Oh folks, now they’ve gone and done it — but you’re going to have to read very carefully for content to catch it. Incidentally, if you wait long enough folks of political persuasion, when they’re BSing you, will usually do this — patience is a virtue!
Liberals talk about booming incomes at the top while lower-income households barely see benefits from economic growth. Conservatives talk about a rising share of the population that depends on government benefits and a shrinking share that pays income tax.
Though the frames are different, these are descriptions of the same economic phenomenon: rising inequality of pre-tax incomes. But only liberals are advancing a semblance of an agenda to address it.
The main liberal reaction to this phenomenon is to call for more progressive fiscal policy: higher taxes on the rich people who have benefited most from the last 30 years’ gains in gross domestic product to pay for programs that raise low- and middle-income people’s after-tax incomes.
Ah, yes, the old argument that “the rich” benefited so much.
There’s one problem with that, of course — when someone becomes rich (or richer) they tend to buy things with the money, directly and indirectly. This in turn tends to boost economic activity (someone has to build the yacht, Lear Jet, etc) in the general case.
This is the premise the right tries to advance, and there’s a clean logical argument for it.
So why does the claimed disparity advance (and it does) if wealth is of no value simply in accumulation, but rather only is of value to a person when used in some form or fashion?
That’s the $64,000 question, and our author here unfortunately blows his own argument’s brains out when he pinpoints what I’ve been saying now for years:
One conservative message on inequality is to say that it doesn’t matter, and we should accept rises in both pre-tax and post-tax inequality. This is the implication of studies periodically put out by the Heritage Foundation, arguing that poor people aren’t really poor if they have microwave ovens.
And here comes the “in the mouth the foot is deposited” moment!
This isn’t an appealing argument. The problem with rising inequality is not that lower-income families can’t afford ever-cheaper electronics; it’s that they can’t keep pace with the rising costs of health care, education and (in certain parts of the country) housing. There’s also no reason to think that, whatever standard of living we start from, an economy where nearly all the improvements accrue to a small fraction of families is either politically sustainable or morally acceptable.
Hoh hoh hoh.
So the cheaper electronics aren’t the problem eh?
It’s the monopoly costs — advanced by the left and indeed promoted as the answer — that are the problem itself!
My oh my. Let’s see, we’ll make health care universally available without regard to ability to pay and what happens? Demand becomes infinite. We make education universally available by allowing the government (and others) to lend money to buy it without regard to ability to pay (e.g. without any test as to whether what is being pursued is profitable enough as a vocation to cover the expense, nor do we condition the funds on outstanding and continued academic performance) and the demand once again becomes infinite and thus so does the price!
Housing? Uh, ever look at a zoning code and the way costs are escalated there as well — intentionally, and all for the benefit of everyone, of course. Seller-financed down payment assistance anyone? How about subsidizing (by government guarantee) loans with little or no money on the table — inherently dangerous loans? Again too much “money” (credit this time) chases the goods and what does price do? It skyrockets! At least with housing you can choose to move and try to evade the stupidity (e.g. GTFO of California); the monopolists have effectively slammed that door when it comes to health care and education unless you’re willing to travel beyond the United States.
This is an example of what I said two weeks ago: Conservatives do not have economic ideas that are good for the middle class. Since the 1970s, wage gains have decoupled from productivity gains and the median family has therefore reaped a disproportionately small share of the benefits of growth. Conservatives are left without anything to say about this problem.
Sorry, but wrong.
Health care should not advance in cost more than CPI does, in aggregate. Indeed it should advance less or even go down in cost; after all health care is delivered by and large through technology today, and the cost of technology keeps coming down! But instead health care costs go up at rates 2, 3, even 5x headline inflation and yet when you remove all the BS monopoly games in one small place, such as surgery, suddenly costs crash by 80%. (e.g. The Oklahoma Surgical Center)
Education? You used to be able to flip pizzas and pay for it. Tuition and fees were usually under $1,000 per semester — all-in. Books were another few hundred, not a few hundred dollars each.
But then there was no “free money” in either; when you went to the doctor you pulled out a checkbook. When you showed up at college, you pulled out a checkbook. I did both.
Now? You bill “someone else.”
But there is no “someone else” — there is only you, and you get screwed. The further down the economic ladder you are, the more you get screwed.
How do you fix this?
Not by stealing the wealthy person’s money. This isn’t just a matter of what’s proper, it’s a matter of arithmetic — even if you stealall of the wealthy people’s money it’s not enough because the exponential nature of the advance guarantees you cannot outrun it through taxation!
No, the only fix is to remove the monopoly protections and “free money” games in both areas, and let the market work.
We know it will work not only because it used to just a couple of decades ago but because in places where it is allowed to now, such as the aforementioned Oklahoma Surgical Center, it still does today.
Thank you Josh Barro for admitting the truth. Now let’s have both the left and right band together and toss the monopolists in those areas of our economy out on their ear, or even better, imprison them.
While we’re doing that I would like to advance the idea that we should consider throwing those political pundits and the politicians that have knowingly advanced these lies for the last 30 years in the dock as well.