(subliminal) Alan Greenspan

Well-hidden in this Bloomberg article about former Federal Reserve Chairman Alan Greenspan's opinion of John McCain's proposed tax cuts, is Greenspan's brilliant idea for reducing income inequality in the U.S.:

Greenspan said the widening income disparity among Americans is a "very serious'' issue that requires both raising the pay of lower- income workers and reducing higher incomes.

"The best way of doing that is to remove what is essentially protectionism for those skilled workers in the United States who are helped by keeping out their competition,'' he said, referring to the issue of "skilled immigration.''

In other words, all we need to do is fine tune a system already in place. We could raise the minimum wage a little more often, and let in a lot more H-1B visa holders to lower everyone else's wages. So much the better if raising the minimum wage increases the unemployment rate, as many claim.

Greenspan left this as a clue on how we can achieve this goal.

The U.S. education system is "critical'' to help "cutting-edge technologies'' replace older industries that will be phased out over time, Greenspan said.

Greenspan does not come out and say it, but to me, the meaning is clear. Bring in foreign students to study in the STEM fields (Science, Technology, Engineering, Mathematics), subsidize their tuition, and pay them lower wages after they graduate from school.

The only major flaw in his argument is that I'm willing to bet that the main culprit is not that there's too wide of a gap between paycheck amounts for white collar and blue collar workers. The real culprit is the gap in total income reported for the top 1% of earners (who, per page 37 of this 2007 Financial Services Forum report, have 28.1% of the national income as of 2005, the highest since 1928). This group is probably accumulating a lot more in income besides their weekly paychecks.

Greenspan has been tossing out these little asides for years. He's like the old guy who drones on and on, and you nod your head because you've heard it all before, then he slips in a bizarre little comment that goes almost completely unnoticed.

It wouldn't be so bad, except, a lot of people still hang on every word uttered by Greenspan. Worse yet, his ideas on the glories of lowering wages by increasing immigration into the U.S. is fast being accepted as a mainstream idea by conservatives.

What type of message does it send to parents and college-aid children? Send your children to college today for reduced salaries tomorrow. All of a sudden, the thought of pursuing a career in lower-paying service industries is becoming a lot more attractive.

(Thanks to Audible Smirk for the tip on the Bloomberg article.)

(Cross-posted to Carrie's Nation.)