Yanis Varoufakis Speaks!

Well, to be honest, he's a loquacious gentleman and gives lots of interviews. But I always find his analysis interesting and he's certainly not afraid to take a strong position. I thought this interview with Corriere Della Sera, the Italian daily, was particularly good. Lots of excellent points here but let me just highlight his views on Germany and France:

Germany:

Q: President Mattarella has rejected Professor Savona as minister of finance because he is supposedly anti-German. Does a sort of German arrogance exist? Do the Germans pretend to dictate rules to other UE countries?

A: The problem with the German elites is that they are refusing to be hegemonic and, thus, end up being authoritarian. The German political class continues to behave as if Germany is a small open economy whose net exports are only due to the skill and hard work of their engineers and whose surpluses are well earned. They deny the macroeconomic effects of their policies upon their partners and insist, puzzlingly, on celebrating their surpluses while admonishing others for having… deficits. In the end, German savers are forced by the laws of economics to entrust their savings to foreigners whom they end up despising for being indebted to them. Free riding comes in two varieties: (1) Wanting to live off other people’s money. And, (2) Wanting to benefit from the low exchange rate that other people’s moneylessness causes. It is clear that no Union can survive in this manner. Unfortunately, there seems to be no likelihood of a change in Berlin now that the new social democratic finance minister has proven more austere and less imaginative than even Dr Wolfgang Schauble was.

France:

Q: What do you think about Macron?

A: I have spoken a great deal about the French President, praising his solidarity to me personally in 2015 and explaining that he understands that the present architecture of the eurozone is unsustainable. On the other hand, I also said that, ever since he rose to the Presidency, he has adopted legislation that is socially regressive (e.g. cutting taxes on the rich while diminishing the incomes of weaker citizens), awfully authoritarian (e.g. he made permanent security legislation that clashes with civil liberties) and self-defeating. He also put forward proposals about eurozone reform which, while in the right direction, were too lukewarm. Worse still, he did not back them up with any credible threat to Berlin – which led Mrs Merkel and the German establishment to bury them. The result is that, given France’s inability to flourish in the present architecture of the eurozone, Mr Macron is a spent force. He looks and sounds good but his capacity to make a difference has been wasted and will, from now on, lose his authority little by little.

YANISVAROUFAKIS.EU

Complete text of my interview with Corriere Della Sera’s Aldo Cazzullo (in English)

Corriere Della Sera, the Italian daily, published today an interview that I gave to Aldo Cazzullo. For the published version (in Italian of course), you can visit the paper’s site here. Howev…

The Left in Europe: What Is to be Done?

Italy has a new populist government, avoiding new elections at least for awhile. But this new agreement, which merely shuffled anti-Eurozone economist Paulo Savona to a lesser cabinet position, settles nothing. There is trouble brewing--big trouble.. As John Cassidy notes on the New Yorker website:

"In the short run, the sight of a new government emerging in Rome may bring some calm to the financial markets, which have been rattled by the possibility of another Italian election, and even bigger gains for the populists. Looking further ahead, however, there is great uncertainty surrounding not just Italy but the entire nineteen-nation eurozone. For the first time since it was formed, in 1999, the monetary union will be confronting a government in one of its core member countries that is implacably opposed to many of its rules and policies.

As part of Thursday’s agreement, Matteo Salvini, the leader of the League, agreed to the appointment of an economy minister who isn’t an avowed supporter of withdrawing from the euro. (Salvini’s initial choice, the economist Paulo Savona, is a confirmed Euroskeptic.) But Salvini and Luigi Di Maio, Five Star’s leader, are both committed to remaking the E.U.’s economic treaties and introducing expansionary tax and spending policies. Both of these things will place them on a collision course with the authorities in Brussels, Berlin, and Frankfurt. And at this stage, neither side seems likely to back down."

In this situation, what should the left, marginalized in Italy as in a number of other European countries, do? UK commentator Paul Mason recommends the following in his article on the Italian crisis:

"The only chance the left has is to, first, break mentally with the chains of eurozone fiscal rules and with the neoliberal strictures of the Lisbon Treaty. It needs to accept that the eurozone has become a means for suppressing growth in southern Europe, and a game rigged in favour of Germany. It needs to say so because these things are true – and because its refusal to say them has handed powerful arguments to a bunch of racists and loudmouths.

Second, the left needs to out-populist the M5S: in discussions with Italian leftists I’ve noticed a blank refusal to understand why their own supporters are switching to the new movement. Some of its demands are straight out of the playbook of a horizontalist left: the universal basic income, the limitation of MPs to two terms in parliament, the anti-corruption drive and so on. There is a mindset inside the Democratic Party similar to the one you find among Labour councillors in the north of England – an assumption of the right to rule, a closeness to powerful institutions. As a result, M5S and its supporters are always written off as closet right-wingers and the struggle to split populism along its class lines is never pursued.

The showdown between a LN/M5S government and the Italian and Eurozone machines is an opportunity for the left to propose strong and urgent reform – both of the Eurozone and the Italian state.

To advocate Italy leaving the Eurozone, given the structure of Italian debt, would be economic suicide. Rather the left in Italy needs to put forward a plan to reform EU governance and to change the rules of the Eurozone to promote growth in the periphery. President Macron of France has already tabled a weak version of the latter, while numerous left proposals have circulated for the creation of a two-speed Europe – always of course opposed by the unelected Commission and the German government.

And here is where the Italian left has powerful allies, should it want them, in the beleaguered social democratic, green, radical left and left nationalist parties of Europe.

The elements of a pan-European left programme would not be difficult to enumerate. They are:

- Revise the Maastricht Treaty rules, allowing governments to breach the 3 per cent deficit target in order to invest in infrastructure.

- Widen ECB quantitative easing to target growth in the periphery and to incentivise Germany and other north European states to borrow and spend, rather than to promote EU-wide stagnation.

- A new treaty to replace Lisbon, which positively promotes state intervention, aid and ownership of key industries to build a high-welfare, high wage model across Europe.

- A major crackdown on offshore finance, drawing trillions worth of capital out of the tax havens into the real economy in Europe.

- A Europe-wide labour market policy aimed at attracting high-skilled labour, distributing refugees and deterring low-skilled economic migration. For clarity, that means immigration controls at the borders of Europe and an evening-up of minimum wages and social welfare benefits across the EU27.

Who’s against all that? The centre-right for sure, and also the neo-right of eastern Europe. Unfortunately, up until now, it’s been the social democrats and some green parties too, who’ve essentially drunk the Kool Aid of free market economics.

As a result, clearly not all countries would sign up to a Europe that enacted the five bullet points above. However, that is no tragedy if, as a result of a new treaty, a two-speed Europe emerges, leaving the semi-democracies and outright xenophobes of eastern Europe to a second tier.

I think, however, it is possible to get the Austrian and French social democrats to back such a plan, and - if they are prepared to turn their attention to it - Jeremy Corbyn’s Labour and the ruling Syriza party in Greece, which is looking and acting more like a social democratic than a radical left party right now. In addition, most of the European United Left–Nordic Green Left (GUE-NGL - the radical left group in the European Parliament) could sign up to this, and such Green parties prepared to wake up and smell the organic coffee of a revolt against the status quo.

I’ve advocated in these pages before, that the Party of European Socialists, GUE-NGL and any other takers should stand a united Spitzenkandidat in the 2019 European Parliament elections. But the Italian crisis, if it kicks off in Autumn 2018, brings forward the crunch point.

Unless the Italian social democrats a) rip-up the Lisbon Treaty inside their heads and b) seek a pan-European front to force open the Lisbon and Maastricht settlements they will experience outright political extinction."

Some may find Mason's prescription too aggressive. I don't. Only left unity around a program to change the rules and restore growth will allow the left to out-compete the populists, not to mention the right. Mason's recommendations are sensible about where such unity might initially be found. You start with that and build from there. There is no alternative--that is, if want the left to be effective, gain support and solve people's problems. Otherwise, the left may continue sinking slowly into the sunset.

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NEWYORKER.COM

Italy’s Challenge to the Eurozone Is Only Beginning

In the short run, a new government in Rome may calm the financial markets. Looking further ahead, however, there is great uncertainty surrounding not just Italy but the entire eurozone.

On CNN, I debate Steve Phillips on Democratic strategy

I think I'm right but you be the judge:

CNN.COM

Democratic Party's strategy for wooing voters - CNN Video

We're well into the midterm election season and Democratics have a decision to make. Where will they dedicate their money? How will they dedicate their resources in order to win in November? CNN's Victor Blackwell has more.

Fearless Forecasting Department: Democrats Have a 2-in-3 Chance of Taking the House

Says who? Well, says the Economist magazine. They've built quite a sophisticated 435 district model that is explained remarkably clearly in a lengthy methodological post on their site. But here's the latest forecast which gives the 2-in-3 estimate for the Democrats. Too optimistic? Maybe; stay tuned for rival models and the always exciting methodological polemics between them!

ECONOMIST.COM

Who’s ahead in the mid-term race

Our predictive model for November’s elections for the US House of Representatives, updated daily

The Italian Quagmire

With the decision of the Italian President, Sergio Mattarella, not to allow the formation of an M5S-Lega coalition government, the Italian crisis has only deepened. Whatever Mattarella's intent, the winners of this latest move are likely to be the far-right Lega. Yanis Varoufakis in the Guardian notes, with understandable outrage:

"Had Mattarella refused Salvini the post of interior minister, outraged by his promise to expel 500,000 migrants from Italy, I would be compelled to support him. But, no, the president had no such qualms. Not even for a moment did he consider vetoing the idea of a European country deploying its security forces to round up hundreds of thousands of people, cage them, and force them into trains, buses and ferries before sending them goodness knows where.

No, Mattarella chose to clash with an absolute majority of lawmakers for another reason: his disapproval of the finance minister designate. Why? Because the said gentleman, while fully qualified for the job, and despite his declaration that he would abide by the EU’s rules, had in the past expressed doubts about the eurozone’s architecture and has favoured a plan of EU exit just in case it was needed. It was as if Mattarella declared that reasonableness from a prospective finance minister constitutes grounds for his or her exclusion from the post.

What is so striking is that there is no thinking economist anywhere in the world who does not share concern about the eurozone’s faulty architecture. No prudent finance minister would neglect to develop a plan for euro exit. Indeed, I have it on good authority that the German finance ministry, the European Central Bank and every major bank and corporation have plans in place for the possible exit from the eurozone of Italy, even of Germany. Is Mattarella telling us that the Italian finance minister is banned from thinking of such a plan?

Beyond his moral failure to oppose the League’s industrial-scale misanthropy, the president has made a major tactical blunder: he fell right into Salvini’s trap. The formation of another “technical” government, under a former IMF apparatchik, is a fantastic gift to Salvini’s party.

Salvini is secretly salivating at the thought of another election – one that he will fight not as the misanthropic, divisive populist that he is, but as the defender of democracy against the Deep Establishment. He has already scaled the moral high ground with the stirring words: “Italy is not a colony, we are not slaves of the Germans, the French, the spread or finance.”"

What a mess. But that's what you get when elites support policies that produce two lost decades for the Italian economy. Per capita GDP in Italy today is no higher today than it was when Italy initially joined the Eurozone in 1999. Youth unemployment is 35 percent. No wonder outsider forces are running the table and, unfortunately, the savviest of those forces appear to be the Lega.

Note: for more useful info and analysis, see David Broder's lengthy article in the Jacobin on "Salvini's Triumph" and Thomas Fazi's essay on "Italy's Organic Crisis" in American Affairs.

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THEGUARDIAN.COM

With his choice of prime minister, Italy’s president has gifted the far right | Yanis Varoufakis

Sergio Mattarella’s defence of the status quo has ensured the success of racist and populist policies, writes former Greek finance minister Yanis Varoufakis

Dare I say it? The Democrats may actually be doing something right!

I get asked a lot by the press to comment on the Democratic civil war. It is always my sad duty to inform them that the rumors of war are greatly exaggerated. Folks are actually getting along pretty well and seem to have a solid idea of what they need to do to inflict a defeat on the merry band of lunatics running our country.

One guy who does get it is David Leonhardt. He has a terrific column in the Times today on the actually-existing Democratic midterm campaign rather than the caricature of infighting factions favored by many reporters.

Leonhardt has this to say:

"Stacey Abrams and Conor Lamb are supposed to represent opposite poles of the Trump-era Democratic Party. She is the new progressive heroine — the first black woman to win a major-party nomination for governor, who will need a surge of liberal turnout to win Georgia. He is the new centrist hero — the white former Marine who flipped a Western Pennsylvania congressional district with support from gun-loving, abortion-opposing Trump voters.

But when you spend a little time listening to both Abrams and Lamb, you notice something that doesn’t fit the storyline: They sound a lot alike.

They emphasize the same issues, and talk about them in similar ways. They don’t come across as avatars of some Bernie-vs.-Hillary battle for the party’s soul. They come across as ideological soul mates, both upbeat populists who focus on health care, education, upward mobility and the dignity of work...

Yes, there are some tensions on the political left. But these tensions — over Obama-style incrementalism vs. Bernie-style purism, over the wisdom of talking about impeachment, over whether to woo or write off the white working class — are most intense among people who write and tweet about politics. Among Democrats running for office, the tensions are somewhere between mild and nonexistent.

Democratic candidates aren’t obsessed with President Trump, and they aren’t giving up on the white working class as irredeemably racist. They are running pocketbook campaigns that blast Republicans for trying to take health insurance from the middle class while bestowing tax cuts on the rich (charges that have the benefit of being true)....

The political scientist Theda Skocpol is among the sharpest observers of modern American politics, having studied the Obama presidency, the Tea Party reaction and now the Trump resistance. Skocpol and her colleagues are tracking Trump-leaning areas in four swing states, and she too has been struck by the Democrats’ relative unity. “Media pundits and even social scientists want to look for some kind of ideological divide,” she told me. “I just don’t see a huge set of divisions in the Democratic Party. They’re all talking about economic issues.

Doing so is smart, because it helps Democrats send the most powerful message in politics: I’m on your side — and my opponent isn’t. Americans really are divided on abortion, guns, race and other cultural issues, but they’re remarkably progressive on economics. When Democrats talk about health care, education and jobs, they can focus the white working class on the working-class part of its identity rather than the white part. And Democrats can fire up their base at the same time.

Abrams is a particularly good case study. In the primary, she argued that Democrats should stop chasing conservatives who were lost to the party and instead work to lift progressive turnout. But Abrams’s universal, populist message shows that she hasn’t given up on swing voters. Her message resembles the one that helped Barack Obama win over enough white voters in his 2012 re-election campaign."

All correct. Now if he could just get his colleagues in the rest of the press to report this rather than the chimera of a Democratic civil war.

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Opinion | Democrats Are Running a Smart, Populist Campaign

The divide between the party’s left and its center is a lot smaller than it looks.

NYTIMES.COM

When the left lifts its voices in song, they sing.....what?

Todd Gitlin has an interesting article on the New York Review of Books blog concerning "The Missing Music of the Left". Gitlin observes:

"it has been a very long time since insurgents worldwide shared a moral equivalent of “The Internationale,” the anthem adopted by the (second) Socialist International in the late nineteenth century and subject to the contesting claims of socialists and communists ever since. International solidarity and the putative brotherhood of workers crashed and burned in 1914, when the German Social Democrats voted war credits to the Kaiser so that Germany could slaughter its ostensible class allies, and left-wing parties across Europe split over whether to support their respective nation-state or oppose an “imperialist war.”

In 1917, Lenin’s Bolshevik heresy was able to capitalize on antiwar sentiment in Russia to seize power. A few years later, the Soviet Union was promoting a version of “internationalism” that conveniently withered into a defense of the Kremlin’s foreign policy interests of the moment. As Vaclav Havel wrote in his great 1978 essay, “The Power of the Powerless,” universalist slogans like “Workers of the world, unite!” shriveled into loyalty cheers lacking any concrete meaning.

All these years later, the left is still tuneless. Missing from social democracy is a galvanizing cross-border spirit, a sense of historical destiny, and yes, a literal song. In the twenty-first century, attachment to the identity tribe is fiercer, more binding, than any attachment to a common purpose. Today’s most prominent left-wing chant, “The people united will never be defeated,” is a tautology. When it originated, in Allende-era Chile, it meant something topical. Today, it is strictly sentimental. Trump supporters could cheerfully sign on to their version of what it means to be “the people united”—designating immigrants and Muslims, not the bourgeoisie, as the excludables.....

The varieties of revolutionary Marxism, for all their immense differences and faults, shared a lineage, a faith in humanity, and a comfort in believing that the future belonged to them. They had rituals—holidays, heroes, performances, slogans. They had learning and culture—newspapers, magazines, books, movies. They had, in the capitalist class, a common enemy. They had charismatic leaders and they had access to what the sociologist Philip Selznick called “the organizational weapon.” They had a song that was the sonic incarnation of the idea that “the international working class shall be the human race.” However local your struggle, however dire or parochial your circumstances, you could transcend it. You could sing “The Internationale” and—for a moment—find refuge in an imagined future. Here is the first stanza of the American translation (from the original French) by Charles Hope Kerr:

Arise, ye prisoners of starvation!
Arise, ye wretched of the earth!
For justice thunders condemnation:
A better world’s in birth!

Marxism was not the only ideology to crystallize its aims into a song; in fact, it is hard to think of one that doesn’t. There is a reason why nation-states develop national anthems. The theme is not always uniform, not always in march time, but it must be rousing. What I am calling the music of an outlook or a movement captures the overall spirit of the enterprise: that combination of mental and moral senses that arouses the blood, that generates energy and drives persistence to overcome the inevitable obstacles in the way of the realization of ideals....

Nearly three decades after the collapse of the communist phantasm, the left has still not recovered its voice, let alone composed a melody you can’t get out of your head."

I take that as a challenge. Does anyone have a nomination for such a song? This Land Is Your Land with the verses that are always left out? Other ideas?

Once Again on the Roots of Populism

There's such a cottage industry of studies showing a connection between anti-immigrant sentiment and/or racial resentment and right wing populist voting, that many have concluded the question is settled. The origins of populism are purely cultural and do not have anything to do with economics/economic security/economic change. In an alternate universe where globalization shocks and the Great Financial Crisis of 2008 never happened, we would see the exact same pattern of rising right wing populist voting. At least that's the implication.

I beg to differ. So do many academics whose studies you perhaps hear less about. I would particularly highlight here the work of European economists Luigi Guiso, Helios Herrera, Massimo Morellli and Tommaso Sonno who have performed a very sophisticated series of studies using a massive amount of data on economic outcomes, voter attitudes and election results, all broken down by detailed geography.

Guiso et. al. find in their latest study:

"[Our] results underline the fact that the deep cause of populism cannot be culture, it is economics. This view is confirmed in our complementary study using individual survey data instead based on the European Social Survey (ESS), which maps the attitudes, beliefs, and behaviour patterns of European citizens taking place every two years since September 2002, by means of face-to-face interviews (Guiso et al. 2017). The ESS, besides reporting on voter's attitudes towards immigration and traditional politics, also asks people whether they voted in the last parliamentary election in their country and which party they voted for. Therefore, it is possible to identify whether a populist party was voted for. A pseudo-panel analysis allows to study changes in individual economic insecurity and changes in attitudes such as distrust in political parties and anti-immigration sentiments, which are often taken as measures of cultural traits.

We show that the populist drive comes from the ‘barely coping’, who have developed a disgust with the political establishment prompting them to abstain from voting, and a disgust with immigrants that has prompted them to vote populist. However, behind this deterioration in these attitudes is the worsening of economic insecurity: voters who suffer from economic misfortune lose faith in institutions and develop anti-immigrant sentiments (Figure 3). Hence, economic insecurity drives up the populist vote both directly but also indirectly by affecting two key sentiments: anti-immigration and distrust for traditional politics. The direct impact of economic insecurity on the populist vote share and the indirect impact through distrust trust in politics is through voter apathy: economic insecurity has driven mistrust in traditional politics which, in turn, drove down turnout for traditional parties, indirectly increasing the vote share of populist parties. The indirect impact, on the other hand, through anti-immigrant sentiments is explicitly though an increase of the populist vote. Economic insecurity has driven the anti-immigrant sentiment among the barely coping, which in turn successfully drove up turnout for populist parties.

In sum the populist strategy of scapegoating immigrants was very successful – the immigration card has proven to be a powerful grievance that could be awakened by economic downturns. Moreover, countries where a populist party is present have much more anti-immigrant sentiment, which suggests that the populist rhetoric affects greatly these sentiments.

The cultural backlash against globalisation, traditional politics and institutions, immigration, and automation cannot be an exogenous occurrence, it is driven by economic woes....The policy implication and take-home message that stems from our results is clear: if one wants to defeat populism, one must defeat first economic insecurity."

The Guiso et al. team's full papers, with copious technical detail, can all be found on the internet.

The populism backlash: An economically driven backlash | VOX, CEPR’s Policy Portal

There has been some disagreement over the roots of the recent rise of populism in Europe. This column examines variations in exposure to economic shocks and in…

VOXEU.ORG

This just in: Humanity making big progress toward better world!

I highly recommend Charles Kenny's review of Stephen Pinker's new book, Enlightenment Now, in the latest issue of Democracy Journal. I've already flagged Pinker's book several times as the best single compilation of data about the remarkable progress humanity has made in not just the last 200 years but the last 50 as well. Progress has not stopped; it is ongoing even if pessimists on the left and right seem inclined to deny this.

Kenny largely agrees with this assessment. He is not without his criticisms of the book, however, criticisms that I think are well-taken:

"[W]hile Pinker makes a strong case for progress underpinned by the spread of Enlightenment values, it needs a caveat—one that can draw from some of the left-leaning discussions of development. There are less benign interpretations of how we got to the modern world, which involve conquest, slavery and exploitation alongside fellow feeling and rationality. And there’s an active debate about which came first—the material progress or the moral values (see, for example, Benjamin Friedman’s The Moral Consequences of Economic Growth, in which he argues strong economies foster opportunity, tolerance, and mobility). Regardless, all good things don’t necessarily go together: A lot of the recent global progress in income, health, and education has taken place in countries that do not hold fully to Enlightenment values when it comes to liberty and free expression. China and Ethiopia are two examples.

Amongst the humanities, theology is surely Pinker’s least favorite: He suggests that atheist humanism is the purest distillation of the Enlightenment values that he champions. This might go too far: Surely you don’t need God to be good, but you still don’t need to deny God’s existence to agree with progress and humanism—a good thing, too, given that only about 13 percent of surveyed populations worldwide reported themselves as “convinced atheists” in 2012. And while atheism need not be “in” as a core value, I might suggest otherwise about concern for inequality. Pinker argues that inequality “is not itself a dimension of human progress,” and that what exercises (or at least should exercise) people is inequality caused by unfair advantage rather than unequal outcomes. But there is a rich tradition suggesting inequality of outcomes is a bad in its own right. One of the Enlightenment’s most famous brains, Rousseau, wrote a whole discourse on the unnatural (and unhealthy) nature of any inequality not based on personal characteristics, after all."

But Kenny also notes:

"...the danger of progress-denial to progressives. For example, Enlightenment Now lays out significant evidence that, even as inequality has worsened, the War on Poverty has made some important strides, with the proportion of people under one consumption-based measure of poverty falling from 30 percent to 3 percent of Americans between 1960 and 2016. Denying that progress allows welfare opponents to suggest the system has failed and the safety net can be removed without consequence: Whatever the government does, the poor will always be with us.

The same logic applies worldwide. Fear about our ability to feed the global population spurred research into new food crops but also led Robert McNamara, at that point head of the World Bank, to discourage financing of health care because people not dying of illnesses would contribute to the population explosion. And portraying Africa as a shithole is an approach used by people trying to raise money to help the region as well as those trying to lock this country’s doors to immigrants from the continent."

I commend the entire review to you and, if you are so moved, the Pinker book itself.

It's Not As Bad As All That

Humans have made more progress in the past 100 years than in all of history before. What does this tell us?

DEMOCRACYJOURNAL.ORG

Long Live the Upper Middle Class!

Jordan Weissmann at Slate has a great article ("Actually, the 1 Percent Are Still the Problem") taking down the absurd Atlantic cover story essentially blaming the upper middle class for economic inequality and the mobility problems of all those below them on the economic ladder, including the poor. As Weissman notes, the article by Matthew Stewart is essentially a rehash of Brookings economist Richard Reeves' argument in his book, Dream Hoarders. Stewart's take makes no more sense, and probably less, than Reeve's original analysis.

Weissmann points out:

"Reeves’ and Stewart’s arguments start to fall apart....when they try to explain why we should supposedly pay less attention to the 1 percent. In Dream Hoarders, for instance, Reeves argues that the biggest cleavage in American class is between the top 20 percent of highest-earning households and the bottom 80 percent. “Americans in the top fifth of the income distribution—broadly, households with incomes above the $112,000 mark—are separating from the rest,” he writes. (As of this year, the figure is closer to $121,000.) But even a cursory glance at how America’s income distribution has changed over the past three decades shows why it doesn’t make sense to talk about the whole top 20 percent as a cohesive group or to give short shrift to the rise of the 1 percent. According to the U.S. Congressional Budget Office, the share of after-tax income going to households in the 81st to 90th percentile dropped a bit between 1980 and 2014. The share belonging to the 96th to 99th percentiles rose slightly. And the most dramatic change, by far, has been the rise of the 1 percent.....

Stewart and Reeves are right to point out that the American upper class is bigger than just the top 1 percent. There are, indeed, many layers of economic privilege in this country. But they’re doing it in a way that essentially asks us to forget a lot of what we’ve learned about how income and wealth are really concentrating in this country. The 1 percent vs. the 99 percent may not be a perfect shorthand for what ails the economy, but it’s a whole lot more useful than what they’ve offered up."

I would also add the following to Weissmann's analysis. First, as economics columnist Noah Smith put it:

'The real problem isn’t that people are hoarding their spots in the upper-middle class; it’s that there aren’t enough spots to begin with. Instead of focusing on who gets into Harvard, the U.S. should make it cheaper and easier for poor and working-class kids to go to the big public universities that are the real drivers of upward mobility. Instead of moving heaven and earth to ensure that the competition for plum jobs is fairer, the U.S. should focus on increasing the number of plum jobs.

The American Dream may be out of reach for many, but not because it’s being hoarded. The dream doesn’t come in a fixed lump to be parceled out among winners and losers. The goal should be to rebuild the middle class by moving more people into the ranks of the well-off, not to knock down the few who have managed to get there early.'

Second, I would argue that the growth of the upper middle class should be celebrated as an indicator of the high living standards that advanced market economies are capable of delivering.

What do we mean by an upper middle class standard of living? To begin with, since families and households vary considerably by size, the same income can mean very different living standards when that income supports a single person or an entire family of four or five. Thus, to clarify this question, it is useful to look at a standard household size and adjust households’ income to fit that standard size. Using a three person household as the standard, economist Stephen Rose has shown that the median adult in the US today enjoys a standard of living equivalent to $65,000 for a family of three.

Using the same standard, Rose defines the upper middle class as those adults whose household incomes are the equivalent of $100,000 a year for a family of three, but less than $350,000. By this measure, over a quarter (29 percent) of US adults are in the upper middle class today. Interestingly, this analysis indicates that the biggest change since 1979 in class positions defined by these standardized income levels has been a dramatic rise in the size of the upper middle size, more than doubling from 13 to 29 percent of adults. The rich ($350,000+) have, as popular perception suggests, also increased, but they are still a very small group, only 1.8 percent of adults.

Also consistent with popular perception, the middle middle class ($50,000-$100,000 in adjusted income) has declined over this time period (down 7 points to 32 percent of adults). But it is also the case that the lower middle class ($30,000-$50,000 in income has declined (down 7 points to 17 percent), as has the poor/near poor (less than $30,000, down 4 points to 20 percent). Thus, the rise of the upper middle class deserves a place of greater significance in the left’s calculations going forward since this group appears to be absorbing the much-publicized declines in middling income groups.

Applying some standard per capita income growth rates to these data, the median adult by midcentury would have an adjusted income of $98, 000 at 1.2 percent growth, $108,000 at 1.5 percent growth and $124,000 at 1.9 percent growth. That means that around half or more of the country by that time would enjoy the living standards of today’s upper middle class (or even better).

Thus, a reasonable aspiration for the left should be to make upper middle class affluence (by today’s standards) a majority lifestyle in coming decades and to raise the rest of population in advanced countries as close to that level as possible. In short, we should be calling for a mass upper middle class not trying to get rid of it.

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Forget What the Atlantic Is Telling You. The 1 Percent Are Still the Problem.

Why blaming “the 9.9 percent” for income inequality makes no sense.

SLATE.COM