So it all began when Paul Krugman (in the NYTimes, reprint here
) wrote about inequality that:
What’s noticeable is that except during stagflation, when virtually all Americans were hurt by ... oil prices, what happened in each era was what the dominant political tendency of that era wanted to happen.
Franklin Roosevelt favored the interests of workers while declaring of plutocrats who considered him a class traitor, “I welcome their hatred.” Sure enough, under the New Deal wages surged while the rich lost ground.
What followed was an era of bipartisanship and political moderation; Dwight Eisenhower said of those who wanted to roll back the New Deal, “Their number is negligible, and they are stupid.” Sure enough, it was also an era of equable growth.
Finally, since 1980 the U.S. political scene has been dominated by a conservative movement firmly committed to the view that what’s good for the rich is good for America. Sure enough, the rich have seen their incomes soar, while working Americans have seen few if any gains....
And if that’s true, it matters a lot which party is in power — and more important, which ideology.
Now, Krugman does throw the explicit partisanship in, but really this isn't an argument at all about which party control government, nor is it exclusively about government actions. Some bloggers, like Brad Delong, have too-narrowly construed Krugman's argument that inequality is due to government policy. It inarguably is to some extent, but that's not what Krugman is saying. Read it again:
...what happened in each era was what the dominant political tendency of that era wanted to happen.
"The dominant political tendency" isn't the GOP, it isn't Bush, it isn't Congress or the Supreme Court. Broadly speaking, the dominant political tendency of the years 1980-2000 was Reagan-Thatcher neoliberalism. While I've used two national leaders as the icons of this philosophy, they certainly didn't create the ideology - they were, at most, very prominent advocates. Ironically enough, Paul Krugman used to be one of neoliberalism's brightest lights, before he joined the order of the Shrill.
The rise of neoliberalism led to the deification of obscene wealth, and the glorification of men (like Ken Lay or Jack Welch) whose pursuit of that obscenity finds them just the other side of the law. But Marx never really goes out of style, and thesis begets antithesis, and Enron pre-2001 begets Enron post-2001, Worldcom, and Martha Stewart. (Spare me. She broke the law.)
It's been interesting to see the reaction, post dot-com, against neoliberalism gain steam. As I've said before, it's a shame that more people aren't willing to blame the people - like Krugman* - who got us in to this mess. I suppose if the American pundit class can't be expected to properly apologize and recant for a disastrous 3-year war, I can't very well expect those same pundits to apologize for a totally calamitous 20-year debacle of economic policy.
And a debacle it has been. Never mind that growth has been slower - world wide, with the almost-unique exception of China - in the neoliberal era than it was before. How about three lost decades now for Africa and Latin America? How about the final, withering blows against American labour unions? How about the seemingly permanent destruction of our expectations for what a government should do? Well, it's been a debacle for most of us. For the usual suspects, the years since 1980 have been a godsend.
Has there been growth? Yes, albeit less since Reagan than before. Has there been innovation? Yes, but prove to me the connection between Maggie Thatcher and the Internet and I'll bake you a solid gold cake. (Indeed, the Internet's foundation is a relic of the pre-Reagan period.) What we've gotten in exchange for slow growth and innovation is money shovelled to the top and higher unemployment.
Nice work, if you can get it.
*Before you think I'm being too harsh on Krugman, let me be clear: Krugman was not just a leading neoliberal advocate, he explicitly belittled the anti-globalization, fair trade movement, in some pretty insulting language. He was, at one point, not too far from Friedman's condescending language. I sincerely welcome him to our side, but it's kind of like Joe Lieberman coming out against the Iraq War after all this time.
I've been insulting in my writings too, but a) I'm not a writer for the New York Times, and b) the economists I read (Baker
, Galbraith the Younger
) were right, and Krugman (when it comes to the majesty of global capitalism) was tragically wrong.