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Is Income Inequality the New Climate Change?

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Jim Pethokoukis writes: If you dare question the alarming claims about income inequality made by progressives and Democrats, including President Obama, does that make you a “denier” — akin to climate change “deniers” — whose arguments should no longer be taken seriously?

In a recent post, “Yes, Rising Inequality is a Problem,” excellent economics blogger Ashok Rao is sharply critical of Manhattan Institute scholar Scott Winship. Rao describes Winship as “a representative agent of those making the best arguments that progressives overstate the costs of inequality.” I myself have frequently quoted Winship or used his careful research in my blog posts and columns. It’s also worth noting that Winship’s profile has risen dramatically recently due to his role advising House Budget Chairman Paul Ryan, who may run for president in 2016.

Rao has a number of problems with Winship’s arguments, but his core criticism is that Winship sets an unnecessarily high bar for evaluating the “mountain of evidence” that rising inequality is a real phenomenon deserving of redistributive policy action. Rao:

Winship’s argument against inequality being a problem is a value judgement–a value judgement that those of us with a strong theoretical ex antecase must amass an enormous amount of high-quality, expensive, detailed evidence that rising inequality has in fact had the obvious consequences before we are allowed to even have a conversation about the subject, let alone make the case for policy changes. This does strike me as similar to some of the most sophisticated forms of climate-change denialism, which also focus not on reading the evidence we have differently but rather setting up a very different prior from the rest of us, and so redistributing the burden of proof. … Let us hope the future debate about inequality and its consequences does not mirror that on climate change.

Income inequality is an important issue deserving of honest and open debate. But if you’re worried about the issue becoming politicized and hopelessly muddied, Winship is hardly a concern. Unlike many center-right folks, he had conceded that high-end inequality likely has risen dramatically in recent decades. Winship, however, is highly skeptical of the supposed deleterious economic impact and disagrees with claims that middle-class incomes have stagnated since the 1970s.

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Obama’s Unfresh Economic Ideas

Paleo-Liberalism’s Last Stand? Obama’s Economic ideas are a relic of big government’s industrial-age past

Paleo-Liberalism’s Last Stand? Obama’s Economic ideas are a relic of big government’s industrial-age past

His solutions for a stagnant economy were tried and found wanting long ago
Mona Charen writes: If President Obama has entertained an economic insight that wasn’t fashionable in 1933, I haven’t heard about it. Doubtless he’s for recycling glass and plastic, but he’s even more wedded to recycling ideas that were fresh and interesting during the New Deal but have since been discredited.

All of this was clear when he became the Democratic party’s pinup in 2008 (just by way of example, I wrote then that while Obama was “shiny bright and new” his ideas were “suffering from senility”). What’s dumbfounding now is Obama’s detachment from his own presidency. He continues to campaign (well, speak, but it always sounds like a stump speech) as if someone else were sitting in the Oval Office, as if someone else’s policies were responsible for the state of things, as if someone else should shoulder the blame.

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Reality Check: Standard of Living Steadily Improving

When we measure by consumption, it’s clear people are better off today than they were 30 years ago.

iPhones for sale at the Apple Store in Manhattan.

iPhones for sale at the Apple Store in Manhattan.

Aparna Mathur reports: Commenting on the state of the economy at a Habitat for Humanity construction site in Oakland, Calif., former president Jimmy Carter recently said that “the disparity between rich people and poor people in America has increased dramatically” and that “the middle class has become more like poor people than they were 30 years ago.” These sentiments are commonly echoed across the country as the effects of the most damaging economic slump since the Depression continue into their sixth year.

The Census Bureau’s “Income and Poverty” report, released in September, underscored that the economic recovery has largely failed to reach the poor and middle class. However, there is a subtle but substantive difference between stating that inequality is worse today than it was 30 years ago, and that people are worse off today than they were 30 years ago. Rising inequality does not preclude an improvement in standards of living at the bottom of the income distribution.

Stepping back from the traditional debate about income inequality, Kevin Hassett and I recently co-authored a study that focuses on changes in material standards of living over the last 30 years. Consumption of goods and services is often a far better measure of household welfare than is income. What we buy and consume with our income directly adds to our utility and happiness, and it also has a direct impact on our standard of living. Read the rest of this entry »