Page 4 — THE LACONIA DAILY SUN, Thursday, January 6, 2011
Michael Barone
Personal well-being trumps income inequality Consider one conundrum in American politics. Income inequality has been increasing, according to standard statistics. Yet most Americans do not seem very perturbed by it. Barack Obama may have been elected president after telling Joe the Plumber that he wanted to spread the wealth around. But large majorities in polls approved when Obama and congressional Democrats abandoned oft-repeated campaign promises to raise taxes on high earners in the lame duck session. Why don’t voters care more? One reason is that economic statistics can miss important things that affect people’s lives. Wages may not have risen much since 1973, but that’s partly because the tax code encourages increased compensation in the form of benefits, including health insurance. And it’s partly because the Consumer Price Index overstated the effect of inflation in the 1970s, making 1973 wages look higher in “real dollars.” Another is that inflation indexes can’t fully account for product improvement and technological progress. I bought my first electronic calculator in 1970 for $110. Today you can buy the same gadget for $1.99 at your local drug store. The consumer electronics widely available today at declining prices simply didn’t exist in the 1980s. In addition, as George Mason University economist Tyler Cowen writes in The American Interest, “The inequality of personal wellbeing is sharply down over the past hundred years and perhaps over the past 20 years, as well.” Bill Gates may have a bigger house than you do. But you have about the same access to good food, medical care and even to the Internet as he does. Or consider something as prosaic as food. The supermarkets of the 1960s and 1970s didn’t come close to matching the amazing selection of produce, meats and exotic foods as you find in supermarkets today — and not just in high-income neighborhoods, but in modest-income places all over the country. Or clothing. Firms like Walmart, Target and Kohl’s have good quality clothes at astonishingly low prices — you can outfit a kid in school clothes for $100 or so a year. Presidential candidate John Edwards claimed to have seen a little girl shivering in the winter because her parents could not buy a coat; you can get one for $5 at the Salvation Army.
It’s a widespread assumption in some affluent circles that ordinary Americans are seething with envy because they can’t afford to shop regularly at Neiman Marcus or Saks Fifth Avenue. My sense is that most Americans just don’t care. They’re reasonably happy with what they’ve got, and would like a little more. So I am inclined to agree with Cowen when he writes, “The broader change in income distribution, the one occurring beneath the very top earners, can be deconstructed in a manner that makes nearly all of it look harmless.” Cowen is worried that high earners in financial industries benefit hugely when they bet correctly but are sheltered from losses by government bailouts when they bet wrong. It’s a problem that the financial regulation bill passed by the outgoing Congress addressed but, in his opinion and those of many others I respect, did not solve. But there’s little evidence that most Americans begrudge the exceedingly high earnings of the likes of Steve Jobs, Steven Spielberg or J.K. Rowling. We believe they have earned their success and don’t see how taking money away from them will make the rest of us better off. We already take quite a bit. Current tax rates mean that the top 1-percent of earners account for 40-percent of federal income tax revenue — a higher percentage than in many Western European countries. Higher tax rates would probably produce more tax avoidance — rich people can adjust their affairs — and lower revenues than forecast by static economic models. Of course, not everyone is well off in a nation where unemployment has been 9.4-percent or higher for the last 19 months. And I suspect that most Americans would be thrilled to get a 13th month of pay. But they’re not seething with envy at those who are better off. So who does? One example is the cartoonist and author Garry Trudeau, a college classmate of George W. Bush, who has been spewing contempt for the Bushes for 40-some years. The strongest class envy in America, it turns out, may be the resentment of those who were one club above you at Yale. (Syndicated columnist Michael Barone is a senior writer with U.S. News and World Report and principal co-author of The Almanac of American Politics.)
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LETTERS Label attempt to change boat speed limits ‘Inexpedient to Legislate’ To the editor, Responding to articles printed in the Laconia Citizen, January 3rd and 4th, titled “Boating group not just about speed limits” and “Boating group wants to see laws more focused on safety”, if anyone believes that bunch of poppycock and horsefeathers we have shares in a bridge to nowhere to sell you! After more than 20 years in law enforcement and over 50 years of boating experience, more than 40 on Lake Winnipesaukee, we feel more than qualified to say without doubt that the proposed bills in the NH General Court that seek to modify the current boating speed limits of 45/30 mph on the big lake, current law, with “reasonable and prudent” is not only untenable but also unenforceable. Without hard numbered speed limits can you even imagine what our New Hampshire roads and trails would look like ? Now think about boats of every size, description and speed capability coming at you from any and all directions at the same time. This new group, sbonh, has members most of whom own go-fast-beloud vessels that have opposed the speed limits since their formation a year or so ago. Their original motto was, taken from their website, “Educate don’t legislate”. In view of the fact that they have convinced a hand full of legislators to request about four or
five new changes to the boating laws, none of which have anything to do with safety it now seems like more political rhetoric. We believe they are trying very hard to fill our heads with subterfuge and in fact have convinced a few that the speed limits were not their only cause. Gentlemen most of us are not as naive as you were led to believe. The current 45/30 mph limits were not supposed to be a cure for all evils nor were they presented to be. The law enforcement people we have talked with having years of training and experience know that speed limits such as 45/30 mph work for the enjoyment and safety of the general public and make their enforcement activity much easier. Lake Winnipesaukee has been a much more civil and safe place for families, residents, tourists and visitors for the last two years. Let’s keep it that way. An old adage says something like “if it ain’t broke don’t fix it” and we want to tell you it ain’t broke and is working very well. Tell your senators and representatives to the NH General Court that the pending Senate and House bills to change, they call it modify, the current speed limits on Lake Winnipesaukee should be voted “Inexpedient to Legislate” when they come up. Bill Bertholdt Gilford
30% of profits of American firms come from overseas operations To the editor, Tensions are rising over some countries attempts to weaken their currencies. The U.S. and China remain at odds over the value of the renminbi. A global “currency war” raises the risk of protectionist responses. Protectionism would be disruptive for businesses. Some firms would be shut out of markets. Other firms would see profitability hit by having to choose local suppliers over cheaper imports. This is a fairly high probability of occurrence issue. The global economy is closely integrated. Governments will find it difficult to close off many aspects of trade. But trade disputes are likely to increase as populist policies clash with countries’ international obligations. Engagement
in large-scale protectionism will seriously slow economic recovery. Even engagement in protectionism on a smaller scale can be a serious drag on the economy. We need to recognize the perils we are navigating. This is a high impact issue. The U.S. can control its own domestic fiscal and monetary policies. It cannot control the actions taken by other sovereign governments. Because the U.S. economy is open and integrated into the world economy it is important to frame our policies and to comprehend how those policies will be perceived and acted upon by others. Our policies are part of a broader context. There are views other than only our parochial interest, a fact we must recogsee next page