Why Are The Rich Getting So Much Richer?

Back at the end of the 19th century the rich were very rich. They were, principally, the people who had brought us the industrial revolution in oil, steel, railroads, and finance.

Then, over the last century, inequality declined. But now it is rising again.
As Robert Samuelson writes,

Productivity gains (improvements in efficiency) are going disproportionately to those at the top. We do not really understand why.

Actually, we do. John D. Rockefeller became fabulously wealthy because he lowered the price of illuminating oil from about 80 cents per gallon to about 8 cents a gallon. Nobody really was able to compete with Standard Oil Company until they found oil in Texas.

The classic big corporation of the mid-20th century was not particularly nimble and not particularly entrepreneurial. Plus, of course, the high taxes encouraged corporate executives to limit their taxable income.

But since 1980 there has been a frenzy of change in the business world. Almost all the great companies of 1950 are reduced to shells when compared to their glory years. And a host of new companies have risen to take their place.

Have the CEOs of these companies been too greedy? Who knows? Some of them are crooks, and some of them have gone to jail.

But the bottom line is that American businesses are the most productive in the world (Toyota excepted). So it makes sense that their leaders would be the most highly paid.

And if you want to know why “inequality” is rising, maybe it has something to do with the high rate of immigration. If you increase supply of labor, then the price of labor is going to be lower than it would have been without the extra competition.

There is one fly in the ointment. State and local government employees get paid about 45 percent more than comparable employees in the private sector. It seems we are creating a new oligarchy of government employees in the United States.

Now that sounds like a real problem.

Tony Blair's Last Conference Speech

Whatever his faults, British Prime Minister Tony Blair has understood that the welfare state needed reform. It could not continue in its one-size-fits-all implementation. So in his last speech to the Labour Party conference he spent a lot of time trying to move his party towards a consumer- not a producer-powered society.

In an opportunity society, as opposed to the old welfare state, government does not dictate; it empowers.



It makes the individual - patient, parent, law-abiding citizen, job-seeker - the driver of the system, not the state.

But of course it is exactly that principle that the rank and file of the Labour Party in Britain and the Democratic Party in the US contest. The hate it as “privatization.” So when Blair continues that the opportunity society

sets free the huge talent of our public servants and social entrepreneurs whose ability is often thwarted by outdated rules and government bureaucracy.

We all clear our throats. Because after insisting that consumers—patients, parents—should rule, he then proposes to “set free” the government bureaucrats. Can’t be done, old chap. “Outdated rules” are the things you need to control people when they are spending Other Peoples’ Money.

But Blair sets up the challenge of the next century. In the last century we created the vast producer-powered welfare state in which politicians, bureaucrats, and special interests have amassed enormous power to provide us with social benefits that they control.

How do you get from this producer cartel with its subsidies, its powers, and its queues to a consumer choice system?

Because every step along the way will take power or sinecure away from some politician, some bureaucrat, or some special interest.

At least Tony Blair has made a start.

Media Always Hypes Fears of Climate Change

What are we going to do about global warming? That’s what the media were worried about in the 1930s.

But what about the next ice age? Good point. The media were worried about that back in 1900 and again in the mid 1970s.

In fact, says Sen. James Inhofe (R-OK), the media are always worrying about climate change.

Since 1895, the media has alternated between global cooling and warming scares during four separate and sometimes overlapping time periods. From 1895 until the 1930’s the media pedaled a coming ice age.



From the late 1920’s until the 1960’s they warned of global warming. From the 1950’s until the 1970’s they warned us again of a coming ice age. This makes modern global warming the fourth estate’s fourth attempt to promote opposing climate change fears during the last 100 years.

Well, of course, hysteria sells. But it would be nice if, say, when James Hansen, noted scientist and global warming enthusiast, appeared on 60 Minutes we would be told of

Hansen’s partisan ties to former Democrat Vice President Al Gore or Hansen’s receiving of a grant of a quarter of a million dollars from the left-wing Heinz Foundation run by Teresa Heinz Kerry.

Because basic disclosures like that are the mark of professional journalism. Palming off a partisan as an disinterested scientist is fine. But it is straight advocacy.

Breaking the cycles of media hysteria will not be easy since hysteria sells -- it’s very profitable. But I want to challenge the news media to reverse course and report on the objective science of climate change, to stop ignoring legitimate voices this scientific debate and to stop acting as a vehicle for unsubstantiated hype.

You can’t say fairer than that.

Euston Manifesto is Great, But...

Earlier this year a bunch of left wingers and progressives in Britain wrote the Euston Manifesto, in which, according to Martin Walker, they hammered out

a statement of principles in support of democracy, freedom of speech and ideas, and firm opposition to terrorism, all forms of totalitarianism and all soft-headed apologies for it.

Which is nice. Now the manifesto has moved to the United States where

a number of leading academics and intellectuals have signed the Euston Manifesto, and issued their own statement on American liberalism that endorses it.

This is great. I guess.

'Drawing the lesson of the disastrous history of left apologetics over the crimes of Stalinism and Maoism, as well as more recent exercises in the same vein (some of the reaction to the crimes of 9/11, the excuse-making for suicide terrorism, the disgraceful alliances lately set up inside the 'anti-war' movement with illiberal theocrats) we reject the notion that there are no opponents on the Left,' the manifesto says. 'We reject, similarly, the idea that there can be no opening to ideas and individuals to our right.'

But you know, after 30 years of pushing conservative reform against a hail of reckless rhetoric from the left, I have my doubts.

The problem for the left is that its political power depends on the continuing dependency of the poor and the government workers on continuing government spending.

So it can never really emerge from its love affair with government power and domestic government spending, or slough off its hatred for the market and its freedom from government dependence.

The Euston Manifesto is great. But don’t expect it to change anything.

Real-estate Prices Bobble

So now it’s hit the New York Times. “Home Prices Drop after 11-Year Ascent” is the story reported by Jeremy W. Peters.

The median price of a previously owned home fell for the first time in 11 years last month, and inventories of unsold homes swelled to levels not seen in more than a decade.

But not to worry too much. Says David Lereah, chief economist of the National Association of Realtors:

“We do expect an adjustment in home prices to last several months, as we work through a buildup in the inventory of homes on the market,” he said in a written statement. “This is the price correction we’ve been expecting — with sales stabilizing, we should go back to positive price growth early next year.”

So that’s all right. But the real-estate bears, like Bill Fleckenstein think that we are heading into a bloodbath. Quoting James Campbell of the The Campbell Real Estate Timing Letter:

"The United States has experienced the greatest real estate boom in history, but the boom is now turning into a bust, and the aftermath is not going to be pretty. Present American folklore has it that a real estate decline does not have to affect the economy. That's like saying that it will rain, but you're not going to get wet."

Which will it be? A pause or a debt debacle? We’ll know when it’s over.

School Choice a Winner in Alberta

Here’s an interesting factoid, reported in The Economist. Alberta’s schools come in No. 2 in the international school league tables. That is Alberta the Canadian province we are talking about. It’s the home province of Canadian Prime Minister Stephen Harper, leader of the Canadian Conservative Party.

Needless to say, US schools don’t appear in the top ten.

So what is Alberta doing right?

Thank you Senator, I’m glad you asked. The Economist writes that

The curriculum has been revised, stressing core subjects (English, science, mathematics), school facilities and the training of teachers have been improved, clear achievement goals have been set and a rigorous province-wide testing programme... has been established to ensure they are met.

...

[Provincial capital Edmonton] is noted for its innovative system stressing choice, accountability and competition... Each school controls its own budget... Students are free to (and 57% do) attend any school in the city, not just in their own neighbourhood. They can seek out schools specialising in the arts, sports, leadership skills, girls-only education, aboriginal culture, Mandarin, and many other alternative programmes — or simply choose the schools with the best academic results. Students in every grade are tested annually and their scores published.

Elsewhere in Canada, parents are turning to private schools out of dissatisfaction with the government schools. In Alberta things are different.

“In Edmonton,” says Angus McBeath, the city's recently retired schools chief, “the litmus test is that the rich send their kids to the public schools, not the private schools.”

It really isn’t rocket science. Education is like any other product or service. Provide open entry, choice, accountability and you will get results.

Otherwise, as the teachers union leaders say, “You just don’t care about kids.”

Two Limeys Fight Over Home Schooling

Home schooling. Is it a good idea or a bad idea? In Britain’s Spectator they are duelling it out.

Last week James Bartholomew, author of the welfare state critique The Welfare State We're In, wrote that he had had enough.

For during this term at least, I am going to home-educate her.

Oh please, responds Ron Liddle. Let’s leave education to the professionals.

It is a colossal arrogance — and a self-indulgence — on the part of those 180,000 parents [who home-school in Britain] that a) their knowledge of such diverse disciplines as, say, fine art and pure maths should exceed that possessed by the specialists[.]

He is right, of course, at least in theory. And it sounds like his kids go to a pretty good school.

My kids go to a state school; I am in awe of their teachers’ ability to convey knowledge and get them enthused about such a vast array of subjects.

The thing is this. Modern science tells us that the two biggest influences on our children is 1) their parents’ genes and 2) their peer culture. Parenting doesn’t come close.

So if you want to influence your children what matters is the milieu in which they grow up: the friends in the neigborhood and the culture at school.

In Britain, the culture in school is pretty bad. Read the blog of Frank Chalk author of It's Your Time You're Wasting and a teacher at a “bog-standard” comprehensive school in Britain.

Irrespective of what your kids are actually learning in school, would you want your kid influenced by the culture that obtains in so many government schools?

James Bartholomew says that he is taking his 9-year-old daughter to France and expects that she will learn to speak French, a skill she presently lacks despite years of classes.

Could she be doing anything more important at age 9 than learning a new language? Anything that couldn’t wait a year?