I recommend to all of you to read Vox, which is Ezra Klein’s new enterprise. It is definitely a progressive site, but if all you do is read sites you agree with a priori I’d suggest you’re not understanding the full picture of the ideas you care deeply about. The folks who write for Vox are very smart (in a smart-sense), seem to appreciate the value of the academic literature on topics, they speak to an audience that is influential and they pretty much have all of the talking points down pat, among other things.
In any event, I am not sure Vox will survive, and I’ll leave it as an exercise for you to think about why. Part of it is the way each article brandishes itself in a sort of, “We’re so smart and you’re going to be surprised by !!!!” attitude, which can be gleaned from the headlines. Generally I find the articles at least pay a modicum of attention to “the other side” even if they are dismissed, and generally I find the articles implying that in fact the authors themselves are right, even when they are trying to present ideas and arguments objectively.
But, this piece on the new and important book by Thomas Picketty and this piece on the recent dust-up on the gender wage-gap are worth going through with a fine toothed comb. I can’t, but let’s just point out a couple of things to chew on.
First, the review of Picketty’s book. This is a book that is going to be the new bible of the left. But I would urge all non-lefties to take the arguments and data seriously, even if you don’t jump into the same bathtub of policy prescriptions (e.g. a coordinated global wealth tax among them, yikes!). Here is one slice:
Why does this matter?
Capital in the 21st Century essentially takes the existing debate on income inequality and supercharges it. It does so by asserting that in the long run the economic inequality that matters won’t be the gap between people who earn high salaries and those who earn low ones, it will be the gap between people who inherit large sums of money and those who don’t.
Piketty’s vision of a class-ridden, neo-Victorian society dominated by the unearned wealth of a hereditary elite cuts sharply against both liberal notions of a just society and conservative ideas about what a dynamic market economy is supposed to look like. Market-oriented thinkers valorize the idea of entrepreneurial capitalism, but Piketty says we are headed for a world of patrimonial capitalism where the Forbes 400 list will be dominated not by the founders of new companies but by the grandchildren of today’s super-elite.
What is to be done?
Piketty wants the major world economies to band together to assess a modest global wealth tax. Global cooperation is desirable to prevent the wealthy from simply shifting assets into other jurisdictions. But short of intense global cooperation, he thinks larger economic units-the United States, say, or the European Union-should move ahead with wealth taxes, estate taxes, and other efforts to curb the power of wealth.
Here is another:
Since r is usually larger than g, the wealthy get wealthier. The poor don’t necessarily get poorer, but the gap between the earnings power of people who own lots of buildings and shares and the earnings power of people working for a living will grow and grow.
All I would say about this (and you should read more) is that it is yet another prediction. And no, the history of horrible past predictions of doom and gloom do not mean this one will be wrong, but predictions as such must be taken with the appropriate grains of salt. There is a lot of speculation on what new technology will do to “the middle class” and the role of labor income versus capital income in the future. But I think something missing from this review (and we’ll see when my book is delivered) is the democratization of capital today as compared to the past. Even the concentration of the top 1% or higher slices of the income distribution are not the same today as they were 50 years ago. But I think the MAJOR observation that does not get ANY airplay in all of the reviews of this book is the unhidden assumption that the reason to care about the persistence of capital in the future is because of ??? What, exactly? Are those who inherit big piles of wealth, even as the “poorer” themselves are also getting fabulously rich, going to do more damage to us in the future? How is that so? Will they buy up all the property, leaving us peasants to sleep in the open seas? Or is it that they are going to wield an enormous amount of political power? Well you know what, if it’s the latter there are actually some pretty simple solutions. I know they are as unlikely as a coordinated global wealth tax, but nonetheless it shows a real shallowness of intellectual sincerity or depth to not suggest it: shrink the power of the government. Absent the ability of the “landed rich” to control the levels of coercive power, for them to be able to do damage the rest of us requires a fairly elaborate series of imaginary hobgoblins to make me scared, at least. But no such proposal is forthcoming. I’d be more amenable to reading these guys sympathetically if EVERY SINGLE proposal any time there is a “problem” doesn’t involve the wheeling out of larger cannons and missiles than previously prevailed. Again, this is of course my ideology at play, but I can assure you I do no such things. I don’t see every problem out there and just knee-jerk answer, “aha! we just need to see a market emerge there!” … it may look like I say that, but I can assure you that is not the case, as anyone who has spoken to me about lean-tos, water, or the safety net can attest. There’s much more to say on it. My urge to you though is NOT to dismiss the arguments, they rightly ought to be addressed head on.
And here is an exerpt from Matt Yglesias’ brief “take-down” of the “take-down” on the gender wage gap dust-up. Actually, before the slice, a very brief background. Looking at raw data, it looks like the “typical” female earns 23% less than the “typical” male in the labor market. A crude argument made by a lot of folks is that this is evidence of discrimination, or that women are not being paid the same thing for doing the same work as men. But of course this truly is nonsense. And I mean that sincerely. Looking at the raw data tells us nothing about the age, experience, cognitive skills, educational attainment, occupation, and much, much more about the typical persons in the data. So, the point of any “argument” about this is that one needs to do some pretty basic statistical analysis to control for these differences, and then ask the question, “if a woman were in all respects the same as a man, how would her earnings for doing the same job for the same number of hours and years compare to the male counterpart?” Now, when careful statistical studies are done, the findings are that most of the differences disappear. That is relatively uncontroversial, or so I thought. Of course, this does not mean that there is not discrimination against women (maybe they should be earning MORE once we control for all of those other factors) or maybe there are discriminatory factors that lead to choices that make women’s wages lower than men’s … that’s fine, and we can all scream at each other about that and of course never resolve it. But recognizing that the raw data on wage and earnings differences is nearly useless is a requirement to have any reasoned discussion. But this is not possible in the world where we simply need to herd ourselves into our tribes. Here is Yglesias:
The skeptics are wrong — the gender pay gap is very very real
You can see what I mean by the tone and types of articles that prevail on Vox (it’s the same style as existed on Wonkblog previously). In any case here’s a bit more:
The commonly cited statistic that American women suffer from a 23 percent wage gap through which they make just 77 cents for every dollar a man earns is much too simplistic. On the other hand, the frequently heard conservative counterargument that we should subject this raw wage gap to a massive list of statistical controls until it nearly vanishes is an enormous oversimplification in the opposite direction. After all, for many purposes gender is itself a standard demographic control to add to studies — and when you control for gender the wage gap disappears entirely!
Of course that’s completely trivial. The question to ask about the various statistical controls that can be applied to shrink the gender gap is what are they actually telling us. The answer, I think, is that it’s tellinghow the wage gap works.
He then goes on to actually confirm what the research on the gap shows. So, the gender pay gap is real in much the same way that the adult-child pay gap is very very very real. And when we add controls for things like age and education the impact goes away. Understanding that is important, but the title of the piece is I argue extremely misleading. Finally, after recognizing several of the important controls (and reminding readers that these controls themselves are possibly subject to discrimination, such as sorting into occupations or even pre-market discrimination that makes it harder for women to do well in school, be a particular major and so on, etc.) I see no discussion of perhaps another huge reason for the pay gap: job risk. And I see no discussion of the evolution of this pay gap over time, and how it looks for today’s millenial generation and the new cohorts of college grads. And I see no discussion of the impacts of recessions on men versus women. Or the difference in college and grad school attendance and completion by men versus women.
Why is this missing? I don’t know. Maybe Vox is rightly trying to keep its articles short and readable. But then the air of impartiality is certainly nothing more than air if points as such are at least not given space in a footnote. As I said, I am retired from blogging or engaging in these “debates” so these stories deserve a far richer and more thoughtful treatment than the above implies.