Monday, March 27, 2006

Treasury Secretary's Snow Job

Falling middle class living standards have people unhappy, but the situation is improving according to Treasury Secretary John Snow(job).
"Look at the Harvard economics faculty, look at doctors over here at George Washington University . . . look at baseball players, look at football players," Snow told the Journal. "We've moved into a star system for some reason which is not fully understood."

The market, Snow explained, is rewarding the nation's most productive people with the highest compensation. And the rising tide, he argued, is lifting all boats.
Really? Not according to Mark Zandi of Moody's who believes "that while hourly wages show some gains, higher-paid workers are pulling up the average. Wages for lower-income earners still trail inflation."

A great analysis of why wage gains aren't trickling down comes from Paul Krugman, who explains the snow job behind Snow's words:
I find it helpful to illustrate what's going on with a hypothetical example: say 10 middle-class guys are sitting in a bar. Then the richest guy leaves, and Bill Gates walks in. Because the richest guy in the bar is now much richer than before, the average income in the bar soars. But the income of the nine men who aren't Bill Gates hasn't increased, and no amount of repeating "But average income is up!" will convince them that they're better off.


Rory Shock said...

good one

Kathy said...


mikevotes said...

Good catch.

And, Andy Card was apparently offered Snow's job but wouldn't take it, so we'll be blessed with years more of this.