After years of criticism from labor unions and other progressive groups, the Bank’s own chief economist is accusing his colleagues of ideologically-driven data manipulation.
The world has been mired in recession since 2008 — nowhere more so than in Europe. It might thus come as some surprise that sales of super-luxury cars are booming — nowhere more so than in Europe.
In fact, sales of Bentleys (average price around $300,000) are up 60% this year in the United Kingdom, according to a report in the Guardian newspaper.
Bentley sales are also up 35% in the United States.
To put this in perspective, the US economy grew by just 2.2% in 2012. The UK economy grew even less: 0.2%, according to statistics from the International Monetary Fund.
How can sales of super-luxury cars grow at super-fast rates during a recession? The answer is simple: it’s not a recession for everyone.
The last five years have been one of the best times in human history to be rich, and an even better time to be super-rich. The plutonomy — the economy of the super-wealthy — has been growing by leaps and bounds.
Unfortunately, most of us don’t live in the plutonomy. In the realonomy where ordinary people work (or don’t work) things have been much tougher.
The difference is striking. Consider that all-American company, General Motors. According to data compiled by Automotive News, GM sales are up 10% so far this year. Not bad.
But GM famously offers a brand for every level of consumer. Chevy sales are up just 6%. Buick sales are doing better, up 23%. And Cadillac sales? You guessed it: up 37%.
Acura sales are outpacing Honda sales. Infiniti sales are outpacing Nissan sales. Lexus sales are outpacing Toyota sales. In fact, the only company where the mass-market brand is growing faster than the elite brand is Ford — and that’s only because Ford doesn’t separate Ford car from Ford truck sales.
Of course, it’s the more expensive trucks that are leading Ford to higher profits.
The fact is that times are not tough for everyone. Times are tough for low-income people, unemployed people, farmers, and the elderly. For high-income professionals times are pretty good.
For corporate leaders, hedge fund managers, and CEOs, happy days are here again.
[pullquote]The fact is that times are not tough for everyone. Times are tough for low-income people, unemployed people, farmers, and the elderly.[/pullquote]
So the next time you hear that times are tough and belts need tightening, ask yourself who’s saying that times are tough and whose belts it is they want to tighten. Changes are it’s a highly-paid corporate lobbyist who’s saying that times are tough … and it’s someone else’s belt that needs tightening.
American national income per person is now just about back at 2007 levels. The losses of the Great Recession have been made up. In a very real sense, every American could be doing just as well as in 2007.
The reality is that America’s plutonomy is doing fabulously better than in 2007, while America’s realonomy flounders along at rock bottom. The Great Recession hasn’t meant so much the destruction of wealth as the transfer of wealth. The poor have gotten poorer and the rich have gotten richer, leaving the whole country right back where it was.
Except that the country as a whole is now even more unequal than it was in 2007.
We have to ask ourselves: how unequal should a country be? Was the America of 2007 really just too equal for our taste? Were there simply too few Bentleys on our roads in 2007?
Or was the America of 2007 already dangerously unequal — in which case the America of 2013 is even worse?
Personally, I find it hard to believe that 2007 America was a dangerously equal communist worker’s paradise. If you think that 2007 was about right, then you agree that we need to correct the country’s income distribution to bring down our grotesque level of inequality. If you agree with me that America was already grotesquely unequal in 2007, then we have that much farther to go.
Should we have a Bentley tax? Perhaps not. But we should have a seriously progressive income tax that restores some sanity to our economy and our income distribution. Until we do, America will keep moving backwards as the rich get richer and the poor get poorer.
But then, we’ve been moving backwards for forty years now. Working Americans reached their highest income levels in 1973. We have a lot of lost ground to make up. As of 2013, we haven’t even started. That more perfect union is going to be a long time coming.