Sunday, November 07, 2010

"Our Banana Republic"?

In the New York Times this weekend, Nicholas Kristof asserts that the USA has become a banana republic. The piece is typical of what I see on the Gray Lady's op-ed pages lately, and why the opinions expressed in what is regarded as our "newspaper of record" have become so meaningless to me.

To me, a "banana republic" is defined by a corrupt political system, typically run by a dictator for his own benefit, where elections are rigged, and government policy is manipulated to enrich the people in power, usually leaving much of the populace in abject poverty.

Kristof chooses to define banana republics on the basis of relative income; by his standard, in the BRs, "the richest 1 percent of the population gobbles up 20 percent of the national pie".  By that standard, the USA, where "The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976", we are even worse than a typical "banana republic". And we're told that the rise of the Republicans is likely to make it "worse".

Oh, where to start?

The disconnect, for me, is the assumption that our country has a corrupt political system designed to enrich anybody, let alone the ruling clique.

Yes, a few people do get madly rich in this country. People like Oprah Winfrey, George Clooney, Barbra Streisand, Warren Buffett, the Kennedy's, the Kerry's, Barack and Michelle Obama, Steve Jobs, etc. Yes, this list is selective, to make a point: these particular people are on the opposite side of the political spectrum from the Republicans who are supposedly driving us into BR status.

Government policy did not enrich any of these people, or anybody else, for that matter. Most of them went into business, took risks, and were rewarded. (Even the Obama's got most of their wealth by selling books; nobody was forced to buy them.) Kristof's complaint seems to be that the government did not take enough of their additional income away from them. This is not "enriching"; this is, if anything, the absence of "deriching", i.e., confiscation of income and/or wealth.

Let's look at the other end of the spectrum. Oh, wait, Kristof didn't. How are working American's doing vis a vis their standard of living? This wasn't addressed in the column. It's a treatise on wealth, not of the supposed deprivation of the non-wealthy.

I say "supposed deprivation" because I am not yet convinced that the middle, or any other, class, is being deprived on behalf of the wealthy. I have not seen a careful assessment of the challenges to the middle or working classes. Certainly housing and medical expenses are up, but the quality (and presumably the cost) of both is greatly improved, mostly as a result of government intervention in building codes and required coverage. There may be more at work, but I'm not convinced that it's a simple case of a particular class being excluded by policy.

The standard of living for the "working class" in this country -- cell phones, cable TV, housing, sanitation -- would be the envy of the working class of  any country otherwise considered a "banana republic". I don't think we have to hang our heads in shame.

Having said all that, I have an open mind with respect to adjusting tax policy. But I am mindful of the difference between current income and pre-existing wealth. Whenever someone writes a column that conflates the two, I smell demagoguery, and tune it out.