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Thursday, August 16, 2007
Rant About Inequality, Part 17
EPI's Ross Eisenbrey wrote a great response to another economist whose love for the market has made him misrepresent the facts.
For example, the authors declare that it is a fact of nature "as unquestionable as the Earth rotating around the sun" that productivity — output per hour — drives wages. But the authors attempt to demonstrate this relationship by charting productivity against per capita income — a measure very different from wages. In fact, as the profit share of national income has increased over the last generation, per capita income has grown much faster than the typical worker's wage. The result has been a steep rise in inequality, with the rich getting much richer and working folks treading water.
Eisenbrey also makes what I think is the most critical point about inequality. This is why EPI is so awesome.
Productivity and wages should be related, and wages ought to rise as productivity increases. It's only fair, after all, that workers should benefit from their higher output. But productivity and wages don't necessarily rise in tandem. One of the biggest economic problems facing the country is the fact that over the last 30 years, productivity grew substantially while the wage of the typical American worker has barely increased after adjusting for inflation. The problem has been quite severe in recent years: from 2000 to 2005, productivity increased 17 percent while the median wage increased only 3 percent. Most economists, including Federal Reserve Chairman Ben Bernanke, have come to recognize this problem — but not the authors.
Workers deserve a higher wage because they have earned it. They produce more, they should get more.
Many academics are coming to the conclusion that the public cares most about who deserves what, rather than who gets what (via inclusionist.org). This research contradicts the model that reduces politics to self-interested, income-maximizing behavior, a powerful idea that's prevalent in elite discourse on both the left and the right. Turns out that reciprocity and fairness probably matter most.
How do you become deserving in this country? You work hard, you make a contribution, you have bad luck, etc. It's conditional, and it's about dignity more than it is about sympathy, I think.
There are nice ways of saying these things and there are not so nice ways. I don't care how people say it, as long as they say that people deserve higher wages because they've earned them. Not just because workers are human beings. Not just because they have unmet needs. Not just because other people don't need the money. And not just because otherwise evil corporations get it.
Posted by Matt Lewis
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