Bill Moyer’s latest show, with Matt Taibbi and and Chrystia Freeland, focuses on how the super rich have established a yawning chasm between themselves and ordinary Americans, both in financial and physical terms. One major focus is view the rich are where they are by virtue of their talents and efforts, not (say) by regulatory and tax arbitrage, and how they’ve convinced themselves and a large swathe of society of this myth.
One place where I quibble is where and Freeland argues that “progressives” have dropped the ball by focusing on manufacturing jobs as a solution to the woes of the fallen middle class. That’s hardly the first or best remedy; more progressive taxation (on the order, say, of what we had in Reagan’s day) and getting rid of the favorable treatment of “carried interest” would have far more short term impact. And if I’ve heard the weak tea lefties correctly, the preferred fix for creating more manly jobs (remember Obama’s fixation with that?) is infrastructure spending, where the US has fallen way behind its advanced economy peers, and lousy infrastructure is an impediment to commerce. Freeland has spent too much time in Davos and is unduly enamored of the big multinational corporation business models of extended supply chains. First, a fair bit of their attractiveness rests on tax arbs (as in using them to shift profits to low income tax booking centers). Second (as we’ve discussed at length) in many industries, the economics of offshoring and outsourcing are not compelling and are much more a transfer from direct factory labor to middle and upper management (factory labor cost savings are largely offset by increased coordination costs, meaning managerial costs, as well as greater transportation costs, and that’s before you factor in the greater risk of extended supply chains, the most important being inventory risks). Third, despite her implicit “get over it, China is unbeatable” position, the fact is US manufacturers are repatriating jobs from China to the US NOW because high levels of domestic inflation in China have effectively revalued Chinese labor (in other words, the advantage China gained by pegging its currency artificially low has been eroded, and a lot of outsourcing depended on that extra cost savings).
But that aside, there is a lot of good stuff in this show (hat tip Aquifer). Enjoy!
Oh, and I’m told Neil Barofsky is up on Moyers next week!