Dean,

Nicholas Kristof is not an economist, and unlike Thomas Friedman, doesn't resort to faux economic analysis or prescribe economic solutions.

Kristof concludes today's column with:

So let’s get real. A crisis is developing in the white working class, a byproduct of growing income inequality in America. The pathologies are achingly real. But the solution isn’t finger-wagging, or averting our eyes — but opportunity.

While you do provide the economic analysis missing from Kristof's column, you seem to be substantially in agreement with his column.

T

Regarding your statement that these policies redistribute from less educated to more educated workers, I think Paul Krugman has shown some statistics that prove a different conclusion: That the top 21% minus the top 1% have largely been stagnant, while wealth has been transferred from the bottom 4 quintiles to the top 1%.

Most of the "working educated" are captured below this 1%, which has captured all the gains.

Which brings me to another point: Maybe the 99% needs to stick together.

As elections approach, I see a surge in wedge issue debates. I wonder if the Santorum Surge" is due to a successful distraction to the wedge issues of abortion and contraception, triggered by the Komen and "Obamacare" debates.

I am not saying these issues are unimportant, but they certainly divide the 99%.

As a country, we have an emergency situation regarding who controls our media and government. If we stay focused on the economic issues, and the issues of control of our government by the bankers, we have a chance to make some headway this election season. If we get sidetracked and divided by wedge issues, the Oligarchs win again.

I am sure a lot of liberals feel passionate about women's health issues, but the fact is, defending either of the Oligarch parties because they are on your side of this issue will ensure continued rule by the bankers, no matter which party wins.

Populist,

here is the ratio of wages of the 90th percentile worker (college grads) to the 50th percentile http://stateofworkingamerica.o...1973-2009/

Ron,

yes, I agree with Kristoff

Dean - the RSS feed seems to have been disrupted. Would you have your webmaster look at it? Thanks

Get out the Kleenex, Kristof is writing up another world of pity, while Wall Street and the National Security State stomp on the very people he pretends to call attention to.
The CIA and BofA are wiping away tears of laughter.
Charles Murray just got a lot of free publicity.

Izzatzo, are Liberals opposed to marriage as Kristof claims?

Pinker is just an Ivy League Dr Phil, he's too impressed with his own mind to understand real politcal exploitation.

In the first line of the second paragraph, should "Board" be "Board's failure"?

While Kristof imagines himself some hybrid of Ida Tarbell and Gandhi, he really is not very different from his colleague David Brooks.

What Fed policies would simultaneously promote full employment and deflate asset bubbles? (Serious question, not a gotcha.) Low interest rates promote both employment and bubbles; vice versa for high rates. So what are the more subtle policy options?

Dean,

Your graph shows that the 50th percentile is losing ground to the 95th percentile.  This is not at all inconsistent with bar graphs showing the top quintile excluding the top 1% as keeping a steady share of income, while the losses to the bottom 80% are largely accounted for by the gains to the top 1%.  I don't have the bar graph in question handy, and I might be a little imprecise on the exact details of that bar graph, but I remember distinctly, that the income percentage losses of the vast majority of workers on the bottom, can be totally explained by income gains in the very, very, top.  Your graph in no way refutes this.

It's mighty white of Kristof to appeal to Charles Murray's Bell Curve of White Failure based on Steven Pinker's Blank Slate Mind of inferior misundereducated intelligence.

Just wait till Hot Monogamy Bigot Rick Santorum works this into the command and control family values coming apart at the seams due to an activist Supreme Court gone wild with Homo Orgy Fever (HOF).

Yes Virginia, rising oil prices caused the housing bubble and with nothing but Immoralist Filth (IF) to fall back on, the purist of the impure races succumbed to Radical Individual Fear (RIF) when Forced into Foreclosure (FIF) and exposed to (HOF) simultaneously.

Contrary to Pinker's prediction of whitey tamed
as angels by the hot monogamy of traditional marriage, the frigid chill of excessive headaches set in to trigger explict violence displayed at OWS rallies with chants of:

IF HOF THEN RIF! IF RIF THEN FIF!

Elect Gingrich now. Hetero Polyamory is a choice.

Stupid liberals.

Populist,

the graph is showing wages at the 95th percentile, it says zero about wages for people above this income level. In other words, if wages for everyone about the 95th percentile had fallen to the level of the 95th percentile worker, my graph would show the exact same thing.

Andrew,

The way that the Fed should have combated the bubble is first and foremost by documenting it and calling attention to its existence. I know that there is a conventional wisdom among economists that this would have had no effect, but of course that contradicts what they say at other times -- that the Fed has to be very careful in public statements, because they move markets. Big banks and other financial actors cannot just ignore the Fed and I can tell you, they had no answer to the bubble claim. If Greenspan had gone this costless route, it would have put the fear of God into a lot of people on Wall Street. they also have a lot of regulatory power that they could used to crack down on fraudulent mortgages.


So low interest rates were the right policy, but they should also have thrown everything they had at the bubble.

Andrew Burday wrote,

Low interest rates promote both employment and bubbles; vice versa for high rates.

That's not so clear. In the case of the housing bubble, while low interest rates didn't help matters, they were responsible for only a fairly small fraction of the absurd increases in house prices.

(I didn't believe that myself, until I bought a house and got out the mortgage tables and did the computation.)

Dean,

I'm really disappointed in today's post - especially the comments. I can not understand how reader's can't see that Kristof's column has nothing at all to do with macroeconomics or even the unemployed. that it's only concern is Manufacturing Consent and that ugly process. What possesses this experienced journalist to consult Charles Murray on such a critically important subject? And, If Kristof wants to examine the psyche of under educated whites why cite Pinker? Instead, he should do an expose' on Roger Ailes, and television programing, and there he'll see how his fellow Oregonians have been lied to and cheated out any possible understanding of the political economy in which they languish. To any doubters, go back and read Kristof's 20,000 word polish job of George W. Bush before the 2000 election. Then read ANY of his columns, from ANY painful corner of this misstreated world and see if Kristof is capable of helping his readers understand how we got to where we are, or is he just deliberate noise and confusion?

A suggestion for Kristof: read Michelle Alexander's book on mass incarceration in the US. Don"t do a column on it - you'll screw it up - just read it.

Dean,

I think maybe you linked to the wrong graph.  All that graph shows, is that the 50th percentile income fell relative to the 95th percentile.

Let me illustrate my point, with a concrete hypothetical:

Suppose the income distribution for a population of 5 people looked like this at time "A", and time "B", respectively:

Ta   Tb
10.   5
20.   10
20.   15
20.   20
30.   50

Ok, in this case, the income share of the guy at "the 50th percentile" (half the population makes more, half makes less) has fallen relative to the guy just above him ( that guy's share is up by 33% relative to the middle guy).

Yet, it is clear that the guy above him, started at a  20% share, and ended at a 20% share - so he hasn't "taken anything" from those below him.  In fact, in this example, he is just getting an equal share of total income, because the top guy has "hogged it all".

I think the graph on this blog page from IRS data is instructive:

http://krugman.blogs.nytimes.com/page/2/

The green line for the 90-95th percentile income share is basically flat. So, a rough guess is that people at the 92nd percentile have not contributed in any way to income inequality.  Those just above them have contributed slightly, and those in the very, very, top, have "hogged it all".

So, yeah, if you were to put income shares back where they were 30 years ago, the people at the 95th through the 99th percentile would lose a few percent, but I think blaming them for the majority of the income losses of the lower quintiles is very incorrect.

One final point:  Since the 1% already had a huge percentage of the total income (and even more so of wealth), and this was increased by a large percentage in this time period, the 1% has taken a huge amount of cash from the poor, and is responsible for the vast majority of the losses to the lower quintiles.

Populist,

here is a different graph http://stateofworkingamerica.o...1973-2009/

of course you could have a story where the income of 95th percentile stayed flat and everyone below fell, but that is not what happened. The 95th and even 90th percentile saw healthy wage gains in the last three decades, unlike the 50th percentile or 10th percentile.

We have to look at the world with clear eyes. The top 5 percent will not see themselves as losers because they are not. They have been doing pretty well. It is not just Bill Gate and Mark Zuckerberg. This is important to understand both where the money is going -- a lot is going to wealthy doctors and lawyers -- and also for political alliances.

To steal a line from a different debate, in the battle of us against them, the 95th percentile is with them.

Now imagine that the top quintile in your column Tb takes its 50% and invests it in colonies on another planet so that the money is effectively withdrawn from the country which it shares with the bottom 80%. For the bottom 60% then, the "gains" of the 60 to 80 quintile are absolute and not merely relative even if its share of the total remained the same. Runaway finance literally sucks money out of the "real" economy as it sloshes around in a parallel netherworld.

Dean,

Yes, the income of the 95th percentile rose, as did the income of the 92nd percentile, and even many people well below this, as total income did in fact increase.

My point, which Krugman's IRS graph shows, is that over that time period, the percentage of total income of the "92nd percentile" remained constant.  So, the persons at the 92nd percentile didn't "take income" from the lower quintiles.

Looked at in a more precise way, if you were to put the income distribution back to the exact apportionment percentages for the beginning of the time period, the 95th percentile would only lose a few percent.

In fact, the IRS graph shows that the income percentage share of the top 1% rose by about 6% of total income, while the income share of the 95%-99% rose only about 3% of total income.

So, fully 2/3 of the income losses to the lower quintiles, are due to the 1%.  In order for this small population to grab so much share, their income had to skyrocket (which it has).

I don't know the percentage of people with college education today, but I would venture it includes more than just the top 5% of workers.  So, blaming "college graduates" for the redistribution in income, doesn't seem to me to be a fair characterization.

Populist,

i was talking explicitly about doctors and lawyers, people with post graduate degrees. These people make up a good portion of the one percent and almost all of them are in the 5 percent. And, the point is that they are winners in the current economy. They didn't win as much as Gates, Zuckerberg and the Wall Street boys, but they have come out way ahead. They are not interested in an agenda that reverses the upward redistribution of the last 30 years.

Dean,

I guess I should say that this exchange has changed my perception somewhat on the distribution.

I was under the impression that virtually all of the share lost at the bottom, was due to the gain in share by the 1%.  As I interpret the numbers, I still think the gain for the 1% accounts for most of the losses for the bottom quintiles, but now it seems to me that the rest of the top 5% still played a smaller role than the 1%, but yet a more significant role than I realized.  I guess at some point I am just splitting hairs, but the general perceptions about the data, do drive opinions on policy.

I don't really like the prescription of bringing in foreign workers to bring the earnings of the top 5% down.  I read there are actually an excess of Law graduates, and we really need to reform our system, which has so many lawyers, bankers, medical insurance company employees, defense workers, (lobbyists!), our bloated prison system, surveillance state, etc.

In particular, lawyers, bankers, hedge fund operators, and medical insurance companies waste both our dollars, and much of our educated talent, which could be put to more efficient use.  I am probably preaching to the choir on that one.

If we did that, might we have more college grads than we need?

Thanks for taking the time.  I did learn something.

Thanks Populist,

we'll have more exchanges.