“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Saturday, August 09, 2008

Five theses on the state of the art in inequality

1. Inequality isn’t the result of contingent trajectories driven by an indifferent marketplace. Like everything else, inequality is a moneymaking proposition.
2. There’s a polite fiction, maintained across the political spectrum, that all of us are concerned about inequality and conservatives and liberals both want to lessen it. This is, of course, the ripest bullshit.
3. The rich will always use part of their wealth to maintain their socio-economic position. Strategies for doing this are various. For instance, there is the creation of various barriers to entry to block social mobility (which operate in many dimensions – for instance, denying dental care to the children of the poor and the lower middle class is an excellent way to mark them, physically, with a burden that will be hard to lift as they try to advance in life). For surprisingly cheap sums, the wealthy can buy a contingent of scholars whose careers are dedicated to defending the current position of the wealthy – and this attitude, suitably disseminated in the media, brings an amazing payoff. But of course the greatest weapon in the arsenal of maintaining inequality is the state. So far, the behavior of the wealthy here is as utterly predictable as it is utterly invisible.
4. The great majority of the goods and services produced in the U.S. is, of course, generated by the non-wealthy. The wealthy depend upon this. So here’s the question, from the point of view of the wealthy – is it better to employ a long term or a short term strategy to manage the share of the national wealth going to the non-wealthy? A long term strategy might depend on wages and salaries rising in tandem with rises in productivity based upon the notion that this gives us a solid consumer base, and in the long term this is of benefit to the wealthy, too. In the short term, though, what if you could have your consumer spending and crimp the rise in wages and salaries? in other words, what if you arrested wage increases and increased credit limits? Take a man who made 45,000 dollars per in 1995, say. Would it be better for his compensation to rise as it has traditionally done (at least in the postwar years), so that in 2005 he made 75000 per – or would it be better for the wealthy that his compensation rise by only 5,000 dollars, while his credit limit expanded as though he were making $75,000 dollars? The short term answer is obvious. Not only do the wealthy accrue a greater margin on the productivity of our 40,000 dollar man, but the indebtedness necessary for this man to lead a $75,000 dollar lifestyle in 2005 is almost pure gold for the wealthiest, frolicking at the other end of the 6 percent interest rate. This, then, is the most beautiful way to make money, and it has become the American way in the age of the Great Fly. Of course, if it were baldly put that economic policy was about slowing the compensation and expanding the endebtedness of the majority of Americans, and that both are golden revenue streams for the wealthy, this policy might not be so popular. This is why you will never read that this is the policy course we have followed for the past twenty years, and the central economic fact to which we all must respond. This is why, when the conversation turns to inequality, the first rule in the discourse is the pretense that inequality yields no benefits. The return on producing obfuscation on this crucial point has been impressive, and can, apparently, continue indefinitely.
5. However, although I hate to harsh the Great Fly mellow, there is a flaw in this beautiful story of fleecing the mass of little piggies who make the stuff and watch tv to tell them how to be good little piggies. It turns out that there is a cost to supporting a $75,000 lifestyle on $50,000. Our 50,000 man, homo stupeficus, has to find ever more desperate expedients to keep going, and eventually he breaks: with his fog, his amphetimine, and his pearls. Who’d have guessed? This can rapidly dry up the revenue stream to the wealthy. Not only that, but there is even, it turns out, a downside to the obfuscation and promoting a debased, slavish, vile and utterly corrupt picture of humanity – in the name, of course, of free enterprise. John Q. Public might start operating with the same dirty, disgusting, vile and sick means that the wealthy operate with. As Felix Salmon recently pointed out, when the Delay and Lieberman Congress gaily passed the debt slavery act, aka the Bankruptcy bill, making it nigh impossible to get rid of credit card debt, they produced a little trap for their big fat piggish selves. Because that bill makes it more economically rational to screw the larger debt of the mortgage via jingle mail than to quit paying Visa. Greed wrongfooted greed! As we are toted up, piggies all, in the debtmonger’s bag, it turns out the little piggies can shit with impunity on the banks in this area! Funny, eh? The piggies kicked! It is almost a revolution.

Take the skin and peel it back/
Doesn't it make you feel better?

1 comment:

Brian said...

Great essay, roger.

As a prime example of homo stupefacus (or Homo stupid-idiotus), I am running to the end of my little fun run in the sun. Maybe I can join the local Taak-vodka sippers underneath the highway bridge.