Thursday, June 14, 2007

Come On ... Are Things Really WorseToday?

Here's more class warfare from Barbara Eherenreich, the woman who brought us the book Nickel and Dimed. This particular article recites the same tired canard that the rich are making the poor poorer.

Before I get to what Eherenreich actually said in her piece, I would suggest a bit of reading that challenges the conclusion that we are somehow worse off today then we were thirty years ago. First, give this piece by W. Michael Cox and Richard Alm, on the benefits of free enterprise that economic statistics can miss, a try. And then, take a look at Brian Doherety's blogging about research which points out how income statistics fail to take into account the effects of immigration.

Eherenreich cites four problems with the "super-rich," which we can look at one-by-one. First,

"the Clemens example [the example pointed out that Roger Clemens salary doesn't impact most of us] distracts from the reality that a great deal of the wealth at the top is built on the low-wage labor of the poor. Take Wal-Mart, our largest private employer and premiere exploiter of the working class: Every year, 4 or 5 of the people on Forbes magazine's list of the ten richest Americans carry the surname Walton, meaning they are the children, nieces, and nephews of Wal-Mart's founder."


Eherenreich is right that most of us love to hate trust fund babies- but that's more class warfare than economic fact. Just think about Wal-Mart for a second- if Wal-Mart, from the very start, offered lower wages than people otherwise had the opportunity to earn in their communities, no one would have ever gone to work there in the first place. So obviously, there is some segment of the population that has benefited from the jobs Wal-Mart has to offer. And of course, rich people being rich doesn't make any of the rest of us worse off.

Second, though a lot of today's wealth is being made in the financial industry, by means that are occult to the average citizen and do not seem to involve much labor of any kind, we all pay a price, somewhere down the line. All those late fees, puffed up interest rates and exorbitant charges for low-balance checking accounts do not, as far as I can determine, go to soup kitchens.

Ahhhh- now this is what I've been blogging about the past few months- the fees and interest rates that make it possible for low income people to get credit, buy homes, and maintain a bank account. Yes, I'm sure there are people making money on all these low income people- but if no one wanted to make that money, than no one would offer these services to low income people in the first place. Business doesn't exist to serve people, it exists to make money, and lower income people face higher fees and higher interest rates because they are more of a financial risk. The real question is, does having these opportunities make low-income people worse off? I don't think so.

Third, the overclass bids up the price of goods that ordinary people also need -- housing, for example. Gentrification is dispersing the urban poor into overcrowded suburban ranch houses, while billionaires' horse farms displace the rural poor and middle class. Similarly, the rich can swallow tuitions of $40,000 and up, making a college education increasingly a privilege of the upper classes.

Eherenreich may have a point about gentrification pushing the poor out of cities (at least in certain cities), but this tends to be the result of government policies- urban renewal and eminent domain and the like- and not the result of the market. And I'm not quite sure if "overcrowded suburban ranch houses" are worse living conditions than the urban tenements my relatives lived in when they first came to this country one hundred years ago.

And I just have to point out the utter ridiculousness of this tuition example. Yes, the rising cost of education is troubling, but the fact of the matter is, a greater percentage of kids are going to college today than ever before. Certainly a greater percentage of kids are going to college today than went thirty years ago.

Finally, and perhaps most importantly, the huge concentration of wealth at the top is routinely used to tilt the political process in favor of the wealthy. Yes, we should acknowledge the philanthropic efforts of exceptional billionaires like George Soros and Bill Gates.

But if we don't end up with universal health insurance in the next few years, it won't be because the average American isn't pining for relief from escalating medical costs.


Yes, the wealthy have political power, but I mean, come on. Factor in federal, state, and local taxes, and many of the very wealthy pay up to 50% or more of their income in taxes- that hardly sounds like a system completely controlled by the wealthy. And ... yeah ... we've talked about universal health insurance before.

3 Comments:

Blogger John said...

I don't know much about economics and I don't know if we're better off now or not, but I do disagree with a few things you've said. Basically, I think you over-generalize a lot.

"if Wal-Mart, from the very start, offered lower wages than people otherwise had the opportunity to earn in their communities, no one would have ever gone to work there in the first place"
Are you kidding? Not everyone is in a position to work where they want. A lot of people HAVE to take jobs like the ones offered by Wal-Mart and Wal-Mart knows that. Don't forget, the sheer presence of a mega-store with low prices like Wal-Mart damages other local business. So why pay competitive salaries and hire over-qualified people? There's no need. With local business having trouble competing, and lower salaries, people are forced to shop at Wal-Mart. Rich get richer, poor get little help. (Think South Park)

"Business doesn't exist to serve people, it exists to make money"

I found this statement very interesting. Business in America has changed to fit that idea but you could easily argue that back in the 50s, 60s and less so in the 70s or other times people claim were better, business was there to serve people first. When business is there to facilitate people first, you've got to think times would be better.

"And I'm not quite sure if "overcrowded suburban ranch houses" are worse living conditions than the urban tenements my relatives lived in when they first came to this country one hundred years ago."

C'mon, of course they probably aren't as bad as houses immigrants had to live in, but they're probably worse than the places people lived in the 50s and 60s.

"Yes, the rising cost of education is troubling, but the fact of the matter is, a greater percentage of kids are going to college today than ever before."

More people are going to college, but back in the 50s-60s, it wasn't necessary to go to college. My father, for example, didn't go to college and his family lives in suburban Connecticut, he put 5 kids through college (3 out of state) and has retired at 62. Stories like that are probably more common/similar from people his age than it will be for people my age. Nowadays, almost every job description will say "college-degree required/preferred". Employers are far more likely to take a college grad than someone with just a high school diploma or GED. Also, a lot of people going to college can't afford it. I'd guess a large percentage of college grads were on financial aid and I'm betting a lot of them have a lot of student loans to pay off.

"Factor in federal, state, and local taxes, and many of the very wealthy pay up to 50% or more of their income in taxes- that hardly sounds like a system completely controlled by the wealthy."

How much do you think middle class and lower class people pay in taxes? 20-30%? That's a lot considering the income range and what not. Also, what group gets more tax breaks, the wealthy or poor? Finally, the reason ideas like Universal Health Care are thrown around so much is because there is a problem with health care and the poor.


Now, I know I picked on your arguments a lot and I do stand by what I said, but I'm not trying to say things were better back in the day. I don't know if things are better or not because I didn't live back then and honestly, I just like to argue with you.

3:15 AM  
Blogger QU 3L said...

I did want to take the time to respond before I let this linger too long - First, think long and hard about how good we have things today. If you think we were better off in the past you should have no problem getting of the internet, cellphones, Ipods, and personal computers - not to mention air conditioning, ESPN, and the cheapest, most abundant food supply the planet has ever seen. And that is just the tip of the iceberg but I assume you get my point.

As to my point about Wal-Mart, it was meant to be very basic- and that is, when Wal-Mart first began to open stores, no one would have gone to work there if their wages were not competitive. No one has to take any job, ever, but in particular, when a company is first starting out, they would never be able to get started in the first place if their wages were less than what potential employees could earn somewhere else.

As to the changing business climate, this is a result of changing economic circumstances. The times that people tend to romanticize were not all that different from today in terms of corporate goals- corporations exist to make money for their shareholders. Just to go back to my technology examples above, and look at how drastically technology impacts our economy and in turn, the corporate world. Some industries die out and new industries are born everyday. It may seem that corporations don't have the heart they used to, but the fact of the matter is that the changing technological climate and growing world economy makes doing business the way business was done in the 50's impractical. (And by the way, business serving people is how businesses makes money.)

You bring up education which is another interesting subject - and rather than address it here, I'll address education in another blog post.

And finally, you bring up taxes. You mention the notion of tax breaks for the wealthy, but keep in mind that the wealthy pay the vast majority of taxes. It all depends on your definition of what's fair. The poor don't really pay taxes at all - the taxes they do pay are returned to them in the form of the earned income tax credit and other government benefits. And the wealthy, no matter how many "breaks" they get, are still paying more in taxes than everyone else, both in terms of the total amount of money they pay and the percentage of their income that they pay. Even if you're someone that wants a more egalitarian society, tax rates and tax burdens are still going to be set arbitrarily.

Remember, I'm not saying that every single thing today is better than it was in the past- quite the contrary. As you know, I have many complaints of my own over nanny-state type laws that were never around in the past. And you may well be right about corporate life back in the day. It would probably be more relaxing to have a job at GM back in the 50's than a job at Microsoft or Google today.

But my point is that, overall, it's hard to look at America today and find a better time or place to live in the history of the world.

4:13 PM  
Blogger John said...

Just a few quick hits...

- The wealthy can afford to pay taxes regardless of breaks, that's why they are wealthy. Middle class-Lower class people/families are hit much harder.

- Once again, I think you're wrong with Wal-Mart. Even when starting out, all they need is a few people in the beginning, the people who can't get any other jobs. Like I said, not everyone has the luxury of choosing where they work. And once you have a few workers in the stable, supply and demand takes over and all the other stuff I said.

- What I meant with the business stuff and business serving people back in the past was the idea of the "Mom and Pop" store. But even still, look at Flint, Michigan. Companies like GM used to define the city. GM needed the workers and the workers needed GM. People celebrated the motor industry in Flint until it became clear that outsourcing was needed to make money.

- You bring up iPods and the internet and ESPN and all of that jazz but with all of those innovations come a lot of negatives. I'd first argue that many of the things you listed aren't even necessary. If you didn't live with internet access or cell phones or whatever, you'd probably just as easily be able to say "why would I need that?" I could also argue that all of these technological advances have alienated members of society, destroyed the concepts of community and values and have bred a nation of internet critics who just bad mouth every political decision and news story they don't agree with...

As I said, I'm not saying things aren't better today. What I'm really trying to say is, it's just a matter of opinion and experience. Obviously someone older would say things were better off back when and obviously the internet no-nothing blogger would say today is much better. Each time has it's pros and cons. Technologically, it's a slam dunk that we're better off today. Societally and community-wise, we were probably better off back then minus the overt racism. But then again, having something as universal as the internet is a plus that can shatter through any time line. I mean, it's just so easy, even a Caveman could use it.

1:34 AM  

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