KRUGMAN: We had a society 20 years ago, 30 years ago, in which the center of gravity was with the middle class.
MYERS: Paul Krugman is a professor of economics at Princeton University and a columnist for the New York Times.
Krugman recently caused a stir with this article "the end of middle class America." In it, he writes of the "tectonic shifts that have taken place in the distribution of wealth and income" in the U.S. He cites statistics which show most of the economic gain of recent years has gone not just to the wealthy, but to the very richest of the rich.
From 1979 to 1997, the after-tax income of the top 1% of families rose 157%. That's compared to only a 10% gain for families in the middle fifth. And that's not all. Within that top one percent, most of the gains went to top 1/100th of a percent…a mere 13,000 families now have almost as much income as the bottom 20 million American families combined.
KRUGMAN: The pie is a certain size. You take a bigger slice for the people at the top, then there's less left over so yeah, I think the basic arithmetic is right. That if you ask ultimately why aren't middle class families doing better? The answer is, well, the growing economy is mainly going to the benefit of people who are not middle class.
MYERS: How that economic pie is divided has real consequences, says Krugman. Not only do we have more poverty than many other industrialized nations, we're also seeing increased uncertainty in the lives of ordinary Americans. In fact, Krugman believes the broad middle class society we assume is the norm may have been just a temporary aberration of the '50's and the 60's.
KRUGMAN: I guess the question you have to ask is, 'What kind of society do you want to live in?' Do you want to live in a society where most people are reasonably assured of a decent life? Or do you want to live in a society where bad luck can easily tumble someone who's worked hard and played by the rules into the economic abyss?
http://www.pbs.org/now/transcript/transcript_middleclass.htmlI. The Disappearing Middle
When I was a teenager growing up on Long Island, one of my favorite excursions was a trip to see the great Gilded Age mansions of the North Shore. Those mansions weren't just pieces of architectural history. They were monuments to a bygone social era, one in which the rich could afford the armies of servants needed to maintain a house the size of a European palace. By the time I saw them, of course, that era was long past. Almost none of the Long Island mansions were still private residences. Those that hadn't been turned into museums were occupied by nursing homes or private schools.
For the America I grew up in -- the America of the 1950's and 1960's -- was a middle-class society, both in reality and in feel. The vast income and wealth inequalities of the Gilded Age had disappeared. Yes, of course, there was the poverty of the underclass -- but the conventional wisdom of the time viewed that as a social rather than an economic problem. Yes, of course, some wealthy businessmen and heirs to large fortunes lived far better than the average American. But they weren't rich the way the robber barons who built the mansions had been rich, and there weren't that many of them. The days when plutocrats were a force to be reckoned with in American society, economically or politically, seemed long past.
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II. The New Gilded Age
The Securities and Exchange Commission hath no fury like a woman scorned. The messy divorce proceedings of Jack Welch, the legendary former C.E.O. of General Electric, have had one unintended benefit: they have given us a peek at the perks of the corporate elite, which are normally hidden from public view. For it turns out that when Welch retired, he was granted for life the use of a Manhattan apartment (including food, wine and laundry), access to corporate jets and a variety of other in-kind benefits, worth at least $2 million a year. The perks were revealing: they illustrated the extent to which corporate leaders now expect to be treated like ancien regime royalty. In monetary terms, however, the perks must have meant little to Welch. In 2000, his last full year running G.E., Welch was paid $123 million, mainly in stock and stock options.
Is it news that C.E.O.'s of large American corporations make a lot of money? Actually, it is. They were always well paid compared with the average worker, but there is simply no comparison between what executives got a generation ago and what they are paid today.
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http://www.gisleson.com/krugman.html
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