A reader of the NYT Magazine piece on Senator Obama's economic views would inevitably ask this question. The article is anxious to tell readers that the enormous growth in inequality over the last two decades has been due to the increased value that technology has placed on skills. How can anyone who reads the newspaper believe anything like this? The CEOs of companies like Fannie Mae, Freddie Mac, Citigroup, Wachovia and other major financial institutions have shown themselves to be almost completely without skills, having cost their companies hundreds of billions of dollars of market capitalization, yet they were paid hundreds of millions of dollars for their work. If this reflects pay for skill, it is not obvious how. Most workers have seen downward pressure on their wages over the last three decades because U.S. trade policy has been explicitly designed to put them in direct competition with low-paid workers in the developing workers. By contrast, more highly educated workers, like New York Times reporters, still enjoy considerable protection from competition with workers in the developing world. It would be illegal for the New York Times, or any other newspaper, to hire two hundred highly qualified Indian reporters who would be willing to work for a fraction of the pay of their current reporters. If any newspaper did pursue this policy, it would almost certainly face serious fines and would almost certainly be forced to either pay the prevailing wage or fire the foreign workers. By contrast, tens of thousands of restaurants, construction companies, cleaning companies and other employers of less-educated workers routinely hire undocumented workers at wages far below what native-born workers or green card holders would demand to do the same work. These employers generally have little fear of legal sanctions. It is convenient for those who have benefited from the upward redistribution over the last three decades to believe that it was the natural result of the development of technology. However, this view requires ignoring all the obvious ways in which the government has structured the law to redistribute income upward. The NYT misrepresents the world and misleads its readers by presenting this view in an uncritical manner.
--Dean Baker
