In Charles Dickens’ classic tale, Ebenezer Scrooge refuses to take part in the joys of the Christmas season and only finds redemption after a ghost warns him that he will die, scorned by all, if he continues in his miserly ways. Perhaps “The Christmas Carol” has lessons for our own times.
Right now, the shops are full, office parties are in full swing, trees and buildings are all dressed up in their holiday finery, and airports are jammed with people heading home for Christmas. But behind the glitter and the conviviality, all is not well.
The ranks of the long-term jobless have swelled to unprecedented levels; the proportion of the population participating in the labor market has shrunk, the real earnings of men have declined, and the poverty rate is at peak levels. The Great Recession is partly to blame but there are signs of deeper, longer-lasting problems as well.
In the meantime, those at the top of the distribution have much to celebrate. The top 20 percent is taking home about half of all the income being generated. The top 1 percent has an average income of $1 million a year, even after taxes. (When we used to talk about millionaires we meant people who had that much wealth; now it means people who have that much annual income.) If that much income came from work, it would translate into a wage of $500 an hour. The least-skilled among us are, in the meantime, earning about $8 an hour. Is there any justification for some people earning not just ten times as much as someone else but sixty-two times as much?
To be sure, not all of the income at the top comes from salaries. There is a contingent of creative entrepreneurs and investors in this group. That cell phone your Uncle Ted is giving you for Christmas is just the tail end of a process of innovation that has benefitted us all. Still, most of the people earning this much money are not the Steve Jobs of the world. They include CEOs, financiers, high-paid professionals and some celebrities. It used to be that they were paid a lot less—but still managed to live exceedingly well and enjoy all of the good things in life. There’s not much that you can buy with $1 million that you can’t buy with $500,000 or even less. Efforts to find economic explanations for these sky-high incomes are a bit like Rudyard Kiplings’ Just So Stories – ex post justifications for social norms gone amok.
In the meantime, I can hear Ebenezer Scrooge, looking at this same data, and saying “bah humbug;” some of us are a lot more productive than others. Bob Crachit doesn’t deserve a raise.
I can also imagine Tiny Tim writing a letter to Santa and his elves—John and Mitch, Harry and Nancy, and of course, Barack. The letter explains that all those people earning around $8 an hour have been good and hard-working men and women and are only asking for something other than a lump of coal in their stockings. What specifically do they want? Their Christmas lists include an extension of unemployment benefits, a minimum wage of $10.10, some help with child care and health care, and more generous wage supplements such as the Earned Income Tax Credit. Unfortunately, Santa is broke; the elves are squabbling; the lists remain unread.
The Ghost of “Christmas-Yet-to-Come” tells Scrooge that without more help for those at the bottom the economy may survive but to what end? The society it supports will not flourish. There is nothing about a market economy, the Ghost notes, that automatically produces the “right” distribution of income. Market economies are good at allocating resources, under certain simplifying assumptions. They are not at all good at deciding how to distribute those resources. Markets work best when they are embedded in a democratic society whose leaders treat the Bob Crachits and the Tiny Tims in a way that sustains a healthy society.
The Ghost reminds Scrooge that when you are a poor person living in a very rich country, poverty damages the spirit. It’s not just material deprivation—after all most poor people in the U.S. are well off compared to those in less developed countries. It’s mainly about a loss of hope. The danger is that the poor will stop trying—trying to get an education, trying to find or keep a job, trying to be better parents and better citizens. The miracle is how many keep going despite the odds. The worry is how many have retreated already from the worlds of education, work, and commitment to family.
At the end of Dickens’ tale, Scrooge sees the error of his ways. Thanks to the Ghost, he has peered into the future and been alarmed by what he sees. He gives Bob Crachit a raise and sends a turkey to his family.
May the Ghost of “Christmas-Yet-to-Come” visit us all this holiday season and enable us to see our own future in new ways.
[On the ongoing trade negotiations] If we’re serious about resolving the core issues that the U.S. has with China, then this is going to be a way station that’s going to require a lot more continued focus by the administration for a number of months if not years.