Is There a 'Good Side' to U.S. Economic Inequality?
By Michael Getler
November 3, 2011
Paul Solman, the guy in the hat, is the PBS NewsHour's economics correspondent. He is one of the more memorable and identifiable correspondents on television. Solman is smart, provocative at times, interviews interesting people, asks challenging questions and the trademarked theme of his work is "Making Sense" out of frequently complex financial news for a general audience. Collectively, this comes across on the normally normal NewsHour as something of an iconoclastic presence and approach. It also, at times, generates a lot of mail to the ombudsman.
Photo courtesy of pbs.org/newshour
That has been the case, especially, during September and October. Solman has been covering this beat for the NewsHour for just shy of 25 years, but this year he has been doing a series on the growth of income inequality in this country—a widely documented trend over the past several years—with six or so special segments thus far. The last two of these—one about the "social security safety net" broadcast on Sept. 21 and another asking whether U.S. economic inequality "has a good side" on Oct. 26—drew a great deal of comment, mostly critical, both on the NewsHour's web site and in my inbox.
In fact, in the closing summary of the NewsHour broadcast on Monday, Oct. 31, correspondent Hari Sreenivasan specifically called attention to Solman's online response "to the avalanche of viewer reaction" from the Oct. 26 interview with NYU law school Prof. Richard Epstein.
Some Factual Errors
The first note said: "Many viewers took us to task for failing to acknowledge in our report on Wednesday's program [Sept. 21] that custodial nursing home care is paid for by Medicaid, rather than Medicare. They are correct." It then went on for a fuller explanation. I did not write about the segment at the time because the editor's note quickly and rather fully dealt with the error that clearly upset a lot of people.
The Oct. 31 correction involved a quote that Prof. Epstein mistakenly attributed—as have others, including former President Reagan—to Abraham Lincoln rather than to Rev. William John Henry Boetcker, a conservative Presbyterian minister who wrote in 1916 that "you cannot help the poor by destroying the rich."
A Wider Challenge
But much of the criticism aimed at these pieces was actually broader than the two factual mistakes. The sampling of letters posted below deals only with the most recent segment last week on the "good side" of income equality.
From where I sit, we don't have any journalistic crime here by Solman. Rather what we have, it seems to me, are two programs, more or less back-to-back in a series, that turned out to be ill-timed, with invited guests focusing on aspects of our individual and national economic situation that are legitimate to point out. Yet they are on the fringes of what is bothering so many people when tens of millions are seriously hurting, when the gap in wealth has never been wider—never seemed further away from any reasonable or healthy proportion—and never been more vociferously challenged by more Americans.
So you can't blame some viewers of the "social security safety net" report for being upset when Robert Lerman, a longtime friend of Solman who is a professor of economics at American University in Washington, D.C., suggests, in a nursing home setting, that a big source of wealth "is embodied in the right to your social security flow of income and also to the guaranteed health insurance that you get."
It is true that for many people those programs provide vital income to pay some vital bills. And there is nothing wrong with pointing it out, except that most people in nursing homes or on Medicare and Medicaid can be forgiven for not feeling, or actually being, wealthy.
Then along comes Prof. Epstein, a libertarian and a lawyer, not an economist, who is presented to viewers as offering a "contrarian view." In answer to Solman's questions about income inequality, Epstein says: "What's good about inequality is if, in fact, it turns out that inequality creates an incentive for people to produce and create wealth. It's a wonderful force for innovation…And one of the fundamental mistakes about the egalitarians is they're so interested in trying to minimize differences that they don't understand the completely adverse effects that it has on the size of the [economic] pie."
Solman asks a lot of the right questions and Epstein answers in ways that clearly provoke some viewers. Much of what he offers are assertions and interpretations rather than statistics. But Epstein, it seems to me, describes a perspective on American capitalism that is shared by a fair number of people and he voices a legitimate argument, whether or not you agree. I knew, as I watched this, it would draw mail and criticism, yet I felt it was a lively and worthwhile interview. It's just that you wanted to hear an equal-time challenge to his views right away.
It's a Series, Not a Segment
As is the case with any series of programs or news reports, it is best to judge them as a continuum, or as a whole. The series on inequality included these titles earlier in the year: "Many Americans Feel 'Stuck in a Rut' as Economy Improves, But Inequality Grows"; "Land of the Free, Home of the Poor"; "Americans Facing More Inequality, More Debt and Now More Trouble? " They didn't draw much criticism.
Solman, at the end of what struck me as a quite long and rather defensive response on his web page, invokes these earlier programs and says, finally, that "I think we've told the inequality story carefully, comprehensively and provocatively from early in the trend," and that, "Robert Lerman and Richard Epstein were clear enough and straight-forward enough for any thinking person to evaluate what they said."
I agree with that. But, as I said earlier, the combination of these interviews seemed to reflect unfortunate timing. They both had something of an it's-not-so-bad quality and offered legitimate, yet somehow irrelevant-sounding, arguments for this moment of national trial.
Below are some of the letters I received about the Epstein interview, and below that is a longer commentary by a viewer named David Ramsey that was the first to appear on Solman's online "Business Desk" discussion soon after the Oct. 26 broadcast with Prof. Epstein. I thought the Ramsey comments and opinions encapsulated the broadest viewer concerns about that segment.
Here Are Some Letters
Last night (October 26) you interviewed a Professor Epstein of NYU Law. As an NYU alumnus, I was absolutely embarrassed by Epstein's circular thinking in this time of the Great Recession and for his narrow views on why the rich are indispensable. He never addressed the issues of dishonest lobbyism in DC, phony legislation like Jobs for Americans which REALLY gave no jobs but a 35 percent tax break for corporations to go overseas. I won't go into the litany of ills. Epstein should read "Third World America" by Arianna Huffington and the April issue of Mother Jones Magazine, with its "America's Vampire Economy" replete with REAL graphs by Harvard Business School showing that with deregulation and Congress's reliance on the super-rich corporations for campaign funds and the perversion of legislation to suit corporate needs through a "Shadow Elite," the middle and working class in this country is being systematically destroyed by unregulated greed and sneaky legislation
It is amazing how many people are uninformed about the reality of what is happening in our country and talk well-pronounced nonsense to explain away criminal behavior. The last time we had this situation with corporations, we had a tough and honest president (Theodore Roosevelt) who busted bullies in the rail and oil industries from monopolies down to harmless nothings. Unfortunately no such Knight exists in DC today - where all Congressmen and US Senators act out of self-interest rather than concern for the public as they line their pockets with lobbyist gold. Professor Epstein [has a] fanciful view of the true economic situation existent in this country.
Virginia Dayan, Astoria, NY
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Professor Richard Epstein stated how inequality makes us all better, how the tax system is more redistributive than it has been and that the regulatory system is greater than previously. I don't know where he has been but both of these statements are far from the truth. It seems that PBS's NewsHour continues to expose its viewers to one-sided points on a regular basis. These are not views experienced or expressed by Joe Q Public. So, inequality is something positive and which PBS supports via the guests that you showcase? This is a Public Broadcasting Station that is supposed to have all sides of an issue covered. I have found this not true.
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Although I found Mr. Epstein's position disgusting and reminiscent of Marie Antoinette, I don't object to your airing an extremist, who backs the 1 percent's views. However, please follow up with an equally "extremist" view of Wall St from Stiglitz, Galbraith, Naomi Klein or Krugman. Hopefully, you will not placate your audience with a moderate, portraying them as "far left."
In my humble opinion, what PBS has done recently to shift the news to the right has been reprehensible. Your disregard of Occupy Wall Street, until other mainstream media started, was deplorable.
E. Rivers, Portland, ME
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As a longtime PBS viewer, I cannot understand why the NewsHour is not giving more balanced news. Its practice year after year is to favor and more frequently interview people who are in favor of the growing inequality in the US. It caters to the Republicans in government and corporate sponsors, as if there were no other point of view. I am not overstating my case, as a few interviews of more moderate guests does not balance the overall trend of the show.
Margalo Ashley-Farrand, Portland, OR
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On Oct. 26, you had a [Professor] Epstein speaking on the ECONOMY. After listening to claptrap for minutes I find that he is a LAWYER —NOT an ECONOMIST. He is not expert and should not have been advanced as one on your show. If you have to air wing-nut economics views, you can at least get Taylor (Stanford), or George Schultz. However, why not try some of the Nobel Prize winners (e.g., Krugman) if you want an informed opinion instead of a wing-nut opinion? Or is it because in your zeal to be "balanced" you feel you must give the Flat Earth Society equal time?
The Ramsey Comment
Paul: I am frustrated by economists such as your guest this evening that seem to insist upon revisionist views of U.S. economic history. The "trickle down" theory dates back at least to the Nixon administration. Special tax benefits for the rich have never resulted in economic benefits to the general public. It is instructive that Congress determined that the appropriate highest tax bracket in the 1990s was 39 percent. Microsoft and Apple - examples cited by your guest - made substantial profits in the 1990s as did many other companies. The 39 percent tax rate was determined by Congress to be reasonable at the time of its imposition and the economic gains of the 1990s bear out the reasonableness of this determination.
The [George] W. Bush tax reduction for the wealthy was simply a gift to W's peer group. Obviously, it produced no long term economic benefits, and only exacerbated the burden of the Afghanistan and Iraqi wars on the economy. The extension of the Bush tax breaks in December of 2010 - despite conservative assurances - did not result in an increase in jobs, or other benefits to the economy. The reality is that the wealthy already enjoy a 7+ percent tax break that middle class Americans don't, in the form of the Social Security tax which terminates at about $106,000 in income. Returning the wealthiest Americans to the 39 percent tax bracket - an increase of about 3 or 4 percent - is no great burden on the wealthy. If federal budget deficits are the economic demon that conservatives insist they are, then generating additional revenues through a modest increase in the tax rate on the wealthy should produce greater economic benefits for all Americans, the wealthy and the middle class.
Moving jobs overseas, and the failure to reinvest recent corporate profits in jobs and American productivity, is a very short-sited corporate policy. Unfortunately, the current explosion of corporate executive compensation based on short-term business performance, does not encourage long-term investment. We simply cannot continue to forfeit the overall control of the U. S. economy to corporations controlled by executives that are interested only in short-term profits to justify their short-term executive bonuses. I recall that Adam Smith - the father of capitalist economic theory - praised the exercise of "enlightened self-interest" by business owners. Current practitioners of capitalism - the overpaid corporate executives and Wall Street profiteers - have replaced the "enlightened" element of the theory with simple greed.
Greed has driven the re-distribution of wealth in America in favor of the wealthy in unprecedented proportions. Greed has generated the current "occupation" movement of protesters. Greed will be the downfall of our economy if the federal government does not intercede with changes in tax policy that protect the status of the middle class as the foundation of our prosperity.
I recall the political cartoon included in my high school American history text - the picture of Teddy Roosevelt the "trust buster" battling the corporate profiteers of his era. Unrestrained capitalism is and has always been simply greed; and the failure of the federal government to contain economic greed "to promote the general welfare" has been, and continues to be essential to our economic success.