Krugman on Economic Inequality

Great piece by Paul Krugman in the Rolling Stone (is it me, or is that magazine starting to regain some of its old-time journalistic chops?) on the concentration of wealth in the US. Some startling stuff in there. Check this image out:

The widening gulf between workers and executives is part of a stunning increase in inequality throughout the U.S. economy during the past thirty years. To get a sense of just how dramatic that shift has been, imagine a line of 1,000 people who represent the entire population of America. They are standing in ascending order of income, with the poorest person on the left and the richest person on the right. And their height is proportional to their income — the richer they are, the taller they are.
Start with 1973. If you assume that a height of six feet represents the average income in that year, the person on the far left side of the line — representing those Americans living in extreme poverty — is only sixteen inches tall. By the time you get to the guy at the extreme right, he towers over the line at more than 113 feet.
Now take 2005. The average height has grown from six feet to eight feet, reflecting the modest growth in average incomes over the past generation. And the poorest people on the left side of the line have grown at about the same rate as those near the middle — the gap between the middle class and the poor, in other words, hasn’t changed. But people to the right must have been taking some kind of extreme steroids: The guy at the end of the line is now 560 feet tall, almost five times taller than his 1973 counterpart.

Of course, the US is a particular and special case, and its situation doesn’t generalise to the west. (Krugman: These days, to find societies as unequal as the United States you have to look beyond the advanced world, to Latin America.) But there is important stuff to think about even so.
Krugman points at the way the current inequalities were once prevented by “the outrage constraint” – the public just wouldn’t stand for it. Now, Krugman argues, thanks to years of ‘greed is good’ PR from a network of right-wing thinktanks, that old cap is gone. We in NZ may not be in the same situation economically as the US, but we absolutely are part of their cultural sphere, and that PR spin to legitimise massive wealth discrepancy is absolutely present in our society. We harbour a similar set of comforting myths to disguise the systematic growth of the wealth gap in NZ.
The way in which work, profit, and wealth-sharing are discussed and carried out in the United States influences how these things work here. It is important to remember that the US economic experiment has been a failure, and the failure is rapidly compounding. We must not be seduced by attempts to drag our country further along that dangerous, inequitable road.
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I’ve enjoyed all the Great Little Moments in Cinema shared in response to Monday’s post. Do take a look if you haven’t already. I have just added another one myself.