The Almighty Market and Wealth-Income Distribution
Maybe the most important thing Krugman said in his NYT column yesterday is this:
Is it true market forces that drove CEO incomes up to 400 times worker wages (or whatever obscene multiple in that general range it currently is), versus 30x or so about 40 years ago? In my book, the many, many most highly-rewarded members of the economics profession who have driven the "market-forces" narrative for rising inequality have been bought lock, stock and barrel. Mostly, I suspect, they don't even know it.
It's a long, long story, of course, but somebody someday will weave together into an elegant grand theory such phenomena as residual hatred of TR, Wilson, FDR and their welfare-state creation; the relentless attack on labor and the very idea of collective bargaining; the highly intellectualized and beneath-the-radar attack on antitrust law; the attack on tort law, class action lawsuits and plaintiffs' lawyers; management's general lack of accountability to shareholders and its ability to control the corporation under dominant Delaware corporation law; the tiny number of individuals who populate the boards of the top corporations (and could fit in a relatively small theater).
The common theme is power: the wealthiest elites, presumably, reclaiming the power to tear up the post-Depression/World War II social contract formed on the belief that lesser economic disparities -- not equality per se, which was never part of the American social contract -- would benefit everyone. As a debating proposition at minimum, I would contend that the "market" has had barely anything whatsoever to do with how income and wealth have become re-distributed today. Can modern economists deal with such concepts that are hard to reduce to calculus? Indeed, while we are on a big-picture roll here, was the introduction of deep quantification as a professional necessity for gaining stature in the economics profession itself a technique of control that facilitated the Great Rollback?
The idea that we have a rising oligarchy . . . . suggests that the growth of inequality may have as much to do with power relations as it does with market forces. Unfortunately, that's the real story.
Is it true market forces that drove CEO incomes up to 400 times worker wages (or whatever obscene multiple in that general range it currently is), versus 30x or so about 40 years ago? In my book, the many, many most highly-rewarded members of the economics profession who have driven the "market-forces" narrative for rising inequality have been bought lock, stock and barrel. Mostly, I suspect, they don't even know it.
It's a long, long story, of course, but somebody someday will weave together into an elegant grand theory such phenomena as residual hatred of TR, Wilson, FDR and their welfare-state creation; the relentless attack on labor and the very idea of collective bargaining; the highly intellectualized and beneath-the-radar attack on antitrust law; the attack on tort law, class action lawsuits and plaintiffs' lawyers; management's general lack of accountability to shareholders and its ability to control the corporation under dominant Delaware corporation law; the tiny number of individuals who populate the boards of the top corporations (and could fit in a relatively small theater).
The common theme is power: the wealthiest elites, presumably, reclaiming the power to tear up the post-Depression/World War II social contract formed on the belief that lesser economic disparities -- not equality per se, which was never part of the American social contract -- would benefit everyone. As a debating proposition at minimum, I would contend that the "market" has had barely anything whatsoever to do with how income and wealth have become re-distributed today. Can modern economists deal with such concepts that are hard to reduce to calculus? Indeed, while we are on a big-picture roll here, was the introduction of deep quantification as a professional necessity for gaining stature in the economics profession itself a technique of control that facilitated the Great Rollback?
posted by KISSWeb | 1:59 PM
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