Jeff Bezos' Paper Tells You Not To Worry About Those Billionaires

Authored by Dean Baker via FAIR.org,

Just when you thought economic commentary in the Washington Post couldn’t get any more insipid, Roger Lowenstein proves otherwise. In a business section “perspective” (7/20/18), he tells readers:

But what if inequality is the wrong metric. Herewith a modest proposition: economic inequality is not the best yardstick. What we should be paying attention to is social mobility.

Wow, what a novel idea, as though right-wingers have not been pushing this line since the dawn of time: “Don’t worry that your standard of living is awful, the important thing is that your kids will be able to get rich.” (It doesn’t help his story that his poster child for the rich being good is Lloyd Blankfein, who made his fortune shuffling financial assets at Goldman Sachs, and benefited from a massive government bailout.)

But let’s be generous, and try to take Lowenstein’s story seriously. He goes on: “Rising inequality, although a fact, is also very hard to find a culprit for. Not that economists haven’t tried.”

Really? There are plenty of really good explanations for rising inequality, many of which are in my (free) book Rigged. I suppose in the Age of Trump, it is appropriate that the Post has a business columnist determined to flaunt his ignorance.

But then we get the real payday:

It’s also far from proved - to me, it’s not even intuitive - that high incomes on Wall Street and elsewhere are the reason for, say, flatter wages in manufacturing. The fact that Mark Zuckerberg is so rich is annoying, and his separateness from Main Street may not be a great thing socially, but in an economic sense, his fortune did not “come from” the paychecks of ordinary workers.

OK, let’s explain this one so that even someone profoundly ignorant of economics can understand. Suppose that someone, we’ll call them Jeff Bezos or Mark Zuckerberg, were really good at printing counterfeit bills. Imagine that they printed up trillions of these counterfeit bills. This would make them incredibly rich, if they could get away with it. But, as Lowenstein says, how does this make anyone else worse off?

While Lowenstein doesn’t see any problem with our incredibly rich counterfeiters, in the real world, we have the problem that they are creating demand for goods and services with their consumption. If the economy is below full employment, this would be good news, since any source of demand will generate more output and jobs. However, if we are near full employment, or the Federal Reserve Board thinks we are near full employment, then this demand comes at the expense of the paychecks of ordinary workers.

Prices like house prices and rents are driven up by our counterfeiters and the demand created by their servants. The Fed raises interest rates to slow growth and employment, and lessen the ability of ordinary workers to get pay increases, since the labor market will be weaker.

Now, folks may object that Bezos and Zuckerberg are not like counterfeiters; they actually generate value for the economy.

While this undoubtedly partly true, it is also the case that much of Bezos’ wealth came from avoiding the requirement that retailers collect state and local sales taxes. Zuckerberg’s wealth came from control of a monopoly platform, and Blankfein’s wealth came from running a too-big-to-fail institution with friends in high places.

Insofar as people get incredibly wealthy from being successful in earning rents at the expense of others in the economy, rather than generating wealth, they are very much like counterfeiters. Furthermore, since productivity has been growing at an incredibly slow rate for the last dozen years (just over 1.0 percent annually), it seems in aggregate that these incredibly rich folks are much better at generating wealth for themselves than for the economy as a whole. This makes the rent-seeker story look very plausible.

While Lowenstein’s plea for greater mobility is about as old as capitalism and has been incredibly unsuccessful, let me propose something considerably more original that you probably won’t see in the Washington Post. Since we have so completely bombed at providing anything like equal opportunity, and no serious person can think this is about to change in the decades ahead, how about we structure our economy so that it makes less difference whether someone ends up at the top end, like Jeff Bezos, or at the bottom, earning the minimum wage?

That one is almost certainly far too simple for the great minds to ever consider.

[ZH: In case pictures are easier to comprehend than Dean Baker's words, here is a rather depressing chart from Deutsche Bank showing the collapse of 'The American Dream' that children will outdo their parents... only 50% of current 30-year-olds are earning more than their parents...]

 

Comments

Endgame Napoleon Last of the Mi… Sun, 07/29/2018 - 16:19 Permalink

Social mobility is not more important than an affordable, safe neighborhood and other necessities. It is more like a luxury. That path has narrowed due to assortative mating: two good-paying jobs with benefits under one roof. Some of that is merit-based, but even in those cases, it is contributing to a poorer and more chaotic, overall society. Some of the wealth concentration from assortative mating is not merit-based. It is crony womb-privilege-based. Paid family leave, anyone? It needs to be added to the many 10 two-week babyvacations per year, enjoyed by many in this crowd.

In reply to by Last of the Mi…

SocratesSolutions TRN Sun, 07/29/2018 - 13:58 Permalink

No, you think?! And then, is that why the Protocols of Zion established taking over the newspapers and media by the sick Satanic Zionist Jews? Of course it was. You have no country in America, and never have. They've got the banks, the newspapers, and they are much worse than the stealing black suited Potter in "It's A Wonderful Life". 

This crowd is the Black Magic Black Hat Bullies of the World. They will need to be removed. Every last one of them. Until this is fully and forever accomplished, you are nothing but 911'd cows in America. The time has come to be men and women. 

In reply to by TRN

Let it Go TRN Sun, 07/29/2018 - 19:49 Permalink

Jeff Bezos did not purchase the Washington Post in 2013 because he expected newspapers to make a lucrative resurgence. He purchased the long-trusted U.S. newspaper for the power it would ensure him in Washington and because it could be wielded as a propaganda mouthpiece to extend his ability to both shape and control public opinion.

http://Trump And Bezos Face Off - Clash Of The Titans!html

In reply to by TRN

SocratesSolutions NidStyles Sun, 07/29/2018 - 14:04 Permalink

Oh come on now. You're just a "conspiracy theorist". You're so full of "hate speech". You're an obvious "Anti-Semite". You must be a "holocaust denier" too. 

I'll tell you what you really are: you're 911'd cows in America living under these murdering mafia Satanic Jews. You're going to have to remove the entire Satanic religion from the World Stage as men and women. The time is at hand. And that includes every politician and the like who have sold out to the sick Satanic Jewish bandwagon. 

In reply to by NidStyles

Flatchestynerdette Hopeless for Change Sun, 07/29/2018 - 21:11 Permalink

Carlos Slim, The Walton Family, Jack Ma, Li ka-shing, Wang Jianlin, Francois Pinault, Masayoshi son to name a few not of the desert faith.

Give it a rest about the jews. There are 2,800 billionaires in 2018. About 250 of them if you go only by their last names are jewish or german. About 10%. A little higher than the 8% of their general population. 

Who aren't on the billionaire list in big numbers? Muslims.   

In reply to by Hopeless for Change

SocratesSolutions Yukon Cornholius Sun, 07/29/2018 - 13:27 Permalink

Don't worry about the billionaires or the trillionaires. They will no longer exist under World Law. The very opposite of Communism, Socialism, Feudalism, Fascism is coming in. All of the old systems will die. They were nothing but slavery systems. Monopolies like this, will no longer exist. For now we are about to know why we exist, ourselves. Hence the World Law that comes part and parcel with this knowledge. For when you finally understand why you exist, which the world is on the precipice of doing, then you see the Great Law that comes with this knowledge. It is: The Protection of Children. 

In particular, Jewish supremacy and monopoly will be forever removed from the World Stage. Black Magic will not survive. So Zionism will no longer exist. The real power is coming in. It is not about any group of people. It is about all kids now. The Law of the Earth is revealing itself. 

www.21stcenturyworldmessage.com 

In reply to by Yukon Cornholius

Scipio Africanuz Jus7tme Sun, 07/29/2018 - 13:56 Permalink

Break up the giant conglomerates, dismantle the crony capitalists and let momma and poppa earn a living. Life is not all about super efficiency and were it so, we humans would be extinct. Viruses are way more efficient!

Reinvigorate the economy, hunt the dinosaurs to extinction that mammals may thrive!...

In reply to by Jus7tme

buzzsaw99 Sun, 07/29/2018 - 13:04 Permalink

The fact that Mark Zuckerberg is so rich is annoying, and his separateness from Main Street may not be a great thing socially, but in an economic sense, his fortune did not “come from” the paychecks of ordinary workers...

It damn sure did.  It came straight out of their pension funds.  Thousands of pension funds across the world bought faang stocks and those workers will be getting fucked in the end while while zuck heads back to hawaii with their money.  look at elon, his company hasn't made dime one in profit but he is a billionaire.  amzn, with a p/e of 228.  they didn't get that p/e without millions of ordinary folk buying their overpriced stock.  it is pure ponzi-nomics with fascist overtones and the maggots are cashing out big time.

divingengineer buzzsaw99 Sun, 07/29/2018 - 13:14 Permalink

The greatest fortunes in history have been built in the last 10 years with 0% interest rates. You were spot on about pensions, they were the casualties, almost every private pension in the country bankrupted by 0% rates so that these fucks could amass unimaginable wealth.

Now the filthy commoner scum have the audacity to suggest that they should pay taxes on it. Where will the madness end?

In reply to by buzzsaw99

SocratesSolutions buzzsaw99 Sun, 07/29/2018 - 13:43 Permalink

It's even worse than that. So much worse. Facebook was stolen by the Satanic Judaic Zionist crowd. Research it. Another gentleman invented it. The Jews stole it, like they've stolen pretty much everything else. No wonder Napoleon said that "The Jews are the master robbers of the modern age". And beyond the criminal vile theft, you have what they are using it for. And that is? 

Using it for the 911'd cows in America. And that is you. The Satanic Jews are murdering you and robbing you blind. They 911'd you physically with the Twin Towers. Now they're doing it mentally and financially with Facebook, a control system grid—a gate to herd cattle which they view you as. They are herding you. You'll be 911'd again in larger and larger numbers until the Satanic Judaic is removed from the World Stage. 

Here is the real creator of Facebook: https://www.youtube.com/watch?v=YJ4KRts8RFc

Zuckerberg is a planted punk Zionist spook. You're going to have to clear the world of all of these Satanic Judaic ladies and gentlemen. First the idea needs to come in to show how and why. This is underway. 

In reply to by buzzsaw99

divingengineer Sun, 07/29/2018 - 13:08 Permalink

Sickening wealth and sickening poverty, all on display only feet apart on the West Coast.

I don’t know the answer, neither do they, but they better figure something out and quick if they know what’s good for them.

same2u Sun, 07/29/2018 - 13:12 Permalink

Ever since the housing crisis I been waiting for the world to become a better place. I see now that I been fooling myself into believing that we live in a civilized and honest world. Nobody gives a shit about anyone nor anything, people only care about themselves...

Roger Ramjet Sun, 07/29/2018 - 13:14 Permalink

Boy, reading an article like this makes me want to go out and hang someone by their ankles in the public square.  Lowenstein would be a good start, simply because of his obvious pandering to his boss.  Yuck!

GoldenDonuts Sun, 07/29/2018 - 13:24 Permalink

Sorry but I just don't see what is positive economically about one company that takes unwitting people's information and sells it to the highest bidder while stifling comment that it doesn't like on its platform and another that is putting legions of actual businesses out of business selling goods at a loss much of the time.

Consuelo Sun, 07/29/2018 - 13:28 Permalink

"Wow, what a novel idea, as though right-wingers have not been pushing this line since the dawn of time"

 

And the 'Left Wingers' - like Ms. Ocasio-Cortez have been doing - what precisely, and for how long Mr. Baker...?   Their solution, please Mr. Baker...?