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Concerned Capitalist is Concerned

Continuing the tradition of trolling for clicks, NYT has an op-ed piece by a worried heir to Marie Antoinette, Peter Georgescu, Chairman emeritus of Young and Rubicam. He is worried along with some of his other billionaire friends about ending up like the Sun King’s daughter-in-law. The reason:  the yawning gap in income between the 0.1% and everyone else.

Business has the most to gain from a healthy America, and the most to lose by social unrest or punitive taxation.

His analysis of the problem is spot on, mainly that business is not investing in either research or its employees.

The fact that real wages have been flat for about four decades, while productivity has increased by 80 percent, shows that has not been happening. Before the early 1970s, wages and productivity were both rising. Now most gains from productivity go to shareholders, not employees.

And how does Marie’s heir want to address this problem? By asking taxpayers to foot the bill, so that businesses can pay their employees a fair wage.

There is a way to start. Government can provide tax incentives to business to pay more to employees making $80,000 or less. The program would exist for three to five years and then be evaluated for effectiveness.

How does one pay for these tax incentives?  Not by increasing taxes, since that would be punitive according Mr. Concerned Capitalist.

If inequality is not addressed, the income gap will most likely be resolved in one of two ways: by major social unrest or through oppressive taxes, such as the 80 percent tax rate on income over $500,000 suggested by Thomas Piketty,

The top most marginal rate currently is way less than 80%. In fact it is nearly half of that, 39.6%. What does Mr. Concerned Capitalist think is a fair, not punitive tax rates on his fellow one percenters? Gotta love this new capitalism, where you can socialize the risk and privatize the rewards. Win-win, for Georgescu and friends.

By two_kittehs ( Picture by: dorothyfrancesgoldstein)

Brooks Brother is a Riot

The New York Times has added another Brooks to its opinion pages.  Arthur Brooks, the President of the  American Enterprise Institute is not really David Brooks’ brother, although their shtick is remarkably similar.  Along with a last name they share an ideology that comforts the comfortable, while appearing reasonable on the surface.  Now you can gather pearls of wisdom  from both men on the op-ed pages of the New York Times on the same day.  What a deal, two Brooks for the price of one.

Arthur Brooks  is the President of the  American Enterprise Institute.  In an earlier column he wanted the 99% to be happy with their lot, because envy is bad for you. Pointing out how the policies of the last thirty odd years have resulted in astronomical growth in the incomes of 0.01% and stagnation for everyone else is inciting envy.   Wage slave be happy with your lot, and be thankful that you are not a real slave. Show some magnanimity for the crumbs thrown your way, worship the rich, if  you know what is good for you.

In his latest column Brooks is using Dalai Lama as a spokesperson to advance his agenda.  Dalai Lama was recently a guest at the American Enterprise Institute.  According to Brooks this is what Dalai Lama had to say,

He insisted that while free enterprise could be a blessing, it was not guaranteed to be so. Markets are instrumental, not intrinsic, for human flourishing. As with any tool, wielding capitalism for good requires deep moral awareness. Only activities motivated by a concern for others’ well-being, he declared, could be truly “constructive.”

Brooks then proceeds to sing praises of free enterprise before grudgingly admitting the obvious;

But while free enterprise keeps expanding globally, its success may be faltering in the United States.

He is vague about what exactly he means by free enterprise. However, anyone with even a minimal background in economics knows that when the playing field is not level, markets don’t produce optimal outcomes for all participants. Look to the labor market if you don’t believe me.

After paying lip service to the problem of economic inequality brought about by the policies of the last few decades, promoted by his think tank,  Arthur Brooks puts forth suggestions to make capitalism constructive,

The solution does not lie in the dubious “fair share” class-baiting of  politicians. We need to combine an effective, reliable safety net for the poor with a hard look at modern barriers to upward mobility. That means attacking cronyism that protects the well-connected. It means lifting poor children out of ineffective schools that leave them unable to compete. It entails pruning back outmoded licensing laws that restrain low-income entrepreneurs. And it means creating real solutions — not just proposing market distortions — for people who cannot find jobs that pay enough to support their families.

Translation: Deregulate everything.  Privatize schools, gut all regulations.  Doing away with the New Deal era financial market regulations turned out well for Wall Street not so much for the rest of us.  Thanks but no thanks for your self serving advice, Mr. Brooks.  Modern barriers to upward mobility are same as that of the last gilded age, concentration of wealth and with it the  concentration of power.   Efficiency of the workers has gone up but their wages have remained stagnant, even when corporate profits have soared. Policy preferences skewed towards the interests of a few (top 0.001%) are responsible for the current situation. A step in the right direction would be paying workers a living wage.  Brooks’ American Enterprise Institute is not only against raising the minimum wage but wants the minimum wage to be $4.  I wonder what  real solutions he has in mind, slavery or indentured servitude?

One Percent Kittehs

By two_kittehs (Picture by: ME!)

Nicholas Kristof Pens Another Obtuse Column

Was Nicholas Kristof always a bard of false equivalence or did he become one recently? St. Nick thinks that the Republicans should get some credit for bringing to light the causes of poverty, even if they get the solutions wrong.   He may be damning them with faint praise but I think he is giving the Republicans far too much credit.

  According to St. Nick they get the rhetoric right, never mind  their actual policies.  May be that was true in some bygone era, these days, even their rhetoric drips contempt.  Has St. Nick forgotten the 47% moochers of the last election season?

So what are the conservatives/Republicans right about according to Kristof?

Strong Families: Conservatives highlight the primacy of family and argue that family breakdown exacerbates poverty, and they’re right.

Way to confuse cause and effect.   Poverty makes it hard on a family or to even have a family.  Being married is no guarantee to economic prosperity.    Also what is this strange obsession conservatives have about people’s marriages? At best, this is a peripheral issue to the macroeconomics of income inequality and poverty.  You are already entitled to bigger tax deductions if you have a family. What more besides arranging marriages can the government do on this front?


JOB CREATION President Reagan was right when he said that the best social program is a job.


It is sad that Kristof has the exhume Reagan to come up with a sensible Republican voice.  The actual policies of the Republican  are much more favorable to people with investment income, than they are to wage earners.  Despite productivity gains, trickle down economic policies have not made the average American wealthier. The gains have gone to a tiny sliver of the population, the so called 1%.

SCHOOL REFORM Republicans were right to blow the whistle on broken school systems, for education in inner-city schools is the civil rights issue of the 21st century.

How is demonizing teachers and their unions going to make  problem schools perform better?

Kristof may not accept the Republican solutions, but he adopts their framing which only serves to obfuscate the issue of income inequality and blames the poor.  Doesn’t NYT already have David Brooks to do that?

Why should the party of the Ryan Budget  get credit for shedding crocodile tears over the problems that they helped create and are doing nothing to solve.  In fact they have thrown every conceivable road block in President Obama’s effort to jump start the economy right from early 2009.  The refusal of Republican governors to expand Medicaid in their states is a recent case in point.   Via Paul Krugman,

this is what the health economist Jonathan Gruber, one of the principal architects of health reform — and normally a very mild-mannered guy — recently summed it up: The Medicaid-rejection states “are willing to sacrifice billions of dollars of injections into their economy in order to punish poor people. It really is just almost awesome in its evilness.” Indeed.

It is high time that supposedly liberal columnists stopped giving Republicans  a fig leaf to hide their sheer callousness and ineptitude. 

You are trying my patience, again.

Head Bead

By two_kittehs