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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?

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Comment Preferences

  •  Tip Jar (4+ / 0-)
    Recommended by:
    NCTim, ban nock, JamieG from Md, katiec

    The purpose of government is to do for the people the things they could not do, or could not do so well, for themselves. A. Lincoln

    by ByersAware on Tue Jun 03, 2014 at 08:55:31 AM PDT

  •  When it's time for tax breaks legislators also (1+ / 0-)
    Recommended by:
    Ralphdog

    agree to increases in all the earned income "tax credits" etc.

    I'd guess that between Medicaid and the earned income credit or whatever it's called we get a big boost to our income. I'd much rather higher pay.

    This year I increased what I charge by about 30% and I'm busier than I've ever been. I think minimum shouldn't be at $10.10 but at $20.20. I wouldn't worry about loss of jobs. Everyone used to mow their own lawn and care for their own kids clean their own house. If restaurants cost too much cook at home. All truly needed work would still get done.

    “Conservation… is a positive exercise of skill and insight, not merely a negative exercise of abstinence and caution…” Aldo Leopold

    by ban nock on Tue Jun 03, 2014 at 09:11:42 AM PDT

  •  Easy answer (1+ / 0-)
    Recommended by:
    VClib
    So, who are we subsidizing, the workers or the Waltons?
    The workers.
    •  Nope, we are subsidizing the Walton family. The... (0+ / 0-)

      Nope, we are subsidizing the Walton family. The Walton heirs are worth billions but Walmart is a consistent offender when it comes to wage theft. If left to their own devices the 1% wouldn't pay a wage at all: they'd have us selling our souls at the company store.

    •  Easy, but wrong. (2+ / 0-)
      Recommended by:
      cjtjc, Cassandra Waites

      Without public subsidies permitting workers being paid Wal-Mart's sub-poverty wages to just barely keep their heads above water, Wal-Mart's business model would collapse.

      The vicious feedback loop between 'low low prices' and poverty wages requires public subsidies, otherwise you'd have Wal-Mart workers living in refrigerator boxes and washing their clothes by beating them on rocks in the creek. And Wal-Mart won't tolerate that; won't meet their dress code requirements for 'associates'.

    •  LOL (0+ / 0-)

      Evidently not so easy for everyone to figure out.

      Alabama- In April 2005 the Mobile Register published an article citing data from the Alabama Medicaid Agency on companies in the state with employees whose children are participating in Medicaid. The newspaper obtained a list from the agency of 63 companies whose employees had 100 or more children in the program as of mid-March 2005. At the top of the list was Wal-Mart, whose employees had 4,700 children in the program. Following it were McDonald's (1,931), Hardee's (884) and Burger King (861).

      Arizona
      In July 2005 the state Department of Economic Security issued data on the largest private employers with workers receiving taxpayer-financed medical insurance through the Arizona Health Care Cost Containment System. At the top of the list was Wal-Mart, with about 2,700 workers--or 9.6 percent of its Arizona workforce--participating in the program.

      Florida- In March 2005 the St. Petersburg Times published a summary of data it obtained from the Department of Children and Families on the employers in the state with the most workers who were enrolled in Medicaid or KidCare Insurance (Florida's version of SCHIP). Leading the Medicaid list was Wal-Mart with 12,300 employees or their dependents enrolled in the program. Wal-Mart also accounted for 1,375 employee children enrolled in Kidcare (second only to Miami-Dade County with 1,518). The other employers with the most Medicaid enrollees were McDonald's (8,100), Publix (7,900), Wendy's (4,100), Winn-Dixie (4,000) and Burger King (3,900).

      Many more states at the link: http://www.goodjobsfirst.org/...
  •  But (1+ / 0-)
    Recommended by:
    Cassandra Waites

    At that time, in most states, activities like hunting, gathering, fishing and camping without a permit was not a felony.

  •  Multiple reasons Samuelson is full of shit, (4+ / 0-)
    Recommended by:
    cjtjc, RabbleON, katiec, Cassandra Waites

    as usual.

    1) Medical care. In the 1920s medical costs were completely inconsequential, because medical care of the day was almost worthless. Not coincidentally, the life expectancy was under 60 years. Nowadays medical care is outrageously costly, requiring some kind of 'income transfer' for anyone who's not in the 1% to have access. This is not subject to debate, it's obvious fact.

    2) As noted above, much of that 'income transfer' is in fact corporate subsidy, permitting goliaths like Wal-Mart to pay only poverty wages well below subsistence level yet maintain a desperate workforce ready for further exploitation.

    3) The size of 'income transfers' in the form of corporate welfare, bailouts for the Banksters who caused the 2008 meltdown, the un-billed socialized cost of carbon dioxide and pollution, the relentless draining of Midwestern aquifers to support factory farms and so on likely dwarfs the magnitude of 'income transfers' to the poor and working poor.

    4) U.S. Military policy, weapons acquisition, and our ongoing endless war on brown people at taxpayer expense (not to mention the horrific toll in death and suffering to Veterans) represents a colossal transfer of wealth and wellness from working class Americans to the corporate 1%.

    I could go on.

    •  "Income Transfers" is inaccurate. The fed (1+ / 0-)
      Recommended by:
      Ralphdog

      gov creates dollars out of  thin air.

      It has infinity at it's disposal.

      Obviously, taxes are not necessary to fund it's spending, or as Pres of TheFed, Beardsly Ruml wrote back in 1946, "taxes for revenue are obsolete"

      http://mikenormaneconomics.blogspot.com/...

      Adam Smith viewed taxes are primarily a way to insure that an aristocracy wouldn't rise up.

      While under the gold standard of his day, taxes did serve to raise revenue, he was also aware that this was a self imposed constraint, and that "if a prince can issue a bond, he can issue a bill".

      Meaning bonds are created out of thin air, just like bills are.

      Anyway, taxes should be confiscatory due to political power, not necessarily the need for revenue.

      Denouncing vast differences in wealth and income, Smith praised a fellow economist’s tax proposal:

      “To remedy inequality of riches as much as possible, by relieving the poor and burdening the rich.””

      And if this wasn't enough to prevent our Aristocratic heroes from gaining their rightful place in the universe:

      "A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural."

      We really need to get back to arguing about whether we want a democracy, and the issue of how money is distributed first - by whom, to whom, and for what purpose - and then taxed later.

      "In the beginning there was the power to distribute money.... and these same forces write our tax codes"

  •  Neoclassical, marginalist economics vs. (0+ / 0-)

    the heterodox:

    Orthodox:  "In the beginning there were prices"

    Heterodox:  "In the beginning there was power"

    Orthodox:  "Let's fix income inequality through tax policy - or not".

    Heterodox:  "Let's look at the institutions that distribute our money, and set tax policy in light of this"

    Economics is a parable in pursuit of political and moral outcomes:

    http://fixingtheeconomists.wordpress.com/...

    http://fixingtheeconomists.wordpress.com/...

  •  Kuttner on confronting the climate emergency (0+ / 0-)

    in the same way we did WWII and creating shared prosperity in the process:

    http://prospect.org/...

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