Sec. Snow Fires Back

It astounds me -- and Larry Kudlow -- that the Bush administration seems to allow others to frame the debate on the economy, in short that they never fight back. Secretary Snow, in an interview in the Wall Street Journal news pages, does just that.

"What's been happening in the United States for about 20 years is [a] long-term trend to differentiate compensation," Mr. Snow said in an interview with The Wall Street Journal last week. "Look at the Harvard economics faculty, look at doctors over here at George Washington University...look at baseball players, look at football players. We've moved into a star system for some reason which is not fully understood. Across virtually all professions, there have been growing gaps."

Mr. Snow said the same phenomenon explains why compensation for corporate chief executive officers has climbed so sharply. "In an aggregate sense, it reflects the marginal productivity of CEOs. Do I trust the market for CEOs to work efficiently? Yes. Until we can find a better way to compensate CEOs, I'm going to trust the marketplace."

Wow! defending wage disparity as the product of an efficient market. I must be dreaming or something.

As hard as I have been on the Bush administration lately, it occurs to me that in the recent differences between the President and Congressional Republicans, I have been on the side of Mr. Bush. He was right on the Dubai ports deal, right on the need for a guest worker program, right on the need to extend the tax cuts. My brother-in-law said "count me in with the 38% who are still with him." Me too.

The Journal piece (remember that their news pages are pretty liberal) suggests that averages distort the picture for middle class Americans. Mirabile non dictu, I disagree. I think the naysayers are cherry-picking negative data -- and that it is getting harder and harder to find it.

An efficient economy will always have uncertainty. Buggy whip manufacturers will need to worry (unless they live in France...) but Snow had good news to share.

Mr. Snow distributed a fact sheet that showed after-tax income per person, adjusted for inflation, rose 8.2% from January 2001, when George W. Bush took office as president, through January 2006. The sheet also showed that per-person net worth -- total assets minus debt -- rose 24%, unadjusted for inflation, from early 2001 to the end of 2005. "People have more money in their pocket" and in their bank accounts, he said.

Put that in your opium pipe and smoke it, Keynesians!

Second Bush Administration Posted by jk at March 20, 2006 10:44 AM