Among the Intellectualoids

Junk Economics at the ‘Times’

Throwing fixed pies into the face of its readers.

By 3.8.14

UPI
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The Great Divide” series of articles on inequality in the New York Times offers a textbook example of exaggerating the size of the hole and ignoring the donut. In “We Are Not All in This Together,” for instance, sociology professor Shamus Khan at Columbia paints a picture of the economy as a fixed pie: “Let’s be honest. If a few of us are better off, then many are not. If many are better off, then a few will be constrained. Which world would you rather live in? To me the answer is obvious.”

In fact, Khan’s assertion of how the world works is far from obvious.

Is he saying the rest of us became worse off when Steve Jobs and his top associates became better off? Is he claiming that we’ll somehow become worse off, automatically, if the stockholders of Merck or Bristol-Myers become better off because their investments succeed in producing a drug that can zap cancer tumors via the immune system?

And what’s that about “a few will be constrained” if “many are better off”? I hope he’s not saying that Palm Beach would be economically better off if they “constrained” Donald Trump’s ankles in stocks along A1A, Colonial-style.

“John F. Kennedy famously used an analogy to imprint” an “elegant view of economic relations upon the American psyche, ‘A rising tide lifts all boats,’” states Khan. “Yet the evidence of the past 70 years shows that this is a myth.”

Seventy years ago, in 1944, life expectancy for U.S. males was 60.8 years, only 5,000 TV sets were in American homes, there was no open-heart bypass surgery, and 45 percent of U.S. homes had no indoor plumbing.

Clearly, a rising tide over the past 70 years has lifted the mega-yachts along with the cheap dinghies.

Still, maintains Khan, “In a world of finite resources, if you have more, I have less.”

Khan ignores the fact that the most significant resource, man’s mind, is not finite. Japan, with high levels of human resourcefulness and low levels of natural resources, is not poor or undeveloped, while nations that are richer in natural resources and poorer in resourcefulness than Japan are poorer and less developed.

Additionally, “the rich,” states Khan, “underestimate the advantages that helped them” and “overestimate their own contributions to their status.” I haven’t interviewed thousands of rich entrepreneurs or wealthy investors to find out if that might be true, but it’s clear that there’s never been a shortage of tenured pontificators in academia who “overestimate their own contributions” to the social discourse.

Further, Khan claims that the rich, seeking tax cuts, “found common ground with suburbanites who didn’t see social spending as something that enhanced their lives and neighborhoods, but as something that transferred their tax dollars to a different kind of America — urban, of a notably darker hue.”

So tax cutters, rather than being rational opponents of government waste and fraud, are portrayed in Khan’s analysis as a debauched coalition of the undeserving rich and suburban racists.

Khan doesn’t mention that the top 10 percent of income earners in the U.S. in 2011 paid 68 percent of all federal income taxes, while the top 1 percent, earning 18 percent of total income, paid 37 percent of all federal income taxes, double their share of income.

In another article in “The Great Divide” series, “Your Ancestors, Your Fate,” University of California economist Gregory Clark states that “Capitalism has not led to pervasive, rapid mobility.” In fact, in the 1700s, after tens of thousands of years of human history, and before capitalism, life expectancy in America and Europe was 35 years. With capitalism, the simultaneous development of free markets and free minds produced unprecedented successes in the “rapid mobility” of both longevity and living conditions.

In “One Nation Under Guard,” the first sentence sets the gloomy mood. “Another dubious first for America: We now employ as many security guards as high school teachers.” Does that mean we’d be better off if we doubled the number of teachers by cutting class sizes from 20 to 10 while simultaneously cutting security and enabling a free-for-all in the street level redistribution of goods and services?

A fourth article in “The Great Divide” series, “In No One We Trust,” referred to those who pursue their own self-interest as simply “morally uninspired.” I suppose that’s referring to the earnings of businessmen and profits and wages in the private sector, not to the paychecks in the government sector where “public servants” have allegedly relegated “self-interest” to a back burner.

Another column, “How Inequality Hollows Out the Soul,” didn’t mention that it was forced equality in the Soviet Union, not inequality, that produced a surplus of dreary housing, ugly dresses and remarkably hollow men.

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About the Author
Ralph R. Reiland is the B. Kenneth Simon professor of free enterprise and an associate professor of economics at Robert Morris University in Pittsburgh.