What He Said
I’ve witnessed a certain number of dim-witted right-wing blog commenters making arguments along the lines of “if you think inequality is so bad, the you must love the current global recession.” Naturally, Washington Post columnist Robert Samuelson decided to hop on that bandwagon. Brad DeLong replies:
Making the rich poorer by deregulating financial markets so that a bunch of overleveraged Wall Street firms fail at risk management and cause a financial crisis doesn’t make anybody richer. Making the rich poorer by taxing them more and devoting the money to debt reduction, infrastructure, and education does make everybody else richer–as we learned in the 1990s. [...]
The income and wealth of Wall Street has vanished not because the “rich” of Wall Street have stopped doing what they do, but because the too many of the “rich” of Wall Street did do what they do: it is their failures of risk management that have made everybody poorer.
Every column of Robert Samuelson that Newsweek and the Washington Post publish hastens their demise–and harms the reputation of all their reporters.
Meanwhile, yes, global financial crisis does show that some things are worse than US domestic inequality — we don’t want incomes worldwide to converge to zero. But what Brad said.
On top of which, removing barriers to advancement by ensuring that everyone grows receiving adequate levels of nutrition, intellectual stimulation, health care, etc. reduces inequality and boosts overall growth.
32 Responses to “What He Said”
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November 7th, 2008 at 1:30 pm
Robert Samuelson’s extremely crappy columns reflect a deep-seated psychological disturbance — He is a self-hating journalist.
Any day now, I expect a report that he’s rubbed his own feces in his hair during an interview with Bill O’Reilly.
November 7th, 2008 at 1:50 pm
Mr. Yglesias,
The aim of economic policy should not be to make everyone ‘rich’, or to achieve eternal economic growth, both of which are illusions. Rather, we should aim at achieving _sufficiency_ . That means a society where everyone has adequate shelter, nutrition, access to education, health care, meaningful and productive work, and so forth. That does mean, of course, “making the rich poorer” as you put it.
Recessions are generally a pretty poor way of curbing the greed and rapacity of the rich, since they hurt the poor and working classes as well. They do, however, weaken the foundations of the current economic system and create more space for alternatives. The more businesses go bankrupt, the more space opens up for public, cooperative, and other sorts of enterprises.
November 7th, 2008 at 1:52 pm
Is that first link messed up (gmail inbox?) or is it just me?
November 7th, 2008 at 2:04 pm
Has anyone even established the claim that inequality is lower now in relative terms than a few years ago? It doesn’t seem obvious to me. I can see that anyone with large equity and real estate holdings has taken a hit, and is significantly “poorer”, but this applies not only to the wealthy but to anyone with retirement funds and a house. And anyone with more debt than assets who has just lost their job is going to be much poorer in real terms than those who have lost money they can afford to lose.
November 7th, 2008 at 2:06 pm
I Brad DeLong the biggest moron in the field of economics? I think that the answer is pretty clearly yes.
DeLong is so stupid that he doesn’t even realize that his argument supports the right-wing, not the left. Right-wingers contend that inequality is not an very important problem, what’s important is making sure everybody’s income is rising.
Contra the moron Brad DeLong, in the 1990s, the rich were not made poorer. The rich got far, far richer in the 1990s. However, the poor got richer too, which is why the 1990s were good economic times.
Inequality skyrocketed in the 1990s – it increased far more in the 1990s than it has in the 2000s. Moron Brad DeLong doesn’t even seem aware of this basic fact. But we didn’t care that much about the gigantic leap in inequality in the 1990s because the bottom’s income rose (even though much less than the top’s income rose).
Again, this is just proof positive that Brad DeLong is the dumbest economist on the face of the earth.
November 7th, 2008 at 2:10 pm
Yes both Matt and Brad’s links are wrong: It can be found at
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/04/AR2008110403817.html
but don’t bother reading it, it is really, really bad.
For instance:
But the redistributionist argument is at best a half-truth. The larger truth is that much of the income of the rich and well-to-do comes from what they do. If they stop doing it, then the income and wealth vanish. No one gets it. It can’t be redistributed because it doesn’t exist. Everyone’s poorer.
But if you redistribute income from the working poor and middle class to the rich, that’s just dandy!
November 7th, 2008 at 2:11 pm
If that is true than maybe we should stop talking about “inequality” and focus solely on maximizing the well-being of those below the 95% wealth percentile, regardless of whether the net effect is an increase or decrease in inequality.
November 7th, 2008 at 2:16 pm
The larger truth is that much of the income of the rich and well-to-do comes from what they do. If they stop doing it, then the income and wealth vanish.
That sentence leapt out at me too when I read the quote. What the hell is it supposed to mean, exactly? That “the rich” are magical wealth-fountains, bountifully creating money out of nothing, and unless we propitiate them properly, they’ll stop?
November 7th, 2008 at 2:19 pm
That “the rich” are magical wealth-fountains, bountifully creating money out of nothing, and unless we propitiate them properly, they’ll stop?
There’s nothing magical about it. Wealth comes from work (among other things). If wealthy people stop working, and their work is valuable, that wealth is lost.
November 7th, 2008 at 2:21 pm
Al: “The rich got far, far richer in the 1990s.”
DeLong’s point was that the rich were made poorer relative to where they would be if they had been taxed less (e.g. at the rates after the Bush tax cuts). He is implicitly arguing that the higher taxation did not hurt economic growth, at least significantly, which runs counter to the standard rightwing argument for lower taxes. So I don’t see how you would argue that he supports rightwing claims.
November 7th, 2008 at 3:11 pm
I don’t think conservative pundits realize what the financial meltdown has done to the premise of their economics: it obliterated it. They keep acting like they’ve got something backing them up other than belligerence and powerful people in key places.
November 7th, 2008 at 3:15 pm
Consumption inequality in the Bush Years was much lower than Income Inequality, much less Net Worth Inequality.
Bush repeatedly encouraged lower-income people to buy nice homes with no money down loans and for people who already had homes to take out refi loans on their home equity and spend it on crud.
So, the masses ended up with lots of Chinese made stuff and the rich ended up with pieces of paper saying the masses were going to pay it all back Real Soon Now.
How’s that working out for us lately?
November 7th, 2008 at 4:59 pm
Realist:
There’s nothing magical about it. Wealth comes from work (among other things). If wealthy people stop working, and their work is valuable, that wealth is lost.
Right! If you’re a prostitute and suck a mean dick, but you stop working, that wealth is lost.
Or, if you’re a crappy columnist like Samuelson, and you stop spitting out crappy columns, that wealth is lost.
Actually, if wealthy person stops “working” at, say, playing financial shell games, wouldn’t someone else just do it and create that wealth?
November 7th, 2008 at 6:50 pm
But if you redistribute income from the working poor and middle class to the rich, that’s just dandy!
He’s proposing less redistribution, not reverse redistribution.
That “the rich” are magical wealth-fountains, bountifully creating money out of nothing, and unless we propitiate them properly, they’ll stop?
No, not “magical” wealth-fountains. Wealth-fountains by virtue of their talents and labor.
I don’t think conservative pundits realize what the financial meltdown has done to the premise of their economics: it obliterated it. They keep acting like they’ve got something backing them up other than belligerence and powerful people in key places.
I don’t think some of the more excitable liberal pundits realize just how absurd their conclusion-jumping has become. Gas hitting $4 = The suburbs are dead and the future is density and transit. A once-in-a-lifetime financial crisis = the end of capitalism. Obama win = political realignment.
Calm down. Chill out. Learn some history. This too shall pass.
November 7th, 2008 at 9:26 pm
Actually, if wealthy person stops “working” at, say, playing financial shell games, wouldn’t someone else just do it and create that wealth?
If someone else does it, then whatever wealth that someone would have created instead of doing that is lost.
November 7th, 2008 at 10:01 pm
Re Mixner’s comment “I don’t think some of the more excitable liberal pundits realize just how absurd their conclusion-jumping has become. Gas hitting $4 = The suburbs are dead and the future is density and transit. A once-in-a-lifetime financial crisis = the end of capitalism. Obama win = political realignment.
Calm down. Chill out. Learn some history. This too shall pass.”
————-
Here’s hoping stoic Mixner gets a kidney stone.
November 8th, 2008 at 12:27 am
Please, no more idiotic comments about “if they stop working”.
You can increase my taxes to 90% and I CAN’T FRICKING STOP WORKING!!
At least say businesses will leave the US or something. Not this bullshit.
November 8th, 2008 at 2:53 am
You don’t think people can reduce the amount they work in response to reduced rewards for such work?
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