Every Friday at noon, a swarm of students descend upon Wheeler Hall abuzz with excitement. Though they represent an array of majors, one would hardly guess so by the singular topic of their conversations. That’s because these students have temporarily put their test tubes and problem sets aside to enroll in one of UC Berkeley’s most popular courses — “Wealth and Poverty” with Professor Robert Reich.
As Secretary of Labor under the Clinton administration and the Chancellor’s Professor of Public Policy at Berkeley’s Goldman School, Reich’s resume has set this scene like clockwork over the years. Yet, unsurprisingly for someone of such political celebrity, what his students experience after settling into their seats is not an objective analysis of poverty in America. Rather, Reich’s economic narrative excludes evidence that counters his redistributionist aims.
Having completed the course last year, I will critique Reich’s central claim that income inequality is widening in America. In doing so, I will demonstrate that things are much more complex than the polarizing picture of “haves versus have-nots” that the professor portrays. I encourage current “Wealth and Poverty” students to similarly supplement Reich’s research with their own to read between the lines of his copious charts.
Last spring, Reich started his course by projecting several graphs showing widening income inequality in America. While the professor is correct that wages for low-income households have stagnated since the 1970s while flourishing for high-income ones, these statistics don’t tell the entire story. First, the bottom fifth of incomeearning households usually only have one working family member while the top fifth have more than one. Moreover, fewer than one-third of households in the lowest quintile have a family member working fulltime, while more than three-fourths of families do in the top quintile. Finally, only one-third of households in the bottom quintile are headed by someone between the ages of 35 and 54 — when workers typically earn their lifetimes’ highest wages.
In plain English, the evidence shows there is a correlation between how hard one works and the amount of money one earns. Unsurprisingly, most people enter the working world with lower incomes and are upwardly mobile until retirement. So unless we want to heed the Communist call to absolute income equality, our system of incentivizing work hardly seems unfair.
Furthermore, a low income is not equivalent to a low living standard. Most Americans have other means of money than simply income, like selling property or redeeming insurance policies. Thus, many economists agree that household consumption is a more accurate measurement of economic well-being than income.
In fact, when analyzing consumption, one sees that the gap between the rich and poor is severely less stark. Whereas the average income of the top fifth compared to the bottom fifth is a ratio of 15 to one, for consumption the ratio is only four to one. Because of the large amounts of economic freedom that Americans enjoy, rich and poor alike have more access to affordable food, shelter and technology today than ever before. Is this really the inegalitarian image that Reich has in mind?
Certainly the professor is correct in one respect: there are fat cats that rig our system to their own economic advantage. But, one must ask how exactly these thieves steal from a marketplace that functions through voluntary exchange between buyer and seller. The answer is found in the institution with the monopoly on violence — the government. Through its countless bailouts and subsidies to big business, the federal government regressively redistributes wealth from poor to rich to the tune of billions every year.
Even worse, the state not only pursues policies that benefit the rich but also continues others that systematically discriminate against the poor. Sin taxes on alcohol and tobacco disproportionately hurt the impoverished. Failing public schools render poor children unequipped with the skills needed to flourish in our competitive economy. The War on Drugs imprisons hundreds of thousands of minorities for nonviolent crimes. This is the work of the state, not the work of the millions of high-income individuals that toil hard and honestly for their paycheck.
Indeed, if we want to reduce poverty in America, we should not persecute the investors that drive the economy forward but rather the government that holds the poor back — and certainly not give it more power! The philosopher Bertrand de Jouvenel once noted that “redistribution is in effect far less a redistribution of free income from the richer to the poorer, as we imagined, than a redistribution of power from the individual to the State.” Until redistributionists like Reich understand this, we will continue to live in the very inegalitarian society that they decry.
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Mr. Given I have to agree with ” worst case ” with respect to the cash in insurance or sell some property story line. Don’t have a pot to piss in is just that and making the case that a 4/1 consumption discrepancy somehow is not as bad as a 15/1 income disparity leaves on a little unsatisfied and unconvinced . There is a huge difference between making 150k and making 15k just as there is a big difference between 25 k and 100k and a family of 4 making 25k ain’t selling any property to pay the kids tuition to Cal.
Also, we must be getting lazy faster than we are getting poorer and hence hastening the race to the bottom for the lower class Americans.Why are those poor households not working full time? Why is only one household member employed? Why have wages stagnated so? Are they just simply lazy and uninspired? Is the system somehow rigged?
I agree with the libertarian perspective on foreign adventures, specious drug war fantasies and allowing hard working citizens to be rewarded for their effort, moxie and good fortune. That being said I am not certain that our lack of any sort of industrial policy to foment certain economic outcomes to maximize benefit not just to consumers but to workers as well might not somehow make sense. Globalism has its merits but let us not be so naive to think that there have not been folks in this country on the losing side of that equation and not for being lazy but for being unlucky and poorly prepared for a dramatic new reality.
Also, let’s not mistake income with wealth. We have allowed the modern day robber barons free rein to create a plutocratic haven whereby frankly many individuals and corporate entities have created pretty nice fortunes based on manipulating the big government to make gargantuan sums. U.S. Forces keep the oil flowing…do the oil companies pay for that protection? Do banking laws allowing institutions to play both sides of a transaction to their liking or the Supreme Court allowing corporate money to support candidates unfettered from any messy reporting or essential limits?
I do not profess to know what the answer might be but let us not delude ourselves into thinking that a little more hard work and more freedom to rig the system will bring about harmony to the land our fathers. There is a better system. It will painfully be manifest through the diligence and dreams the people. And in some way allow for free enterprise, distilled clear wisdom and principled regard for a each individuals own pursuit of happiness.
Please Casey… stop besmirching the intellectual esteem of rhetoricians and libertarians alike with your asinine opinions and poorly researched articles.
Hmm. How do you define “Most” in paragraphs 5 & 6, as in “most people” and “Most Americans”. Most of the people I know do not follow either of the life paths you describe. And, the majority of Americans (and “majority” seems a reasonable definition of “most”) do not have IRA’s or 501K’s, nor insurance policies to cash out. As a far as selling possessions, most people recognize the difference between pawning your grandmother’s ring to pay for a doctor visit vs. selling some prized art or real estate to . . . to. . . to do what? Pay for a Caribbean vacation? Add to your IRA?
So, what do YOU mean by “most people; Most Americans” anyway.
Signed, a college educated, full-time working, 51 year old person who cannot afford to see the only real “asset” she owns, which she’s wished to do for 4 years now: a home underwater. I’m treading water, as are most of the people I know. No savings (went to property taxes) no equity, no hope of ever regaining even the down payment cash put in. Guess it depends on which “most” circles you travel in, huh?
I’ve never taken Robert Reich’s class, but does he ever examine how “income inequality” translates into measurable misery? The very poor have government-subsidized food, housing, and Medi-Cal so let’s compare the somewhat-poor to the 1%: both groups have cell phones (some prepaid), both have internet access (public libraries), both have adequate calories to eat (value menu at fast food restaurants), both have cars and bicycles, both have financial aid (bank of Daddy) to attend college, both have color TVs, both have books to read, places to live, access to Emergency Rooms, access to legal professionals, warm (donated) coats to wear, friends to chat with and the power to vote. Sure the 1% can vacation in Europe and afford MacBook Pros but where is the misery experienced by the somewhat-poor in America that justifies a Communist redistribution of wealth? If the only misery is health care related, there are plenty of self-employed middle-income citizens who cannot afford health care either.
The minimum wage/no benefits workers whose lack of initiative and poor work habits are literally dragging down productivity in corporate America to the point that benefactors like Walmart are forced to survive on a mere $15 Billion in after tax profits last year. By your reasoning then, these ungrateful jerks should do the math and work four jobs at once…Let’s see, here in California, at eight bucks and hour, that would come to $32.00 an hour. Not bad…
Casey is absolutely right on one point. The families with lower income have fewer people working, at fewer hours per day, with less pay per hour. He never provided a moral judgment on how hard people should work, he merely states the obvious, that if your part-time job only offers 30 hours per week, you are not working as hard as someone who gets 40+ hours per week. Should we redistribute wealth so that those who work 30 hours per week get as much money as those who work 40 or 60 hours per week? Or should we gently remind those who are not fortunate enough to find full-time work to keep looking for more work if they envy other people’s wealth? Illegal aliens don’t seem to have trouble finding jobs in Berkeley.
Shorter Casey:
poor people aren’t (comparatively) worse off than they were 40 years ago,
and if they are it’s b/c they don’t want to work (or to work ‘hard’),
also it’s not b/c there are inadequate numbers of jobs, or that those jobs don’t pay decent wages and benefits.
“Most Americans have other means of money than simply income, like selling property or redeeming insurance policies”
Sure, most of us have some properties we don’t need that we can just sell at will for mega-scratch!
Fantasy-land shit, Casey!
Christ, Casey, based on your previous columns I expected a lot better of you than this.
Fascinating that no one knocking Casey’s article on the basis of the data he cites, or his interpretation of said data. The criticisms are mainly accusations that his writing comes off as privileged and insensitive. Even if that were true, you aren’t really striking at the heart of his argument.
I’m not saying that Casey’s points are unassailable, but if people counter-argued with half of the insight in which he counter-argues Robert Reich, we’d all be in a better place, discourse-wise.
i posted 3 articles that directly countered casey’s data. there was no accusation of his writing coming off any certain way. it is fascinating that you would post a comment 2 hours after i had posted my comment, and mischaracterize it so blatantly and incorrectly. i’m not saying that your observation doesn’t matter, just that it is factually incorrect and misleading.
He basically only compares the bottom quintile with the top quintile. He essentially ignores 60% of the American population, especially the shrinking middle class that Americans are concerned about.
And in response to his arguments about the bottom quintile, they are disproportionately single parent households (so only one parent can work, rather than one working and the other staying at home), andthey disproportionately have part-time jobs because employers don’t want to higher minimum wage full time works (to which they have to provide expensive fringe benefits).
It is not to say I don’t sympathize with Casey’s argument, but he is either being lazy by presenting facts without contextualizing them, or he is deliberately misrepresenting these facts. Do your research next time, since I’m hoping its just the former rather than the latter.
TRANSLATION: poor people aren’t working hard enough.
Get a clue.
hahaha. this analysis is laughable. so by your argument the reason income inequality has widened is because people are working less hard than they used to, not because the structure of the global economy has changed, eliminating decent paying jobs for the working class, and replacing them with lower paying service jobs. Hopefully, the next class you take is either research methodology or logic.
reasoning reminisce of the cliche-god helps those that help themselves- In other words, do your job and God will do his. in essence if everyone works hard, minds their of own business, does not provide any help for their neighbor in need, grab as much as you can and don’t give back, the end result will be a sorry world in which to live, no mater if you are rich or poor.
Obama’s strategy to keep his sheeple on the Lib plantation….
This year’s Index of Dependence on Government presented startling findings about the sharp increase of Americans who rely on the federal government for housing, food, income, student aid or other assistance.
Another eye-popping number was the percentage of Americans who don’t pay income taxes, which now accounts for 49.5% of the U.S. population. Meanwhile, most of that population receives generous federal benefits.
“One of the most worrying trends in the Index is the coinciding growth in the non-taxpaying public,” wrote Heritage authors Bill Beach and Patrick Tyrrell. “The percentage of people who do not pay federal income taxes, and who are not claimed as dependents by someone who does pay them, jumped from 14.8 percent in 1984 to 49.5 percent in 2009.”
You 50.5% Income taxpayers keep working so Obongo can shovel more of your tax money to his Lib sheeple.
Since Obama’s solar program went bust and his Chevy Volt turned out to be a Clown car, his next idea is this:
President Obama admitted today that he does not have a solution for skyrocketing gas prices, but he proposed alternative energy sources such as “a plant-like substance, algae” as a way of cutting dependence on oil by 17 percent.
Watch him throw money at his fat cats who will get rich off this boondoggle. GE maybe
Obama has another first
According to the Senate Budget Committee, ’America’s Per Capita Government Debt is Worse Than Greece,’ as well as Ireland, Italy, France, Portugal, and Spain
Yup, here comes another downgrade for The Fail in Chi
Borrow, spend, depreciate the dollar, watch gas and food prices go up, watch the poor get poorer….get the message Reich you Clown
More Obama Greenie Fat Cat Cronies strike it rich on taxpayer money
A123 Systems, an electric car battery company once touted as a stimulus “success story” has laid off 125 employees since receiving $390 million in government subsidies — but is still handing out big pay raises to company executives.
Bottom line: Obama cronies get richer, poorer peeps laid off….another Obama FAIL
This seems to come from a lack of regulation of business executives, not a problem of feeding money into companies.
Libs love control. Obama loves to control his fat cat cronies.
More Obama Fat Cat Cronyism:
President Obama is pushing hard for the reauthorization and expansion of the Export-Import Bank, which, as stated earlier, gives the vast majority of its dollars to Boeing. Lo and behold, we recently learned that Obama’s chief advisor, David Plouffe, used to make good money consulting for Boeing, as The New York Times revealed in an expansive profile this week.
It may sound like the kind of corporate welfare that actually helps a great American company, but that’s only half the story. By subsidizing Boeing’s foreign customers, the Ex-Im Bank actually puts U.S. companies at a competitive disadvantage, costing America jobs.
Domestic airlines, for example, lose out to foreign carriers like Air India because the latter can buy Boeing jets for cheap off of the Ex-Im’s dime. U.S. taxpayer dollars are spent overseas, with Americans’ jobs shipped closely behind.
Yup, The Corruptocrat in Chief Obama is hard at work killing American jobs.
http://www.nytimes.com/2012/01/05/us/harder-for-americans-to-rise-from-lower-rungs.html?sq=mobility&st=cse&scp=1&pagewanted=all
Not only is income inequality widening, but social mobility is contracting in america. Sweden is now one of the countries who stayed strong through the recession and is doing even better now, yet it was the exact country bandied about by neo-cons as a warning against the “evils of socialization.” I am not a strict democrat, but the progressives amongst them do lean more toward a populist message than any corporatist candidate such as Paul and the like. And in the coming years, that will be the growing schism. Not if you are a D or an R, or any other mutation thereof. The party that brings a true populist message and is not in on the long con of the neo-cons (NOT necessarily the Democrats, although they are positioned closer) will be the one to win the electorate. Expect the distinction between republic and democracy to be ramped up from the right– the right are failing to attract sizable portions of the populace through their policies, and are now trying to change the demographics of the election by disenfranchising key constituencies.
http://nymag.com/news/features/gop-primary-chait-2012-3/
This article outlines how the Right has lost ground to a changing demographic. If you think the electorate has changed now, wait ten years. Right now, the clamor for states’ rights is once again a code by those on the Right, this time, though, the call is genuine, for once you give the power to the states, you then establish corporate sponsors, and achieve fascism by turning it on its head and having the government run by the business– big in both cases, of course. The prison privatization scheme is a part of this, as are the attacks on collective bargaining, as in fact are most calls for deregulation of industry; the businessmen are now the ones in control, and they are actually writing the rules for republican lawmakers– literally.
http://thinkprogress.org/economy/2012/02/02/417488/florida-gop-alec-forget/
Until there is a true metric of the true state of middle America that is a gague for economic action, we will continue to bring on the corporatocracy. As long as Wall Street decides the economic strength of our country instead of true manufacturing and such, we will continue to pass policy and make ideological stands against the middle class in the interest of big government. Until middle America can effectively move the market, as the market affects their everyday lives, there will be no change. The average person is now being taught to accept less so that those who have more can get even more. Read the above article. The demographic shift is being augmented by a bracing round of populism, and corporatist ideologies like libertarianism, like any -ism, really, are not in the interest of the populace over corporations. This economic crisis has been used to the advantage of those who would return us to the Gilded Age, but a growing percentage of the populace do not share the same goal.
Hope you are doing well, Casey.
“In plain English, the evidence shows there is a correlation between how hard one works and the amount of money one earns.”
Besides that statement being obviously unconscious of racial class discrimination, and not understanding of the white privilege Givens enjoys as an intellectual elite (who doesnt return to the ghetto every school break and hasnt dealt with systematic prejudice since the inception of this country) not a bad article for once.
Hey, an article by Given that doesn’t suck and isn’t (that) self-absorbed. Good stuff.
You are kidding right?