An interesting piece over at Alternet about what they think's been going wrong with the American economy over the decades. One of the joys is of course seeing Krugman being attacked from the left. It's just amusing to think of him as being too right wing. But at the heart of the argument is this:
This period, which can be called the Keynesian era, was indeed a time of great economic growth and increased economic equality. Looking back today, it does seem like an exceptional time to be in the working class. (As long as you were white, of course.) It was an age of compromise, between the capitalist class and the working class, and perhaps the most democratic period in our liberal capitalist society. During that epoch, it certainly looked as though a form of socialism was on the horizon, with the middle class growing and forming a previously unimaginable kind of egalitarian society within capitalism.
I guess we can call that period "Keynesian" because we can call it whatever we want. But it's not the result of something that Keynes himself would have recognised as stemming from his work. He was, in British terms, a Liberal (not to be confused with the modern American "liberal") and it's usually said that he thought government should top out at perhaps 25% of GDP. Rather lower than even the US has today. However, let's go with that: we'll call it Keynesian when the effect is a strongly growing middle class.
Which is all rather like the effects of globalisation actually. From Branko Milanovic, one of my favourite charts:
As he says about this:
The top 1% of the global income distribution has seen its real income (adjusted for inflation) rise by more than 60% over those two decades.
What is far less known is that an even greater increase in incomes was realized by those parts of the global income distribution that now lie around the median. They achieved an 80% real increase in incomes.
It is there — between the 50th and 60th percentile of global income distribution, which in 2008 included people with annual after-tax per capita incomes between 1,200 and 1,800 international dollars — that we find some 200 million Chinese and 90 million Indians, as well as about 30 million each in Indonesia, Brazil, Egypt and Mexico. These 400 million people are among the biggest gainers in the global income distribution.
The real surprise is that those in the bottom third of the global income distribution have also made significant gains, with real incomes rising between more than 40% and almost 70%. (The only exception is the poorest 5% of the population, whose real incomes have remained about the same.)
And:
But the biggest losers of globalization — or at least the “non-winners” (other than the very poorest 5%) — were those between the 75th and 90th percentile of the global income distribution. Their real income gains were essentially nil.
These people represent what can be called a global upper-middle class. Their ranks include the citizens of rich countries with stagnant real incomes as well as many people from former Communist countries and Latin America.
The praise for the "Keynesian" post war American state above comes from the manner in which the poor and the working class were able to enter the middle class. Creating that more egalitarian society within capitalism. As Milanovic relates, globalisation is having very much the same effect. The global upper middle class are marking time while the globally poor and global working class are becoming that global middle class. Which is just great: I certainly think it's a just peachy idea. What does confuse though is why those who praise that first period of rising equality seem so dead set against the current move towards greater equality. As Alternet does here: they really are arguing against globalisation because it does on a global scale what they want to happen in America. And what's so darn special about Americans that only they should be equal?
All of which is why I support globalisation of course: and think you should too. Because the poor get rich as a result.
