Krugman: The Social Contract

[ProSense]

The Social Contract

By PAUL KRUGMAN

This week President Obama said the obvious: that wealthy Americans, many of whom pay remarkably little in taxes, should bear part of the cost of reducing the long-run budget deficit. And Republicans like Representative Paul Ryan responded with shrieks of “class warfare.”

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As background, it helps to know what has been happening to incomes over the past three decades. Detailed estimates from the Congressional Budget Office — which only go up to 2005, but the basic picture surely hasn’t changed — show that between 1979 and 2005 the inflation-adjusted income of families in the middle of the income distribution rose 21 percent. That’s growth, but it’s slow, especially compared with the 100 percent rise in median income over a generation after World War II.

Meanwhile, over the same period, the income of the very rich, the top 100th of 1 percent of the income distribution, rose by 480 percent. No, that isn’t a misprint. In 2005 dollars, the average annual income of that group rose from $4.2 million to $24.3 million.

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Elizabeth Warren, the financial reformer who is now running for the United States Senate in Massachusetts, recently made some eloquent remarks to this effect that are, rightly, getting a lot of attention. “There is nobody in this country who got rich on his own. Nobody,” she declared, pointing out that the rich can only get rich thanks to the “social contract” that provides a decent, functioning society in which they can prosper.

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[Blue Meany]

1. One might add that very few in this country or any other get

rich of their own labor. People make a living off their own labor, but they generally only get rich off the labor of others.

[Stuart G]

2. k & r thanks for posting...nt

[wiggs]

3. Fine article. What is missing is someone who can write about the big picture

of social safety nets in america. What is the historical reason for them? What have the benefits been in terms of the middle class and big picture economics? What is the role of demand in economics and how much of this comes from middle and lower income levels? What were the 20's like economically and what does it mean that we're looking at similar stats now? What do countries with strong social contracts look like economically and in terms of quality of life? What do countries with weak federal govt look like?

Hartmann has talked about some of this background and about comparisons with other countries in a reasoned, historical way. This kind of discussion, you would think, would be a strong, clear part of public discussion about unions, middle class, safety nets, etc. But it is not. As it is, the RW puts up their 'articles of faith' that tax cuts and deregulation will result in economic growth and dems put up their own articles of faith that government can help end vicious circles of recession and that recession is no time to cut govt services for many reasons. But without making the case...it's just one vision against another. The case needs to be made.

[wiggs]

4. I think Obama has done a bit of this in a speech about what America is and

how we support those who need it. But I get the feeling that once he covers a nuanced topic in an important speech he doesn't feel the need to repeat, expand, or push the same info. On the right, a meme is pushed, and pushed and pushed until by sheer force it comes to be accepted. I don't want to adopt RW tactics but there is far too little background big picture discussion of this topic by dems and pundits.