The cruel myth behind Bush 'ownership society'

The New York Times' Princeton-economist-in-residence, Paul Krugman, opines on a new line of Bush rhetoric. From the NYT via the Houston Chronicle:

But there's a political imperative behind the "ownership society" theme: the need to provide pseudopopulist cover to policies that are, in reality, highly elitist.

The Bush tax cuts have, of course, heavily favored the very, very well off. But they have also, more specifically, favored unearned income over earned income — or, if you prefer, investment returns over wages. Last year Daniel Altman pointed out in The New York Times that Bush's proposals, if fully adopted, "could eliminate almost all taxes on investment income and wealth for almost all Americans." Bush hasn't yet gotten all he wants, but he has taken a large step toward a system in which only labor income is taxed.

The political problem with a policy favoring investment returns over wages is that a vast majority of Americans derive their income primarily from wages, and that the bulk of investment income goes to a small elite. How, then, can such a policy be sold? By promising that everyone can join the elite.

Right now, the ownership of stocks and bonds is highly concentrated. Conservatives like to point out that a majority of American families now own stock, but that's a misleading statistic because most of those "investors" have only a small stake in the market.

Click here for the rest.

Because most people are not rich and probably never will be, the right wing needs to use a well developed mythology in order to sell their economic policies that essentially favor the wealthy at everybody else's expense. Neo-liberalism is the philosophical basis for this mythology: even though it doesn't work, it sure sounds good, and the endless false ramifications of this sophistry make for a great deal of political elocution. Such rhetoric has come to completely dominate the public discourse, underlying virtually all discussion on economics. As Noam Chomsky points out, defying the conventional economic wisdom is essentially an invitation for scorn. It's nice to see Krugman talking common sense in such a mainstream venue.

Also, Rob Salkowitz over at Emphasis Added has been hitting on these issues for the past few days: click here and here for more myth-busting.

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