<div dir="ltr">
<div class="">
<div class="">
<a href="http://www.nytimes.com/"><img src="http://graphics8.nytimes.com/images/misc/nytlogo153x23.gif" alt="The New York Times" align="left" border="0" hspace="0" vspace="0"></a>
</div>
<div class="">
</div>
</div>
<br clear="all"><hr align="left" size="1">
<div class="">September 12, 2013</div>
<h1>Rich Man’s Recovery</h1>
<h6 class="">By
<span>
<a href="http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/paulkrugman/index.html" rel="author" title="More Articles by PAUL KRUGMAN"><span>PAUL KRUGMAN</span></a></span></h6>
<div id="articleBody">
<p>
A few days ago, <a title="The report" href="http://www.nytimes.com/2013/09/10/education/harvard-business-students-see-class-as-divisive-an-issue-as-gender.html">The Times published a report</a>
on a society that is being undermined by extreme inequality. This
society claims to reward the best and brightest regardless of family
background. In practice, however, the children of the wealthy benefit
from opportunities and connections unavailable to children of the middle
and working classes. And it was clear from the article that the gap
between the society’s meritocratic ideology and its increasingly
oligarchic reality is having a deeply demoralizing effect. </p>
<p>
The report illustrated in a nutshell why extreme inequality is
destructive, why claims ring hollow that inequality of outcomes doesn’t
matter as long as there is equality of opportunity. If the rich are so
much richer than the rest that they live in a different social and
material universe, that fact in itself makes nonsense of any notion of
equal opportunity. </p>
<p>
By the way, which society are we talking about? The answer is: the
Harvard Business School — an elite institution, but one that is now
characterized by a sharp internal division between ordinary students and
a sub-elite of students from wealthy families. </p>
<p>
The point, of course, is that as the business school goes, so goes
America, only even more so — a point driven home by the latest data on
taxpayer incomes. </p>
<p>
The data in question have been compiled for the past decade by the
economists Thomas Piketty and Emmanuel Saez, who use I.R.S. numbers to
estimate the concentration of income in America’s upper strata. <a title="A pdf" href="http://elsa.berkeley.edu/%7Esaez/saez-UStopincomes-2012.pdf">According to their estimates</a>,
top income shares took a hit during the Great Recession, as things like
capital gains and Wall Street bonuses temporarily dried up. <a title="An Economix blog report" href="http://economix.blogs.nytimes.com/2013/09/10/the-rich-get-richer-through-the-recovery/">But the rich have come roaring back</a>,
to such an extent that 95 percent of the gains from economic recovery
since 2009 have gone to the famous 1 percent. In fact, more than 60
percent of the gains went to the top 0.1 percent, people with annual
incomes of more than $1.9 million. </p>
<p>
Basically, while the great majority of Americans are still living in a
depressed economy, the rich have recovered just about all their losses
and are powering ahead. </p>
<p>
An aside: These numbers should (but probably won’t) finally kill claims
that rising inequality is all about the highly educated doing better
than those with less training. Only a small fraction of college
graduates make it into the charmed circle of the 1 percent. Meanwhile,
many, even most, highly educated young people are having a very rough
time. They have their degrees, often acquired at the cost of heavy
debts, but <a href="http://www.epi.org/publication/class-of-2013-graduates-job-prospects/">many remain unemployed or underemployed</a>,
while many more find that they are employed in jobs that make no use of
their expensive educations. The college graduate serving lattes at
Starbucks is a cliché, but he reflects a very real situation. </p>
<p>
What’s driving these huge income gains at the top? There’s intense debate on that point, with <a href="http://krugman.blogs.nytimes.com/2013/06/22/greg-mankiw-and-the-gatsby-curve/">some economists still claiming</a>
that incredibly high incomes reflect comparably incredible
contributions to the economy. I guess I’d note that a large proportion
of those superhigh incomes come from the financial industry, which is,
as you may remember, the industry that taxpayers had to bail out after
its looming collapse threatened to take down the whole economy. </p>
<p>
In any case, however, whatever is causing the growing concentration of
income at the top, the effect of that concentration is to undermine all
the values that define America. Year by year, we’re diverging from our
ideals. Inherited privilege is crowding out equality of opportunity; the
power of money is crowding out effective democracy. </p>
<p>
So what can be done? For the moment, the kind of transformation that
took place under the New Deal — a transformation that created a
middle-class society, not just through government programs, but by
greatly increasing workers’ bargaining power — seems politically out of
reach. But that doesn’t mean we should give up on smaller steps,
initiatives that do at least a bit to level the playing field. </p>
<p>
Take, for example, <a title="A Times article from last month" href="http://www.nytimes.com/2013/08/29/education/obstacles-seen-for-de-blasios-preschools-plan.html">the proposal by Bill de Blasio</a>,
who finished in first place in Tuesday’s Democratic primary and is the
probable next mayor of New York, to provide universal prekindergarten
education, paid for with a small tax surcharge on those with incomes
over $500,000. The usual suspects are, of course, screaming and talking
about their hurt feelings; they’ve been doing a lot of that these past
few years, even while making out like bandits. But surely this is
exactly the sort of thing we should be doing: Taxing the ever-richer
rich, at least a bit, to expand opportunity for the children of the less
fortunate. </p>
<p>
<a href="http://www.thedailybeast.com/articles/2013/09/12/the-rise-of-the-new-new-left.html">Some pundits are already suggesting</a>
that Mr. de Blasio’s unexpected rise is the leading edge of a new
economic populism that will shake up our whole political system. That
seems premature, but I hope they’re right. For extreme inequality is
still on the rise — and it’s poisoning our society. </p>
<div class="">
</div>
</div>
<br clear="all"><br>-- <br>Art Deco (Wayne A. Fox)<br><a href="mailto:art.deco.studios@gmail.com" target="_blank">art.deco.studios@gmail.com</a><br><br><img src="http://users.moscow.com/waf/WP%20Fox%2001.jpg"><br>
</div>