David Brooks Is Projecting His Self Indulgence Again

Undoubtedly projecting from the fact that he can draw a nice 6-figure income for little obvious work, David Brooks complained in his column:

"Today, the country is middle-aged but self-indulgent. Bad habits have accumulated."

For the most part the column is a confused diatribe against the Obama administration's economic policies with a lecture on moral rectitude thrown in for good measure. He starts by condemning the efforts to stimulate the economy by telling readers:

"According to a Gallup survey, 64 percent of Americans polled said they believed that big government is the biggest threat to the country. Only 26 percent believed that big business is the biggest threat. As a result, the public has reacted to Obama’s activism with fear and anxiety. The Democrats lost 63 House seats in the 2010 elections."

One might think that the fact that the Obama administration relied on a stimulus that was only designed to lower the unemployment rate by 1.5-2.0 percentage points might have played a big role in the election defeat. (Read the number of jobs the stimulus was projected to create, not the baseline forecasts for the economy.) If the government had used bigger stimulus to get the unemployment rate down to say -- 7 percent -- it is difficult to believe that the Democrats would have suffered such a big defeat last year, in spite of people's fear of big government.

After dismissing the stimulative policies of the Great Depression, Brooks then gives us a beautifully crafted grand misunderstanding of economics comparing the economy today with the economy of the Progressive era:

"the underlying economic situations are very different. A century ago, the American economy was a vibrant jobs machine. Industrialization was volatile and cruel, but it produced millions of new jobs, sucking labor in from the countryside and from overseas.

"Today’s economy is not a jobs machine and lacks that bursting vibrancy. The rate of new business start-ups was declining even before the 2008 financial crisis. Companies are finding that they can get by with fewer workers. As President Obama has observed, factories that used to employ 1,000 workers can now be even more productive with less than 100."

The fact that factories can produce large amounts of output with 100 workers is in fact evidence of economic vibrancy, not the opposite. This is called "productivity growth." It is the main measure of the economy's ability to raise living standards through time. The fact that 100 people in a factory can produce the same output as 1000 people did 30 years ago means that we are potentially much richer than we were 30 years ago. We can have the other 900 people doing other productive work. Alternatively, we can all work many fewer hours.

Whether or not this productivity growth generates jobs depends on the structure of the economy. If the productivity growth translates into wage growth, as was the case with the very rapid productivity growth of early post-war period, then it is likely to be associated with a vibrant jobs machine. On the other hand, if the One Percent pocket most of the benefits of productivity growth, then we may have real problems of stagnation and lack of job growth, since the Bill Gateses of the world will probably not increase their spending much if they get another billion or two. The key issue here is the distribution of the gains of productivity growth, a simple fact that totally escapes Brooks.

"Moreover, the information economy widens inequality for deep and varied reasons that were unknown a century ago. Inequality is growing in nearly every developed country. According to a report from the Organization for Economic Cooperation and Development, over the past 30 years, inequality in Sweden, Germany, Israel, Finland and New Zealand has grown as fast or faster than inequality in the United States, even though these countries have very different welfare systems. "

This comment is highly misleading. While most countries have seen increases in inequality over the last three decades, even with the increases over this period countries like Sweden, Germany, and Finland are nowhere near as unequal today as the United States was at the start of this period.

Furthermore, it is not a simple fact of nature that the information economy will generate inequality, it requires the hand of Brooks' friend: big government. People are getting rich off the information economy because the government enforces copyright and patent monopolies. These are massive interferences by the government into the market. As a result of government granted patent monopolies were pay close to $300 billion a year for prescription drugs that would sell for around $30 billion a year in a free market. This $270 billion redistribution of income is close to 5 times as large as the money at stake with the Bush tax cuts for those in the top 2 percent.

The government must also take increasingly repressive measures to ensure that this income keeps flowing to the top. The Stop Online Piracy Act is the latest example of the efforts of big government to ensure that the money keeps flowing upward. In short, this upward redistribution is not the natural workings of the market, it is the direct result of the work of the big government that Brooks doesn't like and tells us the American people do not like either.

"the moral culture of the nation is very different. The progressive era still had a Victorian culture, with its rectitude and restrictions. Back then, there was a moral horror at the thought of debt. No matter how bad the economic problems became, progressive-era politicians did not impose huge debt burdens on their children. That ethos is clearly gone."

As a country we cannot impose huge debt burdens on our children. It is impossible, at least if we are referring to government debt. The reason is simple, at one point we will all be dead. That means that the ownership of our debt will be passed on to our children. If we have some huge thousand trillion dollar debt that is owed to our children, then how have we imposed a burden on them? There is a distributional issue -- Bill Gates children may own all the debt -- but that is within generations, not between generations. As a group, our children's well-being will be determined by the productivity of the economy (which Brooks complained about earlier), the state of the physical and social infrastructure and the environment.

One can make the point that much of the debt is owned by foreigners, but this is a result of our trade deficit, which is in turn caused by the over-valued dollar. Brooks never said a word about the trade deficit or the value of the dollar, so insofar as there may be a real issue of indebtedness for our children, it is not even on Brooks radar screen.

"There is a distributional issue -- Bill Gates children may own all the debt..."
written by diesel, December 27, 2011 7:41

Which gave rise to what has come to be known today (2030) as Brooks' Maxim: "Let events unfold such that the rate of inflation never outpaces the rate of return on long term bonds" and its corollary: "Let intergenerational bequests be treated as Evidence of a Benevolent Providence who has seen fit to reward His Own for Their Goodliness whilst Condemning the UnGodly for their Iniquity and Sloth".

...
written by Mark Jamison, December 27, 2011 8:03

The best answer to David Brooks is to stop reading him. He is the master purveyor of false equivalency, using the voice of moderation to give the impression that he has fairly viewed the evidence and surely the "conservative" viewpoint best fills the bill.
I often read people I'm likely to disagree with just to understand their arguments better but David Brooks has no constituency and nothing to offer.

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written by George, December 27, 2011 8:08

I saw this coming the second I finished Brooks article this morning.

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written by Kat, December 27, 2011 8:10

It is the end of the year so I suppose it is time for Brooks' grand synthesis of mean spirited and half baked ideas. I predict Friday's column will consist of "David Brooks is off today" or one of his columns showcasing the more "humane" side of David Brooks-- a "life report" or some similar nonsense.

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written by skeptonomist, December 27, 2011 8:42

It is probably true that debt is viewed differently by society now than it was fifty or a hundred years ago, but this seems to be a result of changes in banking and government policies. The ridiculously usurious rates that people pay on credit card balances and the way that people bought houses that they obviously could not afford during the boom indicate that most consumers do not voluntarily limit their own debt or care much about interest rates. Limitations have come in the past from lender's evaluation of credit risk and in the case of interest rates, from usury laws, which mostly vanished around 1980. Banks found ways to profit from huge credit-card debt despite high default rates - this would not have been possible in the days of usury laws. Of course it has come to the point where banks take a commission of several percent on almost every retail transaction, which did not happen in the days of actual metal or paper currency. Increased consumer debt is largely a matter of banks increasing their profits with the aid of changed government policies.

By the way, debt was a big problem for many people back in the 19th century (during the reign of Queen Victoria) when most people were farmers. At that time debtors wanted to do away with the gold standard, but of course this was resisted by big-money interests.

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written by skeptonomist, December 27, 2011 8:56

It is also true that government debt is viewed differently than it was at times in the past. In fact politicians, especially Republicans, now change their views drastically whether they are in or out of office, whether their party controls Congress, etc. More than about 50 years ago, Republicans could usually be counted on to oppose increasing debt, but this changed completely with the onset of Voodoo economics under Reagan. Popular and pundit opinion about government debt is now at the mercy of perpetually changing party lines.

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written by Kat, December 27, 2011 9:25

By the way, debt was a big problem for many people back in the 19th century (during the reign of Queen Victoria) when most people were farmers. At that time debtors wanted to do away with the gold standard, but of course this was resisted by big-money interests.

Exactly. How does he get away with writing such things? His assertions may be refuted by turning to such obscure texts as say, any 8th grade American history text.

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written by PeonInChief, December 27, 2011 10:25

Brooks never said a word about the trade deficit or the value of the dollar, so insofar as there may be a real issue of indebtedness for our children, it is not even on Brooks radar screen.

No, it's not because it's not on his radar screen, but because he hasn't the vaguest idea what you're talking about.

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written by sherparick, December 27, 2011 11:02

Brooks is also meme and myth spinning. He has not done any actual knowledge or research into the "good ol' days" as he would have discovered that creditor and debtor conflicts and the burden of debt goes back to the beginning of the Republic (Shays Rebellion, Jackson v. the Bank of the United States, the Greenback Party, the Populist Party and Bryan's Cross of Gold Speech, and the fact that private U.S. debt reached a peak of proportion to income in 1929 that was not met again until, 2007!!

There is also a certain mysogny about Brooks column. Women not in a subodinate, partiarchial marriage should not have sex, and if they do, should bear some awful consequences I think is the gist.

New Economy
written by Zev Arnold, December 27, 2011 12:08

I don't yet buy the argument that government regulations are responsible for a significant amount of the change in income distribution we've observed over the last decade. Although you make an attractive argument with regard to copy-right and patent laws, these laws have been on the books for many years so could not be responsible for the recent change. Another attractive argument addresses the allocation of gains from productivity growth and the shifting of jobs overseas.

Is it possible that we are facing a "new economy" where there simply are no more jobs for people to do and receive a middle-class wage? If so, what is a possible remedy for this?

@Zev
written by fuller schmidt, December 27, 2011 12:42

My current guess is that the emerging world doesn't have enough democracy to support its global aspirations, so the dollar will fall and jobs will eventually move back here.

'''
written by mel in oregon, December 27, 2011 12:53

i think lack of government regulation in most areas (such as repeal of glass-steagall & the enactment of the commodities futures modernization act), the lack of enough manpower at the security & exchange commission to more than superficially look at goldman sachs evil deeds, & the fed & fdic being totally controlled by wallstreet financial institutions is a major cause of our troubled economy. but the other part of the equation is the permanent war economy with our hundreds of useless military bases, several moronic wars going on at all times, & weapons systems that are obsolete before they are built, always cost 10 times too much, & have all kinds of logistical & procurement problems. as far as not reading david brooks, i never do, you can't learn anything from him. same thing with bill maher, he isn't funny, but the biggest annoyance is when he gets a brilliant guest, he either constantly interupts him or lets some crackpot rightwing zealot dominate the conversation.

Fabricating OECD Data
written by Jeff Thomas, December 27, 2011 2:21

Brooks notes a report on income inequality in the OECD supposedly claiming that "over the past 30 years, inequality in Sweden, Germany, Israel, Finland and New Zealand has grown as fast or faster than inequality in the United States."

This is a fabrication. OECD data show that inequality has been growing faster and is more severe in the United States than in any of these countries.

Source:

http://stats.oecd.org/Index.aspx?QueryId=26068 [click on aggregate country data]

so so close
written by joe, December 27, 2011 3:29

Dean gets tantalizingly close to mmt but the light bulb never quite goes on. He gets almost there, and then makes a blunder, almost there, and then a blunder. The overall trajectory is positive, though... I couldn't quite get what he meant with government debt. If he's saying that federal government debt is private sector savings, then bravo, I believe it's the first time. The difference between treasuries and cash is basically the interest rate (just what the hell did everyone think it meant to close the gold window?). The federal govt doesn't borrow per se, we call it borrowing, but it's not remotely similar to household, corporate, state govt or eurozone govt borrowing... He's right that Brooks is a knownothing clown. He should be writing for fox instead of nyt.

Victorian horror of debt ?
written by H-Bob, December 27, 2011 3:43

The last time that the U.S. did not have a national debt was under Andrew Jackson ! The Victorians apparently overcome their horror of debt but good !

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written by Kat, December 27, 2011 5:01

Brooks notes a report on income inequality in the OECD supposedly claiming that "over the past 30 years, inequality in Sweden, Germany, Israel, Finland and New Zealand has grown as fast or faster than inequality in the United States."

This is a fabrication. OECD data show that inequality has been growing faster and is more severe in the United States than in any of these countries.

Good job. I suspect most people did not go there because they were too busy taking him to task for his use of relative rather than absolute growth.
This is even better. He's just a big ol' liar. But we knew that.

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written by Roger Bloyce, December 27, 2011 5:12

It’s a shame anyone feels obliged to refute David Brooks, but there he is, dumbing down the New York Times and PBS Newshour on a regular basis and showing up on talk shows to defend the Republican outrage du jour.

After years of persistent effort, Brooks has emerged as the nation’s foremost socio-craptologist.

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written by sufferingsuccatash, December 27, 2011 6:19

I agree with Jamison and Kat. I stopped reading Brooks long ago. I was and am angered that such an utter gasbag is tolerated at the NYT. I guess its some sort of policy obligation or something. Kat is right. Not only is inequity growing faster in the US but up until recently economic mobility was greater in Sweden than the US. Given the perception that Sweden is a socialized democracy, that greater mobility it generates is quite a feat.

Groth of inequality VS actual level of inequality
written by Joe Emersberger, December 28, 2011 12:15

Jeff Thomas,
Thanks fo digging up that link, but be careful.

Sweden's Gini coefficient (after taxes and transfers) went from 0.212 to 0.259 between the mid 70s and the end of the 2000s. That is about a 22% increase in Sweden's level of inequality over the period. However in the USA the Gini coefficient (again, AFTER taxes and transfers) went from 0.316 to 0.378 - about the same % increase (20%)- but at a MUCH higher level of inequality. Hence Dean wrote

"While most countries have seen increases in inequality over the last three decades, even with the increases over this period countries like Sweden, Germany, and Finland are nowhere near as unequal today as the United States was at the start of this period."

Bobo
written by Pat, December 28, 2011 4:02

And the New York Times thinks for a moment I'm going to pay to read BoBo. LOLOLOLOL

Silly New York Times.

Empirical or Theoretical Support Stagnation due to Inequality?
written by Lots to Learn, December 28, 2011 5:29

If you could suggest some empirical or theoretical support for the proposition, "if the One Percent pocket most of the benefits of productivity growth, then we may have real problems of stagnation and lack of job growth", I'd really appreciate it. It sounds right but I would like to see it tested empirically or set in a more rigorous setting. Thank you.

I don't think you should use % change in Gini
written by Mike B., December 28, 2011 7:29

From the numbers given by Joe Emersberger, I would say that US's inequality increased more than Sweden's, because I would use the difference rather than % change. After all, if the Gini coefficient increased from 0.01 to 0.02, that's a 100% increase, as is 0.5 to 1, which is much more significant. Also, you could equivalently use 1-Gini as an index of equality, but this trivial change makes the % change much lower for Sweden.

Kill that meme: U.S. government debt is not ever, cannot, be paid off.
written by Steve Roth, December 28, 2011 9:42

History in pictures:

http://www.angrybearblog.com/2011/12/meme-that-refuses-to-die-government.html

In 200 years the U.S. has never paid off its debt, except once (result: massive depression). Nor, in *400 years,* has the U.K.

We're not paying off our great-grandparents' debt, and our great-grandchildren won't be paying off ours.

The only reason the country even issues "debt" (bonds) today is because economists are still stuck with gold-standard (mis)understandings.

We could be issuing dollar bills instead of t-bills. It comes to exactly the same thing (yes, including its effect on inflation), but without the bogeyman word "debt" attached. And without paying "investors" to store their wealth for them, risk-free.

David isn't wrong
written by Jerry Brown, December 28, 2011 11:58

Regarding your arguments bashing Brooks:

The following is an unproven assumption.
"If the government had used bigger stimulus to get the unemployment rate down to say -- 7 percent -- it is difficult to believe that the Democrats would have suffered such a big defeat last year, in spite of people's fear of big government."

The following statement doesn't change the fact that large numbers of unskilled people who can no longer find jobs in factories will likely have serious difficulties finding new occupations. And it is extremely naive to think that everyone can become "knowledge workers".
"The fact that 100 people in a factory can produce the same output as 1000 people did 30 years ago means that we are potentially much richer than we were 30 years ago. We can have the other 900 people doing other productive work. Alternatively, we can all work many fewer hours."

You're putting words in Brooks mouth with this statement. Brooks wouldn't disagree with you that government is a big part of the problem.
"Furthermore, it is not a simple fact of nature that the information economy will generate inequality, it requires the hand of Brooks' friend: big government. People are getting rich off the information economy because the government enforces copyright and patent monopolies."

Toward the end, you reveal the real point of your attack on Brooks - the defense of progressivism's most cherished belief - that technocrats could solve all of our social and economic ills through the redsistribution of wealth.
"As a country we cannot impose huge debt burdens on our children. It is impossible, at least if we are referring to government debt. The reason is simple, at one point we will all be dead. That means that the ownership of our debt will be passed on to our children. If we have some huge thousand trillion dollar debt that is owed to our children, then how have we imposed a burden on them? There is a distributional issue -- Bill Gates children may own all the debt -- but that is within generations, not between generations."

-3

Yes, but...
written by Erik, December 28, 2011 12:23

I firmly agree with everything Dean writes above except the lumping in of copyright and patent. As a creator if copyrighted material (in the arts), I must object to vaguely referencing copyright in the context of medical patents. Copyright and patent are different and the degree to which the government "enforces monopolies" on the two is also quite different. The exclusive right to sell copies of one's art is certainly not as objectionable as the power to decide who lives and dies based on the ability to pay for an overpriced medication. The younger generation's desire to steal music and movies and circumvent the established method of compensating artists is really not analagous to life and death concerns relating to med patents. The work of developing medicine does not require private industry, as its goals are clear and measurable and can be effectively reached without profit motive. There is, in other words, no chilling effect created by doing away with med patents assuming the government does so as part of a shift toward socialized medicine in general. Of course, government taking over the business of artistic expression would turn the arts into a de facto propaganda tool. Doing away with copyright protection, in other words, would have much stronger cultural effects, ultimately changing who we are as a people, than would the narrow example of med patents. It seems obvious that any private system requires some protection of the fruit of one's labor. If you're arguing for socializing medicine, I'm with you. But your argument really seems to condemn all intellectual property law to avoid one specific bad outcome of those laws. Sorry to rant. I'm sure you were just a little flustered by Brooks's silliness. But let's not throw the artists in with the death and disease profiteers. Okay?

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written by Ignacio, December 28, 2011 12:32

It is also possible that worlwide increases in inequality have much to do with another worldwide phenomenon: complete liberalization of finantial transactions (with accompanying tax fleeing). That means increasing money flow to the rentiers.

David isn't right
written by fuller schmidt, December 28, 2011 12:50

Paul Krugman writes that it's still clearly insufficient demand that is causing unemployment, not new technology. He's probably looked at the facts as opposed to Brooks.

According to Jerry Brown,
written by diesel, December 28, 2011 1:10

"progressivism's most cherished belief [is} that technocrats could solve all of our social and economic ills through the redsistribution of wealth".

Not so. Progressives believe that the current Inequality in the distribution of wealth is the cause of our social and economic ills. There's a subtle difference. The wealth has already been "redistributed", and that in an unjust and deleterious way that has damaged the social fabric.

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written by Jerry Brown, December 28, 2011 4:05

In a perfect world, you might be right. In this world, David is right. And he's much more polite.

Debt and Redistribution
written by Michael Cohen, December 28, 2011 4:18

As remarked above debt is largely a distributional problem as the rich are usually net creditors and the poor are net debtors. Excessive debt, aside from debt help by foreigners which is a tax on the economy say government debt is in effect a redistribution of income from poorer system (the average taxpayer) to richer citizens (the bondholders). Excessive debt means redistribution upward which can counterbalance whatever progressive features the taxcode has. One needs to see the size of this effect. It may be one should means test government repayment with repayment only going to poorer individuals for examplwe

To diesel
written by Jerry Brown, December 28, 2011 4:31

Wealth is distributed badly. I think David Brooks would agree with that. Progressives believe in the ability of technocrats like Krugman to optimize the distribution of wealth with "carefully crafted legislation". In a perfect world, that might work. In the messy, complicated world we live in, there is no single "ism" that will work. Futhermore, it is power that is in most need of redistribution. Concentrating it in government or labor is as bad or worse than concentrating it in business institutions. I think you will find that theme throughout Brook's writing.

-2

To fuller schmidt
written by Jerry Brown, December 28, 2011 4:52

There are many economist who believe that the current economic crisis is a long-delayed response to deep structural changes in our economy and culture. If they are correct, our unemployment problems won't be solved by theories that focus on restoring demand.
It is quite possible that David Brooks training as a historian enables him to see this more clearly than Paul Krugman or Dean Baker.

-4

"And he's much more polite."
written by diesel, December 28, 2011 5:02

Than who?

To use the phrase "redistribute wealth" is to regard wealth as a scalar and ignore the historic, active, "verb" part of the process of distributing wealth. "Distributing wealth" is a vector, it has magnitude, direction and also, duration through time. One doesn't simply level everyone's pile of chips and then expect different outcomes. This is the error in statements such as the one I quoted above in which you wrongly attribute that error to progressives.

diesel 6:02 pm
written by Jerry Brown, December 28, 2011 5:24

I have no idea what you were trying to say.

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written by liberal, December 28, 2011 8:26

Erik wrote,

Copyright and patent are different and the degree to which the government "enforces monopolies" on the two is also quite different. The exclusive right to sell copies of one's art is certainly not as objectionable as the power to decide who lives and dies based on the ability to pay for an overpriced medication.

No, you have this completely wrong.

It's true that patents are more objectionable than copyright, but not for the reason you mention.

Rather, patents are more objectionable because they constitute a larger constraint on freedom than do copyrights, since they're broader. (Because copyright only "protects" the (relatively) narrow form of expression, whereas patents "protect" ideas.)

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written by liberal, December 28, 2011 8:33

Jerry Brown wrote,

...progressivism's most cherished belief - that technocrats could solve all of our social and economic ills through the redsistribution of wealth.

What utter nonsense. Liberals want to solve much (not all) of our socio-economic ills by not having the government transfer as much wealth upwards.

You apparently are under the delusion that government acts, on net, to transfer wealth from the rich to the middle and poor. That's empirically false.

The largest transfer of wealth is to landowners, who on net tend to be relatively wealthy. (Meaning, in particular, that while quite a few nonwealthy people own land, it's not as much as the wealthy.)

Behind land, there's the economic privilege inherent in banking; bank owners, bondholders, and management tend to be wealthy. Commercial banks are privileged by the right to create money and lend it out at interest. The entire financial sector is privileged because the government acts as backstop to failure (heads I win, tails the taxpayer loses).

Then, as Dean mentioned, there's things like patent and copyright, and limits on competition in relatively well-remunerated fields like medicine and law.

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written by liberal, December 28, 2011 8:38

Jerry Brown wrote,

Progressives believe in the ability of technocrats like Krugman to optimize the distribution of wealth with "carefully crafted legislation".

More nonsense. Government currently acts to secure privileges that largely though not entirely accrue to the rich. That's both unjust and economically inefficient. Undoing those unjust and inefficient mechanisms requires writing laws, or equivalently un-writing existing laws.

In a perfect world, that might work. In the messy, complicated world we live in, there is no single "ism" that will work.

Perhaps not, but "working against providing opportunities for economic rent collection" will go a long way.

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written by liberal, December 28, 2011 9:50

Jerry Brown wrote,

It is quite possible that David Brooks training as a historian enables him to see this more clearly than Paul Krugman or Dean Baker.

LOL.

well
written by Michael, December 30, 2011 4:42

Brooks acknowledges: "Today we have oligarchic economics ..." what is his proposal: "Interest groups have emerged to protect the status quo. The job is to restore old disciplines, strip away decaying structures and reform the welfare state."
Well i don't know what that means, but the rest of his comments are truly more a rant than arguments.
And the worst you didn't attack here. From simple logic this is obviously wrong: "It spends so much on poverty programs that if we just took that money and handed poor people checks, we would virtually eliminate poverty overnight." Or does he mean the money from "poverty programs" is mostly diverted to non-poor people? This is meant with "reform the welfare state" ?

@ "liberal"
written by Erik, January 01, 2012 12:18

You say my point regarding the relative objectionability of med patent and copyright protections is "completely wrong". Your next sentence starts by affirming my conclusion, then rejecting my reasoning. How does that equate to completely wrong? Maybe you should dial back the hyperbole?

I don't personally believe that the concept of patent is waaaay more objectionable in general than copyright, as you seem to. Just medical patent, which is counter to progress in medical care and outcomes. In other words, it is against society's interest to grant patents for medicines. It is absolutely in society's interest to protect copyright, unless we want a country in which only those who can afford to give away their art can produce art. I don't agree as you seem to that all patent protection is a problem. Just the idea that profits should be more important than medical need. And it is silly in my mind to declare all intellectual property protection to be similar to med patent protection. Just as the healthcare market is different from most markets, med patents are different from most patents, and copyright.

David Brooks Is Projecting His Self Indulgence Again

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