Almost Classical

The narrative is set, and as a rhetorician, I appreciate the value of a good story in shaping public debate. The rich are getting richer, the poor are getting poorer, and many of the middle class are being pushed down into the lower-class. It's a sad story, a compelling story, and in some important ways it is a fiction. Yes, the middle class is shrinking. That should concern us. But what if the shrinking middle class is as much a result of people moving into the upper class as it is a result of others moving down the social ladder? In fact, some research shows there are more people moving from the middle into the upper income brackets, leaving a smaller middle class — but not for the reasons being promoted by the media and politicians. Exceptions in the media coverage exist, as they do in little tiny dimly lit sections of academia. Readers know I enjoy Robert Samuelson because he digs deeper into statistics than other newspaper columnists. The 'hollowing' of the mi...

I dislike the notion of a "minimum wage" but recognize that it isn't about to be abolished. And, there is the sad reality that many companies don't recognize that employees are the value behind any business or non-profit. Organizations are their people. My first problem with the national minimum wage is that any nationwide standard ignores the cost of living variations from region to region. Beyond that, we have issues of how to set a minimum wage, how to index it to inflation, and many other complicated issues. If you set rates by region, would you also have regional inflation indices? What about tiered minimums, based on age or other variables? There are already odd exemptions to the minimum wage, namely in the dining industry. Should there be a full-time minimum wage apart from a part-time minimum? How many people working 40-hour weeks earn the minimum wage? If they do earn the minimum, for how long do they earn this before their first raises? How long before...

As people debate into Lean In: Women, Work, and the Will to Lead  by Sheryl Sandberg, the topic of pay inequality often arises. President Obama has also made the issue of "fair" compensation a political issue. But, is there really a problem with inequality within the same job, or is there something else at work? Based on research, it seems that if you want to study comparisons of apples to oranges, examine the "income inequality" debate. The differences in pay are more the result of career choices than differences within identical job positions. Why Women Earn Less According to a new report (PDF) by the American Association of University Women, the man would be earning a salary of $51,300. The woman's pay would be $39,600—about 77 percent of what her male counterpart earns. The AAUW report compared the earnings of men and women just one year out of college across various sectors of the economy. The report controlled for different factors that tend to impa...

The most popular (and unpopular) post on Almost Classical is on the 90 Percent Tax Rate Myth . In that post, I attempt to explain the obvious: When there was a 94% top rate in 1944-45, there were so many deductions and exclusions that the taxable income was not comparable to someone's entire income. First, the top rate started at $200,000, which today is equal to $2,413,059.90 — so the maximum EMTR would apply only to incomes of $2.5 million. But, that's still taxable income, not earned income.  In 1944, you could deduct business meals, all business travel, all forms of interest payments, and much more. You could even deduct spousal travel expenses on a business trip! (Why travel alone?) Companies could also "loan" or "provide" almost anything to an employee, from an apartment to standard benefits. It was possible to shelter tens of thousands of dollars from taxable income. Three-martini lunches and expense accounts were important realities, skewing tax ...

One of the arguments I've advanced in various forums, including my classrooms, is that much of the rise America experienced during and after the Second World War was "luck" — we were spared the direct destruction experienced by every other global economic leader. It's hard to lose the war of economic dominance when you're the only player in the game for two to three decades. But what about the "end" of the Great Depression before the War? First, I'm not convinced we were truly out of the Depression; economists and historians debate this. (I've noticed historians are more inclined to embrace the "FDR saved us!" line, while economists are skeptical of simplified credit to a person or political party.) FDR was not a purist; he was a political pragmatist. He spent, or cut, as he saw fit, without any grand plan. I believe it is far too simple to accuse FDR of adhering to Keynes or any other economist's views. FDR bounced from idea to...