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Dec 20, 2006


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thoughts: things have not gotten worse for most people in material terms, but you gotta be kidding me about lauding a 30% increase in median income over an almost 30 year time period.

You failed to mention that the overall growth rate of the economy was higher prior to the seventies, which means that during that unusual period where income inequality was being regularly reduced was when our economy was doing quite well.

It seems inescapable not to say that Reaganomics exacerbated income inequality.

You fail to mention the import of K street, their reorganization in the early seventies to exert more lobbying pressure and the rise of the religious right seem to be strongly correlated with the turnaround our system has shown.

Long and short, from my pov, the increased influence of $peech on our gov't has been a very bad thing overall for us, as it has also accompanied a hyper-individualism that has been harmful for us spiritually. I do not think that is a coincidence.

I do not trust centrism to extricate us from the present situation. I think we need to continue to reduce the faith-based political acrimony that has been poisoning our democracy and continue to have the political influence tilt economically left and develop a viable third party system(first focusing on state level institutional reform) so that the third parties will force the main parties to be more dynamic in their platforms.


Merry Christmas to you and your family.


Michael W. Kruse

"...lauding a 30% increase in median income over an almost 30 year time period."

I don't know that I was "lauding" this growth but a 30% growth in real inflation adjusted income is not insignificant. There was general stagnation over the period from the early 1970s to 1980s so the growth is really over a period of less than twenty years.

As to the period in the 1950s and 1960s, I think we had a very unusual set of circumstances. During WWII you had a large household savings build because of scarcity of goods available for purchase. Meanwhile, industry retooled and remade itself as it production turned to the war effort. When the war ended you had a surge of experienced and disciplined labor into the market. Pent up demand, cutting-edge infrastructure, people with money in the bank, and relatively inexpensive quality labor set the nation on a growth trend that lasted almost two decades. I began with 1967 because that is how far back the data source went that I was using.

"It seems inescapable not to say that Reaganomics exacerbated income inequality."

I didn't say that it didn't contribute but that the rise began prior to it by about six years. There was something more at work than just Reganomics. However, if you look at the chart in the previous post, median income began to rise about 1983 when Reganomics kicked in. That growth has only been interrupted by the recessions in '91-'92 and in '00-'01. And this gets to my question about the ability to achieve growth in the overall economy without allowing for inequality. The precise nature of the relationship is unclear to me but I think it is there.


“…continue to have the political influence tilt economically left”

I agree with you about hyper-individualism. However, I reject the idea that free market capitalism is the prime source of hyper-individualism. I see it primarily as a product of the Enlightenment/Modernist idol of the autonomous self seeking self-actualization. Proto free-market capitalism predates the Enlightenment and is solidly grounded in the Christian ethos. The economic system is not so much flawed as are the players who bring their Modernist selves into the market place.

I am not in favor of statist solutions to most of our problems. I am in favor of the Church being salt and light in the world who see themselves as stewards of creation and community, and then feeding those values into the most dynamic wealth generating system ever seen. The answer lies with transformation of the Church not economic systems in my estimation.

Merry Christmas to you too!


30% increase over 20 years is still a 1.3% annual increase which a pretty small fraction of the overall pie.

Economic growth slowed during this period, but not by that much.

I agree that the 50s and 60s were unusual, also in part because of our vantage point coming out of WWII. I'd also argue that worker bargaining power was on the increase because of gains made by organized labor, since employers are more likely to raise wages/increase benefits to stave off a unionization threat.

Methinks that is inevitably part of what makes the trickle-down effect actually work. Unfortunately, the imputation of income problem does require some bargaining, in part because a significant source of gains come from advances in basic sciences.

I think we've had both growth and a significant reduction in inequality in the past, yes there were some differences back then, but things weren't that radically different.

One thing that has changed seriously has been the level at which executives have been paid, relative to the entry level or median-paid worker in a corporation. Corporations' performances(the non-inflated or Enronized versions) have not improved significantly since this change and so one can question this practice, though it might be better to somehow get back to the voluntary means by which corporations mediated income inequality within themselves in the pastt.

Free market capitalism does have an impact on values overall. The issue is almost always markets plus frameworks, or the rules of the game. Those early days of capitalism had a better framework than today and were about subverting the control the medieval hierarchy had over "society" in ways that were more meritocratic.

But I don't think this can be seen as "free market capitalism". I think the state inevitably plays a role as where the rules of the game for our economic relations get worked out. Also, all private property inevitably refers back to the owner's ability to get the state's monopoly on the legit use of violence to be wielded on their behalf. There are limitations to the ability of the threat of force to change people's behavior, but it still is present there.

I see the church's command to love our neighbors as ourselves inevitably affecting our participation in the remaking of the rules that govern us apart from(but not per se excluding) our own self-interests.



Michael W. Kruse

Great comments dlw. I especially liked your last paragraph. Markets and the shema. Now there is a formula for you! :)

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