Upturn in Economic Outlooks

Yesterday, Michael van der Galiën wrote a comment about an editorial which appeared in the WSJ. Even though I can’t read the entire editorial because I don’t have a subscription (recent confessions aside, the Numbers Guy is free), I’d like to point out something.The WSJ editorial starts with

It’s been a rough week for John Edwards, and now comes more bad news for his “two Americas” campaign theme. A new study by the Congressional Budget Office says the poor have been getting less poor. On average, CBO found that low-wage households with children had incomes after inflation that were more than one-third higher in 2005 than in 1991.

That sounds cheery. Michael echos Jonathan Chait from the New Republic in pointing out the disingenuousness of the editorial. While income did increase between 1991 and 2005, it seems to have peaked in 2000. I wonder what happened in 2000? Oh yeah. Katherine Harris elected George W. Bush.

But looking at the study and perhaps casting a sidelong glance at today’s New York Times might point out a few more interesting tid-bits.

Let’t start the CRS study. This is the graph shown on the very first page.

Changes in the Economic Resources of Low-Income Households with Children

While I might be a bit myopic, The total government financial aid dropped between 1991 and 2006, it seems to have remained fairly constant since George W. took office. I wonder why the Republicans don’t seem to want to lower that number since the poor are obviously earning so much? Don’t they want their tax dollars spent wisely? Aren’t the Democrats the ones who spend and run? What about the welfare queens in pink caddies?!

But wait. It gets better. Now let’s compare this with the graph on page 11. This chart shows increase in real income of households with children.

Growth in Real Income and Earnings of Households with Children, by Quintile

While the report is titled Changes in the Economic Resources of Low-Income Households with Children, [my emphasis] this chart includes all economic income brackets from the lowest to the highest. (Note: I edited the graph to include the the income levels.)

So while lower class income does seem to have improved, the over-pressured, much maligned, highest-income bracket is doing much better. Thank goodness! I was starting to think the Republicans hadn’t achieved anything.

And remember, the scale on that graphic is percent. That means not only are the top 20% doing better in an absolute sense, they are doing better in a relative sense. That means not only were the best of the best earning much more to begin with, they get even more income now. Cool huh? Bush II is my hero!

And who might these poor, deprived super-rich be?

Eduardo Porter gives us a glimpse in today’s New York Times.

As executive pay has surged in most American companies, attention has focused on the growing gap between the earnings of top executives and the average wage of workers in cubicles or on the shop floor. Little noticed, though, is how much the gap has also widened between the summit and the next few echelons down.
[…]
Few are deprived in corporate suites, of course. But the widening disparities in business, which show up in a variety of other ways, reflect a dynamic that is taking hold across the economy: the growing concentration of wealth and income among a select group at the pinnacle of success, leaving many others with similar talents and experience well behind.

In the 1960s and ’70s, chief executives running the nation’s biggest companies earned 80 percent more, on average, than the third-highest-paid executives, according to a recent study by Carola Frydman of the Massachusetts Institute of Technology and Raven E. Saks at the Federal Reserve. By the early part of this decade, the gap in the executive suite between No. 1 and No. 3 [poor little guy] had swollen to 260 percent. [my emphasis]

Perhaps we need to change from calling these people neo-conservatives to calling them “neo-feudalists:” people creating a super rich elite able to change justice to keep them in power and suit their lifestyles .

While even those one or two titles – um – ranks down are left to deal with the unruly serfdom, the CEOs (Barons?) and Presidents (Kings?) can truely say – the economic outlook of the serfs has never been better; much better now, than under that pesky democracy thing.

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  1. [...] May 25th, 2007 by mvdg At Eclectics Anonymous. [...]


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