term story there. The problem is that there is a story here. And as bad as this is for the people (And environment!) of West Virginia, the story is much bigger than even that.

John Boehner claims that we have enough regulations on the books and then has a temerity to ask, “Why wasn’t this plant inspected since 1991?” Well, I’ve got one reason for you: the government doesn’t spend enough money to pay people to do the necessary inspections. And this is because of people like John Boehner who know it is hard to repeal regulations, but it is easy to deprive agencies of the money they need to perform their mandated duties. In fact, most Republicans would eliminate the entire EPA if they could. And they’ve been gunning for the Clean Water Act and the Clean Air Act. (Note: the Clean Water Act was passed under a Republican; the Clean Air Act was greatly expanded under two different Republican presidents.)

But I can hear the conservative cry foul, “But the government just doesn’t have the money to properly regulate!” And, “The private sector can’t afford to clean up their act when the economy is weak!” Both of these statements are exactly the opposite of the truth. The government can now borrow money at no cost. Thus, it should be borrowing money to clean up the nation and repair and expand infrastructure. And do you know what? That would stimulate the economy. As for the second claim, the economy is bad for workers. Business is doing better than ever. Now is the time they can afford to clean up their acts. And do you know what? That would stimulate the economy, because it would force the rich who are just sitting on piles of cash to actually spend some of it. This is not rocket science, folks; this is Econ 101.

Boehner’s question is an excellent example of conservative double speak. On the one hand, he wants to claim that this wasn’t the fault of Freedom Industries; it was the government’s fault for not doing its job. (You know, the job John Boehner actually thinks the government shouldn’t be doing?) On the other hand, conservatives (not John Boehner specifically) usually think that if left alone, businesses will do the right thing. They say things like, “Why would they pollute half a state? That just costs them money!” (The answer is that not doing any maintenance for 23 years saved them far more than any clean-up or punitive costs this spill will cost.) Well, my conservative friends, you can’t have it both ways. Either Freedom Industries is totally to blame here or we need to properly fund our government’s regulatory systems.

Richardson makes another great point about the spill:

The only state that has poorer people on average than West Virginia is Mississippi. Richardson complains when the Washington Post compared life in West Virginia to “camping,” writing, “What is happening in West Virginia is not at all like camping, it’s more like a taste of the Third World, where the powerful behave recklessly and leave the poor to suffer the consequences.” And that, in the end, is what it is all about. In the coverage of Hurricane Sandy, there were lots of stories of middle class people (none of truly poor people that I remember), because they were close by to the rich who really matter. West Virginia is not exactly a Mecca for the beau monde.

To me, the West Virginia chemical spill story is yet another story about income inequality. It’s all about economics. As I always point out, although I am a liberal on pretty much all issues, I don’t especially care about anything but the economic issues. If we lived in a reasonably equitable country, we would be doing something about global warming. We wouldn’t be treating coal with 4-Methylcyclohexanemethanol to make it “clean.” We would be revitalizing West Virginia so that it’s people could be doing something that is not destroying the planet. Of course, Freedom Industries itself is a fairly small company with about 40 employees and roughly $5 million in profits each year. But it only exists because of far bigger and more profitable coal companies. The huge profits provide great incentives to create externalities. And the huge profits provide great political power to make sure that when tens of thousands of people are harmed by those externalities, nothing costly is ever done to these power elites.

And as Reed Richardson notes: that includes even having the stories properly covered by the national media.

Afterword

The local press continues to provide good coverage. This morning’s news, Pregnant? Bottled Water Recommended. As of Friday, the concentration of the chemical was at 2 ppm. As of today, it seems to be below 1 ppm, which the CDC claims is safe. But they say if a woman is pregnant, it is best that they wait until the concentration is below detectable levels. Regardless, many people question this 1 ppm level, being as it is based on very little study. The US Navy laboratory at Norfolk Naval Air Station, Norfolk, VA says the only safe level is less than 0.057 ppm.