My last post showed how The New York Times promotes the Green party line. The one before that showed how it has supported the Red party line. Like a traffic light, The New York Times alternates between Red and Green. (There is actually little fundamental difference between the two. The Reds want to abolish the individual’s pursuit of happiness on the grounds that it results in exploitation, monopolies, and depressions. The Greens want to abolish it on the grounds that it results in acid rain, destruction of the ozone layer, and global warming.)
Today we are back to Red, with two transparent attempts of The Times to promote the doctrine of class warfare.
In a January 8, 2007 article titled u201CWorking Harder for the Man,u201D Times columnist Bob Herbert writes:
[T]he top five Wall Street firms (Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley) were expected to award an estimated $36 billion to $44 billion worth of bonuses to their 173,000 employees, an average of between $208,000 and $254,000, u201Cwith the bulk of the gains accruing to the top 1,000 or so highest-paid managers.u201D … There are 93 million production and nonsupervisory workers (exclusive of farmworkers) in the U.S. Their combined real annual earnings from 2000 to 2006 rose by $15.4 billion, which is less than half of the combined bonuses awarded by the five Wall Street firms for just one year.
As if to answer the question of whether his intention is to provoke a riot or revolution inspired by the notion of class warfare, Mr. Herbert concludes his article with these words:
There’s a reason why the power elite get bent out of shape at the merest mention of a class conflict in the U.S. The fear is that the cringing majority that has taken it on the chin for so long will wise up and begin to fight back.
I provide an exhaustive critique of Marxism and the doctrine of class warfare in my book Capitalism. Here I will observe only that the activities of businessmen and capitalists are the driving force of virtually all increases in real wages. It is their savings that pay the wages of workers and buy the capital goods with which they work and on which the wage earners’ productivity depends. It is the innovations of the businessmen and capitalists that underlie both continuing capital accumulation and the continuing rise in the productivity and real wages of the workers. To the extent that real wages fail to rise, the explanation is to be found in the frustration of the activities of businessmen and capitalists by misguided government policies that undermine capital accumulation and the rise in the productivity of labor.
In this brief space, I only want to concentrate on challenging Mr. Herbert’s assertions alleging a gross disparity between the earnings of a comparative handful of Wall Streeters and the great mass of wage earners.
As soon as I saw that Mr. Herbert was comparing the alleged meager growth in real earnings of wage earners with the alleged very substantial current monetary earnings of the Wall Streeters, a warning flag went up in my mind, simply because such a thing is not a legitimate comparison. It’s comparable to comparing one entity’s net gain with another entity’s gross revenues, e.g., Toyota’s net profit with General Motors’ sales revenues.
To compare apples with apples, I was immediately curious to know what the growth in wage earners’ monetary earnings had been between 2000 and 2006. To find the answer, I turned to the Survey of Current Business, which is the leading source of statistics on national income, wages, and profits, and gross domestic product. Page D 15 of the January 2007 issue of that publication reports total annual compensation of employees as $7524.4 billion as of the 3rd quarter of 2006, which is the most recent quarter for which data have been published.
At the same time, page 197 of the August 2005 issue of the Survey of Current Business reports total compensation of employees as $5837.4 billion as of the 3rd quarter of 2000. Subtracting this number from the total compensation of employees in 2006 gives a difference of $1687.0 billion. If this, apples-to-apples number is compared with the alleged $36 billion to $44 billion of Wall Street bonuses, it is 38 to 47 times larger, not half as large.
But what about the growth in wage earners’ real earnings, their earnings adjusted for the rise in prices? Might that not turn out to be a mere $15.4 billion, as alleged by Mr. Herbert? The answer is no, far from it.
To calculate the change in real earnings, it’s necessary to allow for the rise in prices between 2000 and 2006. According to the Bureau of Labor Statistics, which is the source of the data, the Consumer Price Index for Urban Wage Earners and Clerical Workers stood at 168.9 for 2000 and at 196.8 as of November of 2006, the most recent month for which data are available. This is an increase of 17 percent. If this rise in prices is applied to the employee compensation of $5837.4 billion in 2000, that number is raised to $6801.7 billion. The difference between this inflation-adjusted figure and 2006’s total employee compensation of $7524.4 billion is $722.7 billion. This is the rise in real total employee compensation over the period. This number is more than 47 times larger than the number alleged by Mr. Herbert. It also ranges from more than 16 to more than 20 times the Wall Street bonuses alleged by Mr. Herbert.
Mr. Herbert needs to explain how he arrived at his numbers. Until he provides a reasonable explanation, I leave it to the reader to judge his honesty and to decide whether or not and to what extent the culture of The New York Times has changed since the days of Jayson Blair, The Times’ reporter who simply fabricated claims.