Wednesday, June 20, 2007

Inequality is economically beneficial

Big executive pay goes with increasing prosperity. "Fairness" no more works in America than it did in Russia

After World War II, many executives strove to refurbish the image of Big Business, badly battered in the Depression. Managers and professionals received more than production workers, but legal and bureaucratic filters narrowed the gaps. By the 1980s this generation of business leaders had mostly retired. Companies increasingly paid what the market would bear or they could afford.

Pay gains diverged. In early postwar decades, compensation increases crudely paralleled productivity gains -- improvements in efficiency. From 1950 to 1973, productivity rose 97 percent. Over the same period, median compensation of male high school graduates aged 35-44 rose 95 percent (after inflation); for college graduates 35-44, the increase was 106 percent. Those in the top one-half of 1 percent received only a 37 percent gain. From 1980 to 2005, productivity increased 71 percent. Median compensation for high school graduates dropped 4 percent, and compensation for college graduates rose only 24 percent. For those in the top one-half of 1 percent, it jumped 89 percent.

Comparisons such as these evoke images of greedy CEOs and hedge fund managers. But the story is more complicated. On the whole, the economy that produces these growing inequalities outperforms the one that created more statistical equality. The norms and practices highlighted by Levy and Temin collapsed mainly because they no longer worked. The idea that everyone's wages should reflect inflation plus a few percentage points worsened both inflation and stability. There were four recessions between 1969 and 1981; by then, inflation was 10 percent and mortgage rates 15 percent. Productivity growth had plunged.

Greater competition -- from imports, deregulation, new technologies -- also doomed pattern wage-setting. Companies with lax pay practices lost sales and profits. Consider GM, Ford and Chrysler as Exhibit A.

Economic inequality is an intellectual quagmire, because its origins and consequences are so murky. Contrary to popular belief, for example, it has not prevented most Americans from getting ahead. Consider families with children. A study by the Congressional Budget Office finds that from 1991 to 2005 income gains averaged 35 percent for the poorest fifth of these households, 19 percent for the middle three-fifths and 53 percent for the richest fifth. But their gains have decreased slightly since 2000. Here's another twist to the discussion: Today's immigration aggravates inequality, because so many new immigrants are poor and unskilled.

In 2008, economic inequality could become a political flash point, because the income gains at the top seem so outsize and gains elsewhere are so choppy. The very uncertainty means that, even amid great prosperity, Americans feel anxious. Whether the debate becomes an empty exercise in class warfare or a genuine search for ways to reconcile economic justice and economic growth is an open question.

More here



Fred Thompson is a small town guy who made it from the agricultural communes of south-central Tennessee to Capitol Hill and our TV sets. And while we admire the accomplishments of this distinguished lawyer, Senator and actor, we admire the man even more for seeming to remain grounded to his roots.

Faced with a media establishment that has heightened its opposition to presenting news that makes Republicans look good, Fred Thompson has that rare and invaluable quality of speaking directly to ordinary Americans, saying what needs to be said.

He has ties to Hollywood but is not of Hollywood, which adds legitimacy to his insider knowledge of our media based culture. He is giving voice to that which vexes many of us, that liberal politicians and media elitists increase the risk to this country by downplaying the tyrannical and terrorist enemy in order to win political power. Pointing this out is a talent that has long failed President Bush.

Can anybody imagine President Bush saying what Fred Thompson did a few days ago?

"I listen to the Democratic congressional leaders and I hear them talking about how many (House and Senate) seats they're going to pick up because of this war.... I listened to one of their presidential candidates talk about that this is a phony war, the war on terror. This is what passes for policy today in the Democratic Party."

Can anybody imagine President Bush telling Michael Moore so publicly that the political system he admires in Cuba is nothing but a brutal tyranny? Thompson talked about Castro's abysmal treatment of Cuban journalists, a direct shot at the hypocrisy of the "video-journalist" Moore. The fact that Moore had no memorable response says it all; Thompson scored a direct hit and everybody knew it.

Many of us who loathe Michael Moore cheered silently. Thompson has slyly asserted himself as the easy going but tough guy of the right who also happens to be media savvy, more John Wayne than Reagan. And oddly enough in American politics, it all strikes many of us as genuine.

Much more here



"Democrats" oppose secret ballot in union elections: "Senate Majority Leader Harry Reid has decided to hold a vote this Wednesday on perhaps the most unpopular element of the Democratic agenda. The Employee Free Choice Act has already passed the House, but now it faces real hurdles in the Senate because, contrary to the name, it undermines workplace democracy. Under the so-called card-check bill, a company would no longer have the right to demand a secret-ballot election to certify a union, thus stripping 140 million American workers of the right to decide in private whether to organize. Republican senators, except possibly Pennsylvania's Arlen Specter, are uniformly opposed to the idea. "We went to the secret ballot in the early 1800s in this country for a darn good reason: If somebody's looking over your shoulder, your ballot doesn't mean much," Minority Leader Mitch McConnell says, noting fears of intimidation by unions should the bill pass."

British academic ban on Israel antisemitic: "The Anti-Defamation League, a movement which fights anti-Semitism, has placed some dramatic newspaper advertisements to underline its case that the singling out of Israel by British academia--at a time of terrible misdeeds in Darfur, Zimbabwe and Iran--can only reflect prejudice. Menachem Klein, a political scientist and veteran of Israeli-Palestinian peace initiatives, says academic boycotts are not always wrong--but Israel's misdeeds had not merited such a harsh response".


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"Why should the German be interested in the liberation of the Jew, if the Jew is not interested in the liberation of the German?... We recognize in Judaism, therefore, a general anti-social element of the present time... In the final analysis, the emancipation of the Jews is the emancipation of mankind from Judaism.... Indeed, in North America, the practical domination of Judaism over the Christian world has achieved as its unambiguous and normal expression that the preaching of the Gospel itself and the Christian ministry have become articles of trade... Money is the jealous god of Israel, in face of which no other god may exist". Who said that? Hitler? No. It was Karl Marx. See also here and here.

The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialistisch) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party".


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