Though your cedar is so splendid, does that prove you a king? Think of your father: he ate and drank, deal justly and fairly; all went well with him. He upheld the cause of the lowly and poor; then all was well. Did not this show he know me? say the Lord. Jeremiah 22:15Paul Krugman thinks there is a correlation in American politics between partisanship and division, and periods of great disparity in income and wealth. Sounds like a radical idea to me.
Periods, the Gilded Age, the ‘20s, were periods of grotesque abuse of cultural issues, anything to smear people who might suggest things like, you know, progressive taxation. And times when those kinds of views, when everyone had more or less accepted the existence of the New Deal institutions, were quite calm. So that same Time magazine article in 1953 is saying Republicans and Democrats have a surprising sameness of outlook and political thinking, and that makes a big point about how Eisenhower had made it clear that he was not going to try to roll back the New Deal. Well, that's why we -- that's a consequence of being a relatively equal society. And the ugliness and the viciousness of our political scene right now, I think, are in fact largely a consequence of the gross inequalities that have emerged."So I say to you, use your worldly wealth to win friends for yourselves, so that when money is a thing of the past you may be received into an eternal home." Luke 16:9
Why? How did we -- what happened? There's a tendency to say, well, it's, you know, it's these impersonal market forces, or maybe it’s globalization requires inequality, or just technology. There's always some truth to that kind of thing, but much less than you might imagine. I've already mentioned a little bit about education. We keep on hearing that technology creates this premium for the education for the creative classes, whatever it might be. It turns out that that's really -- put it this way, the median college-educated American has, unlike the median non-college-educated American, actually seen some gains in income over the past 25 years. But they're tiny. It was less than one percent a year on average and, in fact, over the past five years, college-educated workers, most college-educated workers, have actually seen their incomes fall, once you adjust for inflation. It's not actually true that a college education is the key to being successful. It's being part of the tiny magic circle of the economic elite that gets you ahead. So it really isn't about education. It isn't about skills.
A little bit of it is about, you know, we like to talk about human capital being what matters. If you actually look at the last five years, human capital has been losing, but good old capital capital has actually been doing extremely well. Share of profits in national income is at its highest level since 1929. But it's not at least that particular impersonal market force. And a lot of it looks like it's -- in fact, it's the political process does a lot to drive the distribution of income, partly, of course, taxes -- there’s taxes which tax the rich and provide benefits to everyone at large -- but also other things, whether you have a political environment that basically assures workers of the right to organize or one that basically is sympathetic with employers who try to break unions, whether you have a general set of political pressure that says, that fairness is a good thing or that says that greed is good.