A number of the recent comments on inequality have pointed to last year's testimony by Alan Greenspan before a Senate committee. For example, Heather Boushey in her WSJ debate with Russell Roberts:
And Paul Krugman in his NYT op-ed:
If you're like me, you're asking: "OK, what did Greenspan really say?" Here is a link to his testimony. This allows us (unlike Boushey and Krugman) to put the comments about inequality in context.
Greenspan is famous for delphic utterances that leave people arguing about their import for months afterward. But here he is utterly clear about what he thinks is the underlying problem:
Cliff's Notes summary (of what Greenspan says he's already oversimplifying): changes in demand for skilled vs. unskilled labor drive wage trends in opposite directions.
Then comes the part that all the lefties quote:
Greenspan then provides his obvious solution:
I may (probably will) comment further on Greenspan's testimony, but for now, it's worth pointing out that Krugman is particularly shameless about "quoting" Greenspan while actually in fervent disagreement with his underlying thesis. His column was spurred by new Fed Chairman Bernanke's comments essentially saying the same thing as Greenspan:
Krugman is indignant:
So, really, Krugman (et. al.) and Greenspan/Bernanke are really talking about different things, both called "inequality." Confusing, no?
But it's intentionally confusing when Krugman and his ilk dishonestly quote Greenspan in support of their thesis. Greenspan's view of the "inequality problem" is "solved" by broad training initiatives to put the skill distribution of the American workforce more in line with demand. Roughly speaking: work on inequality by shoring up the bottom side of the distribution.
Krugman's "inequality problem" (on the other hand) can't be solved that way. Because even then, we'll still have that "small, privileged elite" that so chaps his hide. (We will swallow, for now, the cognitive dissonance involved in reading a NYT columnist railing against a "small, privileged elite.") Clearly the solution must involve taking those other folks down a peg or two, or nineteen.
What do we do, specifically? Krugman is typically coy, but ominous, writing: "It may take some time before we muster the political will to counter that threat."
Krugman probably doesn't advocate countering the "threat" of
inequality by putting the Forbes 400
concentration camps or anything.
I would guess, if you pressed him, he'd
simply argue for
levels of taxation on income and wealth,
with appropriate "regulation" to insure that victims of this
high-income taxpayers can't escape avoid it.
Or perhaps the lack of a plan simply indicates that all the "eat the rich" rhetoric about inequality is just a cynically-designed issue to inflame the populace, which they desperately hope will help the Democrats win back political power. When and if that happens, the issue will be safely consigned to the memory hole.
Update: Welcome, AmSpecBlog readers, and humble thanks to Shawn Macomber for the link.