My post of January 7 on this blog showed how The New York Times promotes the Green party line. The one before that showed how it has supported the Red party line. Like a traffic light, The New York Times alternates between Red and Green. (There is actually little fundamental difference between the two. The Reds want to abolish the individual’s pursuit of happiness on the grounds that it results in exploitation, monopolies, and depressions. The Greens want to abolish it on the grounds that it results in acid rain, destruction of the ozone layer, and global warming.)
Today we are back to Red, with two transparent attempts of The Times to promote the doctrine of class warfare.
In a January 8, 2007 article titled “Working Harder for the Man,†Times columnist Bob Herbert writes:
[T]he top five Wall Street firms (Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley) were expected to award an estimated $36 billion to $44 billion worth of bonuses to their 173,000 employees, an average of between $208,000 and $254,000, “with the bulk of the gains accruing to the top 1,000 or so highest-paid managers.†… There are 93 million production and nonsupervisory workers (exclusive of farmworkers) in the U.S. Their combined real annual earnings from 2000 to 2006 rose by $15.4 billion, which is less than half of the combined bonuses awarded by the five Wall Street firms for just one year.
As if to answer the question of whether his intention is to provoke a riot or revolution inspired by the notion of class warfare, Mr. Herbert concludes his article with these words:
There’s a reason why the power elite get bent out of shape at the merest mention of a class conflict in the U.S. The fear is that the cringing majority that has taken it on the chin for so long will wise up and begin to fight back.
I provide an exhaustive critique of Marxism and the doctrine of class warfare in my book Capitalism. Here I will observe only that the activities of businessmen and capitalists are the driving force of virtually all increases in real wages. It is their savings that pay the wages of workers and buy the capital goods with which they work and on which the wage earners’ productivity depends. It is the innovations of the businessmen and capitalists that underlie both continuing capital accumulation and the continuing rise in the productivity and real wages of the workers. To the extent that real wages fail to rise, the explanation is to be found in the frustration of the activities of businessmen and capitalists by misguided government policies that undermine capital accumulation and the rise in the productivity of labor.
In this brief space, I only want to concentrate on challenging Mr. Herbert’s assertions alleging a gross disparity between the earnings of a comparative handful of Wall Streeters and the great mass of wage earners.
As soon as I saw that Mr. Herbert was comparing the alleged meager growth in real earnings of wage earners with the alleged very substantial current monetary earnings of the Wall Streeters, a warning flag went up in my mind, simply because such a thing is not a legitimate comparison. It’s comparable to comparing one entity’s net gain with another entity’s gross revenues, e.g., Toyota’s net profit with General Motors’ sales revenues.
To compare apples with apples, I was immediately curious to know what the growth in wage earners’ monetary earnings had been between 2000 and 2006. To find the answer, I turned to the Survey of Current Business, which is the leading source of statistics on national income, wages, and profits, and gross domestic product. Page D 15 of the January 2007 issue of that publication reports total annual compensation of employees as $7524.4 billion as of the 3rd quarter of 2006, which is the most recent quarter for which data have been published.
At the same time, page 197 of the August 2005 issue of the Survey of Current Business reports total compensation of employees as $5837.4 billion as of the 3rd quarter of 2000. Subtracting this number from the total compensation of employees in 2006 gives a difference of $1687.0 billion. If this, apples-to-apples number is compared with the alleged $36 billion to $44 billion of Wall Street bonuses, it is 38 to 47 times larger, not half as large.
But what about the growth in wage earners’ real earnings, their earnings adjusted for the rise in prices? Might that not turn out to be a mere $15.4 billion, as alleged by Mr. Herbert? The answer is no, far from it.
To calculate the change in real earnings, it’s necessary to allow for the rise in prices between 2000 and 2006. According to the Bureau of Labor Statistics, which is the source of the data, the Consumer Price Index for Urban Wage Earners and Clerical Workers stood at 168.9 for 2000 and at 196.8 as of November of 2006, the most recent month for which data are available. This is an increase of 17 percent. If this rise in prices is applied to the employee compensation of $5837.4 billion in 2000, that number is raised to $6801.7 billion. The difference between this inflation-adjusted figure and 2006′s total employee compensation of $7524.4 billion is $722.7 billion. This is the rise in real total employee compensation over the period. This number is more than 47 times larger than the number alleged by Mr. Herbert. It also ranges from more than 16 to more than 20 times the Wall Street bonuses alleged by Mr. Herbert.
Mr. Herbert needs to explain how he arrived at his numbers. Until he provides a reasonable explanation, I leave it to the reader to judge his honesty and to decide whether or not and to what extent the culture of The New York Times has changed since the days of Jayson Blair, The Times’ reporter who simply fabricated claims.
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I turn now to The Times’ second attempt to promote the doctrine of class warfare. This occurs in an article which appeared on the same day titled “[Bush] Tax Cuts Offer Most for Very Rich, Study Says.†(“Bush†is in brackets because it appeared only in the title of the print edition of the article.)
The article opens in a way that easily suggests that while tax rates at the very top are being dramatically reduced, they are actually being increased for middle-class taxpayers.
WASHINGTON, Jan. 7 — Families earning more than $1 million a year saw their federal tax rates drop more sharply than any group in the country as a result of President Bush’s tax cuts, according to a new Congressional study.
The study, by the nonpartisan Congressional Budget Office, also shows that tax rates for middle-income earners edged up in 2004, the most recent year for which data was available, while rates for people at the very top continued to decline.
If one reads the article very carefully, from beginning to end, one learns that what is actually being complained about is merely the fact that the tax rate of the top 1 percent of taxpayers was reduced by a larger number of percentage points than the tax rate of middle-income tax payers. One also learns that the rise in the tax rate on the middle class, so prominently featured by The Times, was a very minor one that took place in the course of a four-year sustained decline in tax rates on the middle class amounting to more than 40 percent. In the article’s own words:
Families in the middle fifth of annual earnings, who had average incomes of $56,200 in 2004, saw their average effective tax rate edge down to 2.9 percent in 2004 from 5 percent in 2000.… (My italics.)
It may have escaped The Times’ reporter, and his editor, but 2.9 percent is less than 60 percent of 5 percent, which implies a reduction in middle-class tax rates of more than 40 percent. This is a decrease, relatively speaking, compared to what the rate was in 2000, a huge decrease. It is not an increase. This decrease deserves to be featured, not presented as the very opposite of itself.
The article goes on to complain that
Households in the top 1 percent of earnings, which had an average income of $1.25 million, saw their effective individual tax rates drop to 19.6 percent in 2004 from 24.2 percent in 2000. The rate cut was twice as deep as for middle-income families.…
What is allegedly unfair here is that while the tax rate of the top 1 percent falls by 4.6 percentage points from 24.2 percent to 19.6 percent, the tax rate on the middle income tax payers falls only by 2.1 percentage points from 5 percent to 2.9 percent. Not only does The Times’ reporter, and his editor, choose to ignore the very substantial, more than 40 percent reduction in middle-class tax rates from 2000 to 2004, but also to completely ignore the fact that relatively speaking the reduction in rates on the top 1 percent was far less than the reduction on the middle class. A tax rate that is still 19.6 percent is approximately 81 percent of a tax rate of 24.2 percent. Thus, relatively speaking, while the income tax rate on the middle class fell by more than 40 percent, it fell by less than 20 percent on the top 1 percent of taxpayers.
Apparently, the only thing that would satisfy The Times (and the authors of the “nonpartisan†Congressional Budget Office study) would be if the tax rate on both groups were reduced by the same number of percentage points. In that case, the middle income tax payers would pay a tax rate of only .4 percent, while the top 1 percent paid 19.6 percent.
Such logic implies that the elimination of the income tax can simply never be fair, unless by some magical means it could be accompanied by the ex nihilo creation of a correspondingly large subsidy for everyone else. Thus if the income tax paid by the middle class were .4 percent, while the tax rate on the top 1 percent of taxpayers were 19.6 percent, fairness would allegedly require that reduction of the 19.6 percent rate to zero be accompanied by the subtraction of 19.6 percentage points from .4 percent. This, of course, would mean the creation of a negative income tax rate of 19.2 percent for the middle class. That is the logic of The New York Times.
The Times and its reporters and editors regard the doctrine of egalitarianism as an axiomatic truth and insinuate it at every turn in all aspects of the newspaper. With respect to egalitarianism and all that goes with it, there is no distinction between news column and editorial at The New York Times. Apart from such features as classified advertising, the entire paper is one huge, day-in and day-out editorial for egalitarianism, collectivism, and Marxism.
When one reads The New York Times, one should know what one is getting. It is not unvarnished news, but the news as seen through the lens of a distinct philosophical and political doctrine, a doctrine that is hostile to the freedom, prosperity, and happiness of the individual, and thus to the foundations of the United States.
This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.
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I have this odd hunch that the natural home for these doctrines of class warfare is one where the kids are presented with a “collective cookie plate” and wind up fighting over the cookies therein…
I believe professor Reismann hit it right on the head when he says that leftists view egalitarianism as an axiomatic truth. Their ethical ideal can be understood if one views things in light of which policies tend to “equalize” people materially. This explains why leftists are often puzzlingly ambivalent when it comes to violence. If the violence in question has the effect of lowering material inequality (if the person or group suffering the violence is materially superior), this is seen as a net “gain” in leftist ethics. The violence has the effect of “bringing down” the material level of one person or group, towards greater equality. And this is why arguments that point to the violence and murder of leftist regimes do not have the effect one would expect. The leftists believe, but perhaps do not want to publicly say, that they see some good in violence that furthers the goal of greater matieral equality. This implicit belief is never (or at least rarely) stated clearly, as it would lessen public support for leftism.
I believe this explains the consistency of the Times’ and Harvard’s ethical ideals manifesting in their consistently leftist world-view and policy recommendations.
It’s hard for libertarians—who tend to view some conception of the natural law’s of man’s nature, as the basis for right and wrong acts—to believe that another person’s ethics could be as simple as calculating which person has “more”, and then trying to make that person have less. But the continued pushing towards the same goals over and over by leftists, in the face of all past failures and in the face of all the negative effects of doing so, suggests that this very simple (amost childish) ethical principle is what continues to drive them, and what continues to shape all of their theoretical and analytical efforts.
“[T]he activities of businessmen and capitalists are the driving force of virtually all increases in real wages. It is their savings that pay the wages of workers and buy the capital goods with which they work and on which the wage earners’ productivity depends.”
Yes, but these savings are dwarfed by the non-savings-related credit that is issued in a financial economy that now dwarfs the productive economy. Thus, as Antal Fekete writes in “The Root Cause of Unemployment ( http://www.financialsense.com/editorials/fekete/2007/0111.html ), “The root cause of unemployment is the coercive legislation making bank notes legal tender. It initiated a slow process that ultimately destroyed the wage fund out of which wages were paid to workers before the underlying merchandise has been sold to the ultimate consumer.”
Thus (and notwithstanding Fekete’s endless promotion of the dubious Bills of Exchange (Real Bills) Doctrine), I have to agree with him that the corruption of money is behind the widening income disparity in this country, as those in the financial economy clean up at the expense (via inflation) of those in the productive economy, especially as production is outsourced to low-wage countries like China.
And to get an idea of that disparity, take a look at this 1955 (i.e., prior to Nixon’s closing of the “gold window”) video — http://video.google.com/videoplay?docid=2309200505292166156&q=wealth&hl=en — and note the astounding inflation that we have experienced since then.
Bottom line: While there’s no sanctioning the Time’s leftist egalitarianism, the global fiat fraud is responsible for the greatest transfer of wealth in the history of the world. And the American middle class is not only feeling the brunt of it; it’s disappearing on account of it.
Given the nature of the NYT, it is not a surprise that such a “legitimate” publication is such a fraud. But in all fairness, even when compared honestly, they still made a huge amount of money, and we have every right to be furious. It doesn’t take much to figure out that the bulk of it was made by “skimming the cream off the top” as the Federal Reserve steals from us by watering down our money and bankrupts us by over saturating society in debt.
In a gold based system, banks can’t print money out of thin air so all investment power must rest in the hands of savers. In a fiat system, all investment power rests in the hands of central bankers, the creators of money, and their close associates. We have every right to be livid that the institutions like Goldman Sachs get to be first in line for new investment opportunities while the rest of us get locked out.
One more thing. The class warfare in the US is a false warfare. This is because the US govt doesn’t tax net worth, but income. Which means that the small business man who busts his chops to earn his first million gets his teeth kicked in, but the guy sitting on a billion dollar pile of assets barley even notices. IMHO, income taxes are the tools of billionaires who can compete on merit.
Correction: IMHO, income taxes are the tools of billionaires who can NOT compete on merit.
As I was saying . . .
“The use of hyper-inflated money supply to postpone a recession over recent years has served to create an imbalance between income and assets. Debt covered the gap for a while, but now debt is extreme, with a limited useful life. With high paying jobs being exported, and a limit to what is essentially slave labor from illegal immigrants, future productivity gains which translate into income are almost entirely technology dependent.”
http://www.safehaven.com/article-6696.htm
And since Bush’s “ownership society” is a chimera, the relative few who own the technology own the economy and the spoils thereof.
Heh heh. This reminds me of the (ex?) pro-wrestler’s The Rock’s cacthphrase: ‘know your damn role!’.
It’s interesting the way the path on how the role of an employee has evolved through history. Nowadays it seems the role of an employee is one of a simple business transaction: do work, get paid. Yet the modern worker was based on the salaried worker: you were on call 24 hours a day, paid on yearly basis regardless on how much you worked during the year. That was in turn based on the master/servant where a servant was always on call and was expected to show unwavering devotion and not serve a second master. And this in turn of course was based on the master/slave relationship . . .
At the end of the day it is reminded that the employee should at all times remember they are in pecking-order situation as in the Armed Forces. Hence all those free-seeking individuals would see employment as an affront to make a living, hence such people are the type who could not help but seek self-employment and be their own master of their destiny.
Mr. Knott offers an accurate analysis regarding the underlying nature of Leftist ethics. Along these lines, I note that a significant essay by Murray Rothbard regarding these issues is titled “Egalitarianism as a Revolt against Natureâ€.
The Left’s policy to implement some degree, if not complete, material equality among individuals must lead to a tremendous concentration of power in the state, i.e. the individuals who control the state apparatus. This brings to mind George Orwell’s observation that “some pigs are more equal then others.†Not only is the Left’s underlying ethical system nonsense and rubbish, but it also contains a fundamental internal contradiction. The Left apparently places no importance on intellectual consistency and rigor.
It is worse. The NYT knows the economics of the situation and chooses not to believe them. They feel that there should be a selected elite who distributes the money from the fat cats to the rest of the useless salves.
What is even funnier is that Bush, Greenspan, Bernanke and the rest of them believe this as well. Why else would they continue to behave the way they do?
I would object to Adam Knott’s calling “calculating which person has more, and then trying to make that person have less” some kind of ethics.
It is not ethics at all. It is simple barbarity, something out of the animal kingdom, not deserving to be called human.
We should not be shy in pointing out that someone pushing leftist ideas is, if you strip the flowery rhetotic, someone who calls for the end of the civilization.
While most of Dr. Reisman’s criticisms of the NYT are correct, I sometimes feel that he has a few favorite whipping boys so that he can avoid addressing even bigger issues, such as the disastrous and ruinous wars that the ruling rightist elite has been leading our country into, and that Lew Rockwell has just criticized on another thread:
“The problem is that there is a huge machine running full speed and it is benefiting too many people. Tens of billions, hundreds of billions, are landing in the pockets of well-connected elites, and they want to keep the party going as long as possible.”
The NYT editors may be wannabe redistributionists on the sidelines to keep in check, but let’s not forget who’s robbing us blind right now, with the professed aim of saving America from our existential enemies. Apparently the imperial president is even now gearing up for an unauthorized attack on Iran.
As an aside, I find it difficult to overlook Zr. Reisman’s statement that “The Greens want to abolish [the individual's pursuit of happiness] on the grounds that it results in acid rain, destruction of the ozone layer, and global warming.” My adage is to “hate the person, love the problem”, so even as I may hate those enviro-leftists/fascists, who are green on the outside and red in the inside, I remain interested in discussing the libertarian approach to environmental problems, which I understand to result for the lack of clearly defined and enforceable property rights.
TokyoTom writes: “…I remain interested in discussing the libertarian approach to environmental problems, which I understand to result for the lack of clearly defined and enforceable property rights.”
And yet he promoted energy taxes! So much for propert rights then.
Sione
Let me commit the heresy of accepting Herbert’s redistributionist premise, and suggest he redistribute his own income. I’m guessing he makes a tad more than “the poor”.
As stated, I remain interested in discussing the libertarian approach to environmental problems, which I understand to result from the lack of clearly defined and enforceable property rights.
Others, such as Sione, prefer to simply to throw stones, rather than to exert themselves to contribute constructively.
Mr. Vatu, there are plenty of proprty rights approaches to environmental problems in general, but some present greater challenges. In such cases, unless there is an offsetting process of privatization, it is clear that individual self-interest leads to an abuse of common, open-access resources, to the detriment of all users. Open seas fisheries are a good example; man’s affect on the climate through GHG emissions is another.
As one economist has stated, “The ascent of man from a primitive existence with no wealth accumulation to life as we know it is fundamentally a story about triumph over, not tragedy of, the commons.” http://www.libertyhaven.com/politicsandcurrentevents/environmentalismorconservation/commons.shtml. How we continue that triumph with respect to certain unmanaged commons is the dialogue that interests me, and I remain open to the possibility.
TokyoTom I’ll ask you a serious question without assumptions and without pretenses: Do you have any ideas or plans for homesteading the commons of the atmosphere?
BB, thanks for your question about homesteading the atmosphere.
If Dr. Reisman will forgive the slight threadjack, allow me to note that the atmosphere is at present an open-access commons precise because others cannot be excluded, either physically or legally in any practical manner under the common law (with some exceptions for identifiable local air pollution). As a result, even as individuals and firms all stake a claim to a small amount of the atmosphere at the time that we use it, no users have any ability to control the atmosphere that they face (though we may all condition or modify it prior to our use, and alter it slightly by our use).
So no, I’ve got no good ideas about how anyone can effectively homestead the atmosphere in the classic sense, even as I recognize that continuing use might otherwise have created homestead rights, were the common resource land or water. Some regulatory schemes might acknowledge a quasi-homesteading right by allocating use permits free to existing users, but this is obviously not a libertarian undertaking or a true homesteading, which refers to a situation where users are able to exclude others.
I also do not see this changing in to any significant degree as technology evolves. Users cannot practically bag the portion of the atmosphere needed for their use (except in special settings such as use for scuba diving and for other assisted breathing cases) nor effectivly be able to identify and obtain court judgments against others who modify the air to one’s disadvantage, even as technology will make it easier to track and identify particular polluters.
Groups of individuals do not seem to be in a much better situation than individuals in this regard, although if Earth were invaded by aliens and we were able to defeat them, then in a large sense one could conclude that we had successfully homesteaded Earth’s common resources, vis-a-vis such aliens.
I worry about the pollution of the space. All that junk would cause a lot of headaches travelling to Mars and beyond.
We need to think of some libertarian homesteading principle of space, itself not the planets and stuff. Since you can’t reach any planet you need to go to without travelling through space.
This is the most important issue of law and politics right now. Not the grandscale theft of real property we use, not the enslavement and murder of real people by the states all over the world.
Forget about those.
Space enviromentalism is the most urgent one.
Thanks for the reasoned response TokyoTom. I believe that the lack of real property rights in the atmosphere has indeed created a tragedy of the commons situation. Unlike you I actually do imagine that as technology matures we will have the ability to solve this problem at all levels. My own primary thought on the matter relates to directed energy force fields. Invisible and intangible beams of energy particles designating the borders of privately owned airspace. An interruption in the particle stream is my first idea for an alarm system which would notify the property owners of an airspace violation.
Agreements on what level of CO2 and other GHGs are acceptable can be made between property owners on the basis of ppm like the tests for water pollution. The removal of those pollutants (specifically CO2) from the owners airspace can probably be achieved through the use of cloud of modified Buckyballs.
These are really just my first thoughts on the matter, and I’m sure I could probably improve upon them if I gave myself time, but this is beside the point. My main point in writing this is to at least give the hope that technology may eventually solve the air pollution problem all the way from emissions to removal, and that property rights can provide the structure for the progress towards a solution.
But of course technology is hindered from developing and solving all kinds of problems so long as there exists an interventionist state. The philosophy of Liberalism and widespread dissemination and acceptance of that philosophy may be the only way to destroy the interventionist state and allow the technological advances we all desire to come to fruition.
BB, thanks for your further thoughts, but I am not as sanguine that technology will give us the ability to solve tragedy of the commons problems in the air and oceans “at all levels”.
Clearly we will have a greater ability to track fugitive resources, monitor important characteristics and to identify resource users, but given the size of the oceans and atmosphere and the energy flows in them, technology will never progress to a point that gives individuals the ability to homestead the resource by excluding others from using or altering it.
The best that we can hope for are property rights approaches to particular classes of resources within these commons, such as agreements between fishers to recognize individual transferrable rights under an agreed yield, but the reality is that for international fisheries governments will inevitably become involved in the process.
Well the thread is officially off-topic now, and this will likely be my last post in it. TokyoTom I’ll only say this: never say never when it comes to technology and progress. In freedom human beings have the potential to progress forever for their own benefits.
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