Now and the 1920s
Syndicated columnist Robert Samuelson cites an essay by Gary Burtless of the Brookings Institution. They argue that today’s income inequality is nowhere near as great as in the 1920s. The reason, they say, is that data on income today does not include such government assistance as food stamps and Medicaid to low-income workers.
Samuelson and Burtless have joined the fascinating and truly important debate on income inequality. Most of us, certainly including myself, have far too little understanding of economics to make meaningful contributions to that debate. But others, in addition to Piketty and Elizabeth Warren, do have the necessary knowledge, and I hope the arguments on both sides will continue to be published widely.
I call attention to one element in Samuelson's column, and I hope I am not distorting anything in doing so. He quoted Burtless as saying: “In 1929 government transfer payments to households represented less than 1 percent of U.S. personal income, By 2012 they were 17 percent of personal income. ... Everything we know about the distribution of government benefits suggests they narrow income disparities.”
Isn't that precisely what the conservative/liberal uproar is all about: the need for government to provide food stamps, Medicaid and other assistance to low-paid workers at businesses such as Walmart and McDonald's in order for those workers to survive? And isn't it the wage disparity that makes this necessary? I have read studies in two states that estimated total government supplemental benefits to employees at the average Walmart store range from $400,000 to $800,000 per year. All this while the profits from those workers' productivity placed six Walmart owner-families among the 20 richest in the nation.
So, who are we subsidizing, the workers or the Waltons?