Kristof on the Hedge Fund Republic

http://www.futureofcapitalism.com/2010/11/kristof-on-the-hedge-fund-republic

New York Times columnist Nicholas Kristof is out with a piece headlined "A Hedge Fund Republic?"

He writes, "inequality in the United States has soared to levels comparable to those in Argentina six decades ago — with 1 percent controlling 24 percent of American income in 2007."

Mr. Kristof uses the word "controlling" rather than "earning" so as not to allow his readers to consider the possibility that these earners might have done something such as work to create value so that customers were willing to pay them that compensation voluntarily.

He also doesn't specify that this income share is probably pre-tax, pre-transfer-program income. The progressive tax system and the benefits that flow to lower-income individuals — food stamps, the earned income tax credit, housing subsidies, Pell Grants — ameliorate the income inequality that Mr. Kristof bemoans, but Mr. Kristof doesn't mention any of that.

He writes: "At a time of such stunning inequality, should Congress put priority on spending $700 billion on extending the Bush tax cuts to those with incomes above $250,000 a year? Or should it extend unemployment benefits for Americans who otherwise will lose them beginning next month?"

It's not a zero sum game. But there's substantial evidence that extending unemployment benefits delays the reentry of the beneficiaries into the workforce. If the government offers to pay people not to work, many people will choose to accept that offer.

Mr. Kristof writes, "Republicans would give the richest 0.1 percent of Americans an average tax cut of $370,000. Does anybody really think that those taxpayers are going to rush out and buy Porsches and yachts, start new businesses, and hire more groundskeepers and chauffeurs?"

Well, yes. A recent Bloomberg News article reported: "President Barack Obama is pushing to let tax cuts for high-earners expire at the end of the year, which could dampen luxury-car demand....'The tax situation would hit BMW's clientele directly,' said Rebecca Lindland, an analyst with IHS Automotive in Lexington, Massachusetts."

There's a kind of piling-on effect at the Times editorial page. Bob Herbert had a Times column November 2 complaining, "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."

And Frank Rich had a column over the weekend complaining about "the superrich who have gotten spectacularly richer over the last four decades while their fellow citizens either treaded water or lost ground. The top 1 percent of American earners took in 23.5 percent of the nation's pretax income in 2007." At least Mr. Rich makes clear it is pre-tax income.

Did all three of these columnists have a meeting and decide that they were all going to write the same column? Are they all getting the same talking points from some central message management agency? Do they think their remaining readers are so senescent that their short-term memory is going, so they need a new column each day of the week reminding them about the horrors of income inequality? Does Nick Kristof figure nobody reads Frank Rich, and Frank Rich figure nobody reads Bob Herbert? Do any of them get any editing? Is there some kind of secret prize being offered by George Soros for most perfervid column on the topic, in an amount sufficiently generous to make the winning columnist part of the "problem"? The whole situation is bizarre.

by Ira Stoll  |  Nov 18, 2010 at 12:33 am Related Topics:  Compensation, Education, George Soros, Housing, Income Inequality, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list