KRUGMAN ON INEQUALITY

I have noticed a few mentions of the latest NYT rant by Leftist economist Paul Krugman but have yet to see much in the way of a reply -- so I thought I might point out a few things. He is pushing the old Leftist wheelbarrow that inequality is once again on the rise in the United States. �The rich are getting richer ..... � You know the tune! Anyway, to quote:

�Over the past 30 years most people have seen only modest salary increases: the average annual salary in America, expressed in 1998 dollars (that is, adjusted for inflation), rose from $32,522 in 1970 to $35,864 in 1999. That's about a 10 percent increase over 29 years -- progress, but not much. Over the same period, however, according to Fortune magazine, the average real annual compensation of the top 100 C.E.O.'s went from $1.3 million -- 39 times the pay of an average worker -- to $37.5 million, more than 1,000 times the pay of ordinary workers

and

�the top 10 percent contains a lot of people whom we would still consider middle class, but they weren't the big winners. Most of the gains in the share of the top 10 percent of taxpayers over the past 30 years were actually gains to the top 1 percent

So that is his beef. The average American is gradually getting richer -- not poorer -- but the corporate top dogs are really getting obscene. And he is of course right. As a company shareholder myself, I think that something has gone wrong when those who run companies can pay themselves whatever they like out of company funds without shareholders having any effective say in it. But corporate governance in the USA is acknowledged by all and sundry to be in a mess and the collapses at Enron etc have exposed that for all to see. And the first steps are now being taken to make CEOs more accountable. Nobody needed Krugman to tell us that there is a problem there that needs fixing.

But Krugman sees it all as a deep problem in American society -- which it clearly is not. It is a problem like many others but a problem-free society has yet to be invented. And a problem affecting only 1% of society is surely the sort of problem all governments would like to have. Mass poverty, for instance, would be a much harder problem -- and by far a more common problem worldwide.

I will leave a major dissection of his rant to people who have better access to current economic statistics than I do but I cannot resist also noting the superficiality of his argument about Sweden. He thinks Sweden is a much better place than the USA, of course. He admits that the average Swede produces 16% less of goods and services per hour worked than the average American does but then goes on to say that this is only an average and that people at the bottom end of the income scale in Sweden actually do a lot better than people at the bottom end of the income scale in the USA.

Of course they do! The whole reason people find the comparison between Sweden and the USA interesting is that huge slabs of the Swedish national income are diverted out of the pockets of those who earn it and into government coffers. Much of that income gets eaten up feeding bureaucrats of course but the whole rationale of the exercise is to equalize incomes no matter what a person does -- and that does happen on a much much larger scale in Sweden than it does in the USA. So Krugman is really telling us only what we already knew. Incomes are more equal in Sweden not because the sub-rich earn more but because they are given more out of everybody else�s pocket. The real issue -- what effect does this destruction of incentives have on national productivity -- he glides over. But that 16% difference suggests the answer. The Swedish system just does produce a much smaller pie to share out.

Krugman also makes much of life-expectancy statistics. He says that Swedes have a life expectancy three years longer than Americans, for instance. But what that has to do with economics he does not tell us. So maybe Americans die younger through eating more junk-food. But if so, that is their free choice. It is, however, unlikely to mean that they are less well-off -- as Krugman implies.


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LEFTIST RELIANCE ON LIES

I have never quite managed to get used to the way many Leftists seem to be completely uninterested in the truth. Stalin�s old Soviet production statistics are of course the classic example of Leftist lies but chronic misrepresentation was also confirmed by the revelations made possible in Russia by former President Gorbachev's policy of "Glasnost". From what has been revealed, there can surely now be no doubt that for most of last century the Soviet system literally floated on a sea of lies. This was so extreme that even the maps produced by official Soviet cartographers were fraudulent. Even an accurate Moscow street map was unavailable! And note that the great cartographical capacity that U.S. spy satellites have had for many years renders any explanation of this in terms of defence considerations quite laughable. And note that this attachment to lies is not confined to the Soviet bloc and China. I myself remember well the pre-Khrushchev times when most Western Leftists dismissed accounts of Stalin's mass murders as "inventions of the capitalist press". There are none so blind as those who will not see.

A more subtle form of dishonesty is the great absurdity of the policies that Leftists have often advocated. Policies such as rent-control and nationalization of industry have a superficial attraction that guaranteed that they would be widely tried but who could honestly advocate them once it is apparent how badly they work? Certainly not a person who had the welfare of the people at heart. Such policies have only ever delivered poverty and housing shortages. Why have Leftists advocated such nostrums for so long?

If their motives were benevolent, it would make no sense to advocate so much misery. If their real motives were, on the other hand, a need for power and a desire to concentrate in the hands of their clique extensive power over the lives of others it makes very great sense indeed.

And the famous Leftist call for abolition of wealth and income differentials would surely lead one to expect that Leftists would reject materalistic ambition in their own lives. But it is not so. Although Leftists seem to decry the scramble for private material possessions (conservatism is smeared as "the politics of greed"), they themselves on the personal level seem to be just as keen for the scramble as anyone else. There has been a lot of research reported in the literature of academic psychology on the subject of achievement motivation but the various measures of materialistic achievement motivation have been shown to have negligible correlation with Leftism -- where a high negative correlation might on theory have been expected (Ray, 1981; Ray & Najman, 1988). In other words, in their own lives Leftists are just about as apt as Rightists to seek personal material gain. Once again the Leftist emerges as being hypocritical and as not honest about his/her real motives and values.

And we do not really need psychological research to see what the motivations of Leftists are actually like in their daily lives. Johnson (1988), himself a former prominent Leftist, explored at length the actual lives of various prominent Leftist intellectuals -- including Karl Marx himself. He found that while such intellectuals claimed to love humanity, their actual deeds in their own lives and their detailed exhortations to their followers suggested a loathing of and contempt for their fellow man. For them it was no joke that "I love humanity. It is just people I can't stand".
Dishonesty of various kinds just seems to be inherent in Leftism.

References:
Johnson, P. (1988) Intellectuals. London: Weidenfeld
Ray, J.J. (1981) The politics of achievement motivation. Journal of Social Psychology, 115, 137-138.
Ray, J.J. & Najman, J.M. (1988) Capitalism and compassion: A test of Milbrath's environmental theory. Personality & Individual Differences, 9, 431-433.


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Email: jonjayray@hotmail.com.
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