Sloppy Thinking on the Obama Recovery

James Pethokoukis writes For 99 percent of Americans, the Obama recovery has been no recovery at all, but the article seems possessed by sloppy thinking. Where to start? He reproaches President Obama and the “Obama recovery”, since the top 1% are capturing 93% of all of the income gains; then goes on to defend income inequality as the natural and beneficial consequence of capitalist economics. He favorably quotes the Federal Bank of St. Louis on the fairness of income inequality, then presents a graph showing income inequality growing to a height in 1928, again in 1999, and again in 2007; seems to me 1929, 2000, and 2008, following our dalliance with income inequality, weren’t great years for the economy. He begins with a chart showing the “weakness” of the Obama recovery in the years 2009-2010 (I didn’t realize we even were in a recovery in those years), and compares those 2 years of “recovery” with 8 during the Clinton administration and 6 during the Bush administration, to draw his unfavorable conclusions. He lambasts Emmanual Saez’s study showing income inequality, then waxes rhapsodic on the wonders of that same income inequality. More subtly, he quotes economist Daren Acemoglu as “persuasively” explaining that income inequality is a result of a bias toward more skilled workers, and the Federal Bank of St. Louis study as showing that earnings are directly related to individual productivity, all the while showing that 93% of all income gains went to the top 1% of earners! Are all skilled workers in America making over $352,000 a year? Or are some skilled workers not benefiting, in contradiction to the study, from their special skills? Are only the top 1% of earners showing increased productivity, and none of the 99%? Or are some productive workers not benefiting from increases in overall wealth? In criticizing Emmanuel Saez, Mr. Pethokoukis notes that income inequality is the result of growth in corporate profits and dividends, as opposed to wages and salaries, then explains income inequality as the result of skilled and productive workers…whose wages and salaries are not rising to meet their greater skill and productivity. This whole article is infused with sloppy thinking.