Robert Samuelson Tells the Middle Class and Poor that They Should Stop Expecting to Have Decent Lives Because His Rich Friends Want All the Money

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Sunday, 28 April 2013 20:47

That is the best way to describe Robert Samuelson's column in Monday's Washington Post. I could go through the piece in detail and offer point by point rebuttals, but what's the point in killing innocent electrons? We've been here before.

Let's just take the first and most obscene of his inaccuracies. He tells readers that the idea that the non-rich could enjoy decent living standards rest on unrealistic assumptions beginning with this one:

"First, that economists knew enough to moderate the business cycle, guaranteeing jobs for most people who wanted them. This seemed true for many years; from 1980 to 2007, the economy created 47 million non-farm jobs. The Great Recession revealed the limits of economic management."

Actually, many economists do know how to restore economic growth (it's simple, spend money), however people like Robert Samuelson and his friends at the Washington Post are doing everything they can to prevent the government from taking the steps needed to restore the economy to full employment. FWIW, they also helped to bury the arguments of those of us warning of this disaster before the housing bubble grew large enough so that its collapse would wreck the economy.

(It is bizarre that Samuelson picks 1980 as the beginning of his era of prosperity. This was actually the beginning of three decades of wage stagnation for most of the population and the end of three decades of broadly shared prosperity.)

The other points in Samuelson's diatribe are equally off the mark, but who cares. He just wants to convince ordinary people that they should get over the idea that they have any claim to the country's wealth; it's all going to the rich.

Addendum:

Okay, I won't be lazy here. Let me correct a couple of Samuelson's other major end of entitlement claims. He tells readers:

"Government could pay for new programs by taking a fixed share of rising incomes. In reality, greater income inequality has dampened middle-class living standards, while existing programs — soaring health costs and the effects of an aging population — have claimed an ever-larger share of taxes.

Actually higher taxes for working people are hardly new. In 1960 the payroll tax was 6.0 percent (combining employee and employer contributions), by 1990 it had increased by 9.35 percentage points to 15.35 percent. Samuelson is probably saying that this tax increase didn't bother people because it was offset by reductions in the corporate income tax. (Actually there were also reductions in excise taxes, mostly tariffs, and the earned income tax offset this increase for many low income families. However, many moderate income families ended up with a substantial net tax increase from this rise in the payroll tax.)

Here's another part of Samuelson's end of entitlement:

"Fourth, that lifestyle choices — to marry, have children or divorce — would expand individual freedom without inflicting adverse social consequences. Wrong. Family breakdown has deepened poverty and worsened children’s prospects. About 30 percent of children live with either one parent or no parent; on average, their life chances are poorer than those in two-parent households."

There are two problems with this one. First the rise of single parent families is largely a 1970s story. There was little increase in the 1980s and there has been some movement in the other direction in the last two decades.

The other problem is a question of causation. Suppose that it's illegal for people to get divorced. This means that in marriages where the husband is an alcoholic, abusive to his spouse and kids, or in other ways harmful to the family, we see that children are being raised by married couples. Now we change divorce law so that many of these families break up and children with unhelpful fathers are now being raised by single mothers.

In this case the data would show an improvement in outcomes for two-parent families and no clear effect on single parent families. This would be true even if getting the father out of the house was beneficial to the kids. In other words, the data in this case would show single parent families leading to worse outcomes for kids even if the children actually benefited from the divorce. (A third point is that many children in countries like Germany and Sweden are raised by single parents with little obvious handicap relative to those raised by two parent families. That suggests the problem is the larger support structure provided by society, not single parents.)