When you’re embedded in the CNBC world of fancy lifestyles based on billion-dollar handouts, it’s not completely surprising that you ponder things like the “good side” of income inequality.
Still, you have to wonder if the CNBC people have family or friends that don’t live in that Wall Street bubble, because this is every bit as loony as the rants of their favorite freak-show, Rick Santelli.
We’ve written a lot about the problems of inequality, and it’s really only in recent months that the political class has woken up to the problem. (There are elections to be had and money to be raised, after all.) The US’ wealth inequality is on par with China and African dictatorships, yet CNBC doesn’t see the problem.
RICHARD FREEMAN: We’re high for a poor country, in terms of inequality, and we’re a rich country. We’re about the same level of inequality as China. And, of course, China, half the population are rural peasants who are not part of the modern world.
And if we were to compare us with African countries, dictators in different places, you know, taking a lot of the wealth from normal people, we would be among the top half of the African countries of inequality. So, the U.S. really has reached an extraordinary level of income inequality.
Yep. It’s even worse than the wealth inequality in Egypt.
According to the CIA World Fact Book, the U.S. is ranked as the 42nd most unequal country in the world, with a Gini Coefficient of 45.
– Tunisia is ranked the 62nd most unequal country, with a Gini Coefficient of 40.
– Yemen is ranked 76th most unequal, with a Gini Coefficient of 37.7.
– And Egypt is ranked as the 90th most unequal country, with a Gini Coefficient of around 34.4.
In September of 2010, I commented on The Great Divergence, which was an eye opening discussion on Slate about the serious problems in the US. The Robber Barron years that we learned about while growing up were even less unequal than what we have today. What part of this is CNBC missing?
The Great Compression ended in the 1970s. Wages stagnated, inflation raged, and by the decade’s end, income inequality had started to rise. Income inequality grew through the 1980s, slackened briefly at the end of the 1990s, and then resumed with a vengeance in the aughts. In his 2007 book The Conscience of a Liberal, the Nobel laureate, Princeton economist and New York Times columnist Paul Krugman labeled the post-1979 epoch the “Great Divergence.”
It’s generally understood that we live in a time of growing income inequality, but “the ordinary person is not really aware of how big it is,” Krugman told me. During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth—the “seven fat years” and the ” long boom.” Yet from 1980 to 2005, more than 80 percent of total increase in Americans’ income went to the top 1 percent. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20 percent. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.
The middle class has been losing ground since the 1970s yet this collection (which includes Rick Santorum) finds this acceptable and even a good thing for America. How curious. Gaius also wrote about the problem and included this stunning graphic that should be upsetting to most Americans.
“There is income inequality in America. There always has been and hopefully, and I do say that, there always will be,” Santorum said during a speech to the Detroit Economic Club. “Why? Because people rise to different levels of success based on what they contribute to society and to the marketplace, and that’s as it should be,” he added.
“We should celebrate like we do in the small towns all across America. You celebrate success. Why? Because in their greatness and innovation, yes – they created wealth, but they created wealth for everybody else. And that’s a good thing, not something to be condemned in America,” he said.
If only these mythical people that Santorum is mentioning created something on their own. The majority of them are rent-seekers, as Joe Stiglitz calls them. Why should anyone celebrate the riches of Wall Street when the money they “make” comes from everyone else? They’re not creating a company the way Jobs or Gates did, but instead, making huge profits and passing on huge losses from/to taxpayers. There’s nothing even remotely close to being an entrepreneur with these freeloaders.
I mean sure, they “successfully” bilked taxpayers out of billions and continue to decimate middle class bank accounts by demanding free money by the Fed, but is that really success that we should celebrate? Is that creating wealth that builds a country or is that creating wealth for an elite class out of your bank account? Comparing those bankers to individuals that actually create businesses, wealth and jobs is laughable.
But that’s where CNBC is going now, even more than ever. They like the freak show that they have with Santelli, and they all laugh and make fun of people like Paul Krugman (because he was so right and they were so wrong?). But I suppose it makes for good TV with their crowd. Are they good for America though?