The Death and Life of the Great American Middle Class

I don’t agree with Andrew Sullivan on the issue of public sector unions at all but at least this post is a good deal more measured than many of his recent efforts. It’s also revealing of a certain mindset that I think a lot of Americans share. I will try to explain how I see the situation. Here are the talking points you hear from the right, in no particular order:

  1. The government is out of money, and we need to cut spending or future generations will suffer.
  2. Austerity should be for everyone, not just private-sector workers.
  3. We cannot raise taxes – even on the rich despite their inordinate wealth and not on corporations despite their extraordinary return to profitability during the jobless recovery.
  4. Public-sector workers have unsustainable wages and benefits. They need to be brought in line with the rest of us by whatever means necessary.
  5. Union-busting is just democracy in action. Protesting is ridiculous. The Republicans won, deal with it.
  6. Passing health-care legislation is tyranny. Tea-party protests are democracy in action. Democrats won, but it’s our duty to obstruct them at every turn.

A protestor in Madison, WI

So this hodge-podge of talking points spins an oddly appealing yarn for many Americans. We must all pull together to sacrifice – but not by raising revenue or taxing those who can afford to be taxed, but rather by laying off public sector workers (since private-sector workers have already been laid off) and cutting back their benefits (since private-sector workers had to have their wages and benefits cut) and busting their unions (because that’s what we did to the private sector). The government is out of money, so we must all tighten our belts. Or, rather, those Americans who depend on public services must tighten their belts. The fabulously rich get a free lunch and are sent on their merry way, lugging along piles of cash and a much more productive workforce thanks to the ever-looming threat of double-digit unemployment.

Average Income Per Family

(chart via Mother Jones)

Meanwhile, as John Cole points out, the first wave of 401k retirees is facing a serious crisis. This should come as no surprise. But context is especially important. At the same time that we’re discovering that the 401k model is unsound, we’re also seeing a concerted effort to attack the last bastion not just of unionism in this country, but of pension-based retirement plans. And the even larger picture, if we zoom out a few hundred feet or so higher, is that this is an attack on the middle class and on the future of the middle class in America. Not just on the public sector, but on the entire middle class, private sector included (though those battles have largely already been fought, and the middle class has lost them one by one).

The truth is that the traditional middle class is simply less necessary to the flow of commerce in an economy dominated by a super-rich elite investor class. So policies that favor the middle class in America have slowly been weeded out in favor of policies which tilt toward investment banks and multi-national corporations. Consciously or not, these policies are designed to replace the middle class with a low-paid service class (which nevertheless has access to long lines of credit). This service class has very little political clout, and will have less and less as whatever good service jobs are outsourced or, in the public sector, stripped of collective bargaining rights (and then privatized and promptly outsourced).

The decline of unions has been a vicious cycle, as the Democratic party has slowly grown more and more dependent on the money and influence of big business rather than organized labor. As a result, the Democrats have become less relevant, a party built on social issues rather than middle-class economics. That’s fine up to a point, but it’s not enough.

So why does Wisconsin matter? Because this is a pivotal battle in that fight. What happens in Wisconsin could be a bellwether for things to come. If Walker wins, expect other like-minded governors to attempt the same thing, and many of them will likely win. If he loses, organized labor may have bought itself a bit more time. But the new class war will continue. Unless the public narrative can be recaptured from the Tea Party and the austerity now crowd we won’t see it end. Unless Democrats wake up to this threat, the party itself could be undone. And we’ll continue to read, over and over, sentences like this one:

At a time when private sector employment is stagnating and wages shrinking, public workers are not going to be able to defend ever-increasing wages and benefits for themselves.

Many of us will accept this unblinkly, never stopping to consider that maybe it’s all backwards, a convenient narrative, a sleight of hand used to turn the middle class against itself.

Perhaps somewhat surprisingly, reports all say that the Tea Partiers and union protestors got along well enough in Madison, the two sides mixing amicably. Things remained civil. Perhaps there was some underlying, unspoken realization that never quite bubbled up to the surface – some foggy sense that we are all in the same boat together, and that someone else is sending it toward the breakers. That the storm is rushing in from above, not below.

PS – I will have a long post up about my own political evolution soon. I realize my move to progressivism has surprised a number of people and perhaps even offended a few, and I will try to coherently explain how I’ve gone from there to here, and here to there.

A similar version of this post appeared at Balloon Juice. This has been edited slightly with additional links, graphs, etc.

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291 thoughts on “The Death and Life of the Great American Middle Class

        • Disraeli was a Conservative and his definition of Progressive would be called Victorian today. They were a remarkable people, high minded sentiments flew about like bats over a lake on a summer’s evening.

          But the Victorians entertained some rum ideas about Empire, especially Disraeli. It was Disraeli who first invaded Afghanistan and his adventures in South Africa all came to a bad end. He played the Great Game and very largely lost.

          They were different times. The Victorians believed in Progress, whatever that means: great steamships, railroads, technology of all sorts. They did care about the factory workers and Dickens made Ebenezer Scrooge into a villain. But it was the Scrooges and Fagins who ran Britain under the Conservatives and the Liberal Party resembled nothing so much as Rand Paul with a top hat and spats. The concept of Labour in government was in the far distant future. The American Progressive would appear at roughly the same time, an allergic reaction to colonialism, the excesses of corporatism and the aftermath of WW1.

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          • BlaiseP – Disraeli said this:

            ““In a progressive country, change is constant; and the great question is not whether you should resist change, which is inevitable, but whether that change should be carried out in deference to the manners, the customs, the laws and traditions of a people, or whether it should be carried out in deference to abstract principles, and arbitrary and general doctrines.”

            The short interpretation is that society is going to move forward and the debate is really just about the speed and direction.

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      • Certainly, and while you’re getting a ‘pair’ of scare quotes you might order a pair of…oh, nevermind. Sorry, couldn’t hep myself.
        Mike, using it as “commie-dem”.

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        • Though much older than Erik, I was once a Conservative who moved into the Progressive camp. Many honest Conservatives no longer find a philosophical home among the Conservatives: there was a day when Conservatives gave more than lip service to the working man.

          It is a sovereign fact the Conservatives have sold their birthright for a bowl of porridge. The virtues of thrift, education and personal responsibility have been transmogrified into the virtues of ur-fascism. Fascism always begins so well, do not conflate my statement with the hideous excesses of the Third Reich. Consider the benefits of a merit-based government run like a corporation, with a CEO capable of Lifting the National Stock Price by any needful means. Gone are those mawky Bleeding Hearts: the weak deserve their fates. Those trade unions, all Communists: let those workers be formed up in platoons and companies, regiments and battalions, the better to serve the CEO.

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            • “Progressivism, or whatever you want to call the collectivist utopian scheme, must lead to tyranny.”

              Assertion without proof.

              “You cannot make the voluntary—Christian charity—mandatory.”

              You can tax people and use the money for good causes. If some dislike that – well, I haven’t seen too many right-wing ‘Christians’ who balk at using government powers whenever they can.

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      • Look, I can see that breathing down Bob’s neck over what he says every once in a while might be prudent toward maintaining the order, but giving the guy crap over what he puts quotes around is way out of line.
        Know what I “mean?”
        Hope you “get it.”
        If you really want a pair of “horns,” use these: ‘_’
        “Custom” made.

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          • Will H., that’s very generous of you to come to my defense and thank you.
            There’s, of course, a great deal of bs impregnating this thread and I’m sure a man of your insights have culled it out. People like us are realists in an age when phenomenalists have totally obsured the language and perverted reason. Alas, it’s down to you and I and a blessed few to right the outrageous wrongs of modernity.
            I’m pretty sure we can do it.
            For me, I intend to adopt the wisdom of one Elwood P. Dowd, a man mentored by an ancient Celtic Pooka named Harvey. I’ve moved happily beyond philosophy to imagination and poetics.
            Again, thank you for risking your reputation in my defense. I am humbled.

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  1. I don’t believe inequality is a red herring. I don’t believe it’s the problem in and of itself, but rather a symptom, since it wraps up two separate phenomena into one: lower- and middle-class wages have stagnated while wages at the tip of the top have absolutely exploded. If lower- and middle-class wages had stagnated as part of a general stagnation, that’s not necessarily a problem in an of itself. And if the wages at the tip of the top had exploded as part of a general upward wage explosion over all income categories, that’d be good for everyone.

    The problem with inequality, as I see it, is this: as EDK noted, the working class has gotten more productive but not seen its wages increase. I see no evidence that the super-rich have gotten more productive proportionally to their increase in income. They seem simply to have gotten better at skimming money and negotiating contracts where their pay doesn’t reflect their performance.

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      • Possibly in part, though you’d have a lot of convincing to do to get me to believe that such gains should accrue so one-sidedly to the “elite” when so much more than that category is involved in creating those products. But I also think that the assumption that wealth and ability are tightly coupled have led to a weird deconstruction that makes no sense. Like, if it’s assumed that ability will lead to wealth, it’s assumed that somebody who has amassed wealth must have the corresponding ability and therefore deserves more wealth.

        I also really think that the increasing importance of finance in business has led to situations where people get richer and richer by skimming fees without actually having a stake in the game, which allows them to participate in high-risk operations and get rich off of them in a way that doesn’t leave them exposed when the operations inevitably blow up.

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        • I’ll definitely agree with that, but I see no solution except in a total, centralized reconstruction of our entire economic system, which is a cure worse than the disease. Personally, I’d push for a consumption-based tax regime with a large deductible coupled with a single-payer healthcare system, but those positions are held by very few people and political impossibilities. Raising the marginal tax rates of the very wealthiest individuals and corporations seems like a fair and proper thing to do, but this is at best a temporary patch in what is ultimately a system full of gaping holes.

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          • Yup, agreed. This is the problem, I think. We’ve got this patchwork system that hobbles along until it needs another patch. It would be better to have had a more sound system in the first place, but at this point it would be much harder to put such a thing in place than to just keep on patching.

            I think one step along the way could be for people to realize that a great many of the systems we have in place (employer-based health coverage comes to mind) are the result of historical accident, not some grandly designed tradition. There’s no reason to view any of our currently established framework as especially sacrosanct, especially if it just straight up doesn’t work.

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            • I find that to be a big part of the problem, the idea that a given regulation/benefit/entitlement is key to the existence of something that it MUST NOT BE CHANGED!

              How often do we hear of rules or policies that are so harmful, but because they might help one person (or better yet, save one child, or, more realistically, they make someone a lot of money/power), we must keep them intact at all costs (e.g. Zero Tolerance in schools, unions being required to protect bad employees, police & prosecutor immunity, staying away from “loser-pays” tort, the war on drugs, etc.)

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            • Employer-based health care is a curious byproduct of WW2. Kaiser Steel found a way around giving raises to employees via a self-funded health care scheme which would in time become Kaiser Permanente. Henry Ford also had a health care scheme, though he funded it directly.

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                  • BlaiseP:

                    If when you say, “Kaiser simply moved on,” you really mean that it went into bankruptcy you would be correct. You know, GM, started out as a car company but ended life as union health care company that had a small sideline making cars.

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                    • Corporations come and go. Kaiser Steel rose and fell with the military shipbuilding industry. One man’s trash is another man’s treasure, Kaiser Ventures offers recycling and landfill services now.

                      That’s the great thing about corporations, they’re like restaurants. You can close them down, redecorate and reopen the doors. Kaiser Ventures is now an LLC.

                      Same goes for GM. Sure was a big IPO when it emerged from Chapter 11. Wonderful thing, capitalism.

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    • They seem simply to have gotten better at skimming money and negotiating contracts where their pay doesn’t reflect their performance.

      If you have any concrete examples of “skimming”, I’d love to hear them.

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      • Dave, welcome back to consciousness; you’ll find that the world has changed in the past few year. I suggest that you start with ‘Great Financial Crash’, in the year 2008.

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      • An example? Well, the mega-banks persuaded the Congress to relax mark-to-market rules, allowing them to overvalue underperforming loans so as to appear profitable.

        They’ve also engineered a relationship with the Fed whereby the megas borrow money at virtually no interest, then loan it back to our government at 2-3%.

        When the Feds decided to buy up some of the toxic assests at full value the megas began snapping up more of them so as to turn a profit at taxpayer expense.

        There are plenty of examples indicating our wealthy class has largely ceased producing anything and simply pursues extractive policies which siphon wealth from the greater economy.

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  2. The Democratic Party has been wrung away from the blue collar worker, and now it’s only appropriate to remove the blue collar worker from the Democratic Party.

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  3. I’d think the sanctity of contract law would be important to Tea Party folks and libertarians in general. Yet I see so many people who don’t think workers should have the right to sign contracts with their employers that recognize unions, establish union-only shops, etc. And the same folks have no problem with the state reneging on decades of contracts. Is the right to negotiate with any potential employer without also negotiating with current employees a fundamental one?

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    • Wasn’t the sanctity of contracts the reason that corporations demanded to get paid out in full from bad bets they’d made with AIG? I think when contracts threaten to take money from corporations, they’re sacred. When they threaten to lose corporations money, they’re not so much sacred anymore. The issue of public employee contracts isn’t directly in this paradigm, since it doesn’t directly involve a corporation, except in that reduction in union density in general is good for the bottom line of most corporations.

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    • I’m OK with anti-trust laws (perhaps not the ones that currently exist, but some laws to restrain monopoly), so I’m also OK with restraining some union activity.

      And I’m really uncomfortable with the notion that a simple majority of workers can force the rest to either join the union or quit, it seems to me to undermine freedom of association, since its forcing you to associate with a group.

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      • | And I’m really uncomfortable with the notion that a simple majority of workers can force the rest to either join the union or quit, it seems to me to undermine freedom of association, since its forcing you to associate with a group.

        Let’s look at this ‘freedom of association’ thing. The weird thing is, the right’s strange objection to being ‘forced’ to join a union only seems to show up with regard to unions. Companies can basically force you to do whatever they want, so it’s entirely reasonable to force you to join a union.

        Likewise, companies can enter ‘partnerships’ and make demands on each other all the time, including demands that they make _each other’s_ workers do something, which no one seems to have a problem with.

        The only time this is ever a problem is when it’s something corporate American _as a whole_ doesn’t really want to agree to, so, somehow, the rights of the worker to ‘not do what the company says’ magically appear out of thin air. But let’s make an identical example to a union using two corporations and see if you have a problem with it:

        You work for company X. X decided to go into partnership with company Y on project XY. You have been assigned to it. It is physically located at Y, so you have to go to work there. People at Y have to pay for a parking pass. So now, you have pay for one, because, duh, you have to park. You also have to wear a Y-assigned ID badge while in Y.

        Yeah, well, that was the example. Bet you were expecting more. Don’t need it. You were just forced to ‘associate’ with the other company, and you were just forced to ‘pay dues’.

        Do you have some _right_ to work for company X without doing this? When they assign you to project XY can you just say ‘Nope, not joining.’? When you got hired, were you allowed to say ‘Except I won’t work on XY.’ Did company X just have no right to agree to XY in the first place?

        Of course not, and no one argue that. But, somehow, when Y is a union, of course workers suddenly have ‘rights’ in that regard, which is utter nonsense.

        Corporate America is always willing to argue that they _shouldn’t be allowed_ to do things that help workers. Not ‘being allowed’ to do things let them claim it’s not their fault.

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        • The difference is that at bottom work is the act of accepting money to do things you otherwise wouldn’t do. My boss gets to tell me to do things because they pay for the privilege, but the union wants to tell me what to do and make me pay them, how is that fair?

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          • I actually addressed that point in part of my post and then deleted it, because it makes things less clear. I was going to explain, and realized it, again, made things less clear, so i will instead make two posts:

            Technically, in what I described, _you_ pay for a parking pass. In fact, people pay for stuff associated with their job all the time. _Most_ of that gets reimbursed, but it certainly doesn’t have to be.

            Do you argue that your employees shouldn’t legally be able to require you to visit a convention somewhere and pay for your own hotel room? Yes, yes, there’d be outrage, but _is it illegal_ for them to do that and fire you if you don’t?

            Likewise, is it illegal for them to require that you keep up your _third-party_ certifications? That you have to go and pay for some company to give you an MSCE or something?

            Those things are pretty dickish moves, even in today’s labor market. However, they aren’t illegal.

            Or, hell, at many jobs you’re required to meet a dress code, and, last I checked, you had to buy those clothes yourself.

            I’m a little confused at the distinction you’re trying to make. Joining the union isn’t some random weird thing that you were just forced to do, you were forced to do it _as a condition of your job_, just like paying for a college degree or gas to get to work.

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          • And my other post. Let’s look at this another direction. I actually put this in my earlier post, and then deleted it because it obscured my point about partnerships, but look at this way:

            You’re not really paying the union. The union negotiated _it’s own_payment, per worker.

            Surely you’ll agree that two companies working together can come to any negotiation they want. In fact, third-party security companies often charge the company they’re working for per-employee they have to deal with. The union is a partnership that supplies labor, ergo, it makes sense for them to charge per laborer.

            So it would be entirely reasonable for a union to charge to a company, say, $30 a worker a month.

            The question is, is it reasonable to charge you, and the answer, of course, is…they _aren’t_. This payment from your company to the union, just, strangely, _goes through your paycheck_.

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            • By that’s my point I guess, I don’t want to be supplied to an employer by a union, I want to do my own supplying.

              Unions have many goals and activities, and the strictly commercial ones are of less concern to me, a lot of them are explicitly political, and given my own ideology their politics run sharply at odds with my own. Hell, the largest non-government union in New Zealand is so closely aligned with out largest left-wing political party that members of the union have voting rights as party members, and the same man is currently president of both organisations.

              Now that’s an extreme case, but I’m sure you can see why I’d be less than keen to be forced to pay for political advocacy I disagree with. Union, like corporations, are both political and commercial activities, and like corporations, I am much more suspicious of unions as a political entity than as a commercial entity.

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  4. ED,

    You negelect the most important conservative talking point which is that public sector unions represent an unfair bargaining model. This was outlined in detail by David Brooks yesterday but what it boils down to is a few key characteristics:

    – If they don’t like the deal they get they can run to the legislature and find assisitance from the very same people they helped elect.
    – They can influence those legislators with lobbying dollars.
    – Private sector unions have an incentive to make sure the company stays profitable so they retain their jobs – public sector unions have guaranteed tax revenues to draw from so there’s no incentive to make reasonable demands.

    I also have to ask about this sarcastic statement:

    “We must all pull together to sacrifice – but not by raising revenue or taxing those who can afford to be taxed…”

    How would taxing the rich be shared sacrafice? Has your progressive turn also signaled that you have bought into the idea that all a government needs to succeed is more taxes?

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    • Last first: taxing the rich only wouldn’t necessarily be “shared sacrifice,” if we start from the baseline of the Bush tax cuts as the ultimate in fairness, which I think is questionable at best. But given wage stagnation, rising health care costs, the housing collapse, and other things that have disproportionately affected lower- and middle-class earners simply because they make less money, those people are already absorbing more than their fair share of sacrifice.

      As to your points about the supposed illegitimacy of public sector unions, your first and second points apply equally well to any government contractors or other corporations with government interests. The third point would be more convincing if you could point to data that showed that public sector workers disproportionately made unreasonable demands and made more money than they deserve and more than the private sector, but such data simply does not exist.

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      • Fargus,
        As one example Gov Chris Christie was just explaining this morning that in Camden, NJ 71% of the costs associated with their police force are fringe benefits. You call that reasonable?
        As a contrast, my benefits in my private sector job represent about 15% of the total cost of my employment to my employer.

        It’s funny you mention the housing collapse as part of the woes affecting the middle class. Yes, home values have fallen but houses never should have been seen as investments to begin with. Isn’t the much bigger problem with the American middle class is the easy access to credit and over-extended borrowers? That’s why I favor an across-the-board tax hike for all incomes above $25,000. Everyone needs to feel the pinch. This is a psychological problem first and foremost.

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        • What exactly is defined as “fringe benefits”? I can’t make an accurate judgment without knowing the terms, and knowing Chris Christie, I’m not going to trust his framing of an issue any further than I can throw him (not an intentional fat joke, but I guess it worked out that way).

          Not all middle class people viewed homes as investments, and your assumption that they did is pretty indicative of your commitment to a narrative over reality. My mother, for instance, did everything right. Saved for retirement, bought a house that was within her means, with a low-interest fixed-rate mortgage. What does she get for that fiscal prudence? Underwater on her house and maxing out her contributions to her 401k in the hopes of making up the losses to her portfolio over the last few years.

          My point wasn’t that some middle-class folks didn’t make mistakes. My point was whether or not they did, they’ve taken on more than their fair share of sacrifice simply due to the fact that they already don’t make enough money to comfortably absorb their losses.

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      • I’m outsourcing my response to Fargus. I’d just note there’s really nothing different between public and private unions. One negotiates with private employers, one negotiates with public employers. Public sector unions do not bargain ‘against the taxpayer’ any more than private sector unions bargain against the consumer

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          • Bull. One, outsourcing your argument is no way to argue. It’s just a way to attempt to shirk a question. Two, Brooks is just wrong. You and he may say that public employee unions fight against taxpayers’ interests, but that’s only if we assume that taxpayers’ interests are solely to pay people the minimum possible for their work. As just the skeleton of a rebuttal, I’d like to advance the claim that it’s in the taxpayers’ interest for public sector unions to bargain to make public sector jobs attractive enough to attract talented people to do the work of the public sector, not just the bottom of the barrel who are willing to work for table scraps.

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            • Brooks is just extremely wrong, Mike. Can you counter any of Fargus’s points? Public unions negotiate with the public bureaucracy. They no more directly influence elections than any other special interest.

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            • Fargus, I was refering priarily to this comment from Brooks:

              “Private sector unions confront managers who have an incentive to push back against their demands. Public sector unions face managers who have an incentive to give into them for the sake of their own survival. Most important, public sector unions help choose those they negotiate with. Through gigantic campaign contributions and overall clout, they have enormous influence over who gets elected to bargain with them, especially in state and local races.”

              Private sector unions do not purchase the people on the other side of the table. As Christie said this morning, if these unions want collective bargainning then they should be barred from lobbying legisltures and using them as a Plan B when bargaining fails to achieve their goals.

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              • Does this mean that companies that have government contracts ought to be legally barred from contributing to political campaigns? It would seem to follow from your Brooksian reasoning. Should public employees be barred from contributing personally to political campaigns? Should employees of government contractors be barred from contributing personally to political campaigns? Why would these not be true, but it should be true of unions? Moreover, why should the argument then generalize to arguing against the very existence of public sector unions? It doesn’t make sense.

                Besides which, you still have yet to make an argument that shows that having public jobs that attract a decent level of talent is somehow against the public interest.

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                  • Well, we can count you in an army of one as to those who think that lobbying should entirely disappear. The right-wing talk radio circuit would be up in arms over the worst ever violation of the first amendment should that happen.

                    The point about unions is that by advocating for workers, they help keep a baseline below which employers, even non-union ones, don’t dare to go. Cutting away support for unions cuts away at the potential gains to be made even by non-union employees.

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                    • What if we anonymized all political contributions? I’m not sure how we could do it, but if politicians no longer could know (as in it would be a felony to seek or be in possession of such data) who gave what, would the unspoken Quid Pro Quo would be gone?

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                    • I’ve heard this argument before but I just don’t see it. If an employer doesn’t pay enough they generally have trouble with employee retention. Unions are not the safeguard of reasonable salaries. If anything they drive them up to unreasonable levels (*cough*…auto industry…*cough*)

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                    • Justice Thomas argued for anonymous donations (as an option, anyway) during the recent Citizens United case.

                      The problem is that you can’t force contributions to be anonymous like-it-or-not. I think that there are free speech issues at play… plus the $1,000/plate fundraiser will always be a place to see and be seen.

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              • Frankly, a big part of the misconceptions going on is due to the fact that, apparently, very few have seen the operation of a viable union.
                The whole dynamic is out-of-whack.
                There really isn’t so much Us vs. Them.
                It’s more of a profit-sharing plan.
                Again: Partnering with labor is a form of profit-sharing plan.
                It’s good for business.

                And there are no profits to be had from the public sector. Any degree of employee ownership beyond ordinary citizenship would be conversion.

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        • “Public sector unions do not bargain ‘against the taxpayer’ any more than private sector unions bargain against the consumer.”

          That is utter crap. If my wage remains constant and private sector unions increase the price of goods through bargaining, then I can choose to consume less of those goods or choose to consume inferior goods (I can eat ramen.)

          If my wage remains constant and public sector unions increase the cost of government through bargaining, then I pay more taxes. End. Stop.

          My problem with this whole discussion is that some people seem to put public sector unions above all reproach.
          We are not allowed to question any union benefits because “we are destroying the middle class.”
          Are there any union benefits that are open to criticism?
          “Well, the benefits were agreed to through good faith bargaining,” you say. Really, because I would argue that every penny of benefits granted in these 50 bills is outright fraud.
          This is not some little pension spiking. This is minimum of a half billion dollars. Was anyone held accountable for this? No.
          No one was held accountable because Albany (Republicans and Democrats) is a wholly owned subsidiary of the public sector unions.
          I agree with you that Walker is going too far in Wisconsin. However, the problems in other states are much more significant than the “little things” you have mentioned before.

          What you don’t and probably can’t understand is that a lot of us feel disenfranchised. You blame the rich. I say they are all just piggies at the trough trying to get every last morsel. That includes public sector unions. Whether I vote for a Democrat or for a Republican, I can be assured of one thing. I will pay more – eventually.

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          • Robert North has been beating the drum for a different pension valuation system for quite some time. I find his arguments compelling, but he is, by his own admission, very much at odds with the prevailing wisdom:

            North says he argued that his market valuations provided important additional financial information. “The whole point is it provides a measure that’s independent of the asset allocation, exclusive of any advance recognition of any expected risk premia, and gets rid of smoothing. I happen to think it’s beneficial.”

            But the outside auditors rejected including these figures in the financial statements for the City and the schemes. North complains: “They told me I couldn’t do it in the financial statements due to the constraints of the Sarbanes-Oxley law. However, there’s an actuarial section in the CAFR for each of the schemes and that’s where I snuck it in, because the auditors don’t control the actuarial section.”

            Even within the US actuarial profession, North has a fight on his hands. “My own actuarial standards of practice are at odds with my ‘just stepping up and doing the financial economics’ view of the world. Today there is generally accepted actuarial practice versus best actuarial practice, and how do you go from ‘generally accepted’ to ‘best’?”

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        • E.D.

          Public sector unions do bargain against the taxpayer. I can chose not to buy a poor quality UAW made GM car but I can hardly do without police, fire or teachers. GM can probably make up for the unions wage extortion by selling more cars to cover the costs but the state is only left with raising taxes.

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          • Er, wait.

            Now, I’m the first to admit that there are problems with elected officials being our proxy in labor negotiations (I mentioned this elsewhere), but this is bad framing.

            The state is not “only left with raising taxes”. They’re left with raising taxes or negotiating new contracts. That’s the legislature’s *job*. If you don’t like what they’re doing, vote the bums out or put some sort of audit mechanism in place so that you get better oversight over the contract in the first place.

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        • Sorry ED, but there is a difference. In the private sector, unions succeed where firms typically make economic profits (ie. profits above the return on capital required to stay in business). That is, the firm has some market power to set prices, sets them above its costs, and returns the money to its shareholders. The union can bargain for a share of that money, and not impact prices, so only the equity-holders are worse off. Where there are no economic profits, a union in trying to bargain for a share of revenue will simply make the firm non-viable since it will not longer be able to raise capital.

          Now where is the surplus revenue in the public sector? Forget the recession – in normal times, where does the public sector get revenue from?

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          • Not to disagree, but this is the “all things being equal” view.
            And that’s not the way it plays out.
            The union knows that it has to give something back to make it work. The phrase I hear all the time is “value added.”
            People don’t buy Nikes because they want the cheapest shoe. They buy Nikes because they want a good shoe, and they’re willing to pay the money for it. Same with Carhartt. Same with any name-brand goods. Quality goods come at a premium.
            That’s where union labor comes in.
            From what I see, the tools are on hand and the safety equipment isn’t lacking. The union guy might have to spend more time waiting around for a permit, but he doesn’t have to go back and fix it after it’s done.
            I’ve walked into a chemical plant where they were losing $30k per day on one tank being down (a little problem with sulfuric acid they were having). I was literally worth my weight in gold that day.
            When it really counts, you go to the best.

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            • That’s an interesting point, Will and I agree. There are certainly cases where I would not hire non-union labor, and if a firm said “our prices are slightly higher because our employees are in XXX union” I might count that in their favour. So yes, all things aren’t equal – unions can add value and they can secure part of that value for their members. For that to happen, the employer has to have some market power, as I said above, because otherwise there wouldn’t be any added value to benefit either the employer or the union, right?

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              • That’s a good point. It’s either that they have to have market power, or will be able to garner market power through the benefit of a union.
                I know every union is different, but as for my own…
                There are a number of ways that unions can make a company more productive. They buy into the pension plan, and they get health insurance through the union. They can rely on a standardized certification program, so the skills required are the ones that show up on the job. And they offer below-market loans.
                So, a small company can take on a big job, and get it done with a few phone calls. All the manpower will be there with the skill sets that they require.
                But they really have to be interested in doing quality work first.
                I remember hearing about a fellow that would go around and buy old barns to tear them down, and use the wood to build houses at a profit. That’s not a person interested in quality goods.
                Everything in its place, I guess.

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                • Way, way, way off topic, but, some of those old barns were built with high quality old growth wood. Wood that is, in some cases exponentially, superior in strength and quality to modern lumber.

                  Unless of course it’s rotten.

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    • On your three points from Brooks:
      1. Ditto for people who dislike unions, want the state to privatize certain unionized jobs (say, education), etc.
      2. See (1)
      3. The WI public union(s) agreed to take benefit cuts and contribute to their pensions in future contracts in order to keep the state solvent. Contracts of public unions have been the first thing modified in many states meeting budget demands. And contracts with public unions are more likely to be modified by legislative fiat than any particular contract between a corporation and a union.

      The trajectory of labor law in this country doesn’t exactly work in your favor here. For example, public employees in Wisconsin are not striking in opposition to what the legislature might do because it would be illegal to do so. On one hand, management has the power to completely void a contract. On the other, labor is not allowed to materially protest this as a consequence of that contract and labor law. Management has a much stronger hand in public unions because it can break contracts with unions without going through bankruptcy.

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      • Personally, I would like to see a modified PLA model put into place, where every school district would be assigned a value according to its standing; ie, 4A, 3A, etc., and the wage package would be the same for each district with that designation. Also, an individual school district would be able to opt-in to a lower scale, but these could be easily identified by comparison, and any option like that would have to be maintained annually by vote.
        Gives both sides something to work with.

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  5. I have a very difficult time working up sympathy for people who were well-positioned to do so, but who didn’t save enough for their own retirement.

    Not only should they have been thinking about it all along, but what am I supposed to do? Give them my retirement savings?

    Further, we ought to be frank about it: The idea that one can easily afford — or even claim, as a right — an additional twenty or thirty years of idle time at the end of life, at the same standard of living as always, is an insanely amazing luxury.

    Why should I fund that, exactly? Out of altruism?

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    • This is where you and I will simply have to very seriously disagree. What do you mean by “well positioned to do so”? I’m not sure you understand how difficult that is for many people or just how many people are not in fact well-positioned to save, or well educated enough, or whose 401k’s mysteriously vanish just before retirement.

      Also, if you don’t support this sort of redistribution out of altruism, you probably ought to simply to avert societal collapse. A generation of impoverished retirees will be more disastrous for libertarians than anything I can think of.

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            • The less we progress?

              So you look at the history of this country and you don’t see how the union movement drove progress for all but the richest inhabitants? Really???

              I am from Europe. A few generations ago, my ancestors lived in slums and worked 7 days a week, 18 hour days for pittance wages. Just three generations later, they had vacations, weekends, legal protections, minimum wages and national health care and pensions.

              To deny the progress we have made due to people who don’t think like you, is to deny reality.

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            • That is an important point.
              Americans give far more in charitable donations than any other nation in the world.
              In those instances where we are compelled to give as a collective, we tend to feel a lot less compelled individually.

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            • I don’t know the statistics here, but no longer having to take (complete) care of parents who plan poorly for retirement seems to be a major benefit of social security and medicare in terms of expediting progress. Would the population shift from cities to the suburbs and from the north to the south post-WW2 have been as rapid if it necessarily required moving millions of the elderly as well?

              Specifically, what fraction of folks who retired circa 1970 would’ve failed to foresee inflation in the price of medical care and be unable to afford end-of-life care without Medicare? Would that be because of personal irresponsibility, given that companies operating at the same time failed to project the high rate of growth in health care costs? I suspect that the rapid economic progress of the 90s is at least somewhat dependent on workers not having to support their parents.

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            • It’s your post and the criticisms are fair. You’ve put your ideological transformation out there as a subject of discussion but you seem to rbe really bothered when people draw conclusions.

              Liberal/progressive theory generally assumes govt hand-holding for most of our lives. Maybe Scott’s comment was a bit snarky but the point is a legitimate one.

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              • Liberal/Progressive theory might have a different brief than you suppose. In some ways, I’d argue the real Progressives and the real Conservatives have a great deal in common. Consider:

                Progressives are convinced Congress has become consumed with its own internal divisions and has lost sight of politics at ground level. This we Progressives attribute to lack of voter participation.

                Progressives and Liberals believe bureaucracies have become self-justifying and increasingly irrelevant sinecures. The round trip time between taxation and benefit must be shortened. While bureaucracies are the necessary evil required to enforce our laws, they must be responsive to the taxpayers.

                Progressives believe in a ground-up theory of government. In this, we share a great deal with our Conservative brethren and ought to find more common cause. The American people are fundamentally conservative: we Progressives do not consider Conservatives the enemy. If we believe injustice for one is injustice for all, this is the simple truth. These soi-disant Conservatives preaching the virtues of the Individual have so consistently sided against the working man, I am put in mind of those tragic scenes of battered women weeping as their wife beating husbands are hauled off to jail.

                What have the Conservatives done for the working man of late?

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      • What do you mean by “well positioned to do so”?

        I mean that they are Americans and members of the middle class. If they felt that retirement was important to them, they should have saved more, but American savings rates have always been terrible. Even though Americans are very wealthy and have ample incentive to do so, in the form of the 401(k) plan itself.

        If someone gives you free money when you save, and you still don’t save, well, don’t come crying to me. Tighten your belt, work a little more, and let that be a lesson to everyone.

        I don’t see a societal collapse in the delayed retirement of the baby boomers, provided only that they fail to bust the budget by crying for new entitlements. Which they may yet do, once they get tired of the Tea Party stuff.

        Bad luck is a legitimate reason for charity, and even, I’d say, for some types of government-provided social insurance. Forgetting the lesson of the Ant and the Grasshopper isn’t a reason for anything.

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        • Part of EDK’s post, Jason, was that people who have managed their 401(k) plans as advised are finding that they’re falling way short. That’s probably largely due to the time that they’re retiring, coming right on the heels of a financial crisis, but still, it’s not as though those people did anything “wrong” in the moment. It’s only after the fact that we’re able to chastise them for not planning for something they couldn’t possibly have foreseen.

          Besides that, there were likely a whole lot of people who were convinced in the housing bubble mania that their house was going to provide all the retirement capital they needed as it inexorably increased in value.

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          • I’m chastising those who failed to save. Surely they deserve it. Don’t they?

            Look, I grew up thinking my family was poor. All the other kids had new clothes seemingly every month of the year! I wore hand-me-downs from my mom’s friends. The other kids had VCRs, color TVs, and every toy you’d see advertised on them. My family didn’t get its first stereo system until I was in high school. Color TV I think was a bit earlier, but not by much.

            But we weren’t poor. It was just that my dad had a job he hated, and he wanted to retire early. My parents saved like… do we even have a cliche here? Anyway, they hoarded like hamsters.

            Then my dad retired early. My mom still works at a low-stress job, mostly to have something to get her out of the house. They’re very comfortable now. Looking back on it, I can’t say I blame them in the least. In fact, I admire them for it. More people should be like them.

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            • I understand your point, and I’d agree with it, except that I think it has a bit of an ex post facto flavor. A portion of those whom you’re chastising are people who had every reason to think that they WERE saving. They were maybe not maxing out their 401(k), but were taking advantage of employer matching and then some. They had bought a home that they may not have been entirely sure was a sound investment, until they were convinced that it would serve them well as homes always go up in value. It’s easy to see in retrospect that they ought not to have taken such claims at face value and maybe ought to have maxed out contributions to their 401(k) in the past, but the point is that a number of people had every reason to think that they were being entirely prudent.

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              • Hold on a second there Fargus – How can that happen exactly? If you were retiring this year, and you were doing “everything right”, you should have your mortgage almost paid off and your 401(k) should have been moving into bonds over the last 10 years. If you were doing that, and you were saving enough, where was the problem?

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                • Call me crazy, but I don’t see why doing everything right has to include having bought your house 30 years ago. Unless moving is a luxury with which the proles shouldn’t concern themselves.

                  As for the balance in the 401(k), and it being in more conservative investments close to retirement, you’re right. I’m just going by the article, which posits retirees who were taking the advice of their financial advisors and in that sense doing everything right.

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                  • Sure people can move. Sell one house, buy another for a similar amount of money, where’s the problem? There’s only a problem if you borrow a whole bunch of money over a long duration when close to retirement, but you shouldn’t need to do that.

                    Unfortunately I think part of the problem is bad financial advice. I’ve never met a a “financial advisor” who was prepared to actually offer advice about asset allocation and risk, because where the commision in that?

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        • Do you think Americans really have incentives to save? By “save” are we talking cash in mattresses? I don’t think saving is rational at all. Our government economic policy has been to purposely discourage saving for the last sixty some-odd years by devaluing currency. Guess what? It worked.

          This is one of those things that makes being a Keynesian stimulus progressive inherently anti-environment for me: we encourage waste for the sake of waste and then whine about how much we’re wasting.

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              • I did. I was referring to this, from the linked WSJ article:

                In general, people facing problems today got too little advice, or bad advice. They didn’t realize that a 6% annual contribution, with a 3% company match, might not be enough.

                Some started saving too late or suspended contributions when they or their spouses lost jobs. Others borrowed against 401(k) accounts for medical emergencies or ran up debts too close to their planned retirement dates.

                In the stock-market collapses of 2000-2002 and 2007-2009, many people were over-invested in stocks. Some bailed out after the market collapse, suffering on the way down and then missing the rebound.

                Some of these people clearly deserve our sympathy. Just as clearly, not all of them do. And proposing that the government should step in and help them seems dubious to me, in part because giving middle-class folks a vast swath of leisure time at the end of their lives strikes me as a less than important goal, even by altruistic standards.

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                • What’s the alternative? I guess that’s where I’m getting stuck. If these people are legitimately stuck at 70 or 75 years old with no money, what’s the alternative? Send them back to work? Who’d have them? People in their 50s who find themselves unemployed have a hard enough time finding work. What are people who have run through their entire retirement portfolio supposed to do?

                  I think that the characterization “vast swath of leisure time” is a bit of a strawman as well.

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        • *applause for Jason*

          I agree 100% with this comment. American savings rates are terrible and it’s remarkable that so many baby-boomers did not learn from their parents who probably represented the most frugal generation of the 20th century. It’s terrible to say but if younger generations watch baby-boomers suffer in their retirement years based on poor decisions and large living, it might be a fantastic lesson in financial management.

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          • While the tax system still contains the mortgage interest deduction, Americans will be steered away from savings. It cannot be otherwise: let me tell you a little story.

            Back in 2006, I was doing a rules engine for Citigroup. It was a variant of the software which computes your FICO score, in fact it was written by the same company, Fair, Isaac and Co. People filled in loan applications for homes, cars and the like. Those applications were thrown over the wall to this rules engine for a first pass. Citigroup will not loan a million dollars to a five year old: some of these applications would be send back to the underwriter.

            But most would make it through the first pass. The system would automatically go off to the Big Three for credit scores. These would be virtually stapled onto the application and hurled back into the rules engine for further inspection.

            There were many rules, too many to fit into a single Java virtual machine. It was my job, like Solomon, to divide the baby. There were two engines at work: one was just-rules, the other was a pricing tree. I watched, horrified, as my divided baby was reconfigured to route applications which would have failed into the pricing tree, where bad credit was no obstacle to a loan. The rules engines would simply return a higher proposed interest rate.

            I remember my last day, my little truck full of luggage, pulling out of that parking lot in St Peters. I winced, looking in the rearview mirror, fully expecting the building to collapse. Billions of dollars of bad loans were moving through the bowels of my babies.

            It has been my fate, like some sort of Forrest Gump, to be present at certain critical junctures in history. Unlike Forrest Gump, I arrive in these situations about two years before they become significant. America lapsed into a debtor nation with its eyes wide open. In 2006, the signs of the impending collapse were all there but nobody seemed to perceive them, least of all the maniacs who deregulated the banks.

            Nobody will ever impose a scheme whereby America will run its banks under effective regulation: the political will is not there. Those oldsters who retired find their savings much-diminished: don’t worry about them, they’ll be in their coffins soon enough. While they had a say in the matter, they voted for the deregulators and scam artistes and held all those bank stocks like Citigroup.

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    • I have a very difficult time working up sympathy for people who were well-positioned to do so, but who didn’t save enough for their own retirement.

      I have somewhat less difficulty. Of course, there’s always the element of “Alors, danzez maintenant!” when someone who should have saved didn’t save or didn’t save as much as they should’ve. And of course, that’s not necessarily an argument to take your or my tax money to make up for their mistakes. Still, one might be inclined to some sympathy when another suffers, even if that suffering is in some degree the fault of the sufferer.

      Re: your points about 401(k)’s with matching contributions: how many employers offer 401(k)’s? How many offer matching contributions? Although I’m too lazy look it up, I should need to know the answer before assessing the degree to which others who are poor now really did have the choice to save.

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      • Pierre:

        Even if your employer doesn’t make contributions that is hardly a reason not to take responsibility for your own retirement. Have we fallen so far that folks have to be bribed to something in their own best interest like saving for their retirement?

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  7. I largely agree with the first two points of what E.D. outlines as the conservative narrative. Point no. 4 has some merit as well, although as phrased I would not agree with it. As I wrote yesterday, I think public sector unions could make a case to justify their own existence but have not done so in the Wisconsin debate. They also need to patrol against excesses particular to the public sector: e.g., police officers accumulate 100% lifetime salary vesting and then become “disabled” on the job, enabling a disability separation at 100% pay and full benefits, resulting in retired police officers earning 200% of their salary and full benefits while also providing no services to the public, or alternatively providing them as “consultants” and triple-dipping from the public trough. The rules allow it, so the individuals who do this aren’t breaking any laws, but the rules shouldn’t allow it because it is wasteful.

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    • It’s ironic that there really _is_ a public union that is much too powerful and abuses its power at all turn, not just internally but in stuff like protecting people who commit actual criminal actions.

      Oh, and on top of that, if _any_ job is was ever so critical that a strike would be disastrous and thus should not be allowed in the interest of public safety, they’re it. And yet there are places that do not allow teachers to strike, but allow them to, like Wisconsin is trying to be.

      …and, yet, for some reason, the police union always gets excluded from this little ‘attack the unions’ nonsense.

      As I’ve said elsewhere, the problem isn’t public unions doing better, the problem is we all (except the rich) started doing worse, and everyone (except the rich) need to tighten their belt. But this is not a budget issue, this is a ‘strip unions of power’, as evidenced by the fact that Wisconsin public unions have offered to do everything that the governor wants, but apparently it’s not enough…he’s really just trying to kill them.

      And what ‘brands you as a liberal’ is actually looking at this from some sort of logical perspective instead of a knee-jerk anti-union one. Shame on you.

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      • Dude, I suspect that we could get by with one third of the police forces we have now.

        All we’d need to do is end the War On Drugs. We’d see crime turn around tomorrow. (See, for example, the end of Prohibition).

        There’s too much money in it, though. And people start yelling “do you want 2/3rds of the police department… UNEMPLOYED???” as if they weren’t paid with tax dollars in the first place.

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            • Which show do you think I am watching too much of? Because I can’t tell.

              That said even if the police were totally fruitless in finding thieves/lost property surely wasting the money on salaries to do so is a cost you would pay to end the drug war.

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              • Oh, pardon me. I was making a joke that was obvious to me but not obvious to anyone else. (That happens a lot.)

                I have heard, more than once, a story involving some sort of property crime (B&E, theft, so on) and the victims talked to the police and suggested something like fingerprints on the point of entry or what have you to have the police respond “you watch too many tv shows”.

                Since *I* have heard these anecdotes, I assumed that everybody has.

                Sorry, yo.

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    • Do we audit the existence of organizations in this country? Do we demand organizations “justify their existence”? I don’t really do the “fundamental rights” language, but it seems to me that association is a findamental activity of humanity. Humans beings associate, form organizations, may or may not explicitly justify their existence to themselves, and are not audited by others in terms of mere existence. Audit corporate actions? Yes. Existence? What is the modality? Where do organizations register these justifications of their existence? Can you point to another type of voluntary organization whose own existence you have asked it to justify to you in recent writings? Because this is a genre that seems to have arisen especially for this debate about public-sector unions, which are organizations of private individuals in voluntary association.

      Humans organize into groups and we accept the existence of those organizations. That is human social life infused with the value of tolerance as we have learnt it. When those organizations start to take actions that impact us, that is when we start to demand for justifications, which is the debate happening in Wisconsin, Indiana, and elsewhere wrt arrangements for public dealing with said private organizations. Those organizations can make their case for their desired arrangements as they have been doing in Madison, and others can object to it or try to change them, as Scott Walker has been doing. But demanding justification for the existence of private organizations is something of an idle demand, given how inexhaustible that conversation would be if we were to delve into it as a general inquiry.

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    • Don’t forget payouts for unused sick-time, something that private sector workers haven’t had since the last century. (It’s rather shocking to see a retired police captain say that greedy taxpayers are forcing staff cuts when he took two beat patrolmen’s yearly salaries with him when he quit the force.)

      Oh, and your pension is based on your final year’s salary, and expenses count towards your salary, which is why retiring police captains get so much training at out-of-state facilities.

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  8. I guess I saw your move towards progressivism a long time coming, even though you denied that was happening.

    While I think that there are some things in your critique of conservatives, there are reasons that middle class wages might have stagnated that have nothing to do with greedy conservatives. Brink Lindsey’s essay of two years ago on nostalgianomics explains how the increased immigration and the rise of women in the workplace led to an increase of income inequality. I’m not saying that’s the only reason, I’m just saying it isn’t just because conservatives are evil.

    Related to the last paragraph I would say that a lot of people on the American Left want to go back to the kind of economy we had in the 1950s, when Big Labor worked with Big Business and was governed by Big Government aka, the Treaty of Detroit. I wouldn’t blame them because it was a sweet deal. Add to that wages continued to rise during that era, which meant you could sustain high tax rates (which I believe were around 91 percent).

    But the economy of that era was largely protected from the rest of world, which was still rebuilding after WWII. By the mid70s, the rest of the world caught up and that had an effect. The high wages in say, the auto industry, began to be less sustainable when workers in other countries were being paid less. Automation also had a role in taking out more workers, because you needed less to make a workplace work. This in turn meant that you could no longer afford the high tax rates and had to lower tax rates to be competative.

    In this era, government has to find ways to be more leaner, but not meaner. I think Governor Walker is doing a poor job of handling this issue, but he also has a point. As a society, we have to find ways to learn to live with less and that includes government workers. Where I disagree with the Governor is that he is too adamant when it comes to something like collective bargaining that it makes something that could have been easily settled into the mess that we see today.

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  9. . . . I will try to coherently explain how I’ve gone from there to here, and here to there.

    I’m looking forward to that piece and hope you discuss how your core principles caused the shift. I think that will help people see that the change wasn’t merely opportunistic or irrational.

    While I don’t think it is the case with you, too often such changes come about when a blogger finds that he can get more attention by “changing teams.” A prime example is your Balloon Juice co-bloggers John Cole. When his influence on the right started to wan he changed—almost overnight—from a conservative into a bleeding-heart liberal. Then he gives a reason (as he recently repeated on this site) for flipping that is the most convoluted and inane that I’ve ever heard. (He was supposedly aghast at government interference in the Schiavo affair so now he . . . advocates even more governmental interference in almost all parts of life? What?)

    Cole stole the unprincipled opportunist crown from David Brock and will likely keep it until Ann Coulter finally decides to make the switch and start selling her schtick to the other side. Please, please show what most of us who have been reading for years believe: Your are not another John Cole.

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      • I’ve watched John Cole for years now. Thinking people do evolve out here online. Political parties evolve, periodically go off the track in a great steaming wreck. F’rinstance, I’m old enough to admit I couldn’t possibly have been a Democrat until Ronald Reagan finally angered me enough to change my party registration.

        But when the Civil Rights movement came along, I sure felt embarrassed when all the ol’ Southern Bigots came a-knockin’ on the door of the GOP.

        Ronald Reagan once observed he didn’t leave the Democratic Party, it left him. Maybe John Cole saw what we all see in time, that the GOP and the Democratic Party go round and round, spouting the Shibboleth du Jour, scaring the rubes, promising the world and delivering bupkis. No intelligent person can be affiliated completely with either one of these institutions.

        Derrida once said we don’t get angry with the mathematicians or the physicists or someone speaking a foreign language because we don’t understand what they’re saying. We only get angry with those who tamper with our language. That’s where I left the GOP, they tampered with my language.

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        • I remember writing a paper on the Sharon Statement.
          The thrust of it was that neo-cons use the same language as conservatives, but they tend to apply it only to economic liberties rather than personal liberties, which has traditionally been the mainstay of conservatism.
          Look at it for yourself through those lenses, and you can see that this is definitely true.

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  10. Joe –

    I’ve been writing about my political struggles and political evolution publicly for a long time. I was writing posts about progressive traditionalism and left-conservatism and all sorts of stuff like that years ago. If you think that this is either A) a sudden transformation with no roots in my earlier writing (I backed the healthcare bill!) or B) opportunistic (I write at the Washington Examiner and have an upcoming gig at Forbes – two conservative publications and the only sources of my writing income) then you really haven’t been paying attention. And that’s fine – there’s no reason you should pay attention – this is my own political evolution we’re talking about, not yours. But I would hesitate before calling into question the sincerity of just about anyone who decided that they were wrong about something and then changed their mind.

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    • Calm down, brother. As I said, I don’t think you are being opportunistic. And while I don’t think the change is all that sudden, it does seem to be occurring quicker than you seem to think. Some of your recent writings are clearly of a more “Conservatives are the Enemy” tone than much of what you’ve written over the past year.

      Also, I am fairly hesitant to question the sincerity of people who radically (and somewhat abruptly) change their mind about political issues. I generally give people the benefit of the doubt and assume that they have good reasons until (like Cole) they prove otherwise.

      But I also have to admit that when someone changes so radically it raises questions about why we should trust them as a pundit. If the facts didn’t change, why does their interpretation change so radically? And why should they be considered a credible interpreter of events when they disagree with positions that recently held?

      Again, I’m not saying this is true of you. I’m withholding judgment until I hear your side of the story. But not everyone has been reading you for as long as I have or is willing to give you the benefit of the doubt.

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        • I just want to tell you that I like those types of posts that you do.
          Were you not sincere in your inquisitiveness, it wouldn’t work.
          And if you were a mean-spirited person, no one would care.
          As it is, it works.

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      • My personal opinion is that I am distrustful of anyone who takes the same ideological opinion on every issue. People are complicated and their political opinions should reflect this. I’ll be interested to see if there is nuance in ED’s progressivism or if it’s an all-in ideological shift.

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      • Joe: Does it make sense that people who have strong principles have a strong emotional need to fit them into an intellectual, and ultimately political, structure that is itself well-founded and powerful, or at least potentially powerful?

        If so, there would seem to be a lot of difficulty leaving such a power base, even as one’s understanding of one’s own principles improves and gels over time. One’s emotions would create paths for rationalization. Colleagues would know how to talk you back into the fold. But ultimately, if you need a new intellectual home, you move.

        From the inside, the change would be very gradual. From the outside, the change would look sudden and inexplicable. I am only reasoning from human first principles here, not trying to specifically analyze Kain or Cole or anyone. Just trying to voice my own understanding that seemingly sudden outward changes in political leanings can be the earthquake that releases tension that had been building on the fault line for a long time.

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  11. “The fabulously rich get a free lunch and are sent on their merry way, lugging along piles of cash and a much more productive workforce thanks to the ever-looming threat of double-digit unemployment.”

    Really? A free lunch on taxes? This, from Brookings, only goes to 2007, but it’s worth a look in terms of actual data.

    http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=558

    Highlights: The top 20 percent of earners paid 56.4 percent of federal taxes in 1979. By 2007, that had plummeted to… 68.9 percent?

    The top 1 percent of earners went from 15.4 percent to

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      • I am not talking about taxes. YOU are talking about taxes. At least I think you are when you say that the government is out of money. That’s an issue that has a lot to do with taxes, I would think. Allow me to quote you a little more fully:

        “The government is out of money, so we must all tighten our belts. Or, rather, those Americans who depend on public services must tighten their belts. The fabulously rich get a free lunch and are sent on their merry way”

        And this, from your list of talking points:

        “We cannot raise taxes – even on the rich despite their inordinate wealth and not on corporations despite their extraordinary return to profitability during the jobless recovery.”

        I took this to mean that you think we are not taxing the rich enough. And that this had something to do with their free lunch. So I sought out the actual tax burden the rich face, took this level as “free lunch,” and asked you to define what they would have to fork over to actually pay for their lunch in your ideal world.

        Seems a natural question.

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      • Using the original post’s Mother Jones data, the 99th percentile’s share of income in 2008 was 21% of total income. The top decile’s share was 52%. So, compared to Sam M’s numbers of 28% of taxes for the top percentile and 69% of taxes for the top quintile, it looks like tax burdens are slightly progressive. We can’t compare the 52% and the 69% directly, of course, because of the addition of the second-from-top decile in the 69% number, but it feels within reason. Also, I’m comparing 2008 incomes to 2007 tax rates

        So there’s nothing totally out of whack in either direction, as far as I can tell.

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      • Fargus,

        Probably a more sure sign of a hack would be mentioning the tax burden of the rich without quoting the tax burden of the rich. But you will have to take that up with Mr. Kain. For the record, I don’t think he’s a hack. But perhaps I read more charitably than you do.

        In the meantime, Boegiboe took care of the income share portion for me. As you wil see from my post below, I didn’t search that out. I wanted to think through, in a visceral way, what I think would be “fair.” Should 1 percent of people pay 50 percent of taxes? 90 percent? Yes. Their share of income will impact the final answer anyone arrives at. But I wanted to set my standard first. Maybe surprise myself. I thoughht maybe the top one percent would have a quarter of total income, give or take a few percentage points.

        Sorry if that’s a hackish enterprise for you.

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        • In 1980, the top 1% of earners took home 8.46% of AGI and paid 19.05% of income taxes. In 2007, the top 1% took home 22.83% of AGI and paid 40.41% of income taxes. In other words, the ratio of taxes to income decreased over the period in question.

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          • I am showing slightly different numbers on the tax side, but close enough.

            As mentioned, I don’t doubt that the ratio has changed. But to claim this as a “free lunch” seems a stretch. It seems like the change has not been that stark to me.

            If a certain segment of the population is making more of the money, it ought to pay more in taxes. But they ARE paying more in taxes. Substantially more. Perhaps you don’t think it’s enough. But that’s far different than saying what ED said.

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    • Anyone who quotes how much ‘a percentage of people pay in taxes’ is _inherently_ dishonest or just plain ignorant. Income taxes are on _income_, not ‘people’.

      ‘The top 23% of _income_ generates 40% of income tax revenue.’ That is how you say that.

      Any other way of stating that is a lie. Any mention of a percentage of _people_ compared to a percentage of _tax revenue_ is a lie.

      Not misleading, not tricky, and outright, an actual, literal lie using statistics. Those two things cannot be compared. They are not comparable.

      It’s like saying ‘99% of car accidents happen in only 0.01% of America.’, or ‘0.00000000000000000000000001% of the population has a college degree.’ or ‘1% pays 90% of the gasoline tax.’ (Bonus point for people who can figure those out.)

      We should not put up with deliberate lies in our political discussion.

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      • I’m afraid I’m not understanding what you are saying here. The Brookings/Urban Institute figures cited seem to be for household income quintiles, and thus neither for individual earners nor for incomes-as-distinct-from-earners. They are for percentages.

        As a result, I’m neither understanding where you think the chicanery originated, nor of what it consists.

        If I were to say “the highest-earning 20% of people paid 68.9% of federal taxes in 2007,” would that be dishonest? If so, how? Does the fault lie with me? With Brookings? With the CBO, where they source their numbers?

        Please explain, and try to accept my assurance that I’m not trying to score a political point here. I’m just trying to understand what you’re saying.

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        • Just because statistics are mathematically correct does not make them ‘true’. Did you know that only 0.01% of people pay 99% of all boat taxes?

          | If I were to say “the highest-earning 20% of people paid 68.9% of federal taxes in 2007,” would that be dishonest? If so, how? Does the fault lie with me? With Brookings? With the CBO, where they source their numbers?

          The fault lies with whoever decided to state income tax as if it was in any way related to the percentage of people who paid it.

          Here’s a question: Do you think it is honest for me to say:
          99% of car accidents happen in only 0.01% of America. We should bar cars from operating in those dangerous areas.

          Do you think it’s okay for me to run around stating statistics about the ‘dangerous 0.01% of America’, and demand that something be done about it?

          Does your opinion change when you learn that by ‘0.01%’, I was referring to the part of America that is _roads_?

          No, people _do not_ get to state thing that are technically true but wildly misleading in politics. Not without getting called liars.

          Stating ‘percent paid in income tax’ as compared to ‘percent of people’ is wildly misleading, so misleading it is, in fact, a lie.

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          • The fault lies with whoever decided to state income tax as if it was in any way related to the percentage of people who paid it.

            Are you asserting that taxes are unrelated to those who pay them? The boat tax thing strikes me as an obviously faulty analogy, as do the others.

            While I readily agree that we’re not getting the whole picture with the numbers in that table, I can’t dismiss it as purposefully mendacious.

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            • | Are you asserting that taxes are unrelated to those who pay them?

              No, I’m asserting that the _amount_ of tax is unrelated to the _amount_ of people paying it. We do not have a ‘head tax’ in this country.

              The revenue from income tax is related to (wait for it…) income. Ergo, the percentage from income tax revenue is related to the percentage of income. That is all it should be _compared_ with when talking about tax rates.

              It is reasonable to mention the amount of people you’re referring to, but not in such a manner that it invites comparison of those unrelated percentages, and certainly not without first stating the actual thing to compare to.

              Did you know that 10% of the patients are responsible for 50% of prostate cancer screening exams paid for by tax dollars? And only 1% of doctors? Doesn’t that seem like scam of taxpayer money?

              Did you know only 20% of people visit the ocean each year, but 100% of shark attacks happen there?

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              • “I’m asserting that the _amount_ of tax is unrelated to the _amount_ of people paying it. ”

                So you’re arguing in favor of the Flat Tax, then?

                (he notion of progressive tax brackets is inherently bound up in the idea that the amount of tax is related to the amount of people paying that tax, because taxes are based on personal income.

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                • Actually, if you want to be technical about it, federal income tax is based on adjusted gross income. Yes, it’s tied up a bit in who’s making it, because if it’s someone’s millionth dollar it’s taxed at a different rate than if it’s their thousandth. But in the way it’s often bandied about (lordy lordy, look at how much tax is paid by so few, it plum gives me the vapors!!) is fundamentally dishonest.

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                  • Indeed. I actually know how taxes work just fine, and if people want to present real arguments that’s one thing.

                    But saying ‘My god, look at how much taxes so few people pay’, without following up with ‘because they make a huge fraction of the income’…

                    Yes, ‘fundamentally dishonest’ is exactly the term I use.

                    Especially since the ‘actual’ numbers, the actual correct comparison, is _still_ dishonest. The top 1% make about _half_ the money in this country, and only pay 40% taxes. They just make only 23% of the ‘income’ because of all the rigging they’ve done to make their stuff not count as income.

                    Magical 100% health care coverage? Not income. Personal assistants who do everything for them, and I’m not talking about corporate assistants, I’m talking butlers? Not income. Private limos everywhere? Not income. Helicopter? Not income.

                    All somehow provided by the companies they own, at company expense. None of it ‘income’. It’s just, for some reason, the company sees fit to provide them near infinite ‘benefits’, and no actual, taxable, cash.

                    But how do they get cash? I’m glad you asked. Why, the company lets them buy stock for cheap, and sell it. Capital gains? Also not income for no explicable reason, only taxed at 15%.

                    Let there be no mistake: If you look at some random guy down the block, and total up every dollar and benefit and physical object he was given over the year, and look at a member of the top 1% and total up everything they were given, the _rich person actually paid less in income tax_, percentage-wise.

                    So even the ‘actual correct percentages’ are dishonest, because ‘income’ has been defined to nonsense under the tax code. Almost every penny given to them (Except, admittedly, health insurance) counts as income for most people, and almost nothing counts for the superrich. But then using _incorrect_ percentages for comparison on top of that is just epically dishonest.

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                    • “But saying ‘My god, look at how much taxes so few people pay’, without following up with ‘because they make a huge fraction of the income’…”

                      It’s not dishonest to bring out facts to counter stupidity. And it’s stupid to repeatedly insist that we ought to raise taxes on the rich so they “pay their fair share” without actually understanding what share they do pay.

                      Like the man asked, what do you mean by fair share?

                      “Magical 100% health care coverage? Not income. Personal assistants who do everything for them, and I’m not talking about corporate assistants, I’m talking butlers? Not income. Private limos everywhere? Not income. Helicopter? Not income. ”

                      Actually, those things are considered income. “Perks” have been being defined as income and written into the tax code for thirty years now. This is why people always go crazy about how “executive salaries have GONE WAY UP!” No; we’ve just declared a lot of previously off-books things to be part of their salary. They always had these things.

                      Of course, here’s me bringing fact into the discussion, which is apparently the height of dishonesty.

                      Although here you are saying that the capital gains tax is not an income tax, and I can’t decide whether that’s dishonest or stupid (or both).

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                    • Um, health insurance isn’t taxed _even for normal people_, I have no idea why you think it’s taxed for the rich.

                      Likewise, while company vehicles are _supposed_ to be taxed, that’s only if they’re actually given to the user. Just letting the CEO or owners jet around on ‘company business’ that is one ‘business related’ lunch in Paris and then a three-day stay is _not_ taxed.

                      Likewise, companies often hire _personal_ assistants for executives. As in, someone who picks up dry cleaning and whatnot. No, that doesn’t count as ‘income’ either.

                      You _might_ have a point about the limos.

                      And capital gains are not _taxed_ as standard income, they are taxed at 15%.

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                    • “Just letting the CEO or owners jet around on ‘company business’ that is one ‘business related’ lunch in Paris and then a three-day stay is _not_ taxed.”

                      Expense reimbursements are reported as income on your W-2, and you pay taxes on them. Now, it’s usually tax-adjusted by the company so that you aren’t out-of-pocket on the expense (otherwise why bother reimbursing you?) but it does increase your effective income.

                      As for the private jet, the company pays property taxes and registration fees on that, plus fuel taxes and operations fees if they actually want to use it.

                      “…companies often hire _personal_ assistants for executives.”

                      …doesn’t everyone at a company work for the CEO? Shouldn’t your reasoning therefore conclude that every person’s salary should be considered part of the CEO’s compensation?

                      “And capital gains are not _taxed_ as standard income, they are taxed at 15%.”

                      So they are taxed, then. Your contention was that they were not.

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                    • Expense reimbursements are reported as income on your W-2, and you pay taxes on them.

                      I don’t think you understand. CEOs do not pay to use the company jet and then get reimbursed for it. They just _get to_ use the company jet for ill-defined ‘business’ purposes.

                      Perhaps you thought I meant ‘flying in first class’, but that’s not right either. Often the company just buys those tickets to start with, and hence no one is ‘reimbursed’ either.

                      As for the private jet, the company pays property taxes and registration fees on that, plus fuel taxes and operations fees if they actually want to use it.

                      I didn’t say taxes weren’t paid, I said _income_ taxes weren’t paid. We are talking about _people_ paying _income_ tax.

                      You appear to have imagine I said ‘Not taxed’ or ‘no taxes’ or something in my post. I didn’t say anything like that at all.

                      I repeatedly said things _didn’t count as income_, which was to lead people to the (correct) conclusion they were not taxed as income. And most aren’t taxed at all. Capital gains is, and I mentioned it.

                      …doesn’t everyone at a company work for the CEO? Shouldn’t your reasoning therefore conclude that every person’s salary should be considered part of the CEO’s compensation?

                      Um, no, more people at a company are, in fact, working for the _company’s_ benefit. Personal assistants are _not_,

                      So they are taxed, then. Your contention was that they were not.

                      Uh, no. it’s pretty easy to read what I said, perhaps you should. I said they mysteriously _weren’t income_, and only taxed at 15%.

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                    • A search for “business jet ownership” shows that company business jets are going away.

                      And when you say stuff like “Often the company just buys those tickets to start with, and hence no one is ‘reimbursed’ either” I have to conclude that, in true Republican tradition, you don’t know what you’re talking about but you’ve invested a lot of emotion in a worldview based on stereotype and hearsay.

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                    • I’m pretty sure I’m not allowed to say anything in ‘true Republican fashion’, being a pretty far-left Democrats. (That is, far-left of where the party appears to be.)

                      But perhaps more important, you’re wrong _anyway_. I thought you were before, but didn’t say anything until I actually looked it up.

                      You do pay taxes on business reimbursements…except you can _deduct business expenses_.

                      If you buy a airplane ticket for $200, you turn a receipt to the company, and your company gives you $200 to cover that, yes, you have to pay taxes on the $200 they just gave you…but you can deduct the $200 you just spent, so it’s exactly the same, tax wise. (Of course, this seriously hurts people who don’t itemize their deductions.)

                      Now, granted, what a business might reimburse you for, and what the government might allow as a deduction, are not the same thing. If a business reimburses you for, example, commuting costs , you’ll still end up paying taxes on that, because you can’t deduct that. (Or, as you said, the company might give you extra to cover the taxes.)

                      But business travel is explicitly deductible. No one pays taxes on that.

                      Of course, peons have to ride coach and only go to a conference every two years, whereas executives get to define their own business reasons and fly wherever, as long as they have a business lunch there for an hour.

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          • It takes five minutes with a calculator to get the truth from those lies. As I commented in a slightly earlier subthread:

            Using the original post’s Mother Jones data, the 99th percentile’s share of income in 2008 was 21% of total income. The top decile’s share was 52%. So, compared to Sam M’s numbers of 28% of taxes for the top percentile and 69% of taxes for the top quintile, it looks like tax burdens are slightly progressive. We can’t compare the 52% and the 69% directly, of course, because of the addition of the second-from-top decile in the 69% number, but it feels within reason. Also, I’m comparing 2008 incomes to 2007 tax rates

            So there’s nothing totally out of whack in either direction, as far as I can tell.

            So. No more lies. Talk about something else. There isn’t any purchase for either side in the too many/too few rich people are taxed debate.

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            • Tax “fairness” arguments leave me cold, from either side. Whatever works. At the point the trouble of avoiding taxes becomes more worthwhile than simply paying them, then that’s what the monied will do.

              And their lawyers are smarter than the government’s. And as long as we have states, or nation-states, anything less than the Universal and Homogeneous State, there will be places for capital to flee from tyranny.

              Laugh at the Laffer Curve, but at your own peril. Capital doesn’t need you, you need it.

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  12. Whoops. Went to 28.1 percent over the same period.

    Maybe that’s bnot enough for you. But it’s hardly a “free lunch.”

    But since you brought it up… what WOULD be a good percentage of total federal receipts for the top 1 percent of earners to pay? What would qualify as “not a free lunch”? What would qualify as “generous”?

    I suspect that the total EARNINGS for this group has changed over the years. But I am not cheating. I won’t look. But I would say that 1 percent of earnings paying, say, 30 percent of total federal revenue would be a pretty big ask. And it’s not that much duifferent than it was in 2007.

    But you might be different. What percentage of the total bills would the rich have to pay without coming across as stingy to you? Half? Three quarters?

    Free lunch. Meh.

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      • That’s the question no-one has the answer to, which makes the whole of the rest of this “income inequality” debate a bit pointless. We don’t really know what we’re looking at, and yet everyone has very strong opinions about it.

        Almost all of the effect is confined to the top 0.1% – it shows up in the top decile because the gain for the top 10th of one percent was so big. There seem to be various components. Firstly the optimal tax avoidance strategy changed from moving income off your personal balance sheet to keeping it on there and claiming it as capital gains. Secondly, non-monetary rewards – untrammeled power and job security, insider training, sexual favors, whatever – probably waned. We fire CEOs quite regularly now, often for fiddling the books. That didn’t happen in 1979. Thirdly the costs of maintaining a very-high-status lifestyle, especially in places like Manhattan and San Francisco, skyrocketed and top end salaries kept pace.

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        • > That’s the question no-one has the answer to

          Lots of people have educated guesses, but regardless:

          > which makes the whole of the rest of this “income
          > inequality” debate a bit pointless.

          Only if you’re looking at it from the one side.

          If you regard the economy as “that which distributes capital among the population”, and you look at income (cross that out and call it capital) inequality as “that which renders the economy more prone to abnormal spikes”, then a sufficient degree of capital inequality is a bad thing, if you want a relatively stable economy.

          Now, the *source* of that inequality is important if you want to try and address it without causing too many unintended consequences, but the source of the inequality is not relevant if the end result regardless is something that is not good for the system as a whole.

          Look, I don’t really care why or how people who have more liquid capital are getting more capital faster than people who have little or no liquid capital. There can be a laundry list of reasons why this is the case. I’m not assigning moral opprobrium to being wealthy.

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              • We don’t understand what it means for people’s wellbeing, even in a narrowly rational economic sense. In general, we generate income by working, in order to get other people to do work for us, because we’re better off this way that trying to everything ourselves. But there are lots of ways that this might not be the case, and at the margin they’re better off without $1 of income and with the other resources (eg,time) they might otherwise have spent generating it.

                I think what everyone is imagining is that income inequality has increase because employer’s willingness to pay for skilled blue collar labor has declined relative to their willingness to pay for other inputs, and the people who’d otherwise have been skilled blue collar laborers are instead doing low end service jobs. I’d agree that that would be a bad thing, but supposing that that’s what has happened is assuming facts not in evidence and runs into trouble with other empirical facts eg. that the real economy has continued to grow.

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  13. I should add that over the same period, the share of federal taxes paid by the three bottom quintiles DECREASED from 22.5 percent to 15.4 percent from 1979 to 2007.

    Again, it might not be what you want it to be. But I have a hard time seeing this as a “free lunch for the rich” dystopia.

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    • Sam M. I love ya dude. Now stop spewing these statistics that don’t agree with our ‘progressive’ efforts here. We’re having a nice little talk and you stop bringing facts into play..stop it, I say.

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      • Maybe this is true. Maybe it isn’t. Do you have data? I would be hapy to see it. But I see a lot of people making a lot of claims about “free lunchh” and “all the wealth,” which seems a good deal more emotional than analytical. And this is coming from me. I am supposed to be the emotional, non-analytical one.

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        • Real wages have been flat for the bottom 90% since the late 70’s. The top one percent has gone from having nine percent of the wealth to twenty-seven percent of the wealth. When something like that happens, the proportion of the taxes paid at the top are going to rise, not in proportion of the capture of wealth, but the proportion is going to rise.

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          • “When something like that happens, the proportion of the taxes paid at the top are going to rise”

            Yes. And tat IS exactly what happened. The richest people started making more money, and they started paying more taxes. How is that a free lunch?

            Let’s say you do something to increase your income a great deal. Education. Luck. A business venture. Whatever. You percetnage of the annual income will have increased. And yo uwill pay more taxes. Did you just get a free lunch?

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            • How many people did you step over to get that education? How many people did you have to hurt to get that business venture?

              Don’t you owe these people a piece of what you’ve cut out of their flesh?

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              • In a rational society, the government would seek out the clever and industrious children and educate those kids to the hilt, for free. If our military is willing to invest a half million dollars in the education of a fighter pilot, I don’t see why we shouldn’t view the creation of economic warriors in the same light.

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                • I agree with this until I start thinking about the process that would be used to seek out the clever and industrious and how it’d be gamed and played and captured and all of the false positives purchased by the wealthy and the false negatives from the wrong side of the tracks overlooked…

                  I love (adore) this idea in theory.

                  In practice I think I would prefer the Jesuits after a generation or two.

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                  • Well, think of it like an Economic ROTC scholarship. We can project these Wunderkinder will quickly pay back the costs of their educations in increased taxes. If they want to go off and raise yaks in the Rockies, hey, who knows, they might be creating a market. No telling what they might do, and that’s the whole point.

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                    • And, to clarify, my problem with the technocrats is *NOT* that I do not agree with their stated goals. Their stated goals are very near and dear to my heart.

                      The problem that I have with the technocrats is that, in practice, they are as likely to ban books as not. They are as likely to re-educate wrong-thinkers as not. They are as likely to make exceptional well-justified mistakes as not.

                      At the end of the day, it’s that I would rather attend the downsides of having too much liberty than attend the downsides of the technocracy and the risk is too great even taking into account relative upside the technocrats occasionally achieve.

                      I do have to take great care to lash myself to the mast. The song of the technocrats is a beautiful one…

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                  • Yes, trotzdem alles I am a Progressive. My son and I worked out there’s no excuse for poverty at all, anywhere in the world. Alas for all the do-gooders, our proposition depends on governments treating their people, especially the women, as improvable assets, more than simple wage earners.

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                    • Well, here’s where it gets tricksy, old palsy. I hope you’ll agree good government is “of the people” and ought to operate in our best interests. In this republic, we delegate power to our elected representatives, simply because it’s more efficient. We count on Checks and Balances to keep things in perspective. The experiment hasn’t always worked out to our mutual satisfaction, and our Civil War was the triumph of Federalism, but government “of the people” is a damned good idea.

                      Why shouldn’t governments consider the governed as a sort of family and operate on its behalf and in its best interests as a whole? How does this make me a Statist? Once again, let’s not play You Fuck the Donkey, eh? Investing in the nation’s children on the expectation they will become taxpayers is hardly Statism.

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                    • BP, “F*ck the Donkey”? Dude, you are one brilliant interlocutor and you’ve taken over this sight and have certan unnamed gentlemen eating out of your hand.
                      I’ve found that every time I play FD, E.D. threatens to send me to bloggo Siberia, n’er to be heard from again. Yet, when you play FD, it’s “oh Blaise how brilliant!” Well, maybe it’s just a bit of sour grapes.
                      Anyway your suggestion has promise so why don’t you write a “Guest Blog”, I’m more than sure the League guardians will promptly publish your efforts and we can start a decent thread.
                      Personally, I’d like to suggest your ideas on the appropriate construct, purpose, of gummint or something along those lines. I am impressed you worked out a political regime with your son, rather touching. My son-in-law is a bleeding heart librul, and I have to deal with that.
                      Let us know, the League is watching!

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                    • There’s no need to play FD at all. Always presume the best in your intellectual opponents; we all come to our conclusions through the vagaries of our varied lives. I learn nothing from those who agree with me. Worse, bad conclusions are reinforced and the Echo Chamber becomes a Straw Man factory.

                      My essay on Strauss and Kojève grows like topsy. I should be pruning it down. I just deleted about a bajillion adjectives from it last night and it still sits there and grins at me like Jabba the Hutt from atop his throne.

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            • That’s NOT exactly what happened. Since tax rates on the top earners decreased, the proportion of the income tax burden borne by top earners didn’t increase as fast as their incomes did. That is, the proportion of taxes at the top to income at the top WENT DOWN.

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              • Yes. I understand. The total tax rate for people wh make a lot of money is less than it used to be. But they are STILL paying a bigger chunck of the total tax hit.

                That is, the top one percent of earners pay a larger percentage of total federal revenue. And the people at the bottom of the pile are paying less of the total tax hit.

                Again, it might not be what you want. Perhaps the percentage should go up. But to argue that the super rich are getting a free lunch seems demonstrably false.

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                • What you are saying is meaningless. They are making more money and paying less in taxes on it. It’s like you’re saying this, and then saying, “See? The rich done got it tough!” It’s insane.

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                  • He’s not saying “the rich done got it tough”. He’s saying “when you talk about how we should raise taxes so the rich pay their fair share, you need to start out with knowledge of the share they already pay.”

                    If nothing else, it avoids the embarassment of suggesting a “fair share” that’s less than they pay now, which I’ve seen happen.

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  14. Here’s are some questions, E.D.: if taxes need to rise, who should get taxed and how much should it be? Should it be as Mike said, that everyone over $25K gets taxed or is it only the upper incomes? What should the upper income tax bracket be? The top bracket is now at 35%. Should it go back to what it was during the Clinton years, which was 39%, or should it be even higher?

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    • Forgive me for barging in here, but there are a few variables we might want to establish before setting up a tax table.

      Emanuele Canegrati has done some interesting work on this problem. Essentially, it depends on how badly the politician wants to get elected. If he’s quite desperate, he will act on behalf of those interest groups with the fewest points to make. The poor don’t make a very good argument for themselves: their needs are so amorphous. The much-pilloried Special Interest Groups get their way, not because the politician is especially venal or immoral, but because they present problems he can actually solve.

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    • ED, The problem with a progressive tax is that the people further down the ladder don’t feel the cost of the programs they ask for. The rich may have more money to share but they also aren’t asking for much in the way of entitlements.

      Healthcare spending went up in this country at the same time that insurance policies removed much of the sting from consumers. Basically since people don’t feel the pinch they spend a lot more. Many experts believe that the best way to get that spend back down is to make consumers pay for more of it out-of-pocket.

      It should be no different with entitlements. If the middle class knew that every new entitlement would come with a certain % tax increase they might feel much differently about them.

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            • I wonder if there’s any meaningful data on just how much tax people actually pay in total. Sales taxes are regressive: it would seem to me these would hit the poor disproportionately hard.

              I’ve always thought the income tax was a bad idea on principle, for various numinous and personal reasons, none of which have any justification in fact, most of which are centered on the gigantic loopholes in the income tax. Perhaps they might not be such bad ideas, but I can’t make my case clearly. My rule of thumb goes in this wise: the shorter the round trip between tax collection and expenditures, the fewer sticky hands will touch and reallocate that money. This explains why small societies like Sweden can support socialism and large societies like the USA hate the idea: in a small society, the ordinary people see the benefits.

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              • The income tax strikes me as a huge imposition on privacy.

                I more take the attitude that taxation should either be in the form of sales taxes (consumption taxes), sin taxes, lotteries, and, tah-dah, taxes on corporations (corporation personhood does not entail anywhere *NEAR* a right to privacy that humanpersonhood does).

                This normally gets me shouted down.

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                • Yeah, sometimes the only way you’ll ever know you’re on the right track is when the Confederacy of Dunces is shouting at you.

                  I’m not a fan of VAT taxes: they’re demonstrably regressive. Corporate taxation is a nightmare: I’m a solo consultant. I paid something like 600 USD to get my taxes done this year, not counting my jackass accountant who should be staked out on an anthill in Uganda in the hot hot sun. But hey, between the two of them and my charitable deductions, I escaped with my skin mostly attached to my withered old carcass.

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                  • Romans 6:23 tells us the wages of sin is death.

                    Ben Franklin said “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”

                    Therefore, by simple extension of the principle wherein sin leads to death, it must also inexorably lead to taxation.

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                    • BP, my comment was directed at JB, but thank you none-the-less.
                      JB, my comment was a criticism directed at you for your apparent support of ‘sin taxes.’ You who mock gummint efforts in the war on drugs, foreign interventions, and our beloved, but large butted first lady’s efforts to make others eat twigs while she dines on Kobe beef and chocolates.
                      “Sin taxes,” really…my heart is broken!

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            • At that point, there’s no point in the entitlement program. The point of an entitlement is insurance, essentially. If you just had to buy it, there’s no point. You’re advocating for disassembling the modern welfare state, basically.

              I might as well say that my use of roads involves no pain for me because gas taxes are too low, and that every road should have a toll on it so that I feel it in my pocket.

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        • By *DESIGN*.

          They were intended to be seen as “contributions” rather than “taxes” when they were sold to the public. They were deliberately sold that way in a “we’re all in this together” kinda thing rather than a “wealth redistribution” kinda thing.

          For the record, when I argue for means testing of Social Security and removing the cap for the “contributions”, it is because I suspect that this will result in public support for these programs cratering (in the way that public support for ‘welfare as we know it’ cratered in the 1990s).

          So means test!
          Remove the cap!

          It’s time that people understood that “we” are all “in” “this” “together”.

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      • Wow. I’ve missed some interesting stuff.

        There are two things that I feel are related and worth discussing. The first is the implication that quality of life and benefits from society are somehow related to income. This entirely doesn’t mesh with the lessons taught in that venerable Notorious B.I.G hip hop single, Mo’ Money, Mo’ Problems.

        The cliche counter is that nobody enjoys poverty but that doesn’t address the issue of low-paid service jobs or the declining middle class, neither of which are facing crippling poverty. In any case, denominating quality of life issues to make a point about economic injustice/inequality, to me, is a critique-less endorsement of consumer culture that I’m a little shocked isn’t pushed back upon more often. To me the idea that the people who make the most money “reap the most benefit from society,” is far from self-evident not least of which because there’s no definition of benefit?

        The second idea and this is in-line with Mike’s various points in the comments here, is that the singular focus on income inequality is self-limiting. While intuitively it seems like taxation for redistribution is an option meant to address the problem it does so without clearly identifying why it is a problem in the first place and whether those tax policies actually work.

        Even if we were able to raise tax rates on the highest earners, if government spending is inefficient and the political process makes it more so, why would anyone expect it to benefit the poor, rather than the next big defense contractor, or more benefits for government employees rather than the poor and lower middle class? I mean without a dedicated revenue stream, it’s like trickle down redistribution-ism, if we take enough from the top, eventually some of it will filter down.

        As for the problem of inequality, if it’s socially destabilizing to have national income be distributed unequally, is it not similarly problematic to have national costs distributed unequally?

        If we were to tax higher earners more and their share of national revenue were to increase, to 3/4 or higher, wouldn’t that make the government’s finances wildly dependent on both a financial aristocracy and their continued ability to rake in large sums of money? At the same time giving the remainder of the country a hugely subsidized level of government services that will increase their consumption/demand of them out of proportion to what they’re willing to pay?

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    • Though progressive taxation ought to hit the upper earner, there’s a diminishing law of returns on how hard we can hit him. If it is true he benefits more from society, he also benefits society. Any society or nation would be glad to have him on board.

      Consider Canada’s investor visa and skilled worker visas. The USA has the E-2 visa program, but Canada’s is a far more inviting proposition.

      In our zeal for fairness, let’s not forget that life isn’t fair. Sometimes the rich do go to straight to the head of the queue. The benefits they bring to a given society make it worth the seeming inequity.

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    • OK. But I am just curious: How much is enough? And how much is generous?

      Right now, one percent of people are paying almost 70 percent of the bill. Forget about what their tax RATE should be for a minute and just ask: How much is enough? And how much do they have to pay to be free and clear of the “free lunch” charge.

      Let’s say I go to lunch with Bill Gates and I go to lunch with our wives. Our tab comes to $100. Bill says, “You know, I make more money than you. How about I pay $68 dollars and you pay $32?”

      Granted, that’s not in proportion to our earnings. And maybe he should agree to pay more. But again, that’s not a free lunch for Bill Gates.

      I am not trying to be pedantic here. But it sure seems like your claims of free lunchness are driven more by emotion than by data. But fine. We can clear all that up. The top one percent of earners made 21 percent of total income in 2008. I presume, in the name of progressivity, you feel they should pay more than 21 percent of federal tax receipts. OK. 30 percent? I assume you want far, far more than that, since 28 percent qualifies as getting off scott free.

      So… 40 percent… 50 percent?

      I said before 30 percent would be fair. But I can see 35 percent being a resonable position to take, if not my preferred one.

      You obviously have strong views on this. So… 60 percent?

      Eventually, do you ever become concerned that X percentage of the population is paying Y percent of the bills? DO you ever worry about the moral hazard of Z percentage such a small percentage?

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        • “We go to the income distribution of 1978 and the top one percent can go back paying the same percentage of taxes they paid in 1978.”

          I would be perfectly fine with that distribution of income. I think it would be preferable to today. Unless, of course, to make this happen we have to implement a series of policies that makes everyone worse off.

          The likeliest tools I see for this reversion include:

          1. A trade war.
          2. Punitive tax rates.
          3. Punitive immigration policies.

          I could go on. But these will suffice for now.

          I know you have not advocated for these things. But I don’t see how you go back without them. And I don’t see how the wage rates take into account a host of other factors that influence quality of life.

          If someone said, “OK, Sam M. You are a plumber. I will put you in this magical machine and you can transport yourself to any moment in American time and ply your profession. Choose the time you would prefer to begin your journey.”

          I would pick 2011.

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    • …And what do you think of WRM’s analysis? Specifically, I wonder what you think of the unsupported assertion that, “The educational system is also going to change in ways the unions and the guilds can’t imagine — and will fight to the death.” It seems to me that these are organizations that are nominally committed to the advancement of learning as well as to the advancement of teachers, and viewing them as opposed “to the death” to progressive change just assumes a political tenet of movement conservative movement (that unions, particularly teachers’ unions are irredeemable and must be rushed, not merely subjected to incentives to change behavior), not a productive approach to effecting change through existing social institutions. but then, not all unsupported assertions are false. What do you think, Dennis? Others?

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      • Michael,

        Actually I tend to agree with his analysis. I don’t doubt that teachers and even teacher’s unions care about students. But I also know that the reason unions exist is to provide some sort of stability for workers (ie: stable pay and benefits, stable work rules, etc.). There is nothing wrong with this. The problem comes when an institution or industry must change to meet the demands of the moment. The union wants to keep things stable, but in reality something has to change for said industry or institution to survive. That’s where we have clashes.

        Coming from Michigan, I think this is one the reasons the Big Three ended up such a bad shape. When things were good for the automakers, the United Auto Workers could benefit with really good benefits. But as time changed and the automakers faced stiff competition, it was hard for the union to make the real changes needed. This is not to exempt the management of GM, Ford and Chrysler which made some awesomely bad mistakes and were slow to change as well.

        I think that the coming changes will affect everyone that might have a stake in the way things are now and that includes unions, but they aren’t the only institution that is going fight change tooth and nail.

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  15. ED Kain,
    It’s interesting watching you become more and more liberal. But not totally surprising. Once you started writing at Ballon Juice, I knew that it was only a matter of time before you fully switched over. I imagine being gung ho for unions was your final ticket into “progressivism”.

    For me, it was the exact opposite. I was always leery of unions and like North was more of a Clinton DLC neo-liberal. What finally pushed me over the edge to libertarianism, was working for AFSCME in Wisconsin DOT. Ever since than it was like seeing behind the curtain in OZ.

    Now Republicans still piss me off but I just can’t go back to Dems either. And I feel that when people talk about the liberaltarian project this arguement you laid out is exactly why it will not work for a long time, unless we have another 90s boom.

    Back to your arguements;
    1. The government is out of money, and we need to cut spending or future generations will suffer. (so you don’t think we need cuts? I would rather not continue bankrolling China)

    2. Austerity should be for everyone, not just private-sector workers.
    (I would say that’s true of all workers, yes. And bosses too)

    3. We cannot raise taxes – even on the rich despite their inordinate wealth and not on corporations despite their extraordinary return to profitability during the jobless recovery.
    (I actually am fine with both during good times. However Wisconsin specifically already has higher taxes than most states. And you can only tax so much, is easier to balance the budget by decreasing spending than increasing taxes.)

    4. Public-sector workers have unsustainable wages and benefits. They need to be brought in line with the rest of us by whatever means necessary. (Maybe not every state but let’s talk about WI. They pay less than 1% for health care and 0 for retirement. When I worked for the state in early 00s they were just starting to pay for health. While when I worked for MO, it was 14% for health and 5% for retirement. WI is just going to where most other states are.)

    5. Union-busting is just democracy in action. Protesting is ridiculous. The Republicans won, deal with it. (Making laws is democracy, protesting is also democracy. The only problem I have was using sick days and getting Dr’s to write you fake notes.)

    6. Passing health-care legislation is tyranny. Tea-party protests are democracy in action. Democrats won, but it’s our duty to obstruct them at every turn. (Passing health-care is democracy and so was protests. Democracy is also seeing if it’s constitutional and if it’s not that it should be changed. If it is than you can try reforming or even repealing. All within democratic means.)

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    • As a fellow Wisconsinite (however temporary your stint as one might have been), I am very interested in your experience. Do you care to expand on this: “What finally pushed me over the edge to libertarianism, was working for AFSCME in Wisconsin DOT. Ever since then it was like seeing behind the curtain in OZ.”?

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      • I grew up in Middleton, WI (suburb of Madison) and lived in WI until I was 27.

        As for why I switched, mostly I saw all the stereotypes come to life. Lazy workers (personal calls, spend most of day on web, even sleeping during day) that were only there for a paycheck.

        Lots of waste of gov’t spending on such stupid things. Just how we did things infuriated me. I had a job where I would drive 6 hours one way, stay two to three nights, work my 34 hours and than go home to make my 40. That was a central office, in the districts guys would drive 2 to 3 hours and not stay in a hotel.

        Now a part of my job was working with contractors. And you can tell which ones wanted to get the most profit and which wanted to actually do a good job. I guess that was the other side seeing gov’t and private work hand in hand is almost worse. I still don’t see a good fix for that. Roads need to be built and maintained but it’s too costly for the state to do. The best you can hope is that you get good bids and public employees do their job to hire the best/cheapest. Luckily we could weed out the ones that just wanted high profit for bad work.

        I also have worked on the contractor side and it can be just as maddening. But not all of that pay is from the taxpayer.

        Those last two paragraphs are why I am not the best libertarian soldier, I see the need for gov’t and I see the bad in private (but it’s usually when it’s hand in hand with gov’t). But I do think public unions can make it worse for gov’t. Your job as a public employee should be how to give the best service for the least cost. But that’s not what the union thinks.

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        • The thing is, I’ve seen the same amount of stupidity in the corporate bureaucracy. Put large numbers of people together and there’s going to be a confusing bureaucracy that leads to some red tape and silliness. That’s the price of a society and you fix the problems as you come across them, you don’t throw out the baby with the bathwater.

          Now, I know the libertarian answer is, ‘just privatize it all and the most efficient private company will win.’ To me, that’s just as insane as the Communist who says just nationalize it all and efficiency will improve.

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          • Oh I agree. It’s probably why I lean libertarian but not fully libertarian.

            As I said I worked for a contractor too, it was a big corporation and there were a lot of things I didn’t like about it.

            I think your large numbers together comment is spot on. It’s why since than I have tried to work for smaller companies. It’s much more personal able but they have their own problems of course.

            One thing I forgot to mention was that working for Missouri DOT it was non-union. I didn’t see same union problems that I saw in WI but did see many of the same gov’t problems.

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          • If we found a better way to do employee retention, that would help One of my really big issues with Unions is how they protect the members jobs, often beyond all sense & reason (as in, the employee is obviously crap, but ‘the Union must defend everyone equally’, or the crap employee can’t be laid off, he has senority/tenure (this is most notable with cops & teachers, but it happens elsewhere as well)).

            Do away with Senority, and lay out simple, clear rules for what is required to fire someone (like, a checklist of 5-10 things, not the legendary NY Public School process), then create a retention system that assigns numerical scores to everyone based on manager review of their work performance. Make the scores a running average, so the longer you work, the less a manager is able to damage your score with one or two bad reviews. Setup tiers so a manager can’t score everyone as crap in order to be able to clean out the department at will (something like you need to have 25% of your employees in the high retention tier, 50% in the middle, and 25% in the ‘first to go’ tier).

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            • Police unions just have way too much power, period. The inability to fire police officers is not bad compared to the inability to _prosecute_ police officers for clear violations of the law. The police union often behaves as a public face for criminal conspiracy to cover up crimes committed by police.

              But with normal unions, the reasons that unions are doing that is companies wold (and still do) fire more expensive older workers to get younger, cheaper ones. That’s why senority exists, to counter that. If you divide people into tiers, companies will just put the expensive people in the ‘first to go’ tier.

              If you fix that by requiring them to have ‘evidence’ before having bad reviews, congrats, you’ve just reinvented the dismissal process you’re complaining about. ;)

              What is supposed to happen is that the union is supposed to know the amount of people, and only keep that many, and _itself_ let people go who are not performing. But that never happens.

              The best way to make unions responsive, to actually make them only defend productive workers, is to give them some profit-sharing. In fact, in my ideal world, we wouldn’t have unions…we’d have worker-owned companies in the first place, where workers owned at least 51% of the voting stock.

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  16. For anyone who at any point used the argument, “we have to cut government spending or future generations will suffer,” if you really don’t want to make future generations suffer, stop forcing us to pay into two social programs, SS and Medicare, that we will most likely never see or touch.

    This whole idea of bankrupting future generations is laughable. You already bankrupted them, and only before pocketing the benefits that they pay into while promising to gut the programs right before they can collect.

    Class warfare is one thing. Where is the age warfare?

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    • Megh.

      Really, you can’t bankrupt somebody that doesn’t exist yet. You know why? When they’re born, you can’t transfer the debt. You can pretend that you can, but this only works as long as they take the debt load.

      If Social Security and Medicare are really the bogeyman people make them out to be, you know what happens? A generation of Americans go elsewhere. It’s happened to every other country in the world, most of them survived it. Some have even flourished with the expats return.

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      • Bankrupted in the sense of closing up shop. Future generations aren’t necessarily unborn. Only one or one and a half generations are ever really in control. The elderly vote, but are otherwise impotent. And the youth do not vote, and are only tangentially involved.

        And it’s not a matter of the debt being transferable. I’m more getting at the point that, whenever the piper get’s paid, it’s at the expense of future generations.

        Medicare payments today mean botched infrastructure tomorrow (or yesterday), and tax cuts for the rich mean funding cuts for transportation, education, etc.

        There’s nothing like watching a bunch of “grown-ups” talk proudly and faux courageously about the “party” being over when that “party” consists of heating subsidies and National Public Radio.

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      • The kids we’re worried about having to deal with the consequences of global warming haven’t even been born yet, either.

        It’s fair to say that they won’t be born until the kids that haven’t been born yet have them.

        And yet…

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  17. Whenever I read about the end of the middle class in America I always think of this scene in the Watchmen graphic novel.

    Nite Owl: What’s happened to us? What happened to the American Dream?

    Comedian: What happened to the American Dream? It came true!

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  18. The middle class looks to the left and sees the government explode in size and scope, union workers bitching about more tax-payor money, errr, income & benefits. They also see less pay because of higher taxes and fees.

    To the right they see Wall Street corruption, mega international corporate crime and deception, CEO income, and employee jobs sent overseas.

    The middle is a tough place to be right now!~ Although much better than the lower class, without the freebees.

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  19. I’m more than a little disappointed that E.D. chose to engage only the noisy and debatable points about public sector unions rather than the serious and systemic ones. I have been writing about these problems at great length at my blog, and have shared them with E.D. in another forum. But no mention of those problems in the ostensibly exhaustive list at the top of this post. I understand the political angle to the union debate. And I agree there’s a vexing problem to the extent it relates to the Middle Class Problem generally. But it is very disappointing that E.D. would ignore, willfully, by all indications, the deeper problems with public unions as they relate to the integrity of our system of government itself. Some of us on the right really are concerned with such problems, and would even concede there’s something to the necessity of unions as a countervailing force against corporate influence. But to meaningfully advance labor’s concerns requires an acknowledgment of some of labor’s serious systemic problems, particularly those in the public sector.

    So when even the most thoughtful among those on the left just pretend the deeper problems with public unions don’t exist, things start to feel very bleak and lonesome.

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  20. Pingback: Maybe I shouldn’t be surprised… « Notes From Babel

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