Michael Medved’s Big Lies: A Review of "The 5 Big Lies About American Business" by Michael Medved

During my winter break from seminary I thought I would try to read some books from a different perspective for the sake of intellectual honesty. One of my selections was Michael Medved’s The 5 Big Lies About American Business.  Medved’s book is predictable faire of libertarian economic ideology (errr, policy) that’s light on data and long on anecdotal “evidence.”  Yet that’s absolutely the point, to throw in just enough numbers to convince the average, un-educated, non-critical Medved loyalist that his assertions are legit while also lacing apropos stories throughout to appeal to their emotion. Conveniently, conservatives of his ilk have a disdain for academics because of their “haughty intellectualism” and “liberalism.” Translation, academia can generally see through the B.S. so many conservatives put out under the guise of “fact.” Since these conservatives can’t dispute these critiques their only option is to disparage the source.

Medved’s “Five Lies” are “The current downturn means the death of Capitalism,” “When the rich get richer, the poor get poorer,” “Business executives are overpaid and corrupt,” “Big business is bad, small business is good,” and “Government is more fair and reliable than business.”  His usage of moral vocabulary helps his cause, because words like “good,” “corrupt,” “fair,” and so on are all relative depending on the context and therefore difficult to critique.  I decided to take a closer look at the one “lie” that lends itself to actual data analysis; specifically “When the rich get richer, the poor get poorer.”  

Medved proudly asserts “the claim that progress for the rich causes pain for the poor is logically impossible, historically unsupportable, and culturally (and psychologically) unforgivable” (69-70).  Despite strong words, his supporting evidence is actually quite sparse. I kept flipping to the back of the book looking for the bibliography, but was disappointed every time; too often Medved depends on broad generalizations or “studies” from obviously biased sources like the Heritage Foundation or Cato Institute.  Medved’s biggest error is his interpretation of growth amongst low and middle incomes. No one would disagree that families make more now than they did years ago, what actually needs to be analyzed is whether that growth has been enough to keep pace with the rising costs of everything else (exemplified in line graph below). Not intended to be exact, the graph illustrates that while median incomes have increased, incomes aren’t growing in relation to costs, and when compared to the income growth amongst the top-earning Americans the rich are actually getting richer while the poor get poorer.

 

Here’s some statistics in response to Medved. In the 30 years I’ve been alive, the median home price has gone up over 200%, the cost of a new car has gone up 275%, and gas has gone up over 220% while median income has only gone up about 81%.  No one would argue that median income hasn’t increased. The real question is whether income is keeping pace with the increases everywhere else.  Data shows that isn’t the case, in fact income has flat-lined, barely keeping up with inflation while the top income brackets have increased exponentially in the same time frame.  Further, the non-partisan Economic Policy Institute asserts that median income households actually lost wealth the last 30 years, which makes absolute sense considering households are spending a bigger chunk of their income for the basics of life.  Consider also that most spending by the “middle class” during the 00’s was on credit.

In another attempt to make his point, Medved uses a “study” by the Heritage Foundation  which asserts households are better off today because of the prevalence of TV’s and microwave’s in the average home (85-86).  A microwave cost $200 in 1984 but I can get one for $50 today.  Additionally, my father-in-law paid a couple thousand for a large flat screen a few years ago; I paid a few hundred last year. Technology almost always gets cheaper, so more families having a TV or microwave doesn’t really represent an increase in overall “wealth.”  Another head-scratcher is the assertion that “eighty-nine percent of the poor report their families have ‘enough’ food to eat, while only 2 percent say they ‘often’ don’t get enough to eat” (86).  The statistics from Feeding America tell a completely different story in which 1 out of 6 Americans lived in “food insecure households.”

Economic inequality is a serious problem in our country, and data clearly shows its only getting worse. It’s time we support fiscal policy as a nation that reduces the gap between rich and poor. And no, I’m not talking about “wealth redistribution” or “socialism,” I’m talking about paying Americans what they deserve.  The wages of the average American worker have been stagnating for the last decade.  Federal minimum wage is $7.25/hour which equates to $15,080/year, below the poverty line for a family of two! Sure, not a lot of folks make just minimum wage, but since much job growth has been in retail and home health care, folks are making $8 or $9/hour, a whopping $18,700/year.  Businesses are making money hand over fist and US workers are the most productive in the world, the problem is that earnings aren’t “trickling down.” We’ve tried lower taxes for top earners for about 10 years and inequality has only increased.  Lower taxes only incentivize top-earners to keep earnings for themselves. A higher marginal tax rate would encourage those same earners to reinvest the money in their business instead of pocketing the money for themselves, which would translate to higher wages and more jobs.

Frankly, I just don’t get it. I may be just plain stupid (and I’ve admitted such before) but to me Medved’s book represents just more justification of self-serving economic policy that I’ve already critiqued (in an oddly popular blog).  Medved may make a reasonable point here or there in his book (like obviously not all business execs are horrible people), but it assumes Capitalism to be a quasi-divine system. Which brings me to a related point, Medved’s usage of Scripture throughout the book is reprehensible.  The Bible has LOTS to say about money and the rich, almost entirely all negative, which he somehow ignores. I’ve criticized Christians for their blind acceptance of conservative economic policy as a way to ease their conscience and I think this is more of the same.  Leaders in Washington are talking right this minute about what to do with the looming “fiscal cliff.”  We can either stick it to the little guy again by cutting needed benefits like food stamps or ask high earners to contribute a little more to society. It’s time to do the right thing America.