Moore Inequality

I had a chance to debate Stephen Moore from the Cato Institute and a regular contributor to the Wall Street Journal's editorial page on a program called the Wall Street Journal Report, which will air Sunday on more than 200 television stations (check local listings at http://moneycentral.msn.com/content/CNBCTV/TV_Info/P8377.asp). He was arguing the economy is robust and there is no problem with inequality. He argued that we were just experiencing the normal cycle of young workers starting off being poor and seniors having less income, but mobility and wage increases were working for everyone in the middle class.

Yo Stephen! Time for an economic refresher.

The world is changing; this is not our fathers' and grandfathers' economy. And even Alan Greenspan, Bob Rubin, Warren Buffett, and yes, President Bush's new Secretary of the Treasury Hank Paulson, acknowledge growing problems with the market not working for middle class Americans.

Second, Stephen, your one defense to show that living standards are improving for middle class Americans was the increasing number of Americans who own stock.

Wrong again: The Federal Reserve and the Economic Policy Institute report that less than half of all Americans are invested in the stock market in any fashion directly or even indirectly through mutual funds or 401(k)s.

In fact stock ownership DECLINED from 51.9% in 2001 to 48.6% in 2004. And this decreasing "Ownership Society" also has produced less stock market assets for individual households. The percentage of households with more than $5,000 in stock FELL from 40.1% to 34.9%.

But here is the inequality gap in black and white: The wealthiest 20 percent of all households in America own 90 percent of all stock value and the wealthiest 5 percent own 65 percent of all stock value directly or indirectly.

This is not a country growing together. A rising tide is only lifting the luxury liners.

As I write in my book, we can make this A Country That Works, but it means facing up to reality and recognizing difficulties confronting hard working Americans. Stephen Colbert intends to be funny. Stephen Moore cooking the books on TV, radio, and in print is not funny. We need a serious effort to find ways together to put America back on track - for our kids and grandkids.