Tides, rising and falling

Source: Free Democracy: PAUL KRUGMAN: GRADUATES VERSUS OLIGARCHS

Paul Krugman

Paul Krugman gives high marks to Ben Bernanke for his maiden testimony to Congress as Fed Chairman, but he takes issue with Bernanke’s answer to a question from Barney Frank regarding the rising inequality of income distribution. Bernanke said that it was a matter of the well educated doing better than the rest of the population; at least by implication, it was an appeal to the old 80/20 rule; the well educated 20% doing proportionately better than the less well-educated 80%. But the truth, Krugman says, is far more disturbing. On the one hand, he points out that income of college graduates actually fell more than 5% between 2000 and 2004. Moreover, the winners in the great money grab are a lot smaller group than the top 20%, or even the top 10%.

Between 1972 and 2001 the wage and salary income of Americans at the 90th percentile of the income distribution rose only 34 percent, or about 1 percent per year. So being in the top 10 percent of the income distribution, like being a college graduate, wasn’t a ticket to big income gains.

But income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that’s not a misprint.

Just to give you a sense of who we’re talking about: the nonpartisan Tax Policy Center estimates that this year the 99th percentile will correspond to an income of $402,306, and the 99.9th percentile to an income of $1,672,726.

The center doesn’t give a number for the 99.99th percentile, but it’s probably well over $6 million a year.

The danger in such a wildly inequitable distribution of wealth, Krugman points out, is real and immediate. “Both history and modern experience tell us that highly unequal societies also tend to be highly corrupt. There’s an arrow of causation that runs from diverging income trends to Jack Abramoff and the K Street project.”

My feeling is that people sense the danger, and they certainly experience the inequity in their own lives and the lives of their friends. But the constant distractions of our plugged-in life keep us from getting together to act on what we know to be wrong. And the fact that the media lie to us, regularly and consistently, in ways to minimize the inequity and hide both its causes and its effects does not help. I think the time is ripe for a renewed socialist vision to emerge, one that is stimulated by disgust at the pervasive corruption and patronage within the Republican establishment, that recognizes such corruption as an inevitable result of inequity, and that rediscovers a role for an enlightened collective in restoring a just balance. Or perhaps that’s just the opium talking. When is American Idol on again?