Krugman sees new Gilded Age

[Carl Remick]

>From: Bradford DeLong <jbdelong at uclink.berkeley.edu>
>
>>[Fr: Carl Remick]
>>[Thought I'd post this nugget from Slate about an upcoming Paul Krugman 
>>article in the NY Times magazine.... I wonder whether Krugman's actual 
>>article will be less stupid than it sounds from this summary.]
>>
>>Slate.com
>>
>>Living in a Gilded Age
>>Updated Wednesday, October 16, 2002, at 1:53 PM PT
>>
>>New York Times Magazine, Oct. 20
>>In Part 1 of a two-part piece on social class, Times columnist Paul 
>>Krugman says we've entered a new Gilded Age, in which the rich again wield 
>>as much wealth and power as they did in Gatsby's time. In the 1980s, the 
>>experts looked for economic explanations for the increase in inequality. 
>>Now there's a growing consensus that the change was cultural: a new 
>>"permissiveness" that condoned huge executive compensation packages.
>
>The thesis is not stupid--and is frighteningly plausible. In my version, it 
>is that the United States of America is not now and has never been a 
>western European-style social democracy. Rather, we Americans believe that 
>our rich, our industrial statesman--even those whom Teddy Roosevelt would 
>call malefactors of great wealth, even those born with many silver spoons 
>in their mouths--in some sense *deserve* their wealth as a reward for their 
>excellence, achievements, and luck in being at the right place at the right 
>time.

No, I don't think the average American stands in astonished admiration of 
business tycoons, nor do I believe the average American approves of the way 
CEOs have plundered US businesses for the past generation.  Moreover, I 
don't think the average American's views have changed at all concerning how 
much wealth CEOs are entitled to.  What has changed is CEOs' 
*self*-perception.  In the early '80s, these guys stopped seeing themselves 
as good gray stewards of well-funded pension plans, corporate social 
responsibility, etc.  Frightened, and inspired, by corporate raiders and 
leveraged-buyout artists, CEOs en masse started styling themselves as lean, 
mean "visionaries" who brought unique gifts to the renewal of American 
competitiveness and building of shareholder value.  I don't think many 
people believed this claptrap apart from the CEOs themselves, but they're 
the ones who sit on each other's compensation committees.  Obviously, 
visionaries deserve far, far, far higher pay than stewards ... presto, a new 
Gilded Age.

Carl

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