The NYT Mag. had a tricky dilemma yesterday: how to devote an issue to rising inequality without spooking the advertisers who hock multi-million-dollar vacation condos with space for “mega-yachts.” An old bromide came to the rescue: don’t kill the goose that lays the golden egg. Echoing Arthur Okun, Roger Lowenstein warns us of a tragic choice: “how can you promote equality without killing off the genie of American prosperity?” He reminds us that the most egalitarian time in American history was that quagmire of stagflation, the seventies:
Remember that while the decade may have been a high-water mark for American egalitarianism, the country was also in its worst economic funk since the Great Depression. Unemployment and inflation were raging, growth was tepid and the stock market was depressed. An economist named Alan Greenspan termed it “the Great Malaise.”
Lowenstein argues that the “cures” for the seventies (deregulation, free trade, and financial speculation) all accelerate inequality. And if we try to look a bit more like a European social democracy, watch out: “the price for being Belgian is steep: [its] median disposable income — what people have left to spend after they pay taxes and collect welfare-type payments — is only 72 percent as high as ours.” But don’t worry–we can educate ourselves out of the gap, since “college grads make more than 40 percent more than high-school grads[, and] those with postgraduate degrees earn twice as much.”
The NYT editorial page, under a bit less pressure to sell ultraluxe adspace, has a more sober view:
New college graduates . . . have been told repeatedly that a college degree is an open sesame to the global economy. But that’s not necessarily so, according to new research by two economists at the Massachusetts Institute of Technology, Frank Levy and Peter Temin. . . . [A] college degree does not ensure a bigger share of the economic pie for many graduates. . . . [Rather,] an outsized share of productivity growth, which expands the nation’s total income, is going to Americans at the top of the income scale. In 2005, the latest year with available data, the top 1 percent of Americans — whose average annual income was $1.1 million — took in 21.8 percent of the nation’s income, their largest share since 1929.
That’s income, not wealth–and the latter measure is far more skewed. Moreover, asset inequality has grown since the housing boom put a chasm between families who bought last century and those who have to face the market now.
I’ve got a few more bones to pick with Lowenstein beneath the fold. . . .