Wanker Of The Day

4 comments July 24th, 2007at 07:14am Posted by Eli

Wary as I have become about awarding a Wanker Of The Day this early (one of the Unwritten Rules Of Blogging is “There is always another wanker”), I think David Brooks will be hard to top today:

If you’ve paid attention to the presidential campaign, you’ve heard the neopopulist story line. C.E.O.s are seeing their incomes skyrocket while the middle class gets squeezed. The tides of globalization work against average Americans while most of the benefits go to the top 1 percent.

This story is not entirely wrong, but it is incredibly simple-minded. To believe it, you have to suppress a whole string of complicating facts.

I think Brooks is admitting that it’s true, but that it doesn’t count ‘cuz he doesn’t like it.

The first complicating fact is that after a lag, average wages are rising sharply. Real average wages rose by 2 percent in 2006, the second fastest rise in 30 years.

And does that figure still hold true if you filter out the millionaires and billionaires?

The second complicating fact is that according to the Congressional Budget Office, earnings for the poorest fifth of Americans are also on the increase. As Ron Haskins of the Brookings Institution noted recently in The Washington Post, between 1991 and 2005, “the bottom fifth increased its earnings by 80 percent, compared with around 50 percent for the highest-income group and around 20 percent for each of the other three groups.”

That’s an interesting timeframe, starting right around the depths of the Bush I recession and encompassing the entire Clinton Administration. If they’re presumably talking about how great Bush has been for incomes, why not start the clock in 2001?

The fourth complicating fact is that recent rises in inequality have less to do with the grinding unfairness of globalization than with the reality that the market increasingly rewards education and hard work.

Yes, of course it does. Everyone knows that you only become rich by being smart and hardworking, and that poor people are all poor because they’re lazy and ignorant. That’s not a load of elitist, social darwinist crap at all.

Fifth, companies are getting more efficient at singling out and rewarding productive workers. A study by the economists Thomas Lemieux, Daniel Parent and W. Bentley MacLeod suggests that as much as 24 percent of the increase in male wage inequality is due to performance pay.

Ho. Ly. Shit. He did just say that men get paid more solely because they’re superior workers, right? I didn’t just imagine that? Okay, according to my buddy Anders in the comments, I apparently did imagine that…

Sixth, inequality is also rising in part because people up the income scale work longer hours. In 1965, less educated Americans and more educated Americans worked the same number of hours a week. But today, many highly educated people work like dogs while those down the income scale have seen their leisure time increase by a phenomenal 14 hours a week.

Ah yes, “leisure time.” That sounds ever so much more relaxing and pleasant than “underemployment.” Yes, all those poor people are just relaxing on the porch with a cold one while those stupid rich people work their asses off. And that’s why they’re poor.

Seventh, it’s not at all clear that the big winners in this economy are self-dealing corporate greedheads who are bilking shareholders. A study by Steven N. Kaplan and Joshua Rauh finds that it’s not corporate honchos who are filling up the ranks of the filthy rich. It’s hedge fund managers. Or, as Kaplan and Rauh put it, “the top 25 hedge fund managers combined appear to have earned more than all 500 S.&P. 500 C.E.O.’s combined.” The hedge fund guys are profiting not because there’s been a shift in social norms favoring the megarich. It’s just that a few superstars are now handling so much capital.

Oh, okay. That’s all right then. I’m sure they must deserve it.

Eighth, to the extent that C.E.O. pay packets have thickened (and they have), there may be good economic reasons. The bigger a company gets, the more a talented C.E.O. can do to increase earnings. Over the past two and a half decades, the value of top U.S. companies has increased 500 percent, according to Xavier Gabaix and Augustin Landier. The compensation for the C.E.O.s of those companies has also increased 500 percent.

Indeed, CEOs even get pay increases when their companies’ values don’t increase, or when their “talent” leads them to increase earnings fictitiously.

All of this is not to say everything is hunky-dory. Inequality is obviously increasing. There’s evidence that global trade is producing more losers.

Instead, the main point is that the Democratic campaign rhetoric is taking on a life of its own, and drifting further away from reality. Feeding off pessimism about the war and anger at Washington, candidates now compete to tell dark, angry and conspiratorial stories about the economy.

I doubt there’s much Republicans can do to salvage their fortunes by 2008. But over the long term a G.O.P. rebound can be built by capturing the Bill Clinton/Democratic Leadership Council ground that the Democrats are now abandoning. Whoever gets globalization right will have a bright future, and in the long run, the facts matter.

Yes, the American people are just dying for a real pro-corporate political party. Go for it, Republicans!

Entry Filed under: Media,Republicans,Wankers

4 Comments

  • 1. virgotex  |  July 24th, 2007 at 7:42 am

    Feeding off pessimism about the war and anger at Washington, candidates now compete to tell dark, angry and conspiratorial stories about the economy.

    I walked into the girls’ bathroom…and The Economy was in there with The Environment and they were smoking…and when I walked in…they were both, like, all guilty and shit you know?…and I was all like “What!??” and both of them just stood there and stared at me but they didn’t say anything. So I left and I heard The Economy laughing at me from outside. Fuck The Economy! I heard it sucks cock out behind the gym after fourth period. What a whore….

  • 2. Eli  |  July 24th, 2007 at 11:52 am

    Wait – so… the Economy and the Environment are lesbian gang members?

    I *knew* it!

  • 3. V.  |  July 24th, 2007 at 4:47 pm

    I normally stay out of this kind of thing, but as a child-free person who has gotten crapped all over at work before by mommies who can’t pull their own weight, I would suggest that SOMETIMES, men ARE more productive workers. It’s usually the mommies who have to cut out early to take Snotleigh to soccer practice, or stay home when the kid is sick, and as a result their co-workers end up doing their job for them. I can’t recall ever working with a man who did those things (not saying it doesn’t happen, just that I’ve never seen it). I’m a woman myself, and I’m absolutely for equal pay for equal work. But the key here is EQUAL WORK. If you’re on the mommy track, you’re probably not doing equal work.

    Controversial rant over. Please don’t crucify me.

  • 4. Anders Weinstein  |  July 24th, 2007 at 10:07 pm

    You will get no argument from me that Brooks deserves a lifetime achievement award for insufferable wankery. However: “male wage inequality” simply refers to differences in wages among male workers. It sems to be a stock concept in economics research papers.


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