Tackling America's Growing Inequality

A fake newspaper: Sebastian Mallaby of the Washington Post:

Political Crackups: The Republicans' dismal performance could shake their grip on power.... But the top congressional Democrats seem barely more attractive than the Republicans; they have mastered the art of obstructionism but are light on policy proposals...

A fake newspaper has to be "bipartisan" in the sense that anything negative said about one political party has to be "balanced" by an equal and opposite negative said about the other.

A real newspaper--like the Financial Times--behaves very differently. For example:

FT.com / Comment & analysis / Editorial comment - Tackling America's growing inequality: April 6 2006 03:00: That George W. Bush has so far had difficulty persuading any prominent Wall Street Republican to replace John Snow as treasury secretary speaks volumes about the low priority his administration has accorded to economic decision-making.... In that context, we welcome the launch yesterday by the Brookings Institution of a new platform - the Hamilton Project, named after America's first Treasury Secretary - to address America's looming economic challenges. Although composed mostly of Democrats, the group states a clear preference for market-based solutions to America's problems. It rejects the latent signs of protectionism recently visible on Capitol Hill. But it makes a strong case for the state to play a more constructive role both in improving the efficiency of America's market economy, but also in addressing the growing inequity of market outcomes.

Most important, it addresses the potentially dangerous impact that America's virtually stagnant median wage could have on the country's political mood and on the workings of the economy. Since 1973, the income of the top 10 per cent of American earners has grown by 111 per cent, while the income of the middle fifth has grown by only 15 per cent. That trend has become more pronounced in the last few years. Between 1998 and 2004, the median income of American households fell by 3.8 per cent. This coincided with annual productivity growth in excess of 3 per cent in most of those years. You do not need to take a definitive stance on why America's high productivity growth has been so disproportionately captured by a small percentage of Americans to agree that it makes for a potentially volatile political scenario. Alan Greenspan, the former chairman of the Federal Reserve and a Republican, has made the same point in public.

There is room for more scepticism about the group's argument that growing income inequality harms economic growth. There is some evidence that the growing volatility of American incomes feeds into a culture of risk aversion, which in turn reduces the creation of small businesses. There are also grounds for believing that a stronger personal bankruptcy law would enhance risk-taking, which would lift America's economic growth. But the jury is still out on the question of whether growing inequity necessarily leads to lower growth.

Yet it would be hard to dispute the recommendation that America should boost investment in the skills of its workforce, both through better technical training and improving the underperforming public school system. Likewise, we strongly agree with the view that the US needs to return to the path of fiscal discipline from which Mr Bush has strayed, even if the group ducked the question of how it would reform America's entitlement system. Reducing the cost of Medicare and Medicaid is America's most important long-term fiscal challenge. It is also critical to reverse Mr Bush's tax cuts.

At a time of economic demagoguery on Capitol Hill and a vacuum of leadership in the White House it is refreshing that rational voices are addressing America's core economic challenges. Many of the policy details are awaited. But the diagnosis is persuasive.

Comments

[Nan]

"A fake newspaper has to be "bipartisan" in the sense that anything negative said about one political party has to be "balanced" by an equal and opposite negative said about the other."

Brad, this is not true. Washington Post regularly writes negative stories about Democrats without worry about providing a fake balance by critizing the GOP.

George Will, Charles Krauthammer never feel the need to "balance" their liberal bashing columns with negative comments about conservatives. Fake balance seems to plague only the fake liberal columnists like Malaby and Cohen and the biggest fake liberal of them all Joe Klein of Time magazine.

People who work for the corporate media fear offending the GOP. They don't fear offending Democrats.

[Jim Dandy]

I attended the Brookings roll out of the Hamilton Project and read the handouts. It is an impressive effort to tackle the key policy issues with serious analysis, empirically based, and focused on practical proposals – a far cry from the vapid stuff that comes out of this Administration.

It remains to be seen how effectively the authors and organizers can insert themselves into the ongoing public debate and influence the audience out there. But if the mid-term elections bring a change in the political balance of the Congress, the results of this project should provide a useful reference point for a Democratic majority.

[Wild Pegasus]

Calling for fiscal responsibility without tackling the looming chasm of entitlements is like telling the falling-down drunk to forgo gin (ignoring that he drinks mostly scotch).

- Josh

[christofay]

Mid-terms and I'm feeling some mid-life angst. I'm thinking of quitting the day job and running as a Republican on a plank of socialized gas for any person who took out a 5 yr car loan for a brontosaurus sized SUV. I'll call it a market based initiative.

[christofay]

Tainte Aime clearly summed up the situation when she (I think it's a woman) wrote that the "security clearances" weren't security clearances but loyalty oaths. Kerik for example. Lately there have been some embarrassing examples.

Gee, I'd like to see a blog of just Tainte's/Loose Shank's writing. She's wicked smart and sharp tongued but without the advance degree to get into a moat protected area.

[save_the_rustbelt]

So does anyone think the Pelosi/Reid/Dean team is competent?

[Crack]

Amy Sullivan does.

[c roast]

"Although composed mostly of Democrats, the group states a clear preference for market-based solutions to America's problems."
Oh, right! A whole new paradigm...that will be so comforting to the large body of marginally afflicted.

[anne]

Ah, America has no problem other than what are sneeringly called "entitlements." Social Security and Medicare have surpluses, of course, and the surplus for Social Security is massive and will grow for at last another 12 years and sustain full benefits for at least another 40 years. Scial Security and Medicare are social insurance programs for which we pay through our working years and for which our parents and grandparents have paid before.

[anne]

Ah, yes, there is no war and occupation of Iraq. Lovely. We are not spending $100 billion and more more more a year for a lunatic war and occupation. So, we must slash Social Security and Medicare and who cares about caring for what our grandparents have so well earned?

[Anonymous]

This post captures why I subscribed to the Financial Times and not the Washington Post when I recently moved to Washington, D.C.

[RT]

I love the circularity of it all. Dems do on occasion propose policy initiatives, but the WaPo doesn't report on them. Then the editorial writers and in-house op-ed writers can say the Dems aren't presenting any alternatives, because they don't see them reported in their own paper. And those editors don't tell their reporters to go looking for stories about Dem policy initiatives, because there aren't any.

[me]

"This post captures why I subscribed to the Financial Times "

WSJ better watch out too.

[anne]

Republicans have long ago decided that the way to deal with growing inequality is to create more inequality. There is the reason for conservative Republican grumbling; they would slash social benefit spending, slash Social Security and Medicare, continue to cut taxes for the wealthiest, and absolutely pay not the slightest attention to how much we are being harmed by needlessly finghting in and occupying Iraq.

[RKKA]

"So does anyone think the Pelosi/Reid/Dean team is competent?"

Rusty, they're far more competent than the bunch of Republicans you've voted for since, like, Eisenhower.

And certainly more honest.

But then, its nothing new for conservatives to have higher expectations of Democrats than Republicans. Its just part of their strategy for tilting the political playing field in their favor.

[dale]

"Republicans have long ago decided that the way to deal with growing inequality is to create more inequality"

You can attempt to delegitizme the very notion of anything but an abstract formal equality that has nothing but an ideological relation to actually existing existing inequalities in society. If distribuational equality is not a norm then there is nothing about rising inequality that needs attending to.
Except perhaps more jails and higher fences and private security forces.

[A. Zarkov]

“Yet it would be hard to dispute the recommendation that America should boost investment in the skills of its workforce, both through better technical training .. “

It’s not hard at all to dispute this recommendation since it assumes that we have a shortage of technical people. If we had a shortage then wages for programmers and engineers would be increasing instead of decreasing. If there were a shortage, then a forty-five year old electrical engineer should have no trouble changing jobs and getting a higher salary. If we had a shortage of programmers then computer science departments would be expanding their enrollment instead of watching it shrink. If we had a shortage we wouldn’t have half of the computer science graduates ending up on the help line. See Matloff at UC Davis for details.

[anon]

Guest worker pogram anyone? If a native wont work for minimum wage we will find and import someone who will. Importing millions of low-skilled workers is the best way to undermine the political support for and fiesibility of broadened social welfare programs. Free first world healthcare for 1.2 billion latins would do wonder for the left center would do wonders to the budget. Both parties(in there own ways) seem intent on turning the US into Brazil. It is enough to transform me from a well intentioned left-center type into a full fledged libertarian...Hey Im rich why fight it...cheap labor..high asset prices...#$#@#$ working class americans.....I quit caring

[anne]

http://www.nytimes.com/2006/04/09/business/businessspecial/09payside.html?ex=1302235200&en=bbabf08b9dedcf9d&ei=5090&partner=rssuserland&emc=rss

April 9, 2006

C.E.O. Pay Keeps Rising, and Bigger Rises Faster
By ERIC DASH

CHIEF executives' pay continued to rise in 2005, although at a slightly slower pace than in 2004.

The average total pay for chief executives rose 27 percent, to $11.3 million, according to a survey of 200 large companies by Pearl Meyer & Partners, the compensation practice of Clark Consulting.

The 123 chief executives included in the survey for the last three years saw their compensation increase, on average, 15 percent, to $11.4 million in 2005. Last year, their pay was up almost 30 percent, to $10.2 million.

Chief executives' median pay — the point at which half are above and half are below — was $8.4 million in 2005, up 10.3 percent from 2004. A few executives who received very large long-term bonus and option awards account for the big difference from the average.

While ordinary workers' wages and benefits were squeezed last year, chief executives were largely immune from those pressures.

The median base salary for chief executives rose about 4 percent, to $1 million. The median bonus rose 8 percent, to $1.8 million. That compares with a 38 percent increase, to $1.9 million, in 2004, when profits were growing faster.

The fastest-growing part of executive compensation in 2005 was in new grants of restricted stock and long-term incentive payouts. For the typical chief executive, they rose almost 15 percent, to $1.9 million. In 2004, they grew almost 111 percent, to $1.4 million, reflecting rising profits and a shift away from stock options.

Of the 200 executives surveyed, about half stand to collect big pensions. At least 20 percent can expect $1 million in annual benefits....

[Emma Anne]

What Anne said.

[anne]

http://www.nytimes.com/2006/04/13/business/13exxon.html?ex=1302580800&en=503f18987db8ca72&ei=5090&partner=rssuserland&emc=rss

April 13, 2006

Exxon Chairman Got Retirement Package Worth at Least $398 Million
By JAD MOUAWAD

Last year's high oil prices not only helped Exxon Mobil report $36 billion in profit — the most ever for any corporation — they also allowed Lee R. Raymond to retire in style as chairman of Exxon Mobil.

Mr. Raymond received a compensation package worth about $140 million last year, including cash, stock, options and a pension plan. He is also still entitled to stock, options and long-term compensation worth at least another $258 million, according to a proxy statement filed by Exxon with the Securities and Exchange Commission yesterday.

The total sum for Mr. Raymond's golden years comes to at least $398 million, among the richest compensation packages ever. The record was the payout of $550 million to Michael D. Eisner, the former head of Walt Disney, in 1997.

Exxon's board also agreed to pick up Mr. Raymond's country club fees, allow him to use the company aircraft and pay him another $1 million to stay on as a consultant for another year. Mr. Raymond agreed to reimburse Exxon partly when he uses the company jet for personal travel. "It begs the old question again, When is enough, enough?" said Brian Foley, an executive compensation consultant in White Plains. "This looks like a spigot that you can't turn off."

Mr. Raymond, 67, spent 43 years at Exxon, including 12 as chairman. He orchestrated the merger between Exxon and Mobil in 1999, making it the largest oil company in the world as well as the most profitable. He was widely recognized for his financial acumen and focus on cost-cutting, whether in good times or bad. Some of the company's recent success, of course, can also be attributed to the doubling of oil prices over the last two years, higher refining margins and record high demand.

While Exxon showed record earnings, the total return to shareholders over the last five years averaged just under 8 percent a year, about the same as the industry average....

[anne]

http://www.calvorn.com/gallery/photo.php?photo=6360&exhibition=7&u=99|10|...

Brown Creeper
New York City--Central Park, The Ravine.

Thanks, Emma Anne :)

[anne]

http://www.nytimes.com/2006/04/10/business/10pay.html?ex=1302321600&en=aab42cd6a965cc31&ei=5090&partner=rssuserland&emc=rss

April 10, 2006

Outside Advice on Boss's Pay May Not Be So Independent
By GRETCHEN MORGENSON

For Ivan G. Seidenberg, chief executive of Verizon Communications, 2005 was a very good year. As head of the telecommunications giant, Mr. Seidenberg received $19.4 million in salary, bonus, restricted stock and other compensation, 48 percent more than in the previous year.

Others with a stake in Verizon did not fare so well. Shareholders watched their stock fall 26 percent, bondholders lost value as credit agencies downgraded the company's debt and pensions for 50,000 managers were frozen at year-end. When Verizon closed the books last year, it reported an earnings decline of 5.5 percent.

And yet, according to the committee of Verizon's board that determines his compensation, Mr. Seidenberg earned his pay last year as the company exceeded "challenging" performance benchmarks. Mr. Seidenberg's package was competitive with that of other companies in Verizon's industry, shareholders were told, and was devised with the help of an "outside consultant" who reports to the committee.

The independence of this "outside consultant" is open to question. Although neither Verizon officials nor its directors identify its compensation consultant, people briefed on the relationship say it is Hewitt Associates of Lincolnshire, Ill., a provider of employee benefits management and consulting services with $2.8 billion in revenue last year.

Hewitt does much more for Verizon than advise it on compensation matters. Verizon is one of Hewitt's biggest customers in the far more profitable businesses of running the company's employee benefit plans, providing actuarial services to its pension plans and advising it on human resources management. According to a former executive of the firm who declined to be identified out of concern about affecting his business, Hewitt has received more than half a billion dollars in revenue from Verizon and its predecessor companies since 1997.

In other words, the very firm that helps Verizon's directors decide what to pay its executives has a long and lucrative relationship with the company, maintained at the behest of the executives whose pay it recommends.

This is the secretive, prosperous and often conflicted world of compensation consultants, who are charged with helping corporate boards determine executive pay that is appropriate and fair, and who are often cited as the unbiased advisers whenever shareholders criticize a company's pay as excessive.

It is a world where consulting fees can reach $950 an hour, rivaling those of the nation's top lawyers. And it has grown into a substantial industry where there is little disclosure about how executive pay is determined....

[Rebecca Allen,PhD,ARNP]

The Wa Po op-ed page becomes more embarrassing every day.

[James Wimberley]

The FT writes: "the US needs to return to the path of fiscal discipline from which Mr Bush has strayed". This is pathetic. Poor Mr Bush! He was distracted by 9/11, Iraq, Katrina, etc, and got fiscally lost accidentally! No. The Bush crew brought in bulldozers and dynamite to destroy the sustainable fiscal policy they inherited from Clinton, well before 9/11. It was deliberate, calculated, vindictive sabotage.

[PJGoober]

FT.com editorial writes:
[Yet it would be hard to dispute the recommendation that America should boost investment in the skills of its workforce, both through better technical training and improving the underperforming public school system.]

The main reason for america's low public school achievement compared to other OECD countries is our high percentage of underperforming minorities.

Bad schools can not be solely blamed for this, see:
Addressing Racial Disparities in High-Achieving Suburban Schools
http://www.ncrel.org/policy/pubs/html/pivol13/dec2002b.htm

see:
Closing the Achievement Gap: Two Views from Current Research. ERIC Digest.
[Historically, we have tried to raise the achievement level of low-achieving minority and immigrant students living in urban low-income areas, but we now recognize that there is an even greater gap in student achievement in schools in suburban middle-income communities than in the inner cities, particularly at the higher achievement levels. (College Board, 1999). More minority students attend suburban schools than popularly believed; in 2000, 33 percent of African-American children, 45 percent of Hispanic children, 54 percent of Asian children, and 55 percent of white children lived in suburban areas, and they attended both poor, segregated schools and excellent racially integrated schools with many resources (Ferguson, 2002, p. 2).....]

Bad schools as a cause is incorrect. Another factor (or factors), that propagates to suburban, urban, high achieving, and low achieving districts across the America, seems to lower average black and hispanic achievement. Once again, this is the heart of america's achievement gap with other OECD nations.

[anne]

American public schools are startlingly segregated by race:

Actually, the Chilean private social security system is proving a singular failure. After an initial burst of investment that stimulated Chile's stock market, contributions have been severely cut by terrible costs and returns even from Chilean stocks have been the poorest in Latin America for almost 20 years. Pension costs and poor returns are putting severe pressure on those middle class workers who unfortunately chose to be part of private system....

[anne]

Forgive the mistake in posting, Brad :)

http://www.nytimes.com/2005/09/25/books/review/25glazer.html?ex=1285300800&en=102aa7de01c051e0&ei=5090&partner=rssuserland&emc=rss

September 25, 2005

'The Shame of the Nation': Separate and Unequal
By NATHAN GLAZER

Jonathan Kozol has been writing books rather similar to this one since "Death at an Early Age" in 1968. He is persistent, it is true, but so is the problem that has aroused his passions since he began teaching in a Boston school more than 40 years ago, when he was a young civil rights activist. That problem is the conditions under which we educate the children of the poor and minorities. In his account, they are trapped, almost uniformly, in old schools that are overcrowded, in poor repair, with scanty teaching materials and disgraceful toilets, and staffed by generally underqualified teachers.

In the five years up to the writing of "The Shame of the Nation," Kozol visited approximately 60 schools, in 30 school districts, in 11 states. Some of these schools are in the South Bronx, and he became familiar with their principals, their teachers and many of their students. (He dedicates the book to a teacher in one such school.)

But along with his familiar theme of the inadequacy of the education we provide the children of the poor and minorities, he has a new focus in this book - the return of a substantial degree of segregation in our urban schools. Black and Hispanic students, he writes, are concentrated in schools where they make up almost the entire student body. (I should say that I once opposed the use of the word "segregation" to cover both the state-imposed separation of the races in the South and the concentration of minority students in schools outside the South, which arises for a number of reasons, but that is a lost cause - today we use "segregation" for both.)

The chief academic authority on this issue, whom Kozol interviews and quotes, is Gary Orfield of the Harvard Graduate School of Education, who has been as persistent in documenting the scale of segregation, and attacking its presumed educational effects, as Kozol has been in describing it. According to Orfield and his colleagues, writing in 2004, and quoted by Kozol, "American public schools are now 12 years into the process of continuous resegregation. . . . During the 1990's, the proportion of black students in majority white schools has decreased . . . to a level lower than in any year since 1968." ...

[anne]

http://select.nytimes.com/2006/01/30/opinion/30herbert.html

January 30, 2006

The Lost Children
By BOB HERBERT

The times — as a fellow named Dylan sang more than 40 years ago — they are a-changin'.

This time it's not the emergence of the tie-dyed 60's and the flowering of the boomer generation. But the changes are at least as fundamental.

A generation from now non-Hispanic whites will make up less than 60 percent of the U.S. population, and by 2050 they will be just half. Nine out of 10 American students currently attend public schools. It is likely that within a decade fewer than half of the public school students will be white.

The dramatic changes in public school enrollment will not be a result of white flight, according to a new study by the Civil Rights Project at Harvard University: "It is because of a changing population structure created by differential birth rates and age structures and a largely nonwhite international flow of millions of immigrants. Since whites are older, marry at later ages, have smaller families and account for a small fraction of immigrants, these changes are almost certain to continue."

So, with these changes in mind, what's happening with the black and Latino students who already account for more than a third of the public school population, and who should be expected to play an increasingly important role in shaping American society?

Not much that is good.

When Bob Dylan first came on the scene, it was very possible for a young man or woman with energy and a dream and a high school diploma (or less) to actually build a decent life. That's pretty much over.

We are now in a time when a college education is a virtual prerequisite for achieving or maintaining a middle-class lifestyle. "Only the kids who get a postsecondary education are even keeping even in terms of income in their lives, and so forth," said Gary Orfield, a professor at the Harvard Graduate School of Education and director of the Civil Rights Project. "The rest are falling behind, year by year. Only about a twelfth of the Latino kids and maybe a sixth of the black kids are getting college degrees. The rest of them aren't getting ready for anything that's going to have much of a future in the American economy."

One of the weirder things occurring in American education is the disappearance of kids — especially black and Hispanic kids — from high school. The San Antonio Express-News, reporting last March on a study by a local research association, said that "more than a third of Texas high school freshman students are disappearing from the system or otherwise failing to obtain a high school diploma in four years."

The Los Angeles Times, for a feature article that same month, interviewed a 17-year-old named Nancy Meza who had quickly made friends with dozens of classmates when she arrived at the Boyle Heights campus of Roosevelt High School. Four years later, as her senior class gathered for its graduation photo, only four of her friends were there. Nearly all of the others had dropped out....

[jenny bonds]

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[Polak]

Real? Fake? Fact/Fiction? Spin?

My lord, this simplistic attempt to categorize print media (are we limiting this to print? Daily? Weekly? What exactly?) Into real and fake based on subjective criteria (equal negative opinion) is undeniably humourous. I do hope that was your intention. Like many today left/right or democrat/republican are the landmarks we reference from. Sad, i know. Giving equal time to the two sides in a two party state is hardly "real" coverage. Because all news is skewed or "spun" I prefer opinions/news that are unabashfully supporting an interest (notice interest not party). .labour, religion, environment, tax reform etc. At least you know where they stand and where they are comming from.
I also think it is humourous the example provided of "real" news was from the Financial times as it is a very interested source (ie markets). Is this what passes as "real"? Becasue elites from both parties own a sh*tload of stock?

I think this demonstrates two things.1)Niche reporting comes off as more fair because it is honest -we are so and so , this is in our interests and we are not shy in this fact. And 2)Our 2 party state has a single ideoplogy when a 'Capitalist'news outlet espouses "real" or "fair" news. 2 paryies, 1 idea. Not alot of room for dissention.