Tag Archives: inequality

Occupying the State of the Union

The conventional wisdom about Occupy Wall Street is that it failed. It made a splash and generated headlines, but ultimately it elected no candidates, passed no laws, and didn’t even leave behind a memorable lost-cause proposal like the Equal Rights Amendment. So it was all a big waste of the activists’ effort and our attention.

By contrast, the Tea Party did elect candidates and has influenced all kinds of laws, especially at the state level. Without the Tea Party, the government wouldn’t have shut down last October. You may not consider that much of an accomplishment, but it is proof of continuing influence. The Tea Party may eventually even displace the Republican establishment and take over half of the two-party system.

What has Occupy done to rival that?

But all along, Occupy visionaries like David Graeber were defining success differently:

For the last quarter millennium or so, revolutions have consisted above all of planetwide transformations of political common sense. … What they really do is transform basic assumptions about what politics is ultimately about. In the wake of a revolution, ideas that had been considered veritably lunatic fringe quickly become the accepted currency of debate.

The French Revolution, for example, failed to hold power, “but afterward, institutions inspired by the French Revolution … were put in place pretty much everywhere.” Suddenly, it was obvious that monarchy was obsolete. Not only did people around the globe believe that, they believed that they had always believed it.

Now consider President Obama’s 2014 State of the Union and the responses from Cathy McMorris Rodgers (for the Republican Party), Mike Lee (for the Tea Party), and Rand Paul (who seems to be a party unto himself). Maybe it’s not surprising that President Obama would talk about inequality and how difficult it is to stay in the middle class:

Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have  barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead.

But here’s the interesting thing: The responders accepted that framing of the problem, they just tried to shift the blame.*

Bear in mind how conservatives used to respond whenever liberals tried to make inequality an issue: Wealth has nothing to do with poverty. Wealth is conjured out of the aether by creative capitalists, not usurped from the common inheritance or distilled from the blood and sweat of the laboring masses. So talk about poverty if you must, but don’t talk about wealth and poverty in the same paragraph, because they’re totally separate phenomena. This was still the conservative conventional wisdom two weeks ago, when David Brooks argued (in his own italics):

to frame the issue as income inequality is to lump together different issues that are not especially related.

More than just conservative dogma, some version of that argument has been the conventional wisdom of Very Serious People for decades. It has been fine for liberal politicians to talk about the plight of the poor or the struggles of the middle class, but if they combined that downward-looking and sideways-looking compassion with an upward-looking head-shake at the explosion of wealth among the few, mainstream pundits would start lobbing phrases like “class warfare” and “redistribution of wealth” — warning shots that come just before “Why don’t you go back to the Soviet Union, comrade?”.

But post-Occupy, everybody knows about the 99% and the 1%. And it’s no longer anti-American to point out that the 1% (and mostly the .01%) have owned all the productivity growth of recent decades.

Mike Lee’s Tea Party response doesn’t deny any of this, but instead tries to pin it on government and President Obama:

This inequality crisis presents itself in three principal forms: immobility among the poor, who are being trapped in poverty by big-government programs; insecurity in the middle class, where families are struggling just to get by and can’t seem to get ahead; and cronyist privilege at the top, where political and economic insiders twist the immense power of the federal government to profit at the expense of everyone else.** … [W]here does this new inequality come from? From government – every time it takes rights and opportunities away from the American people and gives them instead to politicians, bureaucrats, and special interests.

Rodgers points to the same problems, but calls them by a different names and promises that vague, unnamed Republican “plans” will solve them.

our mission – not only as Republicans, but as Americans, is to once again to ensure that we are not bound by where we come from, but empowered by what we can become. That is the gap Republicans are working to close. It’s the gap we all face: between where you are and where you want to be. The President talks a lot about income inequality. But the real gap we face today is one of opportunity inequality… And with this Administration’s policies, that gap has become far too wide. We see this gap growing every single day.

And this is where the spin becomes obvious, because the metaphor changes: The gap “between where you are and where you want to be” would seem to be in front of you, between you and the people whose examples inspire you to be more successful. Republicans are going to help you bridge that gap, so that you can be rich too.

But as Rodgers gets down to cases, it’s clear she’s talking about a chasm opening up behind middle-class voters, threatening to suck them into poverty as it has already claimed so many of their friends and family:

We see it in our neighbors who are struggling to find job, a husband who’s now working just part-time, a child who drops out of college because she can’t afford tuition, or parents who are outliving their life’s savings. Last month, more Americans stopped looking for a job than found one. Too many people are falling further and further behind because, right now, the President’s policies are making people’s lives harder. Republicans have plans to close the gap.

Even Rand Paul has to recognize the hollowing out of the middle class, though (unlike the others) he sticks to the old-time religion that the rich will save us, if only we let them keep getting richer. (It never worked before, but it will if we give it one more shot.)

Parents worry about their children growing up in a country where good jobs are few and far between. More than ever before, Americans wonder how they’ll afford to send their kids to college, and what will happen if they lose their job. … Prosperity comes when more money is left in the private marketplace. … Economic growth will come when we lower taxes for everyone, especially people who own businesses and create jobs.

Another piece of conservative dogma has been to blame the poor for failing; their laziness, crime, drug addiction, and general irresponsibility is dragging down the rest of us. And if people are falling out of the middle class — losing their jobs, getting their homes foreclosed, failing to send their kids to college — well, that’s their own damn fault. We aren’t failing them; they’re failing us.

Recall the opening shot of the Tea Party’s rebellion, Rick Santelli’s famous rant a few weeks after Obama took office. Backed by a cheering mob of traders on the Chicago Mercantile Exchange, Santelli challenged the new president:

How about this, president and administration: Why don’t you put up a web site to have people vote on the internet to see if we really want to subsidize the losers’ mortgages? Or would we like to at least buy cars and buy houses in foreclosure and give them to people that might have a chance to actually prosper down the road, and reward people that could carry the water instead of drink the water? … [Gesturing to include all the traders***] This is America! How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills? Raise their hands! [boos from the crowd]

Tuesday night no one was blaming the “losers” for falling out of the middle class, or fantasizing about picking the bones of their foreclosures. Instead, everyone sympathized with growing middle-class anxiety: how hard it is to find good jobs, how hard it is to pay for college, how insecure you feel even if you currently have a good job. Everyone acknowledged that Americans are losing faith in the old nostrums: work hard, study hard, say no to drugs, get married, buy a house, pay your bills … it just doesn’t seem like enough any more. You might do all that and still lose out, even as billionaires get ever richer.

Everyone but Rand Paul is acknowledging that some kind of gap needs to be bridged, that some people have more of this vaguely defined “opportunity” that you wish you had. Mike Lee is even denouncing “privilege at the top”, though he blames this privilege on government favors rather than the normal workings of capitalism.

It’s important to realize what we’re seeing: an early stage in the “transformation of political common sense”. People who believed and may still believe that OWS was horribly misguided and failed completely — those same people see the world differently now. The problem isn’t that a few “losers” are dragging the rest of us down. The problem is that there’s a 99% and a 1%. We’re arguing about what caused that and how to fix it, but we all see the problem now.

Thank you, Occupy.


* Ultimately they’ll lose that argument, because the facts are clearly against them. Look at the graphs: This problem didn’t start with Obama. It started in the Carter-Reagan years. If your explanation doesn’t account for that, you’re just spinning.

I explain it by Carter and the Democrats in Congress turning to the right: de-regulation, lower capital gains taxes, free trade deals, and turning a blind eye to union-busting. That all started slowly under Carter and then really took off during the Reagan administration. The long version of this story is in Thomas Edsall’s The New Politics of Inequality from 1985, but William Anderson of the conservative Mises Institute noted the same thing in 2000:

Republicans like to point to the failures of the Carter Administration and then claim that Ronald Reagan brought us into the present era. Alas, while I prefer Reagan to Carter, I cannot say that the above statement is true. Granted, much occurred during the Reagan Administration that was good, but if truth be known, many of the important initiatives that enabled those boundaries to expand came from Carter’s presidency.

I agree completely, if you reverse the value judgments and define “the present era” as the Second Gilded Age.


** Perversely, the purest examples of cronyism are due to a trend conservatives champion: privatizing public services like prisons or public schools.


*** I love the assumption that the well-compensated wheeler-dealers on the CME represent “America” and the people who “carry the water”. I think it’s arguable that American productivity would go up if the Earth swallowed the Chicago Mercantile Exchange whole. The people who really “carry the water” are the ones who grow stuff and build stuff and deliver services. The water-carrier is the single mother who cuts your hair (and who may need Food Stamps to feed her son), not the venture capitalist who conjured up millions by franchising Supercuts.

What to Make of Pope Francis?

Is Pope Francis’ denunciation of “unfettered capitalism” new? or long-standing Catholic doctrine most Americans have ignored and forgotten? Either way, does it matter?


The Catholic Church has always been torn: Is it the church of Jesus, who told a rich man, “Go, sell all that you own and give to the poor”? Or is it the church of the Emperor Constantine, who put the Rome in Roman Catholicism? Is it the church of Saint Francis or of the Borgia popes? Of liberation theology or of Franco’s fascist collaborators?

The church in recent American politics. In recent years the public face of the American church has been turned primarily towards sexual issues: abortion, contraception, and homosexuality. And so the bishops have become allies of the Republican Party; the American politician most publicly identified as Catholic has been Rick Santorum. American cardinals have denied communion to pro-choice Catholic politicians like John Kerry and Kathleen Sebelius, but when a Catholic conservative like Paul Ryan proposes slashing programs that help the poor, a letter of protest is deemed sufficient. (Cardinal Dolan, then president of the U.S. Council of Catholic Bishops, subsequently described Ryan as “a great public servant”.)

On ObamaCare, the American bishops have manufactured great outrage against the fairly minor point* of the contraception mandate, while saying relatively little about Medicaid expansion, which will provide health insurance to millions of the working poor.

Liberal Catholic tradition. Unknown to much of the American public, though, the Catholic Church has a long history of liberal economic positions, going back at least to the 1891 encyclical Rerum Novarum by Pope Leo XIII.

I encountered this tradition myself in 2005 after the death of Pope John Paul II, when I went back and read his 1981 encyclical Laborem Exercens. In that encyclical, the Pope re-examined the relationship between capital and labor, and rejected a point of view he called economism (that workers are just another factor of production, like tools or raw materials, rather than divinely created beings with souls), which he saw underlying both capitalism and communism. He also assigned a secondary and functional role to the institution of private property: If a system of private property leads to a better society, fine, but it’s not an end in itself.

So (unlike Rush Limbaugh) I was not shocked this week when I read headlines like Pope Francis attacks ‘tyranny’ of unfettered capitalism, ‘idolatory of money’. Is this actually something new, I wondered, or does it just look new from within the sex-obsessed bubble constructed by the American bishops and their Republican allies?

Symbols and gestures. Pope Francis made a strong first impression on the world when he rejected many of the regal trappings of the papacy and chose the name Francis, which harkens back to the voluntary poverty and simplicity of Saint Francis of Assisi.

He then made a series of conciliatory statements. About gays:

When I meet a gay person, I have to distinguish between their being gay and being part of a lobby. If they accept the Lord and have goodwill, who am I to judge them? They shouldn’t be marginalized. The tendency [to homosexuality] is not the problem … they’re our brothers.

And atheists:

We must meet one another doing good. ‘But I don’t believe, Father, I am an atheist!’ But do good: we will meet one another there.

Where Pope Benedict had enraged Muslims, Francis reached out them, sending a personal message to a leading imam in Cairo, calling for “understanding among Christians and Muslims in the world, to build peace and justice.”

And running through all of his statements was an awareness of the poor, those who have been cut off from the abundant produce of the planet God created to sustain all people.

So far, so good. But would he actually change anything?

Evangelii Gaudium. A week ago yesterday, the Vatican published an “apostolic exhortation” from Pope Francis. Apostolic exhortations are what the name implies: They’re meant to nudge people into action, not announce new doctrine.

Evangelii Gaudium (“the joy of the gospel”) is no different. Its purpose is to “encourage and guide the whole Church in a new phase of evangelization, one marked by enthusiasm and vitality”. Most of the text has nothing to do with politics or economics; it ranges through subjects as diverse as how the faithful should motivate themselves and advice to priests on preparing good homilies.

[In a couple of subjects — abortion and women priests — he announces that there will be no new doctrine, though he does make this interesting and enigmatic statement:

The reservation of the priesthood to males … is not a question open to discussion, but it can prove especially divisive if sacramental power is too closely identified with power in general.

Time will tell whether that is a fig leaf for continued patriarchy or an indication that women could come to have more power in the Church, even if they aren’t serving mass.]

But a document encouraging Catholics to make their faith felt in the world has to say something about what, specifically, the world should be made to feel. And here he did not focus on sexual issues, but on economic ones.

Each individual Christian and every community is called to be an instrument of God for the liberation and promotion of the poor, and for enabling them to be fully a part of society.

Each individual and every community. Not “the poor — that’s somebody else’s gig — I’m fighting against same-sex marriage”.

Catholic economics. Consistently through the years, Catholic economics has revolved around two ideas:

  • God created the world for everybody. Pope Francis is not staking out any new territory when he writes: “we must never forget that the planet belongs to all mankind and is meant for all mankind; the mere fact that some people are born in places with fewer resources or less development does not justify the fact that they are living with less dignity.”
  • God did not institute any particular economic system. Economic systems are human constructions, so they are not proper objects of veneration. God is not a capitalist, a communist, or anything else. So economic arrangements have to be justified in practical terms, by their results.

So even something as basic as private property or the freedom to buy and sell has only a functional justification. Protecting property or upholding economic freedom has no value in itself. Rather

The private ownership of goods is justified by the need to protect and increase them, so that they can better serve the common good. … Sadly, even human rights can be used as a justification for an inordinate defense of individual rights or the rights of the richer peoples.

This position puts the Church fundamentally at odds with Rand-style (or Ryan-style) libertarianism, in which property rights and economic freedom are moral values, not just useful tricks for increasing production. In Randism, the produce of the world rightfully belongs to the people who own the world; if those who own nothing are to survive, they must appeal to the charity of the owners. The owners are the Makers, the poor are the Takers.

Francis observes this position with horror:

We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

He calls on Catholics not just to give alms, but

to eliminate the structural causes of poverty and to promote the integral development of the poor … We are not simply talking about ensuring nourishment or a “dignified sustenance” for all people, but also their “general temporal welfare and prosperity”. This means education, access to health care, and above all employment, for it is through free, creative, participatory and mutually supportive labour that human beings express and enhance the dignity of their lives. A just wage enables them to have adequate access to all the other goods which are destined for our common use. [quotes from Pope John XXIII]

This can’t happen without political action that leads to structural change. The market won’t do it.

We can no longer trust in the unseen forces and the invisible hand of the market. Growth in justice requires more than economic growth, while presupposing such growth: it requires decisions, programmes, mechanisms and processes specifically geared to a better distribution of income, the creation of sources of employment and an integral promotion of the poor which goes beyond a simple welfare mentality.

A mind that worships the Market can only see God as dangerous.

[E]thics leads to a God who calls for a committed response which is outside of the categories of the marketplace. When these latter are absolutized, God can only be seen as uncontrollable, unmanageable, even dangerous, since he calls human beings to their full realization and to freedom from all forms of enslavement.

And a society that writes off the poor can never know peace or be safe from revolution.

Peace in society cannot be understood as pacification or the mere absence of violence resulting from the domination of one part of society over others. … When a society – whether local, national or global – is willing to leave a part of itself on the fringes, no political programmes or resources spent on law enforcement or surveillance systems can indefinitely guarantee tranquility. This is not the case simply because inequality provokes a violent reaction from those excluded from the system, but because the socioeconomic system is unjust at its root. Just as goodness tends to spread, the toleration of evil, which is injustice, tends to expand its baneful influence and quietly to undermine any political and social system, no matter how solid it may appear.

Is this new? No, this is Catholic economics as it has stood for more than a century, with roots going back even further. What’s new is a pope who seems willing to make this the center of his papacy. He has not changed any doctrine — at least not yet — but he has announced a new emphasis away from sex and towards economic justice. As he said in an interview shortly after taking office:

We cannot insist only on issues related to abortion, gay marriage and the use of contraceptive methods. This is not possible. I have not spoken much about these things, and I was reprimanded for that. But when we speak about these issues, we have to talk about them in a context. … The dogmatic and moral teachings of the church are not all equivalent. The church’s pastoral ministry cannot be obsessed with the transmission of a disjointed multitude of doctrines to be imposed insistently.

But the Pope’s re-prioritization of doctrine is going to be a problem for a lot of American bishops. As Jesuit Priest Thomas Reese wrote:

the bishops as a conference have been embarrassingly silent on economic justice during the worst economic crisis since the Great Depression. … Many bishops fear that speaking loudly about economic issues would help Democrats and undermine their alliance with the Republican Party on issues like gay marriage, abortion, and religious liberty. Some even think that the conference’s earlier letters, “Economic Justice for All” and “The Challenge of Peace,” were mistakes because they hurt their friends.

Conservative Catholic response. I recommend reading a thoughtful article by the conservative Catholic NYT columnist Ross Douthat. Douthat observes that the shoe is now on the other foot: For years liberal Catholics have had a yes-but relationship with the Vatican, remaining faithful by their own lights while refusing to get in line with official pronouncements on sexual issues. Now it’s conservatives who want to pick and choose which doctrines they support:

for Catholics who pride themselves on fidelity to Rome, the burden is on them — on us — to explain why a worldview that inspires left-leaning papal rhetoric also allows for right-of-center conclusions.

He attempts to do so, resting his case primarily on the practical effects of capitalism’s increased production, but then concludes:

This Catholic case for limited government, however, is not a case for the Ayn Randian temptation inherent to a capitalism-friendly politics. There is no Catholic warrant for valorizing entrepreneurs at the expense of ordinary workers, or for dismissing all regulation as unnecessary and all redistribution as immoral.

Let me state that conclusion more boldly: If capitalism is going to be justified by its practical ability to create prosperity even for the underclass, then that’s how it must be judged. You can’t talk about the wonders of increasing GDP in the abstract and then ignore the suffering of real people, or worse, blame them for their own suffering and label them as “takers” for wanting to share in the productivity of the planet God made for everyone.

Are you listening, Paul Ryan?


* They’ve been so successful at voicing their manufactured outrage that I need to explain this: Catholic institutions are not required to buy contraceptives for their employees or promote their use. The institutions in question are just required to provide health insurance (or pay a fine). Employees can use their health insurance for contraception if they decide to, just as they can use their wages to buy all sorts of things the Catholic Church disapproves of. The moral onus of choosing contraception (or not) falls on the employee, as it should.

As I have said at length elsewhere, construing this situation as some kind of moral issue for the employer is just passive aggression. They are hyper-extending the sensitivity of their consciences in order to control other people.

What do we know about Romney’s tax and budget plans?

The first Obama/Romney debate on Wednesday had a playground quality to it: One contestant would say “You did X”, the other would say “No I didn’t”, and then either Obama would let it drop or Romney would repeat “Yes you did!”. Jim Lehrer refused to play teacher, so it was left to fact-checkers and other pundits to determine the truth afterwards.

On no subject was the truth less obvious than on Romney’s budget plans. President Obama laid it out like this:

Governor Romney’s central economic plan calls for a $5 trillion tax cut — on top of the extension of the Bush tax cuts — that’s another trillion dollars — and $2 trillion in additional military spending that the military hasn’t asked for. That’s $8 trillion. How we pay for that, reduce the deficit, and make the investments that we need to make, without dumping those costs onto middle-class Americans, I think is one of the central questions of this campaign.

And Governor Romney flatly denied it:

I don’t have a $5 trillion tax cut. I don’t have a tax cut of a scale that you’re talking about. My view is that we ought to provide tax relief to people in the middle class. But I’m not going to reduce the share of taxes paid by high-income people.

Fact-checkers tried to apply their usual categories — true, false, misleading — but often they just added to the confusion. CNN, for example, said Obama’s charge was false, but graded Romney’s denial as “incomplete”, whatever that means.

Here’s what’s going on: The press is afraid of bias accusations, so it hides behind rules of objectivity that have gotten increasingly technical. Campaigns have gotten good at manipulating those rules, so the objective press has a hard time announcing simple judgments. Judgments, then, are left to the partisan voices, who just increase the noise.

The Weekly Sift makes a lesser claim: I’m not objective, I just try to be honest and give you enough links to check my accuracy. So let’s see if some common sense can cut through the confusion.

The $5 trillion tax cut. Mitt Romney has proposed a tax plan, sort of. On his web site, the full plan to “create 12 million new jobs” has four “economic pillars”, one of which is:

Reform The Nation’s Tax Code To Increase Growth And Job Creation.

o Reduce individual marginal income tax rates across-the-board by 20 percent, while keeping current low tax rates on dividends and capital gains. Reduce the corporate income tax rate – the highest in the world – to 25 percent.
o Broaden the tax base to ensure that tax reform is revenue-neutral.

The idea is that people pay a lower tax rate, but that more income gets taxed (“broaden the tax base”), so the government winds up with the same amount of money (“revenue neutral”).

There’s no reason that can’t work in theory, but notice that the marginal-tax-rate cut (the attractive part of the plan) is specified at 20%, while “broaden the tax base” (the unattractive part) is left vague. Elsewhere, Romney promises to eliminate the alternate minimum tax (which falls almost entirely on the wealthy) and the federal estate tax (which only applies to multi-million-dollar estates).

So if you evaluate Romney’s plan by what he has specified — the tax cuts — it’s a $5 trillion tax cut over the next ten years. Now, that’s not entirely fair, because whatever plan he eventually proposes to Congress would also specify the base-broadening part. The rate-cut is part of a “revenue neutral” tax plan in the same way that Cocoa Puffs are “part of this complete breakfast”.

So Romney is technically correct in saying “I don’t have a $5 trillion tax cut.” But let me flesh that out by putting true words in Romney’s mouth: “I don’t have a plan to cut government revenue by $5 trillion. I have a revenue-neutral plan, but the only part of it I’m willing to spell out before the election cuts federal revenue by $5 trillion.”

So he still needs to specify what currently untaxed income will be taxed in order to raise the $5 trillion that his plan needs to fulfill his revenue-neutral pledge.

Growth or funny money? If you read the details on the web site, a big chunk of that previously untaxed income is money that just wouldn’t exist otherwise. Romney’s plan estimates that the economy will grow at a 2.5% rate with the current tax system, but that under his plan (including his similarly vague plan to de-regulate business and other plans he considers growth-inducing) the economy will grow at a 4% rate.

When you compound that over ten years, the difference is huge. Current GDP is around $15 trillion per year. Ten years of 2.5% growth get you to $19 trillion, but ten years of 4% growth get you to $22 trillion, which is almost 16% bigger. So in the tenth year, the 20% rate cut is almost balanced by the growth alone. The extra income you need to broaden the tax base is almost entirely manna that fell from Heaven.

The question is whether you believe any of that. The idea that tax cuts create growth is dogma among conservatives, but recent history doesn’t bear them out. We were promised the cornucopia of growth when Bush cut taxes in 2001 and 2003, but it didn’t arrive. Even with a bubble-based illusion of growth, median household income declined. Atlantic’s Ronald Brownstein reports:

When Bill Clinton left office after 2000, the median income — the income line around which half of households come in above, and half fall below — stood at $52,500 (measured in inflation-adjusted 2008 dollars). When Bush left office after 2008, the median income had fallen to $50,303. That’s a decline of 4.2 per cent. That leaves Bush with the dubious distinction of becoming the only president in recent history to preside over an income decline through two presidential terms, notes Lawrence Mishel, president of the left-leaning Economic Policy Institute.

In the debate, Romney refused any historical comparison. (“My plan is not like anything that’s been tried before.”) But his web site justifies the growth assumptions by looking at the recovery from the 1981-82 recession during the Reagan administration. The problem is that this recession (like the one before it) looks nothing like the 1981-82 recession. The Reagan recession was brought on by the high interest rates (over 20%!) that the Fed imposed to kill off the inflation plague of the 1970s. As the Fed cut rates back to more normal levels, the economy could resume a normal growth pattern, plus make up for lost time.

The last two recessions were set off by popping bubbles: the dot-com bubble of the late 90s and the housing bubble of the Bush years. Recoveries from bubbles are slower, because the previous level was illusory. Let me repeat that: The Obama Recovery is slower than Reagan’s because the level we are trying to recover to was a mirage.

Even if we grant Romney’s 4% growth assumption, the difference in the first year would be small, while the tax-cut hit would be as large as ever. Would the Tea Party types in Congress really accept a budget where the deficit continued to climb for several years while we waited for growth to catch up?

I personally have no confidence in Romney’s growth assumptions. If he’s really going to broaden the tax base, he’s going to have to extend taxes to real income, not imaginary income from the growth fairy.

Deductions. The one real base-broadening idea Romney has floated is to cap deductions. In the debate he said:

But in order for us not to lose revenue, have the government run out of money, I also lower deductions and credits and exemptions, so that we keep taking in the same money when you also account for growth.

One trial balloon suggested that deductions be capped at $17,000, though in the debate Romney refused to be pinned down to any specific number:

what are the various ways we could bring down deductions, for instance? One way, for instance, would be to have a single number. Make up a number, $25,000, $50,000. Anybody can have deductions up to that amount. And then that number disappears for high-income people.

That approach has a problem: If you don’t accept Romney’s growth assumption, eliminating all deductions for upper-income people doesn’t replace the $5 trillion in revenue. So he’s forced to break his pledge not to raise taxes on middle-income people — not all middle-income people, but quite a few. When you add up mortgage interest, state and local taxes, medical expenses, and so on, it’s not hard for a household of slightly-above-average income to hit a $17,000 cap, and even easier to hit some much-lower cap that would really raise $5 trillion.

I know because I did my parents’ taxes last year. In 2011, my parents were in “the 47%” of people who paid no federal income tax. My mother died that year, and both parents spent time in nursing homes, so their medical expenses wiped out their $50,000 of income. Under the Romney plan, with a $17K deduction cap, they’d have owed thousands.

So Al Sharpton is right: “This election isn’t about Obama, it’s about your momma.”

Tax fairness. Romney’s pledge not to favor the rich in his tax plan is very carefully worded: “I’m not going to reduce the share of taxes paid by high-income people.”

This echoes a common conservative framing of taxes. Over the last 30 years, the share of the national income that has gone to the very rich has skyrocketed. Under Romney’s policies, it would presumably continue to skyrocket, because of de-regulation, non-enforcement of antitrust laws, and so on. But all he pledges is to keep their share of taxes the same.

Think about it this way: Imagine a two-person economy that makes $10, with $6 going to the richer guy and $4 to the poorer guy. Imagine their government collects $2 in taxes; let’s say $1.50 from the richer guy and 50 cents from the poorer guy, so that their after-tax incomes are $5.50 and $4.50.

Now imagine that inequality increases, so that the rich guy makes $8 and the poor guy $2. But suppose the government keeps their taxes the same: The rich guy still pays $1.50 and the poor guy 50 cents, so that their after-tax incomes are $6.50 and $1.50.

That system would fulfill Romney’s tax-fairness pledge: the rich guy still pays 75% of the taxes.  But it isn’t fair at all. The rich guy’s tax rate goes down from 25% to 18.75%. The poor guy’s goes up from 12.5% to 25%.

In short: When the rich make more of the money, their share of the taxes should increase, not stay the same.

Spending cuts. The situation on the spending side of Romney’s plan is similar: He has spelled out his spending increasesdefense, mostly. And he has pledged not to cut Medicare of Social Security benefits for anyone currently over 55. In other words, even if he serves eight years, he will never submit a budget that shows a spending cut in either of those two giant entitlements.

But he also pledges to get federal spending down to 20% of GDP by 2016, which (even with his optimistic 4% growth assumption) means $500 billion of annual cuts. The only sizable cut he identifies on his web site is $95 billion by repealing ObamaCare. But repealing ObamaCare also repeals the cost savings and tax increases it contains, and so increases the deficit rather than decreasing it. And “I want to take that $716 billion you’ve cut and put it back into Medicare.” not use it to decrease the deficit. And he was open to retaining the improved drug benefits ObamaCare adds to Medicare.

So the ObamaCare cut is illusion. It won’t cut the deficit.

Romney’s other specified cuts are Amtrak; the national endowments for art, humanities, and public broadcasting (bye-bye, Big Bird); the Legal Services Corporation; family planning; and foreign aid. By Romney’s own account, the total savings (other than ObamaCare) is only $2.6 billion of the $500 billion he says he needs.

So he has specified about half a percent of the cuts his budget needs under his optimistic assumptions. And the biggest parts of the budget — defense, Social Security, Medicare — are off limits. The non-ObamaCare cuts he has specified are insufficient even to cover the increase he wants in defense spending.

That’s why Obama accused him of “gutting our investments in schools and education”, and how Romney was able to deny it: “I reject the idea that I don’t believe in great teachers or more teachers. … I’m not going to cut education funding. I don’t have any plan to cut education funding and — and grants that go to people going to college.”

“I don’t have any plan to cut …” is a universal dodge for Romney. Because he doesn’t have any plan to cut spending, Romney can deny any specific thing you imagine must be cut to plug the huge hole in his budget. The Ryan budget is a little more specific about cuts, but Romney disclaims that as well. His campaign says “as president he will be putting together his own plan.” And Romney has emphasized that he, not Ryan, is “the guy running for president.”

In short, what Romney has given us is a lot of specifics that cut taxes and raise spending, coupled with vague promises to make it all come out right somehow. So electing Romney is sort of like hiring a trainer who promises you can eat more and lose weight. He has pictures of the lavish meals his plan will let you eat, and a graph of how your weight will go down.

How does it work? “Exercise” he says. What exercise? When? How much? “We can work all that out later.”

Monopoly’s Role in Inequality

For several years I’ve been dipping into the subject of rising inequality, usually in book reviews like this one of Hacker and Pierson’s Winner-Take-All Politics. But all along a mystery has been nagging at me, and I think I’m finally getting to the bottom of it.

Inequality. The basic story is simple: Inequality in the United States has risen dramatically since the mid-70s. And the effect gets more extreme the farther out you go. It isn’t just that the top 10% is pulling away from the bottom 90%. The top .01% is pulling away from the top .1% even faster. The multi-billionaires are pulling away from the mere billionaires. (If you want graphs and numbers, look here.)

Obviously you can’t account for all that with education or competition from China. Maybe those factors explain why unskilled workers are having such a tough time, but they say little about the millionaire/billionaire divergence. Ditto for tax rates. Sure, the rich pay a much lower tax rate than they used to, but the explosive growth in their net worth is much bigger than tax rates can account for, and the mega-rich don’t get a significantly better tax deal than the ordinary rich. (Plus, tax cuts start with Reagan in 1982, not the mid-70s.)

Clearly something has happened to the structure of the market, but I couldn’t figure out exactly what.

Monopoly. Barry Lynn’s book Cornered: The New Monopoly Capitalism and the Economics of Destruction looks like the puzzle piece I was missing. Lynn claims our economy is now full of monopolies and near-monopolies — businesses big enough to dictate terms to their customers and/or suppliers.

In the mid-20th-century industrial economy, you got mega-rich by imitating Henry Ford: You figured out how to make things people wanted for a price they wanted to pay. Now you get mega-rich by building choke-points between producers and consumers.

WalMart exemplifies the current paradigm. WalMart makes nothing, but it is big enough to dictate how its suppliers will make things and what prices they can charge. In many of its rural markets, WalMart also dictates what people can buy. If your product isn’t on WalMart’s shelves, it’s not for sale. (WalMart also drives consolidation elsewhere in the economy, which produces big fees for Wall Street. For example, Procter & Gamble bought Gillette largely to improve its negotiating position with WalMart. In slightly different ways, Amazon and Google are trying to duplicate the WalMart model in the online economy. If your book isn’t on Amazon, it’s not for sale.)

Many near-monopolies are less visible than WalMart or Amazon. Lynn begins his book with the story of a pet-food recall, which suddenly made it obvious that many “competing” brands of pet food were actually all packed in the same factory. And Ford lobbied for the government bailout of “competitors” GM and Chrysler because it feared their common suppliers would go bankrupt. Many markets, Lynn says, are hydras: The countless brands on the shelves are just heads that spring from a common body.

The ends against the middle. Reading Lynn, I’m getting a clearer vision of how markets work. The purest form of market is what you can see at any big farmer’s market: Lots of consumers dealing directly with lots of producers. It’s rare that anybody gets really rich from these interactions, but many small producers have a chance to make a living and become independent.

Obviously the global economy has to be more complicated than that. But markets are created by rules, and the rules can be structured to favor either the ends (producers and consumers) or the middle. Producers and consumers benefit from transparent markets, where the rules force middlemen to treat everyone more-or-less the same.

But markets can also be structured to give middlemen as much freedom as possible. The most profitable way to use that freedom is to create choke-points where a toll can be extracted or one producer can be played off against another. In an opaque market, the way to get rich is not to produce things, but to build middleman power that allows you to dictate terms up and down the supply chain. (I don’t have space to go into it here, but keeping the internet transparent is what net neutrality is about, and why Comcast doesn’t like it.)

In a nutshell, what has happened since the mid-70s is that deregulation of old markets and under-regulation of new markets has made our economy more opaque. The people in the best position to take advantage of this are the very rich. Meanwhile, workers and small businessmen — the middle-class people who actually make stuff and deliver services — lose out. In the short term consumers may win or lose, depending on whether the middlemen’s advantage is in raising or lowering prices. But in the long run consumers lose options, power, and quality.

The most interesting thing politically is how the rhetoric of freedom works. Freedom for the middleman leads to domination of producers and consumers. “Freedom” seldom works out to mean more options for everybody.

One worked-out example. If you’ve watched much cable or satellite TV lately, you probably saw Viacom’s ads against DirectTV, like this one.

If you’re a DirectTV subscriber, Comedy Central (and other Viacom channels) went dark for nine days before the two corporations resolved their dispute, so you had to do without The Daily Show or watch it online.

Here’s the point: Maybe you couldn’t watch Jon Stewart for a week, but the problem had nothing to do with either you or Jon Stewart. He wasn’t asking for a raise; you weren’t balking at the price of watching the Daily Show. But both you and Jon were irrelevant when two giant middlemen had a power struggle.

Each brought a lot of power to the struggle. In most of its markets, DirectTV is the only alternative to the local cable monopoly, while Viacom is one of a handful of megacorps that dominate TV content. (Disney, Time Warner, NBCUniversal, NewsCorp, and CBS are the others. National Amusements owns a big chunk of both Viacom and CBS. Comcast plays both sides of the street, being both a cable monopoly and a partner with GE in NBCUniversal.)

Viacom thought it had the upper hand, so it was demanding a bigger payout from DirectTV and insisting DirectTV carry its new Epix channel. I haven’t sorted out yet who won.

These middlemen outweigh both you and Jon Stewart. If Jon doesn’t work for one of the six big media companies, he can’t reach a major audience. If you don’t deal with either DirectTV or a cable monopoly, your TV choices shrink considerably.

Transparent markets. But it’s not hard to imagine a TV system that works differently: Cable or satellite systems could be common carriers, making a fixed amount whenever they connect a TV producer with a TV consumer. Cable and satellite would still compete, but only by changing that fixed amount or by offering more reliable service to the consumer.

With that kind of middleman transparency, small TV companies could spring up and get their shows seen, so Jon Stewart would have a lot more than six choices. You and Jon would have more power, Viacom and DirectTV less.

Even more interesting is what happens to the profit motive: The way to make money in this transparent system is to create shows people want to watch and deliver them reliably. Wheeling and dealing to amass middleman power wouldn’t accomplish much.

Government regulation would probably be necessary to bring this system about, but it would still be capitalism. The marketplace would just be structured differently, so that the benefits and opportunities of capitalism would accrue to producers and consumers rather than to financiers and empire-builders.

Probably this restructured marketplace would lead to more small companies and fewer megacorps, more millionaires and fewer billionaires.

Picture the same transparent-market principle spreading across the economy: More small businesses, more places to look for jobs, greater variety of products, and more opportunity to go into business for yourself. Less inequality.

In Search of a Unified F***-Up Theory

The biggest mystery of recent years is: Why are all our institutions failing at the same time? Think about it:

  • We just had a banking crisis that required trillions of dollars of bailouts and interest-free loans to the very people who caused it and profited from it. No one went to jail, in spite of massive evidence of criminality. More-or-less nothing has been done to prevent the same thing happening again.
  • Our election campaigns have become open bidding wars. As a result, Congress is largely unresponsive to the desires of anybody who’s not rich, and the number of people who rate the “honesty and ethical standards” of congressmen as high or very high is an anemic 7% — the same rating lobbyists get.
  • The public distrusts scientists. Among scientists who study climate, 97% believe in man-made global warming. But only about half of the public does, and that’s a recovery to 2009 levels after a considerable dip.
  • The Catholic Church has been rocked by its pedophilia scandal. And the worst of it is this: When bishops found out, they uniformly protected the guilty priests rather than the innocent children. That part of the scandal goes all the way to the Pope, and there’s been no house-cleaning of implicated bishops.
  • Public expectations of presidential candidates have plummeted. In 2000, Al Gore was tagged with being a “serial exaggerator” after saying a few mostly true things. This year, much of Mitt Romney’s stump speech consists of publicly debunked lies, and it’s not an issue. Voters shrug and say that all politicians lie.
  • The Supreme Court has become partisan. People have always complained that the Court’s legal philosophy was too liberal or too conservative. But only since John Roberts and Sam Alito replaced David Souter and Sandra Day O’Connor have major cases routinely been decided on 5-4 party-line votes. Today, if the president who appointed you was Republican or Democrat, that’s the side you take. The shock of Roberts’ ObamaCare decision wasn’t his legal reasoning, it’s that he crossed party lines.
  • In discussions about baseball’s Hall of Fame, the main topic isn’t how good players were, it’s whether they cheated or not. It’s very possible that the biggest stars of the 1990s — Barry Bonds, Roger Clemens, Alex Rodriguez, Mark McGwire, Sammy Sosa — won’t be in the Hall.
  • Both Presidents Bush and Obama embraced the doctrine that the president can rain death on countries we are not at war with. If Americans get killed in the process, too bad. American citizens might even be the target.
  • Trust in journalism has collapsed. Again and again, the press has been the watch-dog that didn’t bark: Iraq’s non-existent WMDs, the housing bubble, and so on. Plus, they’ve increasingly practiced he-said/she-said journalism that punts the question of what is true. Newspapers are closing, reporters are being laid off — and yet, at the top, the marquee journalists remain the same no matter how many stories they screw up. The marquee pundits keep their jobs no matter how often they are proven wrong.

It goes on and on. All eras experience some institutional failure, but usually when one institution fails, you can take refuge in another: When Al Capone had city government in his pocket, the feds took him down. When the political process denied justice to blacks, the courts provided it. When Nixon’s White House was corrupt, Congress, the judiciary, and the press performed well.

What’s bizarre and unsettling about our era is that there seems to be nowhere to turn. Why is that? What’s making all our institutions suspect at the same time?

Devil theories. If you’re a certain breed of conservative Christian, what’s going on is obvious: The Devil and his minions are stepping up their malignant activities in preparation for the End of the World. And various secular subcultures have their own devil theories: the Koch Brothers, the worldwide socialist conspiracy, and so on.

While I’m no fan of the Kochs, all these one-big-conspiracy theories seem nutty to me. (I’ll bet lots of eras had evil billionaires.) But I do have to give them this: A devil theory is an answer on the scale of the problem. 

Conspiracy theorists respond to our attempts to be rational with: “What? You think this is all a coincidence?”

They’ve got a point. This situation begs for a UFT (Unified Failure Theory, or, as I sometimes call it, Unified Fuck-Up Theory), something that pulls it all together. But could we get a non-crazy one?

The meritocracy did it. If you read classic mysteries, you’ve seen this situation before: The clues link up here and there, but don’t make sense when you put them all together. Usually that means that the murderer is somebody who is off your radar completely, either because you’re trained not to see them (the butler) or you trust them implicitly (the vicar or the victim’s loyal-but-mousy sister).

That’s the approach Chris Hayes takes in Twilight of the Elites. Whatever ties these failures together must be something we’re incapable of doubting. Otherwise we’d have seen the connection by now.

What is it that all our smartest people believe in implicitly? The meritocracy. The principle that the most talented, hardest working people should rise to the top.

And while belief in the meritocracy is self-serving for those who do make it to the top, it’s more than that: All the social progress of the last half-century — civil rights, women’s rights, gay rights — justified itself in meritocratic terms: If you are good at what you do, you should rise, even if you don’t look like the people currently on top.

But what if elite failure — bankers who can’t bank, representatives who can’t represent, immoral moral leaders, and so on — is the dark side of the meritocracy?

What is meritocracy? Hayes says meritocracy depends on two principles: inequality and mobility. There is a top to rise to, and nothing but your own limitations can stop you from rising.

The problem is that the combination is unstable: When inequality passes a certain point, the people on top become powerful enough to screw up mobility. Eventually, no matter where they came from originally, the meritocratic elite comes to look on itself as a class and pursue its own interests.

The first example Hayes gives is the best: his alma mater, Hunter College High School in Manhattan.

Entrance to Hunter rests on a single “objective” measure: one three-hour test. If you clear the bar, you’re in; if not, you’re out. There are no legacy admissions, and there are no strings to pull for the well connected.

Hunter’s racial/ethnic composition never matched New York City’s, but the gap has widened in recent years. The entering class was 18% black/Hispanic in 1995, but just 4% in 2009.

Why? The test-prep industry. If you’re almost Hunter quality but have money, you can train to pass the test. If you’re just barely Hunter quality and you don’t have money, you’ll get aced out.

New York’s wealthy elite has figured out how to game the system for its children. And Hunter’s selection process has not kept up because … why would it? People powerful enough to make the system ungameable are precisely the ones who want to game the system.

Entitlement. What happens when a meritocracy gets corrupted like this? The appearance of rigorous competition remains, leaving the elite with an undeserved sense of entitlement: We are the ones who passed the test, so we deserve the cookies.

Such a ruling class would have all the competitive ferocity inculcated by the ceaseless jockeying within the institutions that produce meritocratic elites, but face no actual sanctions for failing at their duties or succumbing to the temptations of corruption. It would reflexively protect its worst members, it would operate with a wide gulf between performance and reward, and would be shot through with corruption, rule-breaking, and self-dealing as those on top pursued the outsize rewards promised for superstars.

But such a ruling class would also not be as smart as it thinks it is. It might, for example, think it has come up with a totally new and foolproof way to handle financial risk — and screw it up.

It would also see success as its own justification, an attitude that Hayes connects to Enron and the mortgage bubble. The people making the most money must be the smartest, and anyone who tries to tear them down is just jealous.

Co-opting Obama. Newcomers to the ruling class really did have to jump some hurdles, and as a result they have undue faith in the class they have entered into. President Obama, for example, cannot shake his faith in the experts. Surely the bankers must be the right people to fix the banking system. The businessmen must be the right people to revitalize business. If they weren’t the smartest people in the room, they wouldn’t have made it to the top, right?

Fractal inequality. This is my favorite phrase from the book. No matter how high you rise — the 1%, the 0.1%, the 0.001% — there always seems to be a higher level where the real action is. Again, Hayes uses his own experience well: When he finally got an invitation to the Davos meetings, it seemed like evidence that he had really made it. But once there

you realize that in the context of Davos attendees, you are a member of the unwashed masses

And the people you look up at are the unwashed masses of an even higher level.

As a result of this fractal inequality, everybody is constantly struggling to rise higher, grasping for whatever advantage they can get, and no one reaches a position where they can relax and turn a beneficent eye to the people below.

Distance. Representative democracy was supposed to close the distance between the rulers and the ruled. Leaders were supposed to spring up from among the people, and then go off to represent them in Congress.

Again, that’s been circumvented. No one who isn’t already well connected can hope to raise the money necessary to run for Congress or just about any other major office. And so we have a huge social distance between the leaders and the led.

That distance leads to disasters like New Orleans. The evacuation worked very well, Hayes points out, for people with cars. The leadership just underestimated the number of people without cars or what they would be likely to do, even though that information was available if anyone had thought to look for it.

So that’s the picture in failure after failure: A entrenched and entitled elite, hyper-competitive within itself, but distant from the people their actions affect.

What to do? It’s a basic part of our political rhetoric that we want equal opportunity, but want the government not to try to equalize outcomes. Hayes thinks that position is naive. With sufficient inequality of outcome, equality of opportunity is impossible. Meritocracy needs some inequality (or there’s nothing to win). But too much inequality destroys the meritocracy itself. So Hayes’ solutions are all about seeking more equality of outcome.

A second approach is something I’ll explore next week: moving towards a more anarchic system, where less responsibility is delegated and less is expected or demanded of elites. The text for that discussion will be The Leaderless Revolution by Carne Ross.

“If you can’t hear it from me …” — 3 voices that might get through to your conservative friends

If you’re a liberal who has any conservative friends or relatives, you know how well defended they are against anything you might say. Any fact you know is wrong. Any source you might quote is biased: Academia is biased (except for institutes funded by the Koch Brothers). Major newspapers are biased (except for the Washington Times). TV news is biased (except for Fox). Government agencies are biased (unless a Republican president has had their reports vetted by a political appointee) … and so on.

Here are three points of view that might sneak under the conservative radar, because of where they come from and how they’re pitched.

Now let’s look at those one-by-one.

BYU’s Barry Bickmore on climate-change denial. Bickmore’s talk isn’t about climate change. It’s about “How to Avoid the Truth about Climate Change“. (If you don’t have time to watch, scroll down the comments to Anna Haynes’ notes on the talk.) In other words: What techniques make it possible for honest and intelligent people to deny something that virtually all the experts in the field believe?

Bickmore knows why people don’t believe in climate change, because he used to agree with them on two points: There’s lot’s of scientific controversy about global warming, and the is theory based solely on complex computer models which are easy to screw up.

When he looked into the issue more closely, though, Bickmore discovered that each of those points is wrong: Around 97% of actively publishing climate scientists believe that human activity is causing the planet to get hotter, and their opinion is verified by a variety of techniques that may not give exactly the same projections, but do agree within the bounds of the published error estimates.

He wondered: Why didn’t I already know that? What led to my confusion?

First, there were those “thousands of scientists doubt global warming” articles. Bickford explains the strategy that generates them: First, expand the field of “experts” to include a lot of people who aren’t really experts at all, and second, report a raw number that sounds big rather than doing a poll and getting a percentage.

So the Oregon Petition (claiming there is “no convincing scientific evidence” of human-caused global warming) claims 30,000 signers. But signers don’t have to be experts or even scientists. They need only have a bachelors degree, not necessarily in a relevant field.

So why is this impressive to people — 30,000 scientists? … People think about scientists as “Well, you know science, so why don’t you tell me?” Right? But in reality we’re much more specialized than that. If you have cancer, you don’t go to your podiatrist. You go to your oncologist.

Ditto for the 900 peer-reviewed journal articles skeptical of climate change. It sounds like a big number, but in what universe of journals? Apparently, a universe big enough to include journals that publish “research” articles on dog astrology and UFO abductions.

Bickford continues, similarly destroying the “What about Galileo?” and “We don’t need experts” objections, leading to this conclusion:

There’s always room for doubt. But there has to be a point — if we’re going to make any attempt at all at trying to be objective — that we have to admit that we’re trying too hard [to avoid the truth]. And I think that for people who are on the side I was a few years ago, I think we should admit that we’ve reached that point.

Rachel Held Evans on the damage Christianity is suffering from the culture wars. After reviewing some research showing how young adults (even those raised in Christian households and even young church-goers) view Christianity’s anti-gay image negatively and are shamed by what they see as un-Christ-like hostility towards their gay and lesbian friends, Evans gives her personal observations. When she speaks at Christian colleges, she finds that “every single student I have spoken with believes that the Church has mishandled its response to homosexuality.

On the evening when North Carolina’s anti-gay Amendment One was passing by a wide margin, Evans saw a pattern in her Twitter feed:

Christians over 40 were celebrating. Christians under 40 were mourning. Reading through the comments, the same thought kept returning to my mind as occurred to me when I first saw that [pro-amendment] Billy Graham ad:

You’re losing us.

I’ve said it a million times, and I’ll say it again…(though I’m starting to think that no one is listening):

My generation is tired of the culture wars.

Back when gays were in the closet, you could make them out to be any kind of hobgoblins you wanted. All the scary talk about a “gay agenda” depends on that image: sinister conspirators out to destroy everything good and decent in the world.

But to folks under 40, gays and lesbians are their friends from high school. They decorated homecoming floats together and washed cars side-by-side to raise money to send the French Club to Paris.

We know too many wonderful people from the LGBT community to consider homosexuality a mere “issue.” These are people, and they are our friends. When they tell us that something hurts them, we listen.

Evans says her generation wants to “stop waging war and start washing feet”. Translating for those who don’t speak Christian: They want to help people rather than beat them down, and practice their religion humbly rather than be authoritarian ideologues. If they can’t do that inside the church, she says, they’ll do it somewhere else.

Nick Hanauer. This guy was an early investor in Amazon, and then made several other piles of money by starting little-fish companies that he eventually sold to bigger fish like Microsoft. In other words: not a communist, not a fifth-generation Rockefeller who has forgotten where his trust fund came from, not an academic economist who has never made or sold anything.

Hanauer’s 6-minute TED talk addresses one question: Who are the job creators? You might expect him to answer, “People like me.” But he doesn’t.

If there was no one around who could afford to buy what we had to sell, all those companies [I helped start] and all those jobs would have evaporated. That’s why I can say with confidence that rich people don’t create jobs. Nor do businesses, large or small.

Jobs are a consequence of a circle-of-life-like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary consumer is more of a job creator than a capitalist like me.

… Anyone who’s ever run a business knows that hiring more people is a course of last resort for capitalists. It’s what we do if and only if rising consumer demand requires it.

After displaying graphs of rising income and falling tax rates for the rich since 1980, he comments:

If it was true that lower taxes for the rich and more wealth for the wealthy led to job creation, today we would be drowning in jobs.

But when the middle class thrives, businesses grow and everyone does better. So he concludes:

In a capitalistic economy, the true job creators are middle-class consumers. And taxing the rich to make investments that make the middle class grow and thrive, is the single shrewdest thing we can do for the middle class, for the poor, and for the rich.


At first, Hanauer’s talk didn’t appear on the TED website — not all of them do — leading National Journal to bill the talk as “too hot for TED“. This prompted a TED official to post “the real story“, claiming that the audience gave the talk mediocre ratings:

a non-story about a talk not being chosen, because we believed we had better ones, somehow got turned into a scandal about censorship.

Even that spin, though, implies that TED and its audience are not very representative. Once the YouTube got out, it quickly went viral and has been seen (so far) by over 400,000 people.

Jobs, Hobbies, and Reflections on a Viral Post

Last week I wrote Rich People Don’t Have Jobs to point out one of the most important distinctions in American life: the one that separates the people who work out of necessity from the people who either don’t work or work purely for personal satisfaction.

Usually, a distinction that basic corresponds to a pair of one-syllable words: young/old, boy/girl, rich/poor, black/white, smart/dumb, gay/straight, and so on. People like to talk about important categories, so they give them nice short names.

But what happens when there’s a distinction people don’t talk about? Then the words are longer and sound like scientific classifications. When I was young, nobody was supposed to talk about men who love men or women who love women, so they were homosexuals rather than heterosexuals. I first heard the word gay (in that sense) in the 70s, right about the time it became OK to talk about gays.

You know you’ve really hit a taboo subject when you can’t think of a word at all. Picture Freud laboriously searching his dictionary, looking for the word that describes a boy’s lust for his mother. Sorry, Sigmund, you’ll have to coin oedipal yourself.

That’s where I was. I’m not as creative with mythology as Freud, but I suppose I could have hyphenated something: necessity-workers and satisfaction-workers, say. It would have sounded sociological, an academic distinction rather than something people butt their heads against every day.

The other approach is to be outrageous. Gay was outrageous, back when it was coined. It made boys smirk at the idea of donning “gay apparel” at Christmas, or Fred and Barney having “a gay old time” down in Bedrock. A lot of people hated the homosexual community’s appropriation of a perfectly good one-syllable word – as if homosexuality were something people should want to talk about, as if English should reconfigure itself to make those conversations easier.

I decided to be outrageous. So I called work-you-do-out-of-necessity a job and work-you-do-for-satisfaction a hobby. “Rich people don’t have jobs,” I said, “they have hobbies.”

I heard from a lot of people who hated it. (And others who loved it.) Many wanted to talk about the words rather than what they represented. Some accused me of saying that rich people don’t work. (I didn’t.) Or of denigrating well-to-do “hobbyists”. (Why anyone would feel denigrated to be classed with Warren Buffett and Tiger Woods escapes me.) There were the usual write-offs of “class warfare”. Some of the wilder comments I saw were by Facebook friends of my article-sharing Facebook friends. (One thought the point of my post was to beatify my mother and demonize Ann Romney.)

Here’s what I think is going on: America is in denial about inequality and class. It’s fine to talk (occasionally) about rich and poor, but only as a difference of degree. The one has a new BMW and the other an old junker, but they both get where they’re going. The one eats at a four-star restaurant while the other has a bag lunch, but they both eat.

What’s taboo is to suggest that there’s something qualitatively different about living with money. We’re fine with the idea that a concierge doctor will come out to see a billionaire while a waitress goes to the emergency room — a little more convenience, that’s what money gives you a right to expect. But it’s taboo to suggest that the billionaire will live in situations where the waitress will die.

If we don’t talk about those qualitative differences, though, the conversation gets distorted. Inevitably it tilts towards justifying the privileges of the rich, because they appear to be so much better at life than the working poor.

Take the situation I focused on: the necessity-driven working-class housewife versus the wealthy stay-at-home mom. Picture how each might cook for her family. All day, the less affluent one has been juggling the laundry, the chauffeuring, and the baby-minding. Running out of time, she combines the left-over hamburger from last night’s tacos with a jar of Ragu and serves a spaghetti good enough to keep body and soul together for another day.

Meanwhile the wealthy woman sends her cook home early, shops for fresh organic ingredients, and then spends all afternoon in the kitchen trying out what she’s been learning in her Italian cuisine class. The meal she produces is better in every way: tastier, healthier, more artfully presented. Proud of her achievement, she is a more pleasant dinner companion than the harried working-class mom.

If you imagine that the two women are doing the same thing, then you’re forced to conclude that the rich woman is doing it better. Not only is her product of higher quality, it’s superior for virtuous reasons: She devoted more time, searched for better ingredients, and applied more expert knowledge.

It’s that way across the board. If you imagine that necessity-driven families and surplus-enjoying families are doing the same things, it’s obvious that (on the whole) the richer families do them better. Once you accept that frame, you’ll be driven to the conclusion that wealthier families are just superior at doing the stuff life is made of. From there it’s a short jump to the conclusion that each family gets the life it deserves.

But they’re not doing the same things. In America, class differences are qualitative, not just quantitative. Rich and poor lead different lives.

College students who spend the summer manning a cash register or an assembly line are not doing the same things as the middle-aged people they work next to. Living on ramen while you finish your MBA is not the same as living on ramen from now on. Scrimping to save for your Caribbean vacation is not the same as scrimping to pay off what you owe the dentist. The “jobs” of CEOs who choose not to retire to the Hamptons (yet) bear no resemblance to the jobs their secretaries and salesmen do.

The fundamental difference between the classes in America is not the difference between steak and hamburger. It’s the difference between choice and necessity, between striving for fulfillment and striving for survival.

We need qualitatively different words to express those differences. Jobs and hobbies — not perfect, maybe, but better than any alternatives I can think of.

Rich People Don’t Have Jobs

The news hook for this post is the Hilary Rosen/Ann Romney flap, but in truth just about every week offers some hook for the following observation: Rich people don’t have jobs, they have hobbies.

If any multi-millionaire CEOs and investment bankers read the Sift (love to hear from you), they’re probably screaming at me: “What do you mean I don’t have a job? I have the toughest job in the world! I work 80 hours a week, and the stress follows me home. Waitresses and coal miners are slackers compared to me.”

Maybe so.

Whenever the national conversation turns to inequality, the corporate media gives us gobs of stories about and testimonies from the hard-working 1%. Probably some of it’s exaggerated – waitresses and coal miners don’t have publicists, after all – but maybe a lot of it is true.

By all accounts, Bill Gates was very focused during those years when he turned his first Microsoft billion into fifty more. Warren Buffett may spend every waking hour researching Berkshire Hathaway’s next big investment. For all I know, Kobe Byrant and Tiger Woods train like maniacs.

It doesn’t matter. Rich people have always devoted a lot of time and effort to their hobbies. That doesn’t mean they have jobs.

You know what a job is? It’s something you do because you need to eat, or because your family is counting on you. You don’t necessarily hate it, and maybe you’d even keep doing it if you didn’t have to. (I used to get my hair cut by an 80ish guy who just liked feeling useful and talking to people. He told great stories about barbering on luxury trains back in the day.) But that’s the whole point: If it’s really a job, you do have to.

That’s the only test that counts. It’s not how hard you work, it’s what happens if you stop. If quitting means real hardship for you or your family, you have a job. If you keep at it even though you could spend the rest of your life skipping rocks at your house by the lake, you have a hobby.

I’ve got nothing against hobbies. The Weekly Sift is a hobby. One way to describe the Marxist vision of Utopia is that we’d all be hobbyists, and the world’s work would get done by people who just wanted the satisfaction of doing it. (That vision even works sometimes: Wikipedia, open source software, and so on.)

People have hobbies for fulfillment, for identity, to get out of the house, to make the world a better place, to test themselves against worthy adversaries, and for a lot of other creditable reasons. People have jobs because their kids need braces.

It’s not a difficult concept.

And that brings me to the Romneys.

Like most Republican politicians, Mitt Romney has been having trouble figuring out how to respond to the fact that women don’t like him. Across the country, Republicans have been pushing policies that (at best) are insensitive to the needs and desires of the vast majority of American women. Democrats have packaged that as a “War on Women”, and polls show that their message is working. In particular, it’s working against Mitt, who had to endorse a lot of War-on-Women policies to compete with Rick Santorum for the votes of social conservatives.

What to do?

Romney still has problems on his right flank, so he can’t just shake the Etch-a-Sketch and draw a more feminist set of policies. Instead he’s been touting Ann as his connection to the women of America. (That’s patronizingly close to a some-of-my-best friends-are-women defense, but it’s all he’s got.) Women, Ann tells him, don’t care about so-called “women’s issues” like contraception or equal pay:

My wife has the occasion, as you know, to campaign on her own and also with me, and she reports to me regularly that the issue women care about most is the economy.

On CNN’s AC360, liberal talking-head Hilary Rosen objected that even if we shift away from social issues to economic issues, Ann Romney is not the best person to represent women’s interests.

Guess what? His wife has never actually worked a day in her life. She’s never really dealt with the kinds of economic issues that a majority of the women in this country are facing.

And that brought down a hailstorm of outrage, because it allowed Republicans to brand Democrats as anti-Mom. How dare Rosen say Ann Romney has never worked? Ann raised five boys – that’s work enough for anybody! And so on.

All of which is beside the point, because the job/hobby distinction applies as much to within-the-home work as to work-for-money.

Yes, a lot of effort goes into raising five boys to adulthood, and Ann may have done a fair piece of it herself. For all I know, she could have changed all the diapers, nursed all the colds, and packed all the lunch boxes. If so, she must have been reasonably good at it, because the kids seem to have turned out fine.

But here’s what makes all the difference: She didn’t have to. If Ann lifted a finger around the kitchen or nursery, it was because she wanted to. She found it satisfying, it was part of her identity, or she had some other motive unconnected to necessity. If her search for fulfillment ever turned her in a different direction, an upscale domestic-help agency could have dispatched an armada of well-qualified maids and cooks and nannies to Romney Manor in no time at all.

So whatever vomit-wiping, homework-correcting, and cheese-sandwich-grilling Ann did was part of her hobby, not her job. If it ever became too much for her – for one night, a weekend, or forever – she had the option to become Lady Ann and have the servants call her whenever the boys did something cute or fun.

It isn’t like that for most American moms, whether they work inside the home, outside the home, or in somebody else’s home. They have jobs.

It wasn’t like that for my Mom, a housewife who differed from Ann Romney in about a quarter of a billion ways. Mom took pride in providing a good home for her family, but it was a job, not a hobby. Dad worked two jobs of his own, so most of the time there was no back-up.

Cooking in particular was a job. Mom took pride in keeping us well fed, but she rarely bought cookbooks or experimented with recipes. She had an adequate repertoire and stuck to it. Early in their marriage, she nixed Dad’s suggestion of camping or rent-a-cabin vacations. “If I have to cook,” she said, “it’s not a vacation.”

It’s too late to ask her, but I doubt Mom would have picked Ann Romney to be her voice in the halls of power. I don’t think they had a lot in common. Hobbyists and job-workers rarely do, even if (by all outward appearances) they’re doing the same things.

Maybe someday everybody will live in Wikipedia World, where the work gets done by hobbyists and nobody is driven by economic necessity. Some of us get to spend a lot of time there now.

But most people don’t. They have jobs – in the home, in the factory, in the office, or out in cyberspace somewhere. Working a job is a central fact about their lives — which is precisely why you won’t figure out what they want or need by talking to hobbyists. Not even hobbyists who work very, very hard.