Yeah! and I've set up and turned out this state
with my own two hands
We've traveled this land packed tight in minivans
And all this for the fans, girls, money, and fame
I play their game, and then they scream my name
I will show no shame, I live and die for this
If I come off soft, then chew on this....
Are you scared?
If you're not afraid of the truth, the whole truth, and nothing but the truth, according to Krugman, then join me on the flip.
What follows are excerpts from Paul Krugman's latest column, "Graduates Versus Oligarchs."
Ben Bernanke's maiden Congressional testimony as chairman of the Federal Reserve was, everyone agrees, superb. He didn't put a foot wrong on monetary or fiscal policy.
But Mr. Bernanke did stumble at one point. Responding to a question from Rep. Barney Frank about income inequality, he declared that "the most important factor" in rising inequality "is the rising skill premium, the increased return to education."
That's a fundamental misreading of what's happening to American society. What we're seeing isn't the rise of a fairly broad class of knowledge workers. Instead, we're seeing the rise of a narrow oligarchy: income and wealth are becoming increasingly concentrated in the hands of a small, privileged elite.
{Moving forward}
The 2006 Economic Report of the President tell sus that the real earnings of college graduates actually fell more than 5 percent between 2000 and 2004. Over the longer stretch from 1975 to 2004 the average earnings of college graduates rose, but by less than 1 percent per year.
So where are the gains going? Wait for it...
Between 1972 and 2001 the wage and salary income of Americans at the 90th percentile of the income distribution rose only 34 percent, or about 1 percent per year. So being in the top 10 percent of the income distribution, like being a college graduate, wasn't a ticke to big income gains.
But income at the 99th percentile rose 87 percent; income at the 99.9th percntile rose 497 percent; and income at the 99.99th percentile rose 497 percent. No, that's not a misprint.
{Moving forward}
Why would someone as smart and well informed as Mr. Bernanke get the nature of growing inequality wrong? Because the fallacy he fell into tends to dominate polite discussion about income trends, not because it's true, but because it's comforting. The notion that it's all about returns to education suggests that nobody is to blame for rising inequality, that it's just a case of supply and demand at work. And it also suggests that the way to mitigate inequality is to improve our educational system--and better education is a value to which just about every politician in America pays at least lip service.
The idea that we have a rising oligarchy is much more disturbing. It suggests that the growth of inequality may have as much to do with power relations as it does with market forces. Unfortunately, that's the real story.
His conclusion is equally potent, but since I don't want to rip off NYTimes Select too much, I shan't post it here.