The full thread is an interesting read, though a painful one if you're not an economist or somewhat studied in the field (I'm definitely not).

Anyway, in response to Kaus' "Casual empiricism"...

This kind of "empiricism" also suggests that prices of said goods have dropped substantially over time, and thus one needn't be as wealthy to purchase said superfluous techno-fluffery.

I understand Kaus' point but reject his "proof-by-analogy" approach. That kind of proof is only good for first-graders and Presidents.

The full thread suggests that there's plenty of room for interpretation in any direction.

Putting the focus on income inequality never makes any sense to me. Who cares whether Bill Gates has 5 billion or 7? What I can about is how much buying power my near-minimum wage salary has. What needs to be shown in not mere inequality, but a positive correlation between equality and well-being for the poor.

John Rawls and Edward Said were reportedly very nice guys on a personal basis. Unfortunately, this is not enough if one is involved in serious intellectual work. Both of these scholars caused enormous destruction during their lifetimes. It may take decades to undo the harm they inadvertently inflicted on the human race. Rawls is greatly responsible for this ludicrous obsession to make everyone equal. His shallow thesis that there is a moral obligation to bring about an egalitarian society underpins much of the arguments in support of the welfare state. Mickey Kaus’ superb -The End of Equality- does not make this mistake. The latter gentleman rightfully understands that a Bill Gates can add to his bank account without impoverishing the rest of us. We should instead emphasize lifting everyone’s economic boat. This is what our capitalist society accomplishes on a grand scale. The challenge remains for us to treat everyone with dignity regardless of their financial status. “Arguing in this fashion that capitalism doesn't "deliver the goods" is a mug's game. It's the one thing capitalism does! The New Left knew that. The Newer, Hack Left seems to have forgotten. Have Krugman and Uchitelle been to Best Buy and seen all the average families buying big-screen TVs?” adds Kaus. I couldn’t say it any better.

I wonder if Brad DeLong is finally getting fed up with carrying water for Paul Krugman. The Princeton economist was once among our best economic analysts. I used to greatly enjoy his writings on Slate.com. Now Krugman seems nothing more than a partisan hit man who humiliates himself to curry favor with the so-called elite establishment. “Look, I may be for free trade but I’m still a card carrying liberal,” seems to his central message. I still have not had a chance to read Gregg Easterbrook’s -The Progress Paradox: How Life Gets Better While People Feel Worse.- However, I suspect that Easterbrook’s new book aptly responds to the most recent shrill complaints of the academic egalitarians.

I guess, in these comments, what it comes down to is, is purchasing power a good indicator of wealth? I say yes. But then, who would evaluate the value of said goods? Are flat screen tv's really a great leap in upward social mobility? How about tv dinners?

Unless we discount the poverty-line folk and adjust only the middle class, what their progress has been. Constant influx of immigrants is a huge factor here. I've seen this somewhere, if anyone can provide a link, appreciation would be most generous.

Once, when I was young and we didn't have the Open Housing Act, for some reason we were driving through an all-black ghetto and I commented to my Dad on how many nice cars there were. [footnote 1] He mentioned that since the relatively well-off members of the community found it difficult to buy houses outside certain neighborhoods, some of them stayed in cheaper housing and had a little money left over for cars. I don't know if that's true, but I wonder: How many families have a little money for a big TV with change left over from Junior's decision to attend JC, now that tuition at State College quadrupled in a decade and is completely out of reach?

[footnote 1] I've heard that Cadillac survived the Depression while most other luxury marques folded because they were willing to sell to African-Americans as long as they didn't enter the showrooms in white-owned stores. The other manufacturers ignored the black market completely.

May I also say that Kaus isn't actually disagreeing with Krugman. Krugman said that social mobility was on the decline. To this, Kaus replies that "the average worker is [not] getting poorer in absolute terms." It is, of course, perfectly possible that the average worker is getting richer in absolute terms and social mobility is on the decline. Indeed, it could also be true that the average poor worker is getting poorer, even though the even worker is getting richer and social mobility is on the decline. These are just different things.

“These are just different things. “

There is a myth widely held, perhaps subconsciously, that no one will ever “be left behind.” That is simply nonsensical. Every society will require people possessing differing talents. Not everybody will become a brain surgeon---and somebody has to clean out the bed pans! Absolute equality is intrinsically impossible and the very striving for such an utopian goal will most assuredly backfire resulting in enormous damage.

“...now that tuition at State College quadrupled in a decade and is completely out of reach?”

The real question is whether everyone should be attending college. This is totally unrealistic and probably explains the many fraudulent degrees being handed out. Our society has become obsessed with college degrees to the point of madness. I got a little secret to share with everyone: attending college is not mandatory for the ongoing pursuit of knowledge. Requiring this of every worker seeking a decent paying job is a sure fire recipe for avoidable disappointment.

I agree with David Thomson. People just have to get used to the idea that there will be a class of inherited wealth and privilege that determines what our politics and culture will be like, and a class that works very hard for adequate food, housing and medical care, and that's the way things are going to be. The latter class should just be grateful that they have better stuff than working classes of past generations.

I think Mickey Kaus is smoking it. He hasn't been to Best Buy either, or else he'd realize that average families aren't buying shit - they're borrowing those big-screen TV's from their friendly creditors, running up massive credit card debt. Their debt load is far outstripping their income - which any of the credit card loan sharks will be happy to assist us all with.

After all, if average income in this country is $28K, then how else could someone afford $4000 on a plasma HDTV?

“...then how else could someone afford $4000 on a plasma HDTV?”

I should shy away from speaking for Mickey Kaus. Nonetheless, I think he is referring the fact that a 25 inch big screen TV can be purchased today for $161.77 tax included. How do I know that to be the case? This is what I recently paid for a new TV at Wal-Mart. Such an item just twenty years ago would probably cost well over $1,000. The half way prudent family can indeed live very well in modern day America. Their only real achilles is medical coverage, but that is a separate issue best left for another time.

The 1950's novel _Cash McCall_ provides an overview of an era when confiscatory level taxes --up to 90% of "excess profits -- were considered normal.

Interestingly, to modern readers, the results were presented as making income mobility LESS likely. The title character, McCall, was presented as exceptional for becoming rich in an era when the ONLY way to be rich was to have inherited wealth. (McCall was a corporate raider who's profits from turning around badly run companies were taxed only as "capital gains" at some 28% instead of 90%. )

I'd be highly interested in a modern economist's view -- an economist who advocated for greater taxation and redistribution as a means of alleviating inequality -- of the impact of very high income taxes on the ability of average-wealth citizens to earn their way to the ranks of those holding extreme inherited wealth. If income taxes are not effective in balancing wealth (not income) inequalities, what sort of taxes should be imposed toward that end? Inheritance taxes? Sumptuary taxes? Capital gains taxes? Property taxes? Sales or VAT taxes?

It is also worth pointing out that to the extent that goods that are relatively inelastically supplied (e.g. houses in a "good" school district) are an important part of people's consumption the "rich getting richer" can leave you worse off even if your apparent purchasing power has increased. You can buy lots more TVs, cars and gadgets, but you can no longer afford the house in the good school district because its price has doubled, for example.

Yet, Ravi, it's also true that most of the relatively inelastically supplied goods are luxury goods. Especially things like having servants, which were very common among the upper middle class (including professors) even at the start of this century, and now are not. Education is the one real exception-- but education has increased at all levels, and at least at college financial aid makes the cost of tuition extremely progressive. (For local school districts, one of the easier ways to break the link between expensive homes and good school would be a voucher program, but those whose home values include the value of the school district will fight such heavily.)

How many families have a little money for a big TV with change left over from Junior's decision to attend JC, now that tuition at State College quadrupled in a decade and is completely out of reach?

Maybe Junior could have gone to a four-year college if he had gotten a minimum wage part-time job working 30 hours a week instead of relying on his parents to pay for his education. I've heard that many people have done the incredible thing I just described.

I wanted to write my comments here, but it got a bit out of control long. Here are the highlights:

Does immigration drive economic intergenerational mobility?

Capitalism is good, but needs controls to make sure that society looks the way we want. The rub is that no one really knows what he minimum and maximum of those controls are.

How are we going to adjust to a what are some profound economic changes?

Anyway, if you care at all about the full version of these comments just read more on my blog (BTW: I hate this kind of thing, but I thougt it better than a super-long comment)

Since when did the goal of society become getting rich (whatever the hell that means)? I am a physician. I live in a small house. I don't have a TV or cable. Everyone in my family went to college while working, all of us took on financial aid for undergraduate and graduate education. None of us are rich as far as I can tell. We are all comfortable with what we have. I suppose we could make more money and have more stuff, but what's the point of that?

Yes, the very rich may be getting richer. Good for them. Please correct me if I'm wrong, but home ownership is the highest in our nation's history, inflation is at its lowest in a generation, unemployment is somewhere around 6% (what is it in the EU)? and the same is true of interest rates, at an all time low.

For the "disenfranchised" there remains both a broad and accessible safety net. For the rest of us working stiffs, we work. What's the problem?

Our culture is obsessed with narcissistic entitlement and the rage that ensues following the perceived narcissistic injury of "what about me"? And no, we all can't be brain surgeons, pilots, bankers, or Senators. This is news?

Sorry folks, that's why they call it work. Time to get over your bad-selves and "deal".

One thing I have yet to find any consensus on is whether income mobility has increased or decreased recently. As others have pointed out, inequality and mobility are different issues; I would argue that the latter is the more important. On a related note, my relatively new group-blog has also been discussing this to an extent here, here, and here.

If anyone has any links to recent, relatively detailed studies on income mobility, would you please post them in one of those discussions? Much thanks.

The flaw in this argument is that it ignores the political power that aggegation of wealth has.

At some point, the amount of money a person has crosses the line from merely being a tool to ease the exchange of goods and services and becomes a way to exercise unaccountable power over a vast majority of the nation.

The fact that the super rich now have 10,000 times my net worth is not a problem because the super-rich can buy a bigger TV. The problem is that with that kind of money, the super-rich can exert direct and indirect political power over me and my fellow citizens.

More importantly, unlike politicians who I can theoretically hold accountable at the polling place, I have no direct redress against the super-rich if I think they are abusing their political power.

In my mind, it is no coincidence that the periods in our country with the greatest political corruption are also the same periods in our country with the widest distribution of income.

Kilroy Was Here

Speaking of improvement in the inequality field, I find it remarkably telling that Andy Laz, of all people, had to "hear about" black exclusion from markets as oppossed to witnessing it.

A "meme" that rarely expresses itself in his usual 'things are misearable' posts...

So, income inequality has been on the rise in the past few decades. A tremendous expanse of the welfare state has also occurred during that time. Connection?

This "you can't afford to buy a house in a neighborhood with good schools anymore" argument drives me batty. You mean the fact that there aren't enough good schools around or the fact that the educational system is not improving as quickly as the quality of consumer goods is a reason for a broad-based redistribution of income? Can Ravi be serious or am I misinterpreting him?

If there aren't enough good schools, then maybe we should consider educational reform. And why would the tax system make good schools more affordable? The argument is riddled with nonsequiteurs.

The broad generalization is that the relative value of goods is probably not going to be affected by whether a tax system is more or less progressive.

JT -

Since schools are primarily funded through local property taxes, schools in high-priced communities tend to get more funding than schools in other communities.

Higher funding is one factor that makes a school better.

Better schools drive up property values.

Higher property values mean more funding for schools.

Vicious circle begins.

As a result, you quickly get a disparity between schools in high-priced communities and other communities.

Interestingly enough, one article I've seen claims that school vouchers could help counter this trend.

Here's the link: http://www.theatlantic.com/issues/2002/10/rauch.htm

Kilroy Was Here

"Kilroy was here", I was just going to write my usual point about wealth=power, only to see you had already made it and quite eloquently.

Money doesn't just buy political power, it also buys a fair amount of immunity from the law and the power to humiliate and abuse poorer citizens.(employees)

This monatizing of nearly everything is getting out of hand. The more things become propertized, the more power money has, and the more powerful the rich become.

Now ideas, words and phrases have become almost fully propertized. Public spaces are becoming propertized. What's next, air?

Before long rich people will have more power then medival lords. At that point all the hard progress made over the last millenium toward a civil society will be null and void.

As far as I can see, no one has answered Matt Yglesias' comment above to the effect that Kaus has missed Krugman's point -- David Thomson's post which follows Yglesias' certainly does not. Also, surely the scientist's instinct for caution cited in Dan's later post on global warming should kick in when it comes to Kaus' "casual empiricism." How on earth can going to a Best Buy or two tell you much about "the vast majority of citizens"? I find that Kaus is strikingly bad at matching evidence and argument.

And why are cheap consumer goods the correct measure of wealth (or inflation)? How bout things like housing, education, health care, quality of life, transportation, financial security, close-knit neighborhoods, lesiure time, etc.? These are certainly the way that *rich* people measure their wealth. They are rich precisely because they get more of better quality of the above. Whenever people get more money, they almost immediately pay more to improve the following categories. This leads me to conclude that as people measure wealth, consumer goods are a very poor index of quality of life.

Kaus didn't miss Krugman's point. He was responding to one of the points -- the most questionable one -- that Krugman made in his Nation article, namely that the real income of the bottom 90% of American taxpayers has fallen since 1973. If you read the thread about the Krugman article (there was also a different, related thread about Uchitelle's article), you'll see that this statistic is simply false on its own terms.

Although Krugman's piece is in part about mobility, it's also, quite clearly, about inequality and about the idea that things have been getting steadily worse for American workers since the 1970s (in order to make this argument Krugman ignores the undeniable fact that the real wages of American workers have been rising steadily since the mid-1990s). So although Matt is right that mobility and improvement in average incomes are not necessarily connected, Krugman does make the claim that Kaus was responding to.

"Capitalism is good, but needs controls to make sure that society looks the way we want. "

By which I guess you mean that you want controls to make sure that society looks the way you want. What the rest of us want is apparently not important.

"It is also worth pointing out that to the extent that goods that are relatively inelastically supplied (e.g. houses in a "good" school district) are an important part of people's consumption the "rich getting richer" can leave you worse off even if your apparent purchasing power has increased. You can buy lots more TVs, cars and gadgets, but you can no longer afford the house in the good school district because its price has doubled, for example."

It is interesting that the things that get bid up in price (i.e., education, housing, and medical care), rather than being produced in greater quantities to meet demand, are either provided by the government or heavily controlled by the government, and the things that are produced in greater and greater abundance at lower and lower prices are those things that are produced privately and lightly controlled.

This suggests a rather simply way to get education, housing, and medical care produced in greater abundance at lower prices, rather than having them be in short supply and pitting class against class in a mad scramble to acquire them.

"The fact that the super rich now have 10,000 times my net worth is not a problem because the super-rich can buy a bigger TV. The problem is that with that kind of money, the super-rich can exert direct and indirect political power over me and my fellow citizens. "

No, they can't. All they can do is try to convince voters of every class to vote for candidate that enact their favored policies. Since many (but not all!) of their favored policies actually benefit all classes, this is a relatively easy sell in many instances.

"More importantly, unlike politicians who I can theoretically hold accountable at the polling place, I have no direct redress against the super-rich if I think they are abusing their political power."

Sure you do. Ignore them and vote against their favored candidates. What do you want to do as "redress against the super-rich" for "abusing their political power"? Take away their money and throw them in jail for trying to sell political messages you don't like? That's almost the very definition of un-American.

No, they can't. All they can do is try to convince voters of every class to vote for candidate that enact their favored policies. Since many (but not all!) of their favored policies actually benefit all classes, this is a relatively easy sell in many instances.

Hmm. Seems a fairly naive version of how the American democracy works today. Obviously the wealthy are able to influence policy by bypassing the electorate and going straight to the legislatures. Otherwise, what would lobbying be good for?

Furthermore, the superrich are able to control the debate by investing more money in getting their message out and suppressing the message of views they disagree with. (See Rupert Murdoch or Lord Black or William Randolph Hearst etc.)

As for abusing their power, one only has to take a look at WorldCom or Enron to see the superrich abusing their positions to steal from shareholders.

Then, it seems, these same people are able to use their political influence and resources to buy legal expertise to minimize, if not outright avoid, any consequences.

As for redress, why not listen to Warren Buffett or William Gates, Sr? Let's have an estate tax and a more progressive tax system.

As for the whole jailing the rich thing for speaking out on a political vein, that's obviously a straw man and something I never even hinted at.

I was more talking about stricter rules on influence in Congress. Better visibility in campaign contributions. A more aggressive attack on white collar crime. And a tax system that did more to reward labor rather than leisure.

Kilroy Was Here

People just have to get used to the idea that there will be a class of inherited wealth and privilege that determines what our politics and culture will be like, and a class that works very hard for adequate food, housing and medical care, and that's the way things are going to be.

Aristocracy: the return of the repressed.

To the extent that barriers to social mobility are becoming higher, there is most likely one primary culprit:

The increasing emphasis on college, particularly on advanced degrees and on "elite" schools.

These things make it much more difficult for people of very modest circumstances to reach the higher professional and executive levels.

The sad/funny part is that the professors and educational administrators who profit most from this situation are precisely those who consider themselves to be champions of egalitarianism.