What to do about all those wealthy people? Rep. Barney Frank (D-Mass.) has some ideas.
Reporter Jeremy Grant conducted an interview with Frank that appeared in the September 1 issue of the Financial Times. Grant described Frank as “a left-leaning liberal who also espouses the free market.”
The rest of the story, however, revealed Frank’s anti-free market leanings. Frank used anti-free trade and class warfare rhetoric and advocated more government involvement in business.
The interview was held in Falls River, Mass., instead of Washington – apparently to serve as a backdrop to illustrate one of Frank’s points. The town’s biggest employer, Quaker Fabrics (NASDAQ: QFAB) recently filed for Chapter 11 bankruptcy.
Frank blamed trade competition, implying that it benefits only the wealthy – “These working-class people are bearing the brunt of a policy of globalization that benefits the few and damages the many,” said Frank to the Boston Globe in July.
That’s just a symptom of the American worker’s plight, according to Grant.
“After adjusting for inflation, the median American household is earning less than it was in 2000,” wrote Grant. “In some polls, three quarters of Americans say they are either worse off – or no better off – than they were six years ago. Productivity is up, but wages have stagnated.”
Stagnant wages have long been a favorite talking point of the left and the media. But often those claims leave out total compensation, which includes employee benefits – a factor that has been rising in recent years.
Frank echoed Grant’s statement with an emotionally charged diatribe.
“You’ve got this problem where the increased wealth of the last few years, particularly since Bush came in, it’s just been wholly inequitably distributed. And the average citizen says: ‘I’m getting screwed.’ Enough of it now,” Frank said.
Actually, the “average citizen” isn’t getting “screwed,” according to James Sherk, Bradley Fellow in Labor Policy in the Center for Data Analysis at the Heritage Foundation. “Before it embarks on policies to redistribute income to reduce inequality, Congress should recognize that lower-income Americans have disproportionately benefited from the increase in leisure over the past generation,” wrote Sherk in an essay about the increasing leisure time Americans are enjoying.
Grant admitted this would be a key part of the 2008 presidential battle plan – to pit the middle class against the wealthy.
“The so-called ‘middle-class squeeze’ is propelling economic issues to the forefront of the 2008 presidential election,” wrote Grant. “As Democrats grapple with how to forge a united front on it, Frank has acquired, through his chairmanship of the House financial services committee, a powerful pulpit from which to shape the debate.”
As many in the media have done, Frank drew a comparison to the Great Depression era.
“And it’s worse than any time since 1929,” Frank said. “Not only has productivity growth failed to translate into wage growth, government has failed to ‘retard the increase in inequality’ by investing in training colleges. Americans’ ability to access healthcare is still linked to employment,” Grant wrote.
Frank and Grant seemed to equate productivity with a harder-working American – something that is not exactly true in an era of technological advancement. Productivity does not measure how hard people work at all, according Thomas G. Donlan, the Barron’s Business and Financial Weekly editorial page editor.
“It measures how well capitalists invest, and how well managers manage,” he wrote in the September 3 issue of Barron’s. “The tools purchased by capitalists and the working conditions set by managers enable workers to turn out more product per work hour.”
Frank dismissed this as an exercise in class warfare. He said he believes it has progressed to something more.
“For a long time the Republicans were able to stave off a debate about inequality by deriding it as class warfare, Frank says, so engaged with his subject that he is speaking as rapidly as he is chewing,” wrote Grant. “That’s no longer the case because of rising anger over outsized pay packages for chief executives.”
Of course, according to the National Taxpayers Union Foundation, the top 5 percent of wage earners (those earning an adjusted gross income of $137,056 or more annually) pay more than half (57.13 percent) of the federal income tax collected.
But Frank has a vague solution – “A new compact between Democrats and business and conservatives that he sums up thus: ‘Help us with equity and we can help you with growth,’” wrote Grant.
Grant didn’t explain what Frank’s “compact” would mean, aside from government interference in business.