Bob Herbert on Inequality

http://www.futureofcapitalism.com/2010/11/bob-herbert-on-inequality

In today's New York Times, Bob Herbert has a column bemoaning the prosperity of the prosperous:

This hyperconcentration of wealth and income, and the overwhelming political clout it has put into the hands of the monied interests, has drastically eroded the capacity of government to respond to the needs of the middle class and others of modest income.

Nothing better illustrates the enormous power that has accrued to this tiny sliver of the population than its continued ability to thrive and prosper despite the Great Recession that was largely the result of their winner-take-all policies, and that has had such a disastrous effect on so many other Americans.

First of all, "the monied interests" are the ones that employ Mr. Herbert — the New York Times is financially backed by Carlos Slim, a Mexican described by Forbes as the richest man in the world. Second, Mr. Herbert seems genuinely to be disappointed that "the rich" are thriving and prospering. It's as if he wishes them ill, or prefers that they were wallowing in misery. He writes:

As if to underscore this theme, it was revealed last week (by David Cay Johnston, a Pulitzer Prize-winning former reporter for The New York Times), that the incomes of the very highest earners in the United States, a small group of individuals hauling in more than $50 million annually (sometimes much more), increased fivefold from 2008 to 2009, even as the nation was being rocked by the worst economic downturn since the Great Depression.

Last year was a terrific year for those at the very top. Professors Hacker and Pierson note in their book that investors and executives at the nation's 38 largest companies earned a stunning total of $140 billion — a record. The investment firm Goldman Sachs paid bonuses to its employees that averaged nearly $600,000 per person, its best year since it was founded in 1869.

Yeah, 2009 was a better year for some people than 2008 was. But 2008 was pretty terrible. If you had a lot of money invested in the stock market, which a lot of rich people do, you lost a lot of money in 2008 and early 2009 and made a lot of it back in the rest of 2009 and 2010. It's hard to have an economic recovery, which even Mr. Herbert presumably wants, without allowing anyone to be rich or get rich. The whole column is an example of divisive, zero-sum thinking.

It's not even accurate to blame the great recession largely on the "winner take all policies" of the "monied interests." The whole crisis began with sub-prime mortgages, which, if you haul in more than $50 million annually, may be something that you invest in after it is securitized, but isn't something that you need to buy your house with.

Meanwhile, if you want an example of some monied interests that aren't thriving, you could look at the big holders of New York Times Company stock, which has gone from a high of $51.50 a share in 2002 to below $8 a share today, while the dividend has been suspended. It seems like Mr. Herbert would be happier if the rest of the rich were in the same pickle.

by Ira Stoll  |  Nov 2, 2010 at 9:20 am Related Topics:  Compensation, Housing, Income Inequality receive the latest by email: subscribe to the free futureofcapitalism.com mailing list