# Posted 3:33 AM by Ariel David Adesnik  

THE UNKNOWN ECONOMIST: Having almost no knowledge of economics, I rarely comment on the fiscal state of the nation. But if I'm going to pretend to know about current events, I better start figuring out what I think about economics. And besides, this post from Kevin Drum made such an exploration impossible to resist.

As usual, I've decided to give Kevin a hard time because he runs my favorite left-of-center site in the blogosphere. Whenever I put up a post that criticizes the Democratic party, liberal policy or anything similar, I try to anticipate Kevin's counterarguments. Of course, Kevin still manages to surprise me and come up with solid arguments that expose flaws in my own logic. And I'm happy to do the same for him.

Now onto the post in question. In it, Kevin rails against the unjust distribution of the economic gains made by the United States over the past 20 years. In general, I am open to that sort of criticism. I do think that the US government needs to a lot more for America's poor. But designing such programs must begin with a solid analysis of why poverty continues to exist in the midst of rapid growth.

As Kevin points out, the top 5% of American households have seen their incomes rise by $687 billion more than one would expect if one made such projection on the basis of population size. In other words,

That means that the bottom 95% — in other words, households making less than $150,000 per year — have gotten $687 billion less than they would have if we had all shared equitably in the economic prosperity of the past two decades...Translation: if increasing prosperity had been equitably distributed, those households — 100 million of them — would have incomes today nearly $7,000 higher than they do.

With that extra income, those 40 million Americans without health insurance might be able to afford to protection. Or they could spend more on their children's education. In fact, they could probably do both and still have some cash left over to spend on the simple pleasures of life, such as a fine steak and some good beer.

So, to Kevin's credit, one has to admit that the stakes on this issue are large. But I can't bring myself to agree with Kevin's observation that

It's one thing to say that the rich have most of the money — after all, that's the whole point of being rich. But it's quite another to say that as our country grows ever more prosperous, the rich should actually grow richer at a faster rate than anyone else.

But that's the way the Republicans have convinced us the system should work, and they have systematically set about to implement policies that would make this happen.

Without pretending that the Republicans have done anything to ensure the equal distribution of income growth, one can make a strong case that an unequal distribution is (a) the natural outcome of market interactions and (b) especially likely given the United States' recent transition from an industrial to a service-based economy.

While I don't understand much about economics, I tend to accept that growth in market economies reflects the willingness of those with capital to invest it in projects that carry with them a certain degree of risk. If the projects fail, so be it. If they succeed, those who put up the capital reap a far greater share of the profits than those employees who enjoyed the security of wage-based income.

Writ large, this process ensures that when the economy grows, the rich will always get richer far faster than everyone else. Should the government redistribute such gains? Perhaps. But there is no reason to expect, as Kevin seems to, that the distribution of income growth will be at all proportionate.

Now consider the specific state of the American economy over the course of the past couple of decades. Thanks to the decline of heavy industry, millions of high-paying union jobs -- held by those without a college education -- have ceased to exist. While there seems to be little question that the flexibility of American labor markets has given the United States a decisive advantage over Japan and Europe, one cannot doubt that such flexibility incurs tremendous social costs.

Ideally, the government would sponsor programs that facilitate a workers' transition from an outmoded industrial job to a more viable service-based one. How might such a program work? I don't know. How much might it cost? I don't know.

I don't even know if anyone knows the answers to those to questions (although I am willing to guess that no one on the Republican side of the aisle has spent much time trying to figure it out.)

In light of our transition to a service-based economy, education has become ever more valuable. And while I don't know much about American education, it seems that the American system does quite a competent job of educating those bound for college, while those without much interest in higher education don't get the preparation they need to compete in today's economy.

As such, is there any reason to expect that income growth in a service-based economy will benefit the lower income brackets as much as the top 5%?

One last trend I want to comment on is the changing role of women in the marketplace. Women are now a majority of students at America's colleges. If they haven't already, they will soon become a majority at the graduate level as well.

Unsurprisingly, such women tend to marry men who have achieved a similar or higher level of education. Again unsurprisingly, such well-educated couples tend to benefit disproporitionately from the growth of the United States' service-based economy. So in this instance, feminism seems to be responsible for a definite proporition of the inequality that often gets placed on the shoulders of Promise Keeping GOP legislators.

As should be evident from the arguments above, I have no idea what proportion of income inequality reflects natural trends in the American economy as opposed to Republican policy objectives. What I do know is that Kevin and others like him ought to seriously consider such arguments before asking

And when is 95% of American going to wake up, realize they have been mightily ripped off over the past 20 years, and fight back?

That sort of question only leads to elitism and despair on the left, since almost half of those 95% will keep on voting Republican regardless of what the Democrats have to say about the economy. Instead, I think it would be better for all of us -- right, left and center -- if the Democrats sought to gain a few percentage points at the polls by supporting program that promote equality of opportunity rather than equality of outcome.

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