Top Culprits for Income Inequality? Exec Pay and Educational Failures

Tim Noah’s great series on the causes of income inequality got a lot less attention during its second week than its first week. So I thought it worthwhile to focus on what he concluded was causing the dangerous new income inequality in America.

Here’s how he described the relative importance of each of the causes of income inequality he looked at:

Here is a back-of-the-envelope calculation, an admittedly crude composite of my discussions with and reading of the various economists and political scientists cited thus far:

  • Race and gender are responsible for none of it, and single parenthood is responsible for virtually none of it.
  • Immigration is responsible for 5 percent.
  • The imagined uniqueness of computers as a transformative technology is responsible for none of it.
  • Tax policy is responsible for 5 percent.
  • The decline of labor is responsible for 20 percent.
  • Trade is responsible for 10 percent.
  • Wall Street and corporate boards’ pampering of the Stinking Rich is responsible for 30 percent.
  • Various failures in our education system are responsible for 30 percent.

Most of these factors reflect at least in part things the federal government did or failed to do. Immigration is regulated, at least in theory, by the federal government. Tax policy is determined by the federal government. The decline of labor is in large part the doing of the federal government. Trade levels are regulated by the federal government. Government rules concerning finance and executive compensation help determine the quantity of cash that the Stinking Rich take home. Education is affected by government at the local, state, and (increasingly) federal levels. In a broad sense, then, we all created the Great Divergence, because in a democracy, the government is us.

Here’s Noah’s installment on executive pay, in which he argues that things like technology make it easier for entertainers and top execs to maximize their pay, while deregulation allowed the banksters to command huge salaries.

And here’s the one on educational problems. Largely, Noah describes, the problem is that K-12 education isn’t preparing students as well for today’s job market as it used to. In addition, between college costs and the removal of incentives (like the draft) to stay in school, educational attainment stalled for a number of years. As a result, the value of a college education is much greater, so those without a degree do worse by comparison.

image_print
  1. allan says:

    The problem with back-of-the-envelope calculations is that they are back-of-the-envelope.
    For example, I find

    Tax policy is responsible for 5 percent.

    very hard to swallow. The decline in the top rates over the last few decades,
    and little scams like the 15% marginal rate of hedgies, has to have had a sizable effect.
    And it had a multiplicative rather than additive effect when combined with skyrocketing executive pay.

    • emptywheel says:

      Agree, the back of the envelope calculations are just that. After all, part of the argument for how the stinking rich became so has to do w/tech.

      The Economist has a column this week that points more heavily to tech.

      In the 1970s and 1980s employment in quintessentially middle-skilled, middle-income occupations—salespeople, bank clerks, secretaries, machine operators and factory supervisors—grew faster than that in lower-skilled jobs. But around the early 1990s, something changed. Labour markets across the rich countries shifted from a world where people’s job and wage prospects were directly related to their skill levels. Instead, with only a few exceptions, employment in middle-class jobs began to decline as a share of the total while the share of both low- and high-skilled jobs rose (see chart). The pattern was similar in countries with very different levels of unionisation, prevalence of collective bargaining and welfare systems. This “polarisation” of employment almost certainly had a common cause.

      The development of information technology (IT) is the leading candidate. Computers do not directly compete with the abstract, analytical tasks that many high-skilled workers do, but aid their productivity by speeding up the more routine bits of their jobs. But they do directly affect the need for people like assembly-line workers or those doing certain clerical tasks, whose jobs can be reduced to a set of instructions which a machine can easily follow (and which can consequently be mechanised). At the other end of the employment spectrum, as the example of the towel-folding robot neatly demonstrates, low-skilled jobs may not require much education but they are very hard to mechanise.

      Though note that is international, so doesn’t account for the leveling off in US educational attainment or our collapse of unions.

      • Phoenix Woman says:

        I would also question the idea that race isn’t a factor when the defunding of public schools in majority-nonwhite areas, particularly in the South, as a result of white flight is such a big problem.

  2. Mary says:

    It is a great series. There are a lot of things that could get more treatment and might take you different places (like income collections for use of public lands and more in depth aspects of tax policy impact) but it’s a solid and serious place for starting a serious discussion.

    On a completely non-serious front, though, when are we going to get a piece with a title something like, “Ex-Witch Practices Voodoo (Economics)”? ;)

    • BoxTurtle says:

      She’s no witch. She’s what we Wiccan’s sometimes refer to as a “dingbat”.

      Boxturtle (Looks like I’m gonna be spending some time differentiating Wicca and her “witch”. *sigh*)

  3. Xboxershorts says:

    It is hard to blame “we” when we continue to vote against our own interests. Convinced repeatedly by our own media and our own leaders for decades that espousing our own issues was evil, socialist, un-American, Traitorous, ad nauseum.

    The Reagan Revolution really was a revolution, and bankers and captains of industry literally took over our country. They now control the message (mostly), the financing, all legislative initiatives, energy, their bbase, the 28%’ers continue to push these views egged on by what really can only be described as a conspiracy by these very same captains of media, finance and industry to keep us uninformed and misinformed.

    Bloodless, yes. But it was a revolution none the less. And William Jefferson Clinton actually led these captains on their final victorious battle to deregulate Wall St.

    So, what’s a vanquished over the hill hippy to do?

  4. donbacon says:

    Of course government policy is the top cause of income inequality. Who funds the politicians, the poor? Noooo — the squeeky wheel of the rich gets the grease and the tax decreases.

    Who lobbies the Congress and writes the laws? The Congress is simply a facilitator for the rich. The Congress also has largely ceded its power to the Executive to conduct wars on terror and drugs and such, thereby further enriching insiders and profiteers. On matters where it has to actually do something, like pass the Pentagon budget for corporate welfare, it’s done w/o debate, year after year. only a DREAM can hold it up.

    Outsourcing jobs through “free trade,” military sales offset agreements, etc. leading to destruction of the middle class, has long been a government policy because it increases corporate productivity and profit, and political contributions.

    Education? Sit down and shut up, kids, and spout the school solution. It’s good training for that mindless corporate cubicle you’ll be working in. We’ll call it no child left dumbed down.

    The government pays well. How many middle class people have thrown two million dollar weddings recently? Call it marriage inequality.

  5. BayStateLibrul says:

    The rich are greedy.

    They WANT no taxes.

    No sense arguing with them just stick it up their arses.

    Krugy has a great column today.

  6. ecthompson says:

    He forgot to point out the constant pressure that conservatives have put on local and state government to quit spending money and cut taxes. This kills schools, period. No money, no teachers. no money, no computers. no money, old rundown builds, etc. The decline of our schools is directly related to a lack of funding.

    • PJEvans says:

      After you’ve listened to one complaining about how the schools should get less money because they aren’t using the money they already get wisely, with no support provided for said argument, you’d be justified in thinking that all they really want is most people to be at least as ignorant as they are.

      (I think the person making the complaint should ask for a refund of all the fees his parents paid to the parochial school he attended, because he clearly learned nothing while there.)

    • bobschacht says:

      I agree. Here in AZ, AKA retirement central, there are whole communities that don’t want to pay any school-related taxes at all (they also discourage or forbid children.) IOW, the future can go to hell; we’re getting our bennies NOW and will leave nothing for anyone else! The Future is Now! In other words, NO sense of real community.

      Bob in AZ

  7. perris says:

    And here’s the one on educational problems. Largely, Noah describes, the problem is that K-12 education isn’t preparing students as well for today’s job market as it used to. In addition, between college costs and the removal of incentives (like the draft) to stay in school, educational attainment stalled for a number of years. As a result, the value of a college education is much greater, so those without a degree do worse by comparison.

    I also believe rayguns removal of a good portion of government subsidies to the middle class for higher education plays quite the role

    • Sara says:

      “I also believe rayguns removal of a good portion of government subsidies to the middle class for higher education plays quite the role.”

      Well, I think this was totally predictable from Ronald Reagan’s first appearance on the political scene, when he attacked the dissent against alienation, the attack on being characterized by your class cards at the U of California at Berkley, throwing the Hippy Park Builders out of

      “People’s Park”.

      It is an all out attack on the elements of Humanism in Education, the Humanities as philosophy, literature, arts, history, music, drama and all the rest that can be loved and enjoyed with or without hard access to a hard nosed market that delights in killing or being killed.

      Our failure is that of not being sufficently dualist. Yes, schools need to prepare all students for participation in the economic system in some cell or another, but they also need to be about making a long life somewhat meaningful.

      I’ve gotten to the point I daily meditate on food. I keep coming back to the difference between stark nutrition and fuel to keep going, and what to me is critical, namely a few times a week to do the arts, and lay out something it is totally enjoyable to cook and then savor.

      • Knut says:

        “I also believe rayguns removal of a good portion of government subsidies to the middle class for higher education plays quite the role.”

        At the time it happened I remember reading an academic paper to the effect that this was the biggest redistribution of income since the institution of the progressive income tax. It essentially shifted the generational burden from current taxpayers to students and their families. It was a huge shift, tantamount (though not in magnitude) to what would happen if social security were privatized.

        The basis of American prosperity in the last generation (i.e. form 1969 through 1990) was the redistribution of income from current income earners to young people and especially to students who would otherwise not been able to afford an education. Then the notion arose that since education is an investment, people should borrow to pay for it; no matter that they pay later when they earn income and pay taxes on it–Jim Tobin suggested a surtax. Instead, they have to pay tax to the banker who financed the education loans.

        This is what comes from thinking that public goods are the same as private goods. They aren’t. The US ideology says they are. That’s one reason (among many) why we are so fucked.

        Wh

    • MadDog says:

      From page 30 of 209 page PDF:

      VI. FBI Terrorism Classifications

      The FBI classified many of the investigations we reviewed as pertaining to “acts of domestic terrorism” and, in one case, as a Terrorism Enterprise investigation. These classifications raised questions about whether the FBI has expanded the definition of domestic terrorism to people who engage in mainstream political activity, including nonviolent protest and civil disobedience. As described in this section, the consequences of being identified as the subject of a “terrorism” investigation may include being placed on a terrorism watchlist. In subsequent chapters, we discuss some specific cases in which the FBI’s naming of individuals as subject of terrorism investigations have led to their being placed on terrorism watchlists…

  8. cregan says:

    Now, here is the real interesting part of the post and the thread.

    The two big items at cause, according to the envelope, are tied at 30%–failures in education and CEO pay.

    Of these two, which one is directly determined by the government?

    Yes, that’s right, education.

    And who has set the policy for education across the country?

    Yes, that’s right Democrats and their supporters in the teacher’s unions. (though there is also a great deal of influence from witch doctoresque school psychology types).

    Yet, no one here puts ANY attention on that. Lots of attention on one factor that the government doesn’t really have much to do with.

    It is possible that some of this has to do with many just giving up on correcting the failures of education.

  9. HardheadedLiberal says:

    EW, I hate to be picky, but perhaps you should clarify that the subject of Noah’s series is NOT the extent of inequality, but the increase in income inequality over the last thirty years, which Krugman and others refer to as “the Great Divergence.”

    The clarification might be to insert some language in the first sentence of the second paragraph, e.g.,

    the relative importance of each of the causes of the increase in income inequality over the last thirty years

    Race and gender obviously play a role (> zero) in the explanation of income inequality, but Noah’s point in that the share of inequality attributable to those factors has decreased during the last thirty years.

    Thanks for bringing the series to my attention!

  10. JamesJoyce says:

    How about wasting 75 cents of every American dollar spent on a gallon of gas for 60-70 years??? Liberty lost via scam! No athlete could compete if he wasted 75% of his stored potential energy. He would be dead and extinct! Gas, stored potential energy wasted is liberty squandered at life’s expense! Inequality starts with wealth extraction, or as Jim Crow laws manifest, the inability to accumulate wealth, power, political clout!

    Drunks in denial? Drunks in denial?

  11. JamesJoyce says:

    Go buy a gallon of milk. Dump three quarts down the storm drain. Go buy a gallon of gas. Waste three quarts of stored potential energy, which has monetary value, out your tailpipe. Would you consider this a value???

    This is systemic rape and has been taking place for decades. Energy costs and use which is wasteful and inefficient is like the alcoholic in a family.
    How fucking stupid can people be!!!!

  12. readerOfTeaLeaves says:

    Largely, Noah describes, the problem is that K-12 education isn’t preparing students as well for today’s job market as it used to. In addition, between college costs and the removal of incentives (like the draft) to stay in school, educational attainment stalled for a number of years…

    Per K-12… I’m skeptical that many people who opine about education talk to enough teachers.

    I used to teach: with respect to K-12, between Fetal Alcohol Syndrome, prenatal substance abuse problems, family dysfunctions, and vanishing funding, I threw up my hands in frustration. I really admire people teaching today, in any capacity.

    For all the chatter about how K-12 is lagging, consider that today, kids in wheelchairs, kids on multiple (serious) meds, kids who don’t speak English, kids who have grown up in a series of day cares (not a lot of coherence in their lives) are all in schools.

    My friends who are still committed teachers tell me of situations that stun me: one school where several teachers had missing cell phones, until the principle went through the backpacks of two of the school’s kids — guess what turned up?!

    The amount of money spent by local school districts to comply with Title 1 is bleeding money away from educating the kids who aren’t designated as ‘special needs’.

    Last weekend, I talked with a friend of many years who teaches near a Navy base. Some of her kids have had one parent or another off to war their entire lives – these kids are 9 years old, the Iraq War is now 9 years old. Mom or dad is gone for a year, comes home, has to decompress, yadda, yadda, yadda. Meanwhile, the parent ‘at home’ is likely working a shitty retail job, completely exhausted and may not be all that great at covering the soccer-carpools, or the homework schedules.

    And since NCLB (No Child Left Behind) ties test outcomes to the money that schools will receive, people spend too damn much of their time ‘teaching to the tests’. God forbid any kid have time to exercise during a schoolday!

    Oh, and what about the situations where Family A has a restraining order against Child Z? So if the playground assistants are not vigilant and Child Z gets too close to Family A’s child? Lawsuit city!!

    Meanwhile, if the school fails to ‘perform’ — whether or not the parents of the kids have been on-off in Iraq for 9 years, whether or not the kids (mostly male, mostly from families with no fathers) are from Somalia and don’t yet speak English, whether the kids are dealing with sexual abuse, parents with substance abuse issues, or heaven-only-knows-what, it’s all the fault of the teachers. It’s the ‘fault’ of the education system.

    Fuck that bullshit.

    There is PLENTY of work to be done in this nation, and a lot of it involves working one-on-one with young children to nurture them, so that their little synaptic connections snap into socially responsible formations. But unfortunately, our system is so unbelievably fucked up that we don’t cost out the r-e-a-l, extremely expensive costs of social pathologies.

    So we fail to accurately measure and ‘price’ the benefits — long term — of paying people to work with young children in groups of 3, or 5, or 6. And that’s the kind of stupidity that makes it seem ‘rational’ to pay extravagant CEO salaries, while in the nearby suburbs kids are shoved into overcrowded classrooms, don’t have enough play areas, and never have time to do art (which is like ‘brain food’ for kids) because they all have to pass dumbass NCLB ‘tests’ to justify the school’s existence.

    It’s so much simpler to fiddle with the tax code and enable obscene CEO ‘compensation’ than it is to dig down in the weeds and fix the very disturbing, deeply structural problems that we face.

    We have kids who have no stability in their lives.
    What teachers are up against today, in terms of kids with very few community ties, too little long-term continuity, too little opportunity to be physically active, too little time to do art, is seriously worrying.

    I’m ranting.
    Sorry.

    I just can’t take much more of blaming K-12 for problems that fail to take a frank. clear-sighted look at what the lives of many kids are like today.

    There is some heroic parenting happening. And what I’d call ‘heroic teaching’. But the levels of stress on families and kids today are damaging to the learning that needs to happen for many of the kids in school today.

    To be a teacher today, you have to be part social worker, part minister, part cop, part healer, and part teacher.
    I only wanted one of those roles; I certainly tip my hat to the remarkable people who manage to cover multiple bases.

    The problems with education: the scale needs to be broken down.
    For kids with some of the problems that I’m hearing about, smaller class sizes and more school-community support for families is essential.
    But of course, it’s easier to blame the teachers, or the teacher’s unions. They can be problematic, but they’re a symptom, not the real source of the problems.

    But I predict we’ll hear more bullshit about teacher’s unions, because that is a POLITICAL problem, fixable by the political class.
    The real, serious problems in education today?
    Those can best be addressed by educators, art instructors, dance instructors, sports specialists, and people familiar with emotional and cognitive development.

    • bigbrother says:

      Our county has 1300 school age children that are homeless. I collorateed with the Unified School District Homeless coordinator…yes homeless Coordinator on getting a Safe Parking Lot Program going for them.

    • Mauimom says:

      Here in Hawaii we are the victims of some obscure legislation that requires us to educate immigrants from the Marshall Islands and other polynesian locales. Kids arrive here speaking NO English,not knowing an alphabet, numbers, etc.

      I talk to kindergarten teachers here who have 9-11 languages spoken by the kids in their classroom, and not “easy” languages like Spanish, but obscure dialects. Kids literally arrive on Saturday, get off the plane, and are in school on Monday. And it’s the teacher’s responsibility to teach them, and doing that takes away from the needs of the other kids [and their 8-10 languages] in the classroom.

      It’s not ALL due to these needy kids, but this is a HUGE drain on the already completely inadequate resources.

      Nb: Hawaii ranks down with MS, AL and LA in the “crappiness of education” meter.

    • Mauimom says:

      I’m ranting.
      Sorry.

      This was a great “rant.”

      Please consider transforming it into a Seminal diary. Very deserving of coverage.

    • klynn says:

      Why did the trend continue? Katz and Goldin are somewhat tentative on this point, but clearly it represents a failure by elementary and secondary schools to provide education relevant to the economy’s growing demands, a task they performed much better during the first half of the 20th century.

      This Noah quote and similar content has me a bit skeptical about his series. The under tone to his work suggests bring back the “draft” and schools not doing enough to meet current corporate demands thus listen to the corporate world.

      This is buzz language for a great deal of change the Chamber of Commerce and the US Military would like to see happen in education. Neither of which are good signs.

      I join RoTL’s rant. It is spot on.

      I will also add that there are far too many corporations putting their finger into the curriculum development pie for their own interests and developing terrible, “dumbing down” curriculum. Additionally, too much meta data is being collected on students. The time consumption of such work fails to allow for the “art” of teaching.

      • klynn says:

        An area Noah misses all together is the role of “civilized behavior”. This was an aspect of society that allowed for more growth in education equity at one time in the past. A decline in positive, civilized behavior is an area no one wants to address in or outside of education.

        There was a movement, at one time, to remove behavior modification from the school environment. Behavior modification was used as a means of reinforcing positive behavior choices. Behavior choices which aided in better classroom learning environments, better classroom control.

        Then, it was considered the worst approach to classroom control because someone decided behavior modification was akin to bribery and was not a positive message to give children. There was little to nothing used to create positive learning environments except explanations to “use your words”, resulting in classrooms full of behavior distraction and diminished effectiveness in the learning environment.

        The concept of behavior modification is making its’ way back into education as a means of creating better learning environments now. Teachers are going back and getting training on behavior control methodology and classrooms are starting to get some positive behavior choices back into the classroom. It is a slow process.

        My father, a professor emeritus in education, attributes a portion of educational decline to the trend to move away from behavior mod. The timing of the trend away from behavior mod follows our nation’s educational decline.

      • TalkingStick says:

        I agree. This ts the elephant in education. Is education simply to teach children how to do a job? This is a conflict that has been going on since at least the fifties.. We will always have a two tiered society as long as we see the purpose of education as simply to create a compliant work force.

        • klynn says:

          My Mom and Dad were exposed to the “great experiment” of the early fifties which was quite blatant in creating a tiered society via tiered education. It was a terrible way to deny a child the opportunity to explore their dreams.

          Thankfully, my parents fought the system and worked their way around the system to accomplish their dreams. Not everyone they knew was so blessed in their efforts to do the same. My parents watched a great deal of potential lost in the lives of friends and family.

          • TalkingStick says:

            The only thing that saved me was my white face and a Sanford Binet score that belied my being deserving of my parents’ poverty.

        • klynn says:

          Just to add one last concern. The educational concept of “learning potential” has been replaced by “proficiency” language. Proficiency is much different than potential and is given to far more negative outcomes. Within proficiency legislation of NCLB, there is the requirement to have every child within a given school and school district to reach “proficient” performance by every child by 2014. This includes special needs children as well as ESL children still learning English. This legislation begs the question about “how” proficient is defined. What has to happen to standards to make all children “proficient”. Are they lowered? Are they gamed? The other question to consider, what happens to all children that are not proficient? Do we label the school as failing? Do we become a society lacking compassion and point to the special needs child and determine, no more funding for the child because the child is not “proficient” and it is a waste of funding?

          • TalkingStick says:

            My personal experience of the permutations and distortions of the processes of public education has left me cynical and despairing of any changes in the the near future … including the decline of the civility and economy of the nation.

  13. eCAHNomics says:

    Here’s Noah’s installment on executive pay, in which he argues that things like technology make it easier for entertainers and top execs to maximize their pay, while deregulation allowed the banksters to command huge salaries.

    Technology has nothing to do with executive pay. It’s all owing to the agency problem, i.e., executives are agents for shareholders and have all the knowledge that shareholders don’t. My MOI (mafia of the intelligentsia: medical, legal & higher ed industries) are other examples of the knowledge gap between buys & sellers. That gap allows sellers to screw buyers.

    WRT executives, their pay has continued to skyrocket despite the fact that their shareholders have experienced no stock price appreciation in a decade.

  14. TalkingStick says:

    These are very interesting and compelling analyses with no disagreement from me.

    However in all respect to these aspects I really think the major cause of our decline is best described by Redflagg in the Obama townhall thread. #147
    .

    ….: we have a class of very wealthy people almost completely cut off from the rest of the population, who own most of the wealth but whom invest it in more prosperous/ better risks like China. That is the predictable end of a dying empire.

    These super rich have no loyalty to the US.

  15. reddflagg says:

    Robert B. Reich made similar arguments twenty years ago in his “The Work of Nations”. It is a good story of how the “somewhat rich” became that way, but it leaves out the wealthiest: those who inherited it. That emphasis on tech workers and the like distracts us from the true causes of inequality. It reinforces the impression that the most wealthy are that way because of superior talents, when the truth is quite different. Most of the wealth in this country is inherited by people a million miles from its origins, who have never worked for the firms who produced it, as managers or otherwise. Take a look at Jamie Johnson’s film “Born Rich” (he himself inherited $1 Billion on his 18th birthday from the Johnson & Johnson estate) and you will see that these people could never go to school at all and still be wealthy.

    • eCAHNomics says:

      There’s plenty of other ways the rich get richer, like getting into the right colleges, which are gatekeepers for the PTB. What the Poison Ivy League is best at is keeping powerful people in power.

      • reddflagg says:

        Reich’s analysis is actually spot on in most ways in predicting the two paths to be followed: his worst case scenario was that the very wealthy would isolate themselves from the rest of the country, who then could not afford to pay for things like education, which has come to pass. It just was not a good analysis of inequality, nor descriptive of the very rich.

  16. TalkingStick says:

    I think in this country big money is more a matter of class and what one inherits than the usual explanations for mobility to the upper middle class. The reverence for wealth one sees in the big money class supersedes any religiosity I have encountered.

  17. JamesJoyce says:

    http://www.fueleconomy.gov/feg/atv.shtml

    According to this link .85 cents of every dollar spent on gas is wasted.

    Wonder where your liberty and standard of living has gone as you sit in traffic going nowhere? Real value for every gallon of gasoline purchased.

    To ignore this reality is fucking asinine. Slave where raped and exploited for their uncompensated servitude to agrarian slave owners. Today America is in servitude to energy corporations who have replaced the slave-owners. No amount of education can defeat leverage economic servitude, enabled under the color of law. Fuck corporate America!!!!

  18. JamesJoyce says:

    http://www.fueleconomy.gov/feg/evtech.shtml

    “Energy efficient. Electric motors convert 75% of the chemical energy from the batteries to power the wheels—internal combustion engines (ICEs) only convert 20% of the energy stored in gasoline.”

    Value wasted is liberty squandered. A 5th grader understands the concepts! What is wrong with the retarded adults in America! TO many cooked brain cells drinking martinis????

  19. progress says:

    Tax policy is responsible for 5 percent.

    I want to differ on this conclusion. In my opinion tax policy could be responsible more than 50% but also education cutbacks to attract best and brightest to the teaching profession is the other reason but caused primarily by the prior reason of tax policy.

    Let me illustrate why tax policy is the primary culprit.

    Suppose in current environment where we have slightly regressive taxation a CEO of a well running company wants to have a huge payback and retire for good right away. One thing he can do is reduce expenditure from the budgeted amount for the year. Primary way is reducing head count even though this step could be detrimental to the company well being after couple of years.
    He does this with the nodding board, shows huge profit for the current year due to expense reduction and gets huge bonus as a result. He pays very low tax rates for the top income as the worlds second richest man pointed out. What is the result after couple of years. Company is in trouble since it cannot deliver products, reduces more employees, shuts down. Government gets less tax revenue and funds less teachers and less schools.

    If the Eisenhowers top tier 90% progressive tax rate is in effect then the benefit of following above approach is less and the risk of bad tag as a layoff CEO in the industry increases. Even if they try they would not able to retire to those top notch places they planned. Government gets huge tax revenue whenever a CEO tries this inspite of this and funnels this revenue into school system attracting the best and brightest as teachers.

    After any war much less than biggest war world has ever seen any country takes a lot of time to recover. America recovered the fastest and had the biggest economic expansion it has ever seen because of the progressive taxation enacted by the President Eisenhower and LBJ as the senate majority leader during that time. History has shown again and again progressive taxation is the way to go for long term solution.

  20. jdmckay0 says:

    I haven’t read the series, so….

    But a few other “causes” off top of my head:

    * Abramhoff & co type re-direction of gov assets/initiative to narrow few: massive increase through the Delay K-Street years.
    * FOX News (seriously)… they’re the Beavis & Butthead “information” source for a huge swath of what never-ceases-to-amaze-me populace. They have teamed to convince very large portion of folks that “liberal” is evil, w/out ever really defining the term other than association w/dems, enviro concerns and such.
    * And most importantly, (as others have said) a huge redirection in use of nation’s collective capital to exploit resources rather then intelligently appropriate them. The corp. raiders… buying undervalued companies to sell of constituent parts & leave skeletons sitting on the byways: a WS success!!! And “return on investment” trumping quality of investment which gave rise to stealth/faux balance sheets, never ending search for cheaper labor (increased worker efficiency!!!), and all the dislodging of healthy (verrrry generally stated) forward thinking investment, replaced by various incarnations of (essentially) cannibalism.

    And from little bit you posted, I think he’s way off on computer’s contribution: “tech” stuff is huuuuuuge. The massive shift in manufacturing in Asia, made profitable in very large part by entirely computer managed JIT systems… none of this offshoring could have happened even close to scope we currently “enjoy” w/out tech.

    Still, to me, this is somewhat uninteresting in that, just as Iraq & all the other corrosive BushCo undoings of America, this seems like an exercise in putting together some pieces of a crime already successfully executed.

    What concerns me more at this point is utter lack of meaningful initiative anywhere to turn things around. Given our current environment, this is getting increasingly more challenging.

    Just my $0.167 cents worth (and falling fast!!!)

  21. marinara says:

    corporate america want to consume labor from a pool of highly educated people competing desperately for jobs. If you look at wages, wages haven’t risen despite the complaint that employers don’t have a proper labor pool to hire off. Perhaps what employers really want is a “prince charming” available to work 80 hour weeks for a pittance of a salary.

  22. captjjyossarian says:

    How does one prepare for a job market which is being quickly automated and/or outsourced?

    Training requires money and time, todays highly demanded skill sets are likely to disappear by the time you finish the training.

    We need a National industrial policy and educational reforms which dovetail with said industrial policy.