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wa8dzpThe age cohort continues to surprise economists and defy sweeping generalizations, from how many live in poverty to how many drive cars
By Jana Kasperkevic
Dec 26 2014
<http://www.theguardian.com/money/us-money-blog/2014/dec/26/us-census-bureau-report-one-in-five-millennials-poverty>There might be something to the woe-is-me narrative of the millennial generation. It turns out that one in five millennials lives in poverty, according to a recent report released by the US Census Bureau.
The generation that has been dismissed as entitled and whiny is struggling with higher levels of poverty than its counterparts did in 1980. Back then, about one in seven 18-to-34-year-olds lived in poverty.
One possible reason: higher unemployment.
Today, 65% of young adults are employed, down from 69% in 1980. Members of the prior generation were also more likely to find themselves serving in the army: about 9% of the 18-to-34-year-olds were veterans in the 1980; today that number is just 2%.
Drive on
Probably most surprising among the findings published in the interactive Young Adults: Then and Now is what hasn't changed: eight in 10 millennials drive to work. The number is "largely" unchanged, found the bureau.
This news comes at a time when all other statistics seem to point to the fact that millennials have fallen out of love with cars and driving – something that has been troubling carmakers. Millennials are buying fewer cars: new car purchases for the age group dropped 30% between 2007 and 2012. Many of those who drive to work may be using older cars – or, perhaps, car sharing.
There are some areas, however, where millennials rely on other means of transportation. In New York, for example, only 53% of millennials get to work by car. The rest are probably stuck on the L train.
More school, fewer wedding bells
The survey also confirmed a few things we already knew about millennials – like the fact that more of them are going to college. Compared to just 16% of their 1980s counterparts, 22% of young adults today have a college degree.
Their expensive degrees – since 1978 the price of college has rocketed up 1,120% – unfortunately do not guarantee employment, not even in their chosen fields. The underemployment rate for 2013 college graduates was 18.3%, up from 9.9% in 2007.
[snip]
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[Dec 24, 2014] The Atlantic
Where Things Stand Right Now
Income inequality isn't just about the inability of some to afford the finer things in life. Research suggests that a wide gulf between incomes can have more pernicious effects, such as increased feelings of disenfranchisement, fewer opportunities for advancement, and increased poverty. Some economists have even suggested that a large gap between class incomes can lead to stunted economic growth. Between 2009 and 2012 the top one percent of Americans enjoyed 95 percent of all income gains, according to research from U.C. Berkeley.
The same study found that income inequality may be at its most pronounced levels since 1928, the height of the stock-market bubble.
5) Goodbye, Middle ClassThe growing gulf in earnings between America's richest and everyone else means that the group that's historically fallen in the middle, living a life of neither luxury nor poverty, is shrinking. In 2013, median household income was $51,939, still eight percent lower than in 2007, the year before the recession started, according to Census data.
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The labor of moderately educated US workers is rewarded considerably less now than in 1979, even as the country has got much richer. In other words, Thomas Malthus' gloomy prophecies, written in 1798, were not wrong. They were merely early...
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NYTimes.com
Mayor Bill de Blasio on Monday called for protesters to suspend demonstrations in the aftermath of the killing of two New York police officers, who were gunned down in Brooklyn as they sat in their patrol car.
"It's time for everyone to put aside political debates, put aside protests, put aside all of the things that we will talk about in due time," Mr. de Blasio said in a speech. "That can be for another day."
The mayor's call came a few hours after the police commissioner, William J. Bratton, said that the killing of the officers on Saturday was a "direct spinoff of this issue" of the protests that have roiled the nation in recent weeks.
The protests were born of frustration that black people are not treated fairly in the criminal justice system but the demonstrations have often focused broadly on police officers.
For weeks since a grand jury declined to indict a police officer in the death of Michael Brown in Ferguson, Mo., and a grand jury declined to indict a police officer in the death of Eric Garner on Staten Island, protesters have taken to the streets to call for reforms
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Fred C. Dobbs:Harsh realities depicted in Dickens 'Christmas Carol' still haunt us http://www.bostonglobe.com/business/2014/12/21/financial-realities-dickens-classic-echo-our-own-time/E9bWUEok7x6Ij476oPLc1N/story.html
Boston Globe - Jay Fitzgerald - Dec 21, 2014A year before publishing his classic "A Christmas Carol," Charles Dickens landed in Boston in 1842 on the first leg of his tour of the United States.
Dickens arrived during a period that, in some ways, might not seem much different from today. The country was reeling from a financial panic that had begun five years earlier, causing an economic depression that spurred bank failures, widespread unemployment, and revolts in the countryside over mortgage payments.
At the same time, society was struggling to adapt to disruptive technologies - in Dickens's era, the Industrial Revolution - undermining traditional employers, dislocating workers, and expanding the gap between rich and poor.
"Dickens was writing at a stage similar to what we've just gone through economically," says Alasdair Roberts, a law professor at Suffolk University and author of "America's First Great Depression: Economic Crisis and Political Disorder after the Panic of 1837." "The general tenor of our times is very similar to his."
So what if Dickens, perhaps accompanied by one of the ghost characters made famous in "A Christmas Carol," were to return to Boston and other US cities today? Certainly, he'd see the progress in addressing the social and economic ills chronicled in the novel through measures such as child labor laws, social safety net, and other programs designed to help the poor, elderly, and vulnerable. But he might also be surprised that some things have not changed.
'Are there no prisons? Are there no workhouses?'
In "A Christmas Carol,'' the protagonist, the miser Ebenezer Scrooge, is asked to donate money to help ease the sufferings of the poor. Scrooge refuses, noting that his taxes help support institutions available to the impoverished.
"Are there no prisons?'' he asks. "Are there no workhouses?"
Public workhouses were often stark, overcrowded, prison-like places where paupers lived and were forced to work for room and board, breaking stones, making sacks, or manually driving corn mills. They are a thing of the past today, though occasionally state and federal officials still have to crack down on unscrupulous employers, such as human traffickers who smuggle illegal immigrants into the country and treat them like indentured servants in restaurants and other businesses.
Today, many of the poor end up in homeless shelters. More Boston residents are living in shelters today than in any of 25 major cities surveyed across the country, according to a recent report by the US Conference of Mayors. Homelessness has risen faster in Massachusetts than anywhere else in the country, up 40 percent since 2007, according to a recent report by the US Department of Housing and Urban Development. ..
ilsm -> Fred C. Dobbs
"The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough to those who have little". FDR
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December 12, 2014 | The Chronicle of Higher Education
Few topics have animated today's chattering classes more than capitalism. In the wake of the global economic crisis, the discussion has spanned political boundaries, with conservative newspapers in Britain and Germany running stories on the "future of capitalism" (as if that were in doubt) and Korean Marxists analyzing its allegedly self-destructive tendencies. Pope Francis has made capitalism a central theme of his papacy, while the French economist Thomas Piketty attained rock-star status with a 700-page book full of tables and statistics and the succinct but decisively unsexy title Capital in the Twenty-First Century (Harvard University Press).
With such contemporary drama, historians have taken notice. They observe, quite rightly, that the world we live in cannot be understood without coming to terms with the long history of capitalism-a process that has arguably unfolded over more than half a millennium. They are further encouraged by the all-too-frequent failings of economists, who have tended to naturalize particular economic arrangements by defining the "laws" of their development with mathematical precision and preferring short-term over long-term perspectives. What distinguishes today's historians of capitalism is that they insist on its contingent nature, tracing how it has changed over time as it has revolutionized societies, technologies, states, and many if not all facets of life.
Nowhere is this scholarly trend more visible than in the United States. And no issue currently attracts more attention than the relationship between capitalism and slavery.
If capitalism, as many believe, is about wage labor, markets, contracts, and the rule of law, and, most important, if it is based on the idea that markets naturally tend toward maximizing human freedom, then how do we understand slavery's role within it? No other national story raises that question with quite the same urgency as the history of the United States: The quintessential capitalist society of our time, it also looks back on long complicity with slavery. But the topic goes well beyond one nation. The relationship of slavery and capitalism is, in fact, one of the keys to understanding the origins of the modern world.
For too long, many historians saw no problem in the opposition between capitalism and slavery. They depicted the history of American capitalism without slavery, and slavery as quintessentially noncapitalist. Instead of analyzing it as the modern institution that it was, they described it as premodern: cruel, but marginal to the larger history of capitalist modernity, an unproductive system that retarded economic growth, an artifact of an earlier world. Slavery was a Southern pathology, invested in mastery for mastery's sake, supported by fanatics, and finally removed from the world stage by a costly and bloody war.
Some scholars have always disagree with such accounts. In the 1930s and 1940s, C.L.R. James and Eric Williams argued for the centrality of slavery to capitalism, though their findings were largely ignored. Nearly half a century later, two American economists, Stanley L. Engerman and Robert William Fogel, observed in their controversial book Time on the Cross (Little, Brown, 1974) the modernity and profitability of slavery in the United States. Now a flurry of books and conferences are building on those often unacknowledged foundations. They emphasize the dynamic nature of New World slavery, its modernity, profitability, expansiveness, and centrality to capitalism in general and to the economic development of the United States in particular.
The historians Robin Blackburn in England, Rafael Marquese in Brazil, Dale Tomich in the United States, and Michael Zeuske in Germany led the study of slavery in the Atlantic world. They have now been joined by a group of mostly younger American historians, like Walter Johnson, Seth Rockman, Caitlin C. Rosenthal, and Edward E. Baptist looking at the United States.
While their works differ, often significantly, all insist that slavery was a key part of American capitalism-especially during the 19th century, the moment when the institution became inextricable from the expansion of modern industry-and to the development of the United States as a whole.
For the first half of the 19th century, slavery was at the core of the American economy. The South was an economically dynamic part of the nation (for its white citizens); its products not only established the United States' position in the global economy but also created markets for agricultural and industrial goods grown and manufactured in New England and the mid-Atlantic states. More than half of the nation's exports in the first six decades of the 19th century consisted of raw cotton, almost all of it grown by slaves. In an important book, River of Dark Dreams: Slavery and Empire in the Cotton Kingdom (Harvard University Press, 2013), Johnson observes that steam engines were more prevalent on the Mississippi River than in the New England countryside, a telling detail that testifies to the modernity of slavery. Johnson sees slavery not just as an integral part of American capitalism, but as its very essence. To slavery, a correspondent from Savannah noted in the publication Southern Cultivator, "does this country largely-very largely-owe its greatness in commerce, manufactures, and its general prosperity."
Much of the recent work confirms that 1868 observation, taking us outside the major slaveholding areas themselves and insisting on the national importance of slavery, all the way up to its abolition in 1865. In these accounts, slavery was just as present in the counting houses of Lower Manhattan, the spinning mills of New England, and the workshops of budding manufacturers in the Blackstone Valley in Massachusetts and Rhode Island as on the plantations in the Yazoo-Mississippi Delta. The slave economy of the Southern states had ripple effects throughout the entire economy, not just shaping but dominating it.
Merchants in New York City, Boston, and elsewhere, like the Browns in cotton and the Taylors in sugar, organized the trade of slave-grown agricultural commodities, accumulating vast riches in the process. Sometimes the connections to slavery were indirect, but not always: By the 1840s, James Brown was sitting in his counting house in Lower Manhattan hiring overseers for the slave plantations that his defaulting creditors had left to him. Since planters needed ever more funds to invest in land and labor, they drew on global capital markets; without access to the resources of New York and London, the expansion of slave agriculture in the American South would have been all but impossible.
The profits accumulated through slave labor had a lasting impact. Both the Browns and the Taylors eventually moved out of commodities and into banking. The Browns created an institution that partially survives to this day as Brown Brothers, Harriman & Co., while Moses Taylor took charge of the precursor of Citibank. Some of the 19th century's most important financiers-including the Barings and Rothschilds-were deeply involved in the "Southern trade," and the profits they accumulated were eventually reinvested in other sectors of the global economy. As a group of freedmen in Virginia observed in 1867, "our wives, our children, our husbands, have been sold over and over again to purchase the lands we now locate upon. … And then didn't we clear the land, and raise the crops of corn, of tobacco, of rice, of sugar, of every thing. And then didn't the large cities in the North grow up on the cotton and the sugars and the rice that we made?" Slavery, they understood, was inscribed into the very fabric of the American economy.
Southern slavery was important to American capitalism in other ways as well. As management scholars and historians have discovered in recent years, innovations in tabulating the cost and productivity of labor derived from the world of plantations. They were unusual work sites in that owners enjoyed nearly complete control over their workers and were thus able to reinvent the labor process and the accounting for it-a power that no manufacturer enjoyed in the mid-19th century.
As Caitlin Rosenthal has shown, slave labor allowed the enslavers to experiment in novel ways with labor control. Edward E. Baptist, who has studied in great detail the work practices on plantations and emphasized their modernity in The Half Has Never Been Told: Slavery and the Making of Modern Capitalism (Basic Books), has gone so far as to argue that as new methods of labor management entered the repertoire of plantation owners, torture became widely accepted. Slave plantations, not railroads, were in fact America's first "big business."
Moreover, as Seth Rockman has shown, the slave-dominated economy of the South also constituted an important market for goods produced by a wide variety of Northern manufacturers and artisans. Supplying plantations clothing and brooms, plows and fine furniture, Northern businesses dominated the large market in the South, which itself did not see significant industrialization before the end of the 19th century.
Further, as all of us learned in school, industrialization in the United States focused at first largely on cotton manufacturing: the spinning of cotton thread with newfangled machines and eventually the weaving of that thread with looms powered at first by water and then by steam. The raw material that went into the factories was grown almost exclusively by slaves. Indeed, the large factories emerging along the rivers of New England, with their increasing number of wage workers, cannot be imagined without reliable, ever-increasing supplies of ever-cheaper raw cotton. The Cabots, Lowells, and Slaters-whatever their opinions on slavery-all profited greatly from the availability of cheap, slave-grown cotton.
As profits accumulated in the cotton trade, in cotton manufacturing, in cotton growing, and in supplying Southern markets, many cultural, social, and educational institutions benefited: congregations, hospitals, universities. Given that the United States in the first half of the 19th century was a society permeated by slavery and its earnings, it is hardly surprising that institutions that at first glance seem far removed from the violence of plantation life came to be implicated in slavery as well.
Craig Steven Wilder has shown in Ebony and Ivy: Race, Slavery, and the Troubled History of America's Universities (Bloomsbury, 2013) how Brown and Harvard Universities, among others, drew donations from merchants involved in the slave trade, had cotton manufacturers on their boards, trained generations of Southern elites who returned home to a life of violent mastery, and played central roles in creating the ideological underpinnings of slavery.
By 1830, one million Americans, most of them enslaved, grew cotton. Raw cotton was the most important export of the United States, at the center of America's financial flows and emerging modern business practices, and at the core of its first modern manufacturing industry. As John Brown, a fugitive slave, observed in 1854: "When the price [of cotton] rises in the English market, the poor slaves immediately feel the effects, for they are harder driven, and the whip is kept more constantly going."
Just as cotton, and with it slavery, became key to the U.S. economy, it also moved to the center of the world economy and its most consequential transformations: the creation of a globally interconnected economy, the Industrial Revolution, the rapid spread of capitalist social relations in many parts of the world, and the Great Divergence-the moment when a few parts of the world became quite suddenly much richer than every other part.
... ... ...
It is for this reason that most history has been framed within the borders of modern states. In recent years, however, some historians have tried to think beyond such frameworks, bringing together stories of regional or even global scope-for example, Charles S. Maier's Leviathan 2.0: Inventing Modern Statehood (Harvard University Press) and Jürgen Osterhammel's The Transformation of the World: A Global History of the Nineteenth Century (Princeton University Press).
Within that literature, economic history has played a particularly important role, with trailblazing works such as Kenneth Pomeranz's The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, 2000) and Marcel van der Linden's Workers of the World: Essays Toward a Global Labor History (Brill, 2008). Economic history, which for so long has been focused mostly on "national" questions-the "coming of managerial capitalism" in the United States, "organized capitalism" in Germany, the "sprouts of capitalism" in China-now increasingly tackles broader questions, looking at capitalism as a global system.
When we apply a global perspective, we develop a new appreciation for the centrality of slavery, in the United States and elsewhere, in the emergence of modern capitalism. We can also understand how that dependence on slavery was eventually overcome later in the 19th century. We come to understand that the ability of European merchants to secure ever-greater quantities of cotton cloth from South Asia in the 17th and 18th centuries was crucial to the trans-Atlantic slave trade, as cloth came to be the core commodity exchanged for slaves on the western coast of Africa. We grasp that the rapidly expanding markets for South Asian cloth in Europe and elsewhere motivated Europeans to enter the cotton-manufacturing industry, which had flourished elsewhere in the world for millennia.
And a global perspective allows us to comprehend in new ways how slavery became central to the Industrial Revolution. As machine production of cotton textiles expanded in Britain and continental Europe, traditional sources of raw cotton-especially cultivators in the Ottoman Empire as well as in Africa and India-proved insufficient. With European merchants unable to encourage the monocultural production of cotton in these regions and to transform peasant agriculture, they began to draw on slave-grown cotton, at first from the West Indies and Brazil, and by the 1790s especially in the United States.
As a result, Europe's ability to industrialize rested at first entirely on the control of expropriated lands and enslaved labor in the Americas. It was able to escape the constraints on its own resources-no cotton, after all, was grown in Europe-because of its increasing and often violent domination of global trade networks, along with the control of huge territories in the Americas. For the first 80 years of modern industry, the only significant quantities of raw cotton entering European markets were produced by slaves - and not from the vastly larger cotton harvests of China or India.
By 1800, 25 percent of the cotton that landed in Liverpool, the world's most important cotton port, originated in the United States; 20 years later, that proportion had increased to 59 percent; by 1850, 72 percent of the cotton consumed in Britain was grown in the United States, with similar proportions for other European countries. A global perspective lets us see that the ability to secure more and cheaper cotton gave European and North American manufacturers the ability to increase the production of cheap yarn and cloth, which in turn allowed them to capture ancient cotton markets in Asia, Africa, and elsewhere, furthering a wave of deindustrialization in those parts of the world. Innovations in long-distance trade, the investment of capital over long distances, and the institutions in which this new form of capitalist globalization were embedded all derived from a global trade dominated by slave labor and colonial expansion.
A global perspective on the history of cotton also shows that slave labor is as much a sign of the weakness as of the strength of Western capital and states. The ability to subdue labor in distant locations testified to the accumulated power of European and North American capital owners. Yet it also showed their inability to transform peasant agriculture. It was only in the last third of the 19th century that peasant producers in places such as Central Asia, West Africa, India, and upcountry Georgia, in the United States, could be integrated into the global empire of cotton, making a world possible in which the growing of cotton for industry expanded drastically without resort to enslaving the world's cotton workers. Indeed, one of the weaknesses of a perspective that focuses almost exclusively on the fabulously profitable slave/cotton complex of the antebellum American South is its inability to explain the emergence of an empire of cotton without slavery.
We cannot know if the cotton industry was the only possible way into the modern industrial world, but we do know that it was the path to global capitalism. We do not know if Europe and North America could have grown rich without slavery, but we do know that industrial capitalism and the Great Divergence in fact emerged from the violent caldron of slavery, colonialism, and the expropriation of land. In the first 300 years of the expansion of capitalism, particularly the moment after 1780 when it entered into its decisive industrial phase, it was not the small farmers of the rough New England countryside who established the United States' economic position. It was the backbreaking labor of unremunerated American slaves in places like South Carolina, Mississippi, and Alabama.
When we marshal big arguments about the West's superior economic performance, and build these arguments upon an account of the West's allegedly superior institutions like private-property rights, lean government, and the rule of law, we need to remember that the world Westerners forged was equally characterized by exactly the opposite: vast confiscation of land and labor, huge state intervention in the form of colonialism, and the rule of violence and coercion. And we also need to qualify the fairy tale we like to tell about capitalism and free labor. Global capitalism is characterized by a whole variety of labor regimes, one of which, a crucial one, was slavery.
During its heyday, however, slavery was seen as essential to the economy of the Western world. No wonder The Economist worried in September 1861, when Union General John C. Frémont emancipated slaves in Missouri, that such a "fearful measure" might spread to other slaveholding states, "inflict[ing] utter ruin and universal desolation on those fertile territories"-and on the merchants of Boston and New York, "whose prosperity … has always been derived" to a large extent from those territories. Slavery did not die because it was unproductive or unprofitable, as some earlier historians have argued. Slavery was not some feudal remnant on the way to extinction. It died because of violent struggle, because enslaved workers continually challenged the people who held them in bondage - nowhere more successfully than in the 1790s in the French colony of Saint-Domingue (now Haiti, site of the first free nation of color in the New World), and because a courageous group of abolitionists struggled against some of the dominant economic interests of their time.
A contributing factor in the death of slavery was the fact that it was a system not just of labor exploitation but of rule that drew in particular ways on state power. Southern planters had enormous political power. They needed it: to protect the institution of slavery itself, to expand its reach into ever more lands, to improve infrastructures, and to position the United States within the global economy as an exporter of agricultural commodities. In time, the interests of the South conflicted more and more with those of a small but growing group of Northern industrialists, farmers, and workers. Able to mobilize labor through wage payments, Northerners demanded a strong state to raise tariffs, build infrastructures conducive to domestic industrialization, and guarantee the territorial extension of free labor in the United States.
... ... ...
Sven Beckert is a professor of American history at Harvard University. His latest book, Empire of Cotton: A Global History, has just been published by Alfred A. Knopf.
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April 30 1997 | washingtonpost.com
...But Mayer's study also shakes the reassuring conservative assumption that, if pushed, the poor can become self-sufficient through work. Precisely because many long-term welfare recipients aren't as competent or disciplined as middle-class parents, they may not find and keep jobs, let alone well-paying ones. The thrust of Mayer's grim analysis is to support the existence of a permanent "culture of poverty," an argument first advanced in the modern American context by political scientist Edward Banfield in a 1970 book.Banfield split the poor into two groups. Some simply lacked money. These included many disabled and unemployed people, and some single mothers who had been widowed, divorced or abandoned. These people had middle-class values and could benefit from government income support. They could usually recover from a setback (job loss, divorce). Then there was the true "lower class," who would "live in squalor . . . even if their incomes were doubled," Banfield wrote, because they had a "radically present-oriented" outlook that "attaches no value to work, sacrifice, self-improvement, or service to family, friends or community."
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The Guardian
ForgottenVoice -> TheBorderGuard 14 Dec 2014 15:20
No, you're confusing rights with entitlement... the right of every citizen to equal status under the law, not the right of the most wealthy to extra entitlement.
No one is entitled to feed at the public trough, yet bankers, rich Tory landlords, CEO's and oligarchs feed until they're sick, and after being sick over us they go back for more. while you're jumping up and down about the poorest having more than their fair share, the richest are laughing in your face.
You have completely failed to identify the real enemy. 180 degree's wrong.
Ziontrain -> NieuwHaarlem 14 Dec 2014 15:04..o. The US does not have any income requirements for foreign spouses. If you are an american citizen and you marry a foreigner it is considered your own business. You are given a residency permit, a work permit and if the foreign spouse wants, they can go throughout he citizenship process almost automatically. The authorities reserve the right to investigate and prosecute sham marriages, ones arranged for cash,"..
I think you are overly trivialising the process of proving that you are not in a sham marriage in the first place. I have heard from some one who went through the process that they have some crazy procedures, including that they can visit your house at any time and if your wife is not at home that night then well she isn't getting a green card and you are potentially looking at prison etc.
They tend to assume fraud as a default and not the other way round...
Treflesg -> arkley 14 Dec 2014 14:39
When Hong Kong was handed over to China, it had 3.6 million Chinese British Citizens. The UK downgraded their citizenship so that whilst they were still British subjects, they did not have right of free movement to the UK. At the same time, the UK allows free movement to 27 majority white countries.
You say race does not come into our free movement for EU citizens but closing of our historical borders for Commonwealth citizens, even though they happened in the same decade. And happened against the wishes of the Commonwealth countries. What other reason can you give then? Why did we decide in the same political generation to say that we did not have enough room for anymore people from the Caribbean or India, but, we did have room for the then EEC?
taxhaven 14 Dec 2014 14:33
...this utterly false dichotomy between the taxpayer and the person receiving benefits. We are all taxpayers – in fact, the campaigner and number-cruncher Simon Duffy has shown that the poorest 10% pay more in tax (income and council tax as well as VAT) as a proportion of their income than any other decile.
Do you understand why all this stimulus money, admittedly handed largely to the already-wealthy, has gone into speculation, carry trades, derivative bets and central bank-held reserves?
Even the wealthy can only buy so much food, so many cars, so many clothes. And even the wealthy use basically the same government services as do the rest of us: the same roads, the same sewerage and water, the same medical care, the same school costs.
Because the cost of the services we all consume requires X amount of dollars from each user, perhaps the "poor" (read: government-dependent actually should be paying a greater portion of their income for the services they consume.
Remember, in nominal amounts the rich pay far, far more. And I'd hate to think that as a people we'd stoop so low as to, at gunpoint, confiscate assets from some to subsidize the consumption of others...even if that is disingenuously couched as some kind of "insurance" scheme...
TheHyperborean 14 Dec 2014 14:26
In Sweden, for your foreign partner (literally "cohabitant" in Swedish: sambo) to be able to live with you in Sweden and get residence status (and, later, citizenship), you have to meet certain income requirements, your partner has to meet certain income requirements, and your apartment needs to be of a certain size. I thought such was nearly universal in the West.
graun notfemme 14 Dec 2014 14:23
Actually, citizenship rights based on wealth is entirely in line with Britishness. Actually, it's just playing catch-up to what a lot of other countries already do.
The USA offers green-card visas for people willing to invest $1Mil in a company.
Australia, France, Ireland, Holland and Spain (to name just some) all have similar schemes
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Dec 12, 2014 | economistsview.typepad.com
Part 1 of Tankersley's series on the problems facing the middle class ("Liftoff & Letdown: The American middle class is floundering, and it has been for decades. The Post examines the mystery of what's gone wrong, and shows what the country must focus on to get the economy working for everyone again. Monday: The devalued American worker."):
Why America's middle class is lost, by Jim Tankersley, Washington Post: ... Yes, the stock market is soaring, the unemployment rate is finally retreating after the Great Recession and the economy added 321,000 jobs last month. But all that growth has done nothing to boost pay for the typical American worker. Average wages haven't risen over the last year, after adjusting for inflation. Real household median income is still lower than it was when the recession ended.Make no mistake: The American middle class is in trouble.That trouble started decades ago, well before the 2008 financial crisis, and it is rooted in shifts far more complicated than the simple tax-and-spend debates that dominate economic policymaking in Washington. ...In this new reality, a smaller share of Americans enjoy the fruits of an expanding economy. This isn't a fluke of the past few years - it's woven into the very structure of the economy. And even though Republicans and Democrats keep promising to help the middle class reclaim the prosperity it grew accustomed to after World War II, their prescriptions aren't working. ...The great mystery is: What happened? Why did the economy stop boosting ordinary Americans in the way it once did?The answer is complicated, and it's the reason why tax cuts, stimulus spending and rock-bottom interest rates haven't jolted the middle class back to its postwar prosperity. ...Darryl FKA Ron:Never expected WaPo to go there. I just skimmed so far, but it really looked good. I better take a close look. Just want to snark first on, "Why didn't you ask ask as displaced US farm worker sixty years ago?" Remember when blacks would be better off and we would get cheaper lettuce by using green card workers to pick lettuce and herd blacks into urban ghetto slums where some might luck out and find manufacturing jobs. Behind every Luddite there is an equivocating ass hole. THen do give my rant a little class there is the obligatory quote:http://en.wikisource.org/wiki/Meditation_XVII
Meditation #17 By John Donne From Devotions upon Emergent Occasions (1623), XVII:
...No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of thy friend's or of thine own were: any man's death diminishes me, because I am involved in mankind, and therefore never send to know for whom the bell tolls; it tolls for thee...
Wolfgang Price:I happened on this website. I am intrigued by the discussion. The quote from Donne I like (it has been 5 decades since I first read it in a literature course)...though I find in my sympathy for it little relevance for the vagaries that are thought to explain macro-economic activity. Though I practice my 'profession' as economist I am not devoted to any Gospel be it from Marx, Keynes, Hayek, Hicks, Friedman et.al. Nor do I rely altogether on the past for predicating the course of a future course.
If one does go back to 1500 and examine the course of Western economic history in 200 year periods one has a sense for the vast swings which national economies experience. Each swing has the economy topsy-turvy.
The Columbus adventure (circa 1500) would yield for European economies wealth unlike any before it. Royalty would flourish. Spain had an abundance of wealth. It was the age of the three-masted sailing vessels a wealth creating innovation. Looking back from 1700 there remained only remnants of the earlier society. And looking ahead to 1900 the industrial revolution similarly had the 200 year period topsy-turvy. Royalty was out, Burghers were in. Farm rural life became urban life. And there were those who moaned over the horrid conditions of city life and the loss of rural social values in the course of an 'industrial revolution'. The Luddites were the martyrs of the period. From the vantage of 2000 looking back just to 1900...just 100 years...there has been a vast transition in the socio-economic order in Western nations. Serfs are out (mostly), citizens are in (mostly). And lo-and-behold there emerged the middle class. Those who live in its period lay claim to it...even as entitle-ment. In the aftermath of 2008 we notice the prime-time, middle class period receding. It as well was only a 'period'. If it has made us anxious it is no-less anxious than all those other generations that since 1500 (and before) have been anxious about the economic changes that seemed to unfold about them. (Read C. Dickens, Upton Sinclair...and "Gone with the Wind". Economies have no steady state. There no measures that restore the past. It is over. Gone With The Wind.
A new economy emerges, indeed it is already here but we have yet to take full notice of it...but its consequences are evident in multiple ways. It is an economy in which jobs and wage labor are increasingly marginalized in the productive process. In the early period of the 1900-2100 cycle labor was the limiting factor in the productive process. The more labor the more productive the economy. Henry Ford was proud there 100,000 jobs at Dearborn. Now we are proud with the fewest jobs possible...only the few 'right' jobs. And with robot and digital technology just in the earliest phase of application there will ensue mass displacement of
labor...not just middle class labor.
With 40 million robots by 2050, and these capable of displacing occupations which now provide income for half the workforce, we will face
what farming labor once faced a century earlier. Now 2 percent of the work force produces all consumable food stuff AND there is enough over for export. All the re-education for rural labor on new farming techniques did not spare the course of rural labor. Nor will all the STEM education spare course of urban labor. GDP growth will depend on robotic and digital technology. There will be a state of permanent surplus wage-labor.
In the course of the transition we will need to find new ways to occupy those in their prime years. And we will need to find ways of distributing the wealth created by the these new technologies. Failing to recognize what is in progress and harping on measures to restore the middle class diverts attention from addressing the consequences faced going toward 2100. The answers are not to be found in the gospel from Krugman and the dozens of other Gospelers economics offers up in its 'profession'.Darryl FKA Ron -> Wolfgang Price...
"The quote from Donne I like (it has been 5 decades since I first read it in a literature course)...though I find in my sympathy for it little relevance for the vagaries that are thought to explain macro-economic activity."
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[Fair enough since macro-economics only explains the needs of capital for profits to insure future investment. At best macro-economics can guarantee full employment, but not good employment and it is a bit of a stretch to assume that it can produce rising wages under current pressures from trade deficits, rising resource costs, and "financialization" of production. However, in this moment of falling oil prices we may have lucked upon a way out. Time will tell. Saudis are pumping overtime to close that door.
At any rate the bulwark between civilization and the class war elitism of those privileged in a capitalist economic system is "institutional." Ground lost in those institutional arrangements cannot be made up by macro. Macro only even cares about income distribution enough to battle rising equality with its NAIRU. Institutions, including government tax and spend policy not just limited to fiscal stimulus to offset aggregate demand losses in a recession, but ongoing as an investment in improvments to social institutions, chiefly public education from pre-K to college.
In marco-economics Luddites are just road kill. In institutional economics Luddites are social losses of a system failure that must be addressed.
mulp -> Darryl FKA Ron...But economists spouting free lunch economics theories will not lead to better policy recommendations.
People cite FDR, but then ignore what FDR said very clearly: transfer payments DO NOT WORK.
FDR made the case for capitalism.
Free lunch economics uses the word "capitalism" to describe pillage and plunder of capital and the pump and dump asset churn to inflate the price of the declining value of capital assets.
Capitalism absolutely requires labor production in excess of consumption, so the only way for capital to grow in value is with more employment, more labor cost, and to argue that technology is the reason for cutting the amount of capital built in order to inflate the price of old capital is simply pillage and plunder and pump and dump.
In a capitalist economy, the high price of a few billions of labor costs in Google, Facebook, Apple, Exxon at $100 a barrel, mandates investors pour billions of dollars into labor creating new additional Googles, Facebooks, Apples, Exxons which produce so much competition in the market place that all profit is eliminated, and the price of all is reduced to the labor cost investment with a market rate of return, which right now is around 5% for high risk investment.
After all, profit is evidence the economy is operating below capacity and thus inefficiently. Only when profit is eliminated by competition using labor to grab a bit of the profit will the economy grow.
But that's FDR's economics, not today's free lunch economics that justifies lower costs, lower prices, money for nothing whether in handouts or profits.
TANSTAAFL
anne -> mulp...
Free lunch economics uses the word "capitalism" to describe pillage and plunder of capital and the pump and dump asset churn to inflate the price of the declining value of capital assets....
[ This is language meant to foster disdain and hatred, completely false, completely mean-spiritied. ]
anne -> mulp...
But economists spouting free lunch economics theories will not lead to better policy recommendations.
People cite FDR, but then ignore what FDR said very clearly: transfer payments DO NOT WORK....
[ I want the precise reference, I know of no statement and surely Franklin Roosevelt could never have used such crudely mean-spirited language. ]
anne -> mulp...
http://www.nytimes.com/books/00/11/26/specials/schlesinger-hundred.html
April 10, 1983
The 'Hundred Days' of F.D.R.
By ARTHUR SCHLESINGER Jr.Exactly half a century ago, the Republic plunged into the Hundred Days - that time of tumultuous change when a flood of legislation swept away venerable market practices and gave the American economic system a new contour.
In the frenzied weeks from March to June 1933, Franklin D. Roosevelt sent 15 messages to Congress and steered 15 major laws to enactment: among them, central planning for industry and for agriculture, new regulation for banking and for the securities exchanges, the Tennessee Valley Authority, the Civilian Conservation Corps and a national system of unemployment relief.
''At the end of February,'' Walter Lippmann wrote when the special session adjourned, ''we were a congeries of disorderly panic stricken mobs and factions. In the hundred days from March to June we became again an organized nation confident of our power to provide for our own security and to control our own destiny.''
The Hundred Days were only the start of a process that ended by transforming American society. Who can now imagine a day when America offered no Social Security, no unemployment compensation, no food stamps, no Federal guarantee of bank deposits, no Federal supervision of the stock market, no Federal protection for collective bargaining, no Federal standards for wages and hours, no Federal support for farm prices or rural electrification, no Federal refinancing for farm and home mortgages, no Federal commitment to high employment or to equal opportunity - in short, no Federal responsibility for Americans who found themselves, through no fault of their own, in economic or social distress?
These social changes have won general approval. Even the Reagan counterrevolution, for all its 19th-century laissez-faire and Social Darwinist passions, shrinks from abolishing the framework of social protection - the ''safety nets'' - created by the New Deal....
anne -> mulp...
"TANSTAAFL"
[ There ain't no such thing as a free lunch. The language of disdain and meanness. ]
Fred C. Dobbs -> anne...
Wikipedia: In the sciences, TANSTAAFL means that the universe as a whole is ultimately a closed system. There is no magic source of matter, energy, light, or indeed lunch, that does not draw resources from something else, and that will not eventually be exhausted. Therefore the TANSTAAFL argument may also be applied to natural physical processes in a closed system (either the universe as a whole, or any system that does not receive energy or matter from outside). (See Second law of thermodynamics.) ...
Darryl FKA Ron -> mulp...
"But economists spouting free lunch economics theories will not lead to better policy recommendations."
[WHat the hell are you talking about? We got the FOMC for economic policy. THe rest is just a game among intellectuals with no power whatsoever to do a thing about any of it. Before economic policy recommendations matter a majority in Congress has to care. Like I said "Don't confuse making excuses with making policy. Most economists only get to do the former."
You are too crazy to even be an economist, so you don't even get to make excuses.]
anne:
http://www.census.gov/hhes/www/income/data/historical/household/
September 16, 2014
Real Median Household Income, 2000-2013
2000 ( 56,800) *
2001 ( 55,562) Bush
2002 ( 54,913)
2003 ( 54,865)
2004 ( 54,674)2005 ( 55,278)
2006 ( 55,689)
2007 ( 56,436)
2008 ( 54,423)
2009 ( 54,059) Obama2010 ( 52,646)
2011 ( 51,842)
2012 ( 51,758)
2013 ( 51,939)* Income in 2013 adjusted dollars
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Dec 12, 2014 | The American Conservative
Nearly 40 years ago, conservative sociologist Robert Nisbet saw a new specter that threatened American society. In an essay for Commentary called "The New Despotism," he condemned the bureaucratization of American life and its whittling away of individual freedom. These new bureaucracies were staffed and run by a new sort of person: Nisbet called them the "New Equalitarians," and they weren't interested in making America's promises of equality before the law and equal opportunity a reality. Rather they were interested in coercively enforcing an equality of result through a regulatory state that would increasingly centralize its power and invade the every nook and cranny of citizens' lives."Equality has a built-in revolutionary force lacking in such ideas as justice or liberty," Nisbet wrote. "For once the ideal of equality becomes uppermost, it can become insatiable in its demands."
Four decades later, however, it's pretty clear that if these New Equalitarians ever existed in any coherent form, they decidedly lost their fight. As French economist Thomas Piketty has empirically shown in Capital in the Twenty-First Century, the West is lurching back to a past where society can be divided into two distinct classes: a rentier class who live off of the proceeds of their capital assets and everyone else who works for a living, often making meager and falling wages unless they're fortunate enough to be pulling down the "supersalaries" of America's financial elite. The top 1 percent of Americans own about a third of the country's wealth and have seen their average incomes rise by 31 percent in between 2009 and 2012, while everyone else's wages remained stagnant despite considerable increases in productivity.
This wealth concentration, not surprisingly, translates into another form of inequality, that of political power. As researchers Benjamin I. Page, Larry M. Bartels, and Jason Seawright have shown recently, the average American has virtually no say in public policy when their policy preferences diverge from the top percentiles of wealthy Americans. As Founding Father and first Chief Justice John Jay said way back when, "The people who own the country ought to govern it."
Ironically, the growing inequities of 21st-century life in America have caused a resurgence in equalitarianism, primarily Marxist in sympathy, by a new breed of radical thinkers who are very much concerned with the equality of result or condition that so troubled Nisbet.
One of these thinkers is Benjamin Kunkel. A former best-selling novelist and self-labeled "Marxist public intellectual," Kunkel has written a little book, really an anthology of previously published essays, called Utopia or Bust: A Guide to the Present Crisis. It is an alternatively witty and impenetrable survey of six major leftist thinkers over the last half-century.
Kunkel's plunge into autodidactic Marxism was a byproduct of existential angst. Writing about the critical and commercial successes of his novel Indecision, Kunkel admits: "These very welcome developments coincided with the worst depressive episode of my adult life. I can't say what caused it, but I remember thinking of the poet Philip Larkin's line about bursting 'into fulfillment's desolate attic'."
What Kunkel is clearly after is community. "Part of the trouble seems to have been that your own fulfillment is no one else's," he writes, "and therefore not even quite your own." In the pursuit of something bigger than himself and a diagnosis of what ails global society after the financial crisis of 2008, Kunkel rediscovered Marxism and began devouring its present-day theorists.
The two best essays in Kunkel's collection wrestle with the ideas of Marxist historian Robert Brenner and anarchist anthropologist David Graeber. They are the best because they are the most concrete, concerned with the ravages of inequality, the political not natural reasons for this disease's metastasizing, and how political communities can ameliorate inequality's rapid rise since the 1970s.
Brenner's main thesis is that the cause of global economic stagnation during the 1970s wasn't growing wages squeezing out profits but increased international competition as Europe redeveloped after it had been nearly obliterated in World War II and Asia modernized. If Brenner is correct, then the past few decades of neoliberal policies are even more tragic because by driving down workers' wages worldwide, businesses don't have enough customers to realize a reasonable profit. Ironically, their ideological victory undermined their bottom line. Adding to their misery, unsatisfied with the returns from investing in actual production, investors plowed capital into the casino capitalism that nearly took down the global economy in 2008. "Hence," Kunkel writes, "the financialization of the world economy, delivering more volatility than growth."
Where there's finance, there's debt. And where there's debt, there's anarchist David Graeber, a political anthropologist of considerable renown whom Kunkel reads to gain a greater understanding of how debt has functioned as a form of control from antiquity to the present. As Kunkel remarks, "The servicing of debt can … become a way to practically dominate the formally free, to exact a stream of tribute in societies without official hierarchies."
Graeber finds his solution to the debt crisis in an unlikely place for an anarchist: the Bible. Every 50 years, the ancient Israelites engaged in a jubilee, where all debts were canceled and everyone started with a clean slate. However utopian this sounds, it isn't crazy when you consider the massive bailouts-the erasure of debt financed by the indebted American taxpayer-that the federal government orchestrated for Wall Street. As Kunkel observes:
A far simpler and more effective monetary policy would have been for the government to print a new batch of money, distribute an equal amount to everyone, then sit back and watch as stagnant economies were stirred to life by the spending and debts were paid down and eroded by temporarily higher inflation. The inconceivability of such a policy is a mark not of any impracticability, but of the capture of governments by a financial oligarchy.
As an analytical tool, Kunkel's little book shows Marxism remains useful, vibrant, and relevant, even if only among privileged intellectuals and writers, as he freely admits. But as a political program, Kunkel seems to recognize it can lead to nowhere but to tyranny. Much like Marx, Kunkel and the thinkers he analyzes are more content to analyze capitalism's contradictions rather than to lay out a systematic-and always ill-advised-program for humanity's liberation.
Kunkel does take shallow stabs at possible reforms, while noting his next book will tackle how to build the free, cooperative, and sustainable society so many of us, left and right, crave. The general outline is full employment at a living wage guaranteed by the state. These solutions to the present crisis aren't all that novel-they're pretty standard social democratic fare-but they refreshingly refrain from irresponsible Marxist calls for violent revolution, which historically does far more bloodletting than liberating, or anti-democratic vanguard parties, which lead the stubborn masses toward the promised land. This is important because it shows today's young, or youngish, radicals know state-imposed socialism won't work economically, morally, or politically.
Kunkel also smartly stays away from the broad and elitist cultural criticisms that always seems to drag down the left. Any radicalism planted in American soil, as the late cultural critic and former Marxist Christopher Lasch observed, will only grow if it isn't dismissive of belief, family, and community. Kunkel seems to understand this and also recognizes that capitalism's insatiable hunger for profit over people undermines the very things that Lasch castigated leftists for criticizing. There are inklings in Kunkel's writing that his true end game leans toward self-governing communities made up increasingly of worker cooperatives content with more control over their day-to-day lives at the expense of an abundance of material goods.
Kunkel is high on the idea of the government sponsoring workers' cooperatives. "Such cooperatives would receive startup loans from the government, but would then survive on their own income or, like other businesses, fail," he writes. "Compensation would be set by workers themselves, and any profits of enterprise likewise distributed by labor/management."
There's much even conservatives might agree with here, for it would begin to produce a society, reminiscent of the Jeffersonian archetype, of self-sufficient small proprietors, farmers, and cooperatives producing for local markets, where the distinction between worker and capitalist becomes harder and harder to discern. The advent of the "locavore" locally-sourced food movement and the 3-D printer/maker movement, both embraced by fringes of the left and the right, should also provoke optimism that a freer and a more cooperative future is possible.
Ultimately, Kunkel's critiques of capitalism are incomplete: there's little talk of imperial America's vengeful wrath overseas, which redistributes massive amounts of Americans' wealth into the national-security state and the corporations that feed it while undermining democratic institutions and basic civil liberties. Unfortunately, there's also little discussion in Kunkel's book of the dignity of meaningful work, which is another area of common ground shared by the old right and left in America.
"The most important issue remains work," as Lasch observed decades ago,
"the loss of autonomy on the job, the collapse of high standards of workmanship, the pervasive demoralization that results from the mass production of goods that are widely recognized as intrinsically worthless by those who produce them, and the general crisis of a culture historically oriented around the dignity of labor."
This alienation persists today.
Increasingly the divides in American life are not between those who defend equality of opportunity versus those who demand equality of result, as Nisbet argued. Rather they are between whether freedom and voluntary association on a more local level can win out over coercion and bureaucracy at an ever more distant national level. Kunkel's desire for sustainable production by worker-owned businesses and grassroots democratic decision-making seems to envision a new kind of politics, more local and left-libertarian in nature, that transcends easy categorization. And if there is a genuine mood rising among Americans, particularly the young, toward a return to smallness and democratic self-control throughout American society, then the argument now should revolve around means. It's a discussion neither side should flinch from. Through this tension, modesty and limits may well become the new radicalism both left and right can embrace.
Matthew Harwood is senior writer/editor at the American Civil Liberties Union. His work has appeared at Al Jazeera America, The Guardian, The Washington Monthly, and elsewhere.
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economistsview.typepad.com
From the OECD Insights blog:
Is inequality good or bad for growth?, by Brian Keeley: If you've been following the income inequality debate, you'll know there's been much discussion of the question in the headline above. Until just a few years ago, it's probably fair to say that mainstream opinion leaned towards the "good for growth" side of the debate. Yes, inequality might leave a bad taste in the mouth, but it was worth it if it meant a strong economy. ...But over the past couple of years,.... that inequality is good, or at least not bad, for growth ... has come under increasing fire, including from the IMF, the OECD and even Standard & Poor's. And now comes new research from the OECD indicating that "income inequality has curbed economic growth significantly".Much of the coverage of rising inequality has focused on the incomes of "the 1%". But the OECD research, which was led by Michael Förster and Federico Cingano, indicates that it's the situation of people at the other end of the earnings scale that has the biggest impact on growth. These lower-income households are not a small group. They represent some 40% of the population...Where overall inequality is higher in a society, a clear pattern emerges: People from such backgrounds invest much less in developing their human capital – essentially their education and skills. By contrast, it has almost no impact on the educational investment of middle-income and wealthy families. The implications for social mobility are clear – an ever-widening education and earnings gap between society's haves and have-nots. ...Just how bad is clear from the OECD research. It estimates that rising inequality knocked more than 10 percentage points off growth in Mexico and New Zealand in the two decades up to the Great Recession. The impact of rising inequality was also felt – albeit not as strongly – in a number of other OECD countries, including Italy, the UK and the US and even in countries with relatively low levels of inequality like Sweden, Finland and NorwayTo be sure, the debate over inequality and growth will certainly continue. Just last week (before publication of the new OECD paper), Nobel laureate Paul Krugman admitted he was a "skeptic" who remained to be convinced of the link. But the fact that the debate is happening at all is surely a good thing. Rising inequality is one of the most significant socioeconomic trends of our time. Understanding its possible impact on our societies and economies has surely never been more important.In the report, they authors also say:
... Tackling inequality through tax and transfer policies does not harm growth, provided these policies are well designed and implemented. In particular, redistribution efforts should focus on families with children and youth, as this is where key decisions on human capital investment are made and should promote skills development and learning across people's lives. ...Posted by Mark Thoma on Tuesday, December 9, 2014 at 10:21 AM in Economics, Income Distribution | Permalink Comments (12)
I think high inequality can exist only in highly stratified society where rich are isolated from poor almost completely. Living in a country within the country (gated communities, etc).
Such societies were common during human history. We might be returning [to] this type of society on a new level.
Another interesting trend is that high inequality raises the share of guard labour in the economy. http://jaredbernsteinblog.com/inequality-and-guard-labor/
Productivity and GDP as measures of growth are deeply flawed. This fixation on GDP in the USA reminds me the USSR. Larger and larger parts of GDP reflect parasitic, counterproductive activities.
Similarly there is good increased productivity and not-so-good increased productivity, and I think we get mostly the latter. Cutting the workforce and switching it to temps without investing in better technological process is what businesses do nationwide. I also wonder what is so good in elimination of qualified human labour via automation.
Peter K.:
Again I think of Amartya Sen's piece on India versus China.
http://www.nytimes.com/2013/06/20/opinion/why-india-trails-china.html
"....
Inequality is high in both countries, but China has done far more than India to raise life expectancy, expand general education and secure health care for its people. India has elite schools of varying degrees of excellence for the privileged, but among all Indians 7 or older, nearly one in every five males and one in every three females are illiterate. And most schools are of low quality; less than half the children can divide 20 by 5, even after four years of schooling.India may be the world's largest producer of generic medicine, but its health care system is an unregulated mess. The poor have to rely on low-quality - and sometimes exploitative - private medical care, because there isn't enough decent public care. While China devotes 2.7 percent of its gross domestic product to government spending on health care, India allots 1.2 percent.
India's underperformance can be traced to a failure to learn from the examples of so-called Asian economic development, in which rapid expansion of human capability is both a goal in itself and an integral element in achieving rapid growth. Japan pioneered that approach, starting after the Meiji Restoration in 1868, when it resolved to achieve a fully literate society within a few decades. As Kido Takayoshi, a leader of that reform, explained: "Our people are no different from the Americans or Europeans of today; it is all a matter of education or lack of education." Through investments in education and health care, Japan simultaneously enhanced living standards and labor productivity - the government collaborating with the market.
Despite the catastrophe of Japan's war years, the lessons of its development experience remained and were followed, in the postwar period, by South Korea, Taiwan, Singapore and other economies in East Asia.
China, which during the Mao era made advances in land reform and basic education and health care, embarked on market reforms in the early 1980s; its huge success changed the shape of the world economy. India has paid inadequate attention to these lessons.
mulp:
"Where overall inequality is higher in a society, a clear pattern emerges: People from such backgrounds invest much less in developing their human capital – essentially their education and skills."
That is passive aggressive. The poor refuse to invest $100,000 they do not have plus the $100,000 they need for food, housing, clothes, transportation in education to improve their human capital.
Hey, why doesn't the small business in need of skilled workers spend $100,000 in capital does not have in training unskilled workers over a period of five years?
What?? Small businesses can't operate with costs exceeding prices and spending exceeding revenue??? It seems that the poor are supposed to be able to spend more than they have on building human capital while not needing any money for ongoing operations: food, housing, etc.
In Adam Smith and Locke's time, the poor who were able bodies could advance themselves by exploiting the labor shortage in the Americas and pay their way with five or so years of servitude, and then get free land from the government that they can make their own by meeting some improvement and paying token fees to government. Or go to work on a farm for room and board, or similar situations at other businesses. But that is in the era of capitalism creating huge labor shortages from all the construction of capital.
In that era, the value and price of capital never exceeds the lesser of the cost of an addition unit of capital and the value of the return on existing capital. Many farms in the South declined in value and price rapidly from depletion of the soils, and thus the plantation owner had to move West to new land - that is what drove Andrew Jackson the Indian Fighter to become President - his farming practices had destroyed the value of his land. As President, he redistributed wealth from the civilized natives living like the English as Jefferson had promised they could in security.
Today, no land remains for government to redistribute except through bankruptcy and foreclosure. But that method of redistribution takes from the poor Americans and gives to those favored by the likes of President Andrew Johnson.
So, we have lots of wealth redistribution by government under the direction of politicians who seek to be like President Jackson. And like Jackson, they do not believe in capitalism, but in the destruction of capital for profit.
And destroying human capital is just part of the Jacksonian economic idea to generate profit, an idea conservatives hold dear today.
The OECD is composed of those who advocate redistribution of wealth from one class of relatively powerless people to the powerful, so the OECD needs to blame the powerless for their increasing loss of human capital. Today no one can agree to work for room, board, and job training, nor even merely work for room and board. The free lunch economic's policy of asset price inflation requires blocking the use of labor to build more capital which will eliminate profits and drive down capital asset prices to the labor cost of a new equivalent asset. Thus free lunch economics requires a large surplus of labor that is then claimed to have little to no value, all in service of inflating existing old asset prices.
The problem is the poor get to invoke government wealth redistribution by also defaulting on debt backed by their worthless human capital and getting the Federal technocrat to transfer the money long spent to the debtor from the savers. Who have relied on government to print replacement money to prop up the asset price of the bad debt.
But now the poor are cut off from credit, so they can't consume, so that means production can not increase.
It is in the interest of society and the economy that human capital increase based on the return on human capital, which is the income from labor of humans. But free lunch economics consider labor costs to be a dead-weight cost to the economy:
workers are not consumers, consumers are not workers.Until we return to demand side labor income driven economics, we can not have economic growth and can not have a capitalism of capital increase instead of capital destruction.
reason:
djb
It seems we have spent a lot of effort worrying about what the NAIRU (non-accelerating inflation rate of unemployment), but it seems that we have ended up inadvertedly stuck with a diru (decelerating inflation rate of unemployment) instead. Surely deceleration is a (negative) form of acceleration. One problem is that the central bank treats its target rate of inflation as an upper bound, but not as a lower band.But perhaps the real problem is the general mix of policy, I remain unconvinced that encouraging higher leverage (via small deficits combined with low interest rates) is a path to macro-economic stability, and I sort of wonder how anybody who really thinks about it, can believe that either. I really believe that when we had larger government deficits and credit rationing we were better off.
Part of the problem seems to be that if you lack at what economists think is being optimized, economic security is nowhere to be seen. And yet if you actually ask people what they want, it is one of their highest priorities. You can efficient and brittle (the throw away society), but is that really what we as a biological species with a long and vulnerable childhood and a long and vulnerable old age really needs?
The liquidity trap has forced the Feds hand, but there are still plenty who treat ANY money printing as the devil's work. Now I agree, uncontrolled money printing is a bad idea. You may need taxes and or bond sales to combat inflation at some stage. But maybe some money printing, that then is allowed to trickle UP to the best providers for the common good (rather than down based on the whims of the very rich) would produce a better society.
djb -> reason...
its really rather simple
as keynes says for the economy as a whole we must have income (Y) = sales(consumption)(C) plus investment (I)
but for most people they think that the sales (C) of a given period can account for all the income (Y) plus the investment (I)
that is keynes says we must have Y = C + Ibut most people think that it should be C = Y + I
but for the whole economy, that will not work
so basically we need investment from preexisting wealth or newly printed money to be added to income to make the economy viable, otherwise it will collapse
this investment can be fiscal policy from government, capital investment or charity from private sector, or just people spending their preexisting savings,
so real simple, that is why we need investment, and although monetary policy indirectly encourages investment, fiscal policy is direct investment and much more powerful
workers are in a better position to bargain when we have full employment, or the closer to it the better off they are
when wages arent increasing at least to match gdp, then it is right to question how close we are to full employment
and investment is needed to get us there
reason:
Small correction
... if you lack at ...
... if you LOOK at ...P.S. Note that whether inequality is good or bad for growth is rather irrelevant to the previous comment (because it is about stability not long term growth), but inquality not being good for growth certainly makes the point stronger by ruling out any offsets.
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Dec 4, 2014 | Calculated Risk
Bad Dawg Bobby , 12/4/2014 - 3:54 pm
JP , 12/4/2014 - 3:58 pmCR, " The consensus is for the unemployment rate to be unchanged at 5.8% in November."
Read more at Calculated Risk: Friday: Employment, Trade Deficit
- 30% of the population not looking or out of work,
- worst shopping season in years,
- most people on food stamps ever,
- homeless camps poping up everywhere because homelessness is on the rise,
- T Bonds Interest rates at 2%,
- Corporations given tax breaks to move out of the country,
- Riots and protests across the Land, Food costs skyrocketing,
After being warned for months that the next step TPTB in Washington DC will pull on us if the economy doesn't improve is war, there are Troop movements in europe that look like a pre-war footing,
On and On and OnWe are in a Recovery? Stock Market , Corporate CEO, Bankster, 1%er ya but unemplyment at 5.8% HaHaHaHa
Time for Yoringe, Belmont, KP and the econ Shills, I gots to go.JackdawracyFTA:
Why are real wages falling across so many fields for young workers? The Great Recession devastated demand for hotels, amusement parks, and many restaurants, which explains the collapse in pay across those industries. As the ranks of young unemployed and underemployed Millennials pile up, companies around the country know they can attract applicants without raising starter wages.
Everyone keeps talking about how deflation in oil is A Good Thing. But it isn't going to apply any wage pressure for initial offers or raises.
Edit: Also FTA
The evaporation of real wages for young Americans is a real mystery because it's coinciding with what is otherwise a real recovery. The economy has been growing steadily since 2009. We're adding 200,000 jobs a month in 2014. That's what a recovery looks like. And yet, overall U.S. wages are barely growing, and wages for young people are growing 60 percent more slowly than overall U.S. wages. How is a generation supposed to build a future on that?
Work harder, text less. Duh.
WilberforceIf I was an employer and knew I could pick and choose, i'd make sure that I had no young adult full time workers, in order the dangle the carrot of a 40 hour week to the ones that seem promising. Outsider
why nirp and zirp seem endless.
I don't know. T minus eleven months and counting.
Wilberforcethe Costco here starts its workers at ~15/hour, which I thought was great (duh, 2X minimum wage) until I calculated for 40 hours * 52 weeks. not sure if there will ever be a working-class middle class again.
The cashiers at the local Costco are around ~23/hour, even in the Deep South. Puts them close to $50K/year. One of the reasons I use my Costco membership as much as I can, especially compared to Sam's (boo)
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It's repetitive for some to hear, but important for everybody to know: You can't explain Millennial economic behavior without explaining that real wages for young Americans have collapsed.
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January 2, 2014 The Globalist
The economies of the rich democracies today resemble patients in a persistent vegetative state where full employment is a rare bubble condition, rather than the norm. Demand is too modest for a full recovery. The prescription with fewest side effects is to raise wages.
The issue of slowing growth in the West (even after the global financial crisis had passed) was perhaps first explored by Robert Gordon, who warned in August 2012 that longer term U.S. growth was ebbing to the slowest trend in a century.Viewed initially as purely a supply-side phenomenon, it has lately come to be perceived as a demand side phenomenon by Martin Wolf, Daniel Stelter in The Globalist, Lawrence Summers and others. Summers and Stephen King, for example, wonder how the rich democracies can escape from what has become a Japanese-style lost decades.
The new macroeconomic normal features exaggerated trade imbalances and in the West, inadequate demand portending slow growth and thus inadequate progress on public and private debts. Weak demand coupled with excessive debt has unduly raised the odds of destabilizing restructurings and defaults at both the household and national levels.
... ... ...
What to do?
The most promising option is to raise real wages. That proposition won't puzzle European scholars familiar with the Australian and northern Europe wage determination mechanisms. For decades, these countries have effectively and providentially linked real wages there to productivity growth.
For example, wages in the German retail sector rose 1% adjusted for inflation this year, and French wages next year are also forecast to rise about 1% in real terms. That's why wages in those nations, assessed in purchase power parity terms, are $10/hour or so above the United States and inch higher every year.
In contrast, American real wages, as reviewed in my book "What Went Wrong", have been flat or worse for over a generation. The 180 million or so working- and middle-class employees constitute an enormously and doubtless eager cohort for addressing secular stagnation.
Of all people, the CEO of Goldman Sachs, Lloyd Blankfein recently stated: "This country does a great job of creating wealth, but not a great [job] of distributing it."
The relatively high marginal spending propensities of lower income Americans suggest the demand impact would be maximized by raising the minimum wage.
... ... ...
Parallels from peers
Germany will soon be imposing a nationwide minimum wage of €8.50 an hour ($10.50 or so), which will spur domestic demand. The latter would be a step in the right direction of moderating its hot-button current account surplus.
In Australia, the minimum wage exceeds U.S. $11 adjusted for purchasing power. Yet, its growth in GDP has exceeded the United States for years and Australia has an unemployment rate of 5.8%, below that of the United States. Labor participation is also higher than in the United States. Clearly, a high minimum wage has not destroyed jobs or crippled growth.
The United States should similarly support demand by raising its nationwide minimum wage, now set at $7.25 per hour, which is well below rates abroad. Federal Reserve Bank of Chicago economists have concluded that a $1 increase in minimum wages would raise incomes in affected households by $250 per quarter and spending even more the following year.
Raising the minimum wage floor will ratchet up wages for as many as 30 million other employees. Moreover, research by economists such as Arindrajit Dube is concluding that raising minimum wages can even have a tiny positive impact on employment, with employer costs ameliorated by reduced labor force turnover.
Importantly, both Germany and the U.S. should adopt the Australian and French policy of indexing minimum wages to productivity growth as well as inflation.
Stop subsidizing low-wage employers
That step would also see the bizarre American taxpayer subsidy to low-wage employers like McDonalds or Walmart wither away. A Democratic Congressional study found that last year public healthcare subsidies alone averaged $3,015 for each Walmart employee in the typical state of Wisconsin. Other subsides raise the total to as much as $5,800 per employee.
Indexing the minimum wage would also end the spectacle of such profitable firms organizing volunteer donation food drives to supplement employee wages. Along the same lines, rather than raise wages, McDonalds recently suggested that its employees should take second jobs and split dinner into two sittings, several hours apart.
A second step is establishing a sweeping American facsimile of the Australian and northern Europe wage determination mechanism. Labor compensation for almost every American has become structurally decoupled from productivity, and utilizing these proven, effective mechanisms to reconnect will address the secular stagnation conundrum.
Raising labor costs will slow job creation, but an extensive analysis by economists at the International Labor Organization recently concluded that the impact on aggregate demand in the European Union (EU) of a broad one percentage point real wage increase was nonetheless sufficient to raise employment on balance.
Decades of evidence
Above all, the weight of decades of evidence in Australia and northern Europe document that linking wages to productivity growth in this fashion will not jeopardize U.S. competitiveness or engender wage drift.
Addressing the new normal of secular stagnation should not be restricted to macroeconomic tool refinements. The American economy offers opportunities drawn from traditional, proven practice in other rich democracies involving wages to considerably enhance aggregate demand.
Raising minimum wages and indexing all U.S. real wages to productivity growth is an efficient solution. If secular stagnation proves to be the new paradigm as economists fear, it can best be addressed by a new American wage paradigm drawn from decades of practice in other rich nations.
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The Washington Post
Much has been written about the domestic consequences of growing income inequality in the United States - how inequality depresses growth, puts downward pressure on the middle class, accentuates wage stagnation and creates added difficulty paying for a college education and buying a home - but much less has been said about how inequality will affect America's role in the world. How will the social science experiment of allowing wealth to settle so unequally between the top 1 percent and rest of the United States impact the foundations and contours of U.S. foreign policy?
... ... ...
Now, however, the United States is moving in the other direction, toward an unstable society divided between astronomically rich elites and everyone else. This undermines a critical component of U.S. soft power and is a model for societal engineering that few would choose to emulate.
It is also the case that the most recent era of U.S. exertion on the global stage has involved nearly 15 years of conflict in the Middle East and South Asia. The most important features of these largely military engagements have involved refinements in counterinsurgency technique and adaptations in military technology. A different 1 percent of the U.S. population has been primarily involved in this struggle: the U.S. military and others associated with the defense establishment. Aside from clapping when a uniformed military member greets an emotional family at an airport homecoming, the vast majority of the population has been largely unaffected by these conflicts. They neither paid for nor fought these wars.
... ... ...
The next phase of intense global engagement is likely to demand much more from a larger share of the population. The lion's share of 21st-century history will play out in Asia, with its thriving and acquisitive middle classes driving innovation, nationalist competitions, military ambitions, struggles over history and identity, and simple pursuit of power. The United States is in the midst of a major reorientation of its foreign policy and commercial priorities that will draw it more closely to Asia in the decades ahead. The competition for power and prestige there rests on comprehensive aspects of national power - as much to our product and service offerings, the strength of our educational system and the health and vitality of our national infrastructure as to the quality of U.S. military capabilities. Each of these efforts require substantial and sustained longer-term investments; all face funding shortfalls due to myriad challenges. A corresponding consequence of growing inequality has been a reduction in support for these building blocks for comprehensive and sustained international engagement.
... ... ...
Kurt M. Campbell, chairman and chief executive of the Asia Group investment and consulting firm, was assistant secretary of state for East Asian and Pacific Affairs from 2009 to 2013.
Tony83703, 11/29/2014
"Freedom is just another word for nothin' left to lose" ~ Janis Joplin
As the benefits of America accrue to an ever shrinking pool of the wealthy, why should the rest of us risk our lives and abilities to build and maintain America as a "superpower," economic or otherwise?
jkk1943, 11/29/2014
Income inequality in the US is rising because our educational system is in decline. When it comes to math and science- the key to good paying middle class jobs- the US ranks 31st in the world lagging all of the industrial powers and lower than even some second and third world countries. These problems are exacerbated by our downscale immigration policies that leave the door open for mass migration of illiterate, unskilled latino peasants but make it difficult for skilled workers to immigrate to the US. We can thank the Democratic Party for our decline; Their union allies run our schools and they relish the immigration of more impoverish minorities to solidify their dependent voter basel
JeffZ2, 11/29/2014
Not one shred of truth there.
1) Generation Y or millenials is the best educated generation in history when measured by degree attainment, that hasn't helped them.
2) Unions have declined from representing 33% of the workforce in the 1960s to just 6% of the private sector workforce today. If Unions were the issue then inequality should be much less than during the 1960s.You are grasping at straws and lack any data whatsoever to back up your erroneous statements.
DavidGonzales, 11/29/2014
Hi Jkk, don't you think that tax cuts for the rich, first implemented by Reagan but then augmented by succeeding Republican regimes, has contributed much, if not the lion's share, to the problem of growing inequality?
Also, the Republicans continually cut money for education at the state level while cutting taxes for the rich at the same time. This surely has contributed to any decline in America's public education system.
Epaminondas Vindictor, 11/29/2014
The most viable solution is for those concerned to become more politically active, and denote their time and money to the emerging neo-New Deal wing of the Democratic Party. The Republican Party will never be fertile soil for such reform. That is why Rand Paul's viability fizzled out; the South has long enjoyed populist politicians, but the Republican Party in the main will not tolerate them.
Once the neo-New Deal wing is rebuilt, they will need to overthrow the Gentry Liberals within the Democratic Party, of which Hillary is the emerging leader. Once that happens, the Democratic Party will be able to re-connect with middle and working-class voters of all stripes. Once that juggernaut gets rolling, it will be difficult to stop, as it was in the four decades or so following FDR's election in 1932.
christiansmiller, 11/29/2014
Our middle class and foreign nations would be better off if we stopped intervening in the affairs of other nations. Iraq, Libya, Afghanistan, Egypt, Ukraine and Syria are recent examples of our counterproductive foreign interventions.
ContraryWon, 11/29/2014
Raise taxes on capital gains and dividends back to historical levels. Use the proceeds to invest in education and infrastructure (including hi-speed Internet access for everybody). We need a 21st Century structure to compete with rest of world. We need educated citizens. We need a large middle class to support capitalism.
sold2u, 11/29/2014
And watch capital flee the country...
Epaminondas Vindictor, 11/29/2014
Won't happen when one thinks about it. The way for capital to flee the country is to increase corporate taxes - not personal taxes. As for the billionaires and multi-millionaires - they're free to leave. Not that they were ever patriotic Americans in the first place. We don't need their campaign spending.
Epaminondas Vindictor, 11/29/2014
Dubai wants to be their residence.
JeffZ2, 11/29/2014
Yes, like Capital fled the country under Reagan when he raised the capital gains rate to 28% the same as the highest income tax bracket. The Reagan years are a perfect example of what happens when capital gains rates are raised.
YellowJacket, 11/29/2014
They love to talk about income equality but stop just short of saying they want to repeat what happened in Russia 100 years ago which failed miserably.
Giantsmax, 11/29/2014
It is a cop out to say the only solution is a state controlled system like communism.
Crony capitalism is not free market capitalism, the American economic system is much more on the crony side than the free market side.Giantsmax, 11/29/2014
It loses the moral high ground for the American way of life and economic system. How can you tout a system that has so much wealth inequity? Both inside and outside the country the people will laugh when politicians say America is the model for the world to emulate--it gives us moral credence for our foreign policy, to help promote democracy and freedom.
The people of the world outside the US just laugh, some hysterically. Inside the US the people think our leaders are so disconnected from reality, they live in a bubble--often it is a real financial bubble--LOL.
Tony83703, 11/29/2014
I'm currently hosting two high school exchange students, one each from Germany and Italy, and they are appalled by our health care system, infrastructure, and widespread poverty and homelessness. We can only be "an example to the world" only for those who know about America through the rose-colored glasses of Amercan television programs.
DOps, 11/29/2014
Interesting that, like the weather, income inequality is something everyone likes to talk about but no one comes up with viable solutions other that the race to mediocrity that income redistribution brings. Even listening to radicals like Elizabeth Warren, what you find is a set of policies which will essentially bring more power and concentration of wealth to the government, to be redistributed as the ruling politician sees fit to ensure perpetuation of the political elites.
Campbell suggest education with no real programmatic approach or goal framework. Even that, unless we solve the massive dropout rate and entitlement-bound underperformers, we will always have a 1% who, are composed of a lot of people who make a few hundred thousand for a few of their working years and a very small group who we love to hate in the stratosphere and who, by the way actually drive the growth we have.
babalooixnay, 11/29/2014
Right wingers all feel entitled. How's that for a statement of fact?
Giantsmax, 11/29/2014
there are tens of millions of less well off conservatives also--but they vote against their best interest because the politicians know the bait of social issues will reel them in--just like a worm reels in a fish.
jbjinlrsc, 11/29/2014
...and when did Elizabeth Warren become a "radical". She's one of the only politicians these days who is talking sense.
jillbo18, 11/29/2014 2:23 PM ESTGo find a graph of income inequality for the last several decades. You will see since Obama took office inequality has been on a rocket. Why is that. For 6 full years the fed has kept interest rates at or about zero. Investors have been investing at zero interest and they have made mega fortunes. Any why did the fed do this. Because of the sheer incompetence of Obamas economic policies. He has ruled over the worst recovery in US history
TungSten_X, 11/29/2014 2:55 PM EST [Edited]
this was after W bombed the economy? and gave away tax cuts to the rich like lollipops? Poor wingnut. LOL
SayWhat8, 11/29/2014 3:13 PM EST
How did W "bomb" the economy? Oh right, he was in office so it was his fault. Of course now that Obama is in office it's all the House's fault...
effZ2, 11/29/2014 6:23 PM EST
Let's see he failed to control the runaway housing bubble. In 2000 the average US household had a 79% debt to income ratio, by 2007 this had risen to 133%. He caused the deficit to soar from a $230 billion surplus in Clinton's last year to a $1.4 trillion deficit in Bush's final year. He precided over the worst private sector growth rate in history take out the housing bubble and economist estimate real growth at 1% during the 2000s. He started two unnecessary wars that will cost us $4-$6 trillion over 30 years depending on who's estimates you believe, and on and on. There is plenty of evidence to lay the blame at the feet of the Bush administration.
Epaminondas Vindictor, 11/29/2014
The American elite can stand for loss of power and standing on the international stage. The power they are concerned about is domestic.
The long term goal is to convert America into a totalitarian plutocracy of business-people with a layer of the very highly educated supporting them. Then eliminate any obstacles to maximizing profitability of industry within the American borders. It's society as modern-day labor camp, where the ruled subsist and are without rights.
The South has long been accustomed to this model. Now it's gone equal opportunity; anyone can now be a slave.
TungSten_X, 11/29/2014 1:50 PM EST
It is interesting how the world's power brokers eventually end up sabotaging themselves, almost always due to greed.
This historical fact of the rise and fall of the movers and shakers is lost on the USA.
carter03, 11/29/2014 1:25 PM EST [Edited]
Globalization is the driver of income inequality in the United States.
When it's also said and done, Globalization will put Middle Class workers on the same playing field as those living in other parts of the world.
In other words, the gap between the rich and the Middle Class in the United States will be even wider and more deeper, due to Globalization.
It's because the few who will be able to hold onto their Middle Class status in America will have to share their middle class incomes with others in the global world. Those who will not be able to retain their Middle Class status in the United States will be living below the poverty line.
And yes, this does undermine U.S., power globally, but the rich does not care about U.S., power, they only care about their own power.
Epaminondas Vindictor, 11/29/2014 2:00 PM EST [Edited]
This chart shoots a gaping hole in the globalization argument:
http://upload.wikimedia.org/wikipedia/en/e/e2/US_GDP_per_capita_vs_median_household_income.png
The dirty truth is that the top 1% grabbed up most of the new domestic income created since Reagan became president.
walterhart, 11/29/2014 1:04 PM EST
If we really want greater income and wealth equality, what we need to do is to get rid of excessive regressive payroll and self-employment taxation. Social Security costs all but lifetime low wage earners more in regressive taxes than those wage earners can expect to receive in benefits. Medicare is just a part of the overall excessive cost healthcare system in the U.S., which costs twice as much per person as the cost of healthcare in other developed nations. End excessive regressive payroll taxation.
NortonWheeler, 11/29/2014 12:45 PM EST
An interesting hypothesis. The only thing missing is evidence. One way to evaluate the hypothesis might be to observe whether industrious but poor people from other nations reverse a four-century trend of aspiring to come to America. Another might be to observe whether there is declining popular interest in the development and exchange programs of the Ford Foundation, USAID, and other government and non-governmental organizations that adapt American values to foreign contexts.
Epaminondas Vindictor, 11/29/2014 1:56 PM EST
Immigration from Europe has fallen off dramatically as living standards increased there. Canada's standard of living has surpassed Americas - the OECD stats show that there are several other western nations that also did so.
Also many Chinese come to America to have more than one kid.
Sfopilot, 11/29/2014 11:46 AM EST
Not very much depth and research in this article. There are two main reasons and both have to do with the financial interests accelerating their greed. The Global economy was developed by finance folks, in concert, with gullible politicians, to bring in more money for them and their clients no matter what effect it had on the country, the middle class and other countries. How many engineering, manufacturing, assembling and other technical jobs were outsourced overseas at the expense of middle class Americans. For cheaper goods we will sacrifice our truly unique and vibrant middle class. They did it, it worked.
Second, the bean counters are in charge of everything. Just follows the logical progression of the world economy. The bottom line is king at the expense of quality, customer service, energized employees, health care, pensions and just plain old American values.
But the financial dudes have prospered many times over. Even through the 2008 Great depression that they were responsible for creating in concert with the politicians and bureaucrats. They all have bigger yachts, the next generation Gulfstream, a couple of more getaway mansions in the south of France or in the Caribbean. Meanwhile, back at the ranch, my good middle class job has turned into burger flipping and the prospects of this situation getting any better are becoming dimmer.
It is time to start playing catch up on these greasy sleazeballs. We have to start with removing politicians and bureaucrats who are in league with these people and then start both criminal and civil prosecutions against the individuals and corporations that were responsible for 2008. Vote early and often.
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It also needs to be kept in mind that apart from the pursuit of truth, each individual becomes the criterion for measuring himself and his own actions. The way is thus opened to a subjectivistic assertion of rights, so that the concept of human rights, which has an intrinsically universal import, is replaced by an individualistic conception of rights. This leads to an effective lack of concern for others and favours that globalization of indifference born of selfishness, the result of a conception of man incapable of embracing the truth and living an authentic social dimension.
This kind of individualism leads to human impoverishment and cultural aridity, since it effectively cuts off the nourishing roots on which the tree grows. Indifferent individualism leads to the cult of opulence reflected in the throwaway culture all around us. We have a surfeit of unnecessary things, but we no longer have the capacity to build authentic human relationships marked by truth and mutual respect. And so today we are presented with the image of a Europe which is hurt, not only by its many past ordeals, but also by present-day crises which it no longer seems capable of facing with its former vitality and energy; a Europe which is a bit tired and pessimistic, which feels besieged by events and winds of change coming from other continents.
... ... ...
Similarly, the contemporary world offers a number of other challenges requiring careful study and a common commitment, beginning with the welcoming of migrants, who immediately require the essentials of subsistence, but more importantly a recognition of their dignity as persons. Then too, there is the grave problem of labour, chiefly because of the high rate of young adults unemployed in many countries – a veritable mortgage on the future – but also for the issue of the dignity of work.
It is my profound hope that the foundations will be laid for a new social and economic cooperation, free of ideological pressures, capable of confronting a globalized world while at the same time encouraging that sense of solidarity and mutual charity which has been a distinctive feature of Europe, thanks to the generous efforts of hundreds of men and women – some of whom the Catholic Church considers saints – who over the centuries have worked to develop the continent, both by entrepreneurial activity and by works of education, welfare, and human promotion. These works, above all, represent an important point of reference for the many poor people living in Europe. How many of them there are in our streets! They ask not only for the food they need for survival, which is the most elementary of rights, but also for a renewed appreciation of the value of their own life, which poverty obscures, and a rediscovery of the dignity conferred by work.
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From comments: "Charles, October 19, 2013 at 9:46 am George Bush's term opened
my eyes. Barack Obama's term made sure they would never close again. The criminal
elite are the enemy of the people."
Oct 13, 2013 | naked capitalism
Why don't I inundate you with some random data, and when you feel it gets a bit much please realize that this is only a small sample, and on any given day I could make it 10 times more:
Herald Extra:
Poverty stuck at 15% – record 46.5 million Americans
The nation's poverty rate remained stuck at 15% last year despite America's slowly reviving economy …
More than 1 in 7 Americans were living in poverty, [up from the] 46.2 million of 2011 …
[..] For the past year, the official poverty line was an annual income of $23,492 for a family of four.
Poverty remained largely unchanged across race and ethnic groups. Blacks had the highest rate at 27.2%, compared to 25.6% for Hispanics and 11.7% for Asian-Americans. Whites had a rate of 9.7%.
Child poverty stood at 21.8%.
CNS News:
In 2008, according to the Census Bureau, there were approximately 39,829,000 people living in poverty in this country. In 2012, there were 46,496,000. That is an increase of approximately 6,667,000-of 16.73% – from 2008 to 2012.
In 2008, the year Obama was elected, people in poverty represented 13.2% of the national population. In 2012, they represented 15.0% of the population.
Economic Collapse Blog:
They Denied That We Were In A Depression In 1933 And They Are Doing It Again
90.5 million working age Americans are considered to be "not in the labor force".
The labor force participation rate is the lowest it has been in 35 years.
516,000 Americans "left the labor force" . That was a brand new all-time record high.
The number of private sector jobs dropped by 278,000 [in august 2013].
77% of the jobs that have been "created" so far this year have been part-time jobs.
Approximately one out of every four part-time workers in America is living below the poverty line.
New American:
The nominal unemployment rate is still high, but the real jaw-dropping fact is the number of working-age Americans who are not working. Today that is 100,000,000 Americans out of a total population of about 310,000,000. Demographically, about 80,000,000 Americans are minors and about 40,000,000 are age 65 or older. That leaves approximately 190,000,000 Americans who are adults of working age. About half of those do not have a full-time job.
When those "Not in the labor force" are added to those "Unemployed," then those who are not working is growing: 99.5 million in April 2011, 100.3 million in February 2012, 100.5 million in March 2012, and 100.9 million in April 2012. When counting both those "Not in the labor force" (though in the age in which most Americans work) and "Unemployed" as a single group, then those who are not working, but are in the age group in which Americans normally work, has remained steady and high: 41.6% in April 2011, 41.5% in February 2012, 41.5% in March 2012, and 41.6% in April 2012.
While the Establishment survey data was ugly due to both the miss and the prior downward revisions in the NFP print, the real action was in the Household survey, where we find that the number of people not in the labor force rose by a whopping 516,000 in one month, which in turn increased the total number of people outside the labor force to a record 90.5 million Americans.
In America today, only 47% of adults have a full-time job.
According to one recent survey, 76% of all Americans are living paycheck to paycheck.
At this point, one out of every four American workers has a job that pays $10 an hour or less.
The U.S. economy continues to trade good paying jobs for low paying jobs. 60% of the jobs lost during the last recession were mid-wage jobs, but 58% of the jobs created since then have been low wage jobs.
Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.
At this point, an astounding 53% of all American workers make less than $30,000 a year.
According to a study that was released by the Center for Economic and Policy Research, only 24.6% of all jobs in the United States qualify as "good jobs" at this point. [..]
… the three criteria used to define what a "good job" is are:
1 The job must pay at least $18.50 an hour. According to the authors, that is the equivalent of the median hourly pay for American workers back in 1979 after you adjust for inflation.
2 The job must provide access to employer-sponsored health insurance [..]
3 The job must provide access to an employer-sponsored retirement plan. [..]
A record 28 million Americans have part-time jobs …
Washington Post:
Low fast-food wages come at high public cost
[US] taxpayers are spending nearly $7 billion a year to supplement the wages of fast-food workers, even as the leading fast-food companies earn billions of dollars in annual profits, according to a pair of reports released Tuesday.
More than half of the nation's 1.8 million "core" fast-food workers rely on the federal safety net to make ends meet, the reports said. Together, they collect nearly $1.9 billion through the earned income tax credit, $1 billion in food stamps and $3.9 billion through Medicaid and the Children's Health Insurance Program … [..]
Even among the 28% of fast-food workers who were on the job 40 hours a week, the report said, more than half relied on the federal safety net to get by.
Those workers are left to rely on the public safety net even though the nations seven largest publicly traded fast-food companies netted a combined $7.4 billion in profits last year, while paying out $53 million in salaries to their top executives and distributing $7.7 billion to shareholders …
LA Times:
Most Americans expect to work during 'retirement'
More than 4 in 5 older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society, according to a new survey.
Among Americans ages 50 and older who currently have jobs, 82% expect to work in some form during retirement, according to the poll by the Associated Press-NORC Center for Public Affairs Research. In other words, "retirement" is increasingly becoming a misnomer. The still-sluggish economy, battered 401(k) retirement plans and inadequate savings are upending traditional notions of retirement.
Add in an expected increase in lifespans and the result is a generation of workers facing dim financial prospects for what used to be known as the golden years. Excluding pensions and homes, 39% of survey respondents said they have $100,000 or less saved for retirement. Nearly one-quarter have less than $10,000.
And despite conventional wisdom, people can't count on simply working until they drop. One-third of retirees say they didn't have a choice in the decision to leave the workforce, the survey found. In other words, many were pushed out by ill health or layoffs. Among retirees younger than 65, the figure is 54%.
Pittsburgh Post Gazette:
Extreme poverty on the rise for older women
An alarming number of women over the age of 65 joined the ranks of the extreme poor last year, according to a new report by the National Women's Law Center titled "Insecure & Unequal," which analyzed recently released data from the Census Bureau.
The retirement picture for nearly 1 million older women in America whose income fell below extreme poverty levels last year - $5,500 or less in annual income - is anything but golden. They never have enough to cover the cost of food, medicine and housing, and are forced to make tough choices each day on what sacrifices they must make to survive. [..]
The number of aging women struggling to make ends meet on $500 or less each month increased by 18% last year, according to the law center's analysis of U.S. Census data, which means an additional 135,000 elderly people slid into extreme poverty in 2012. The total number of women 65 and older in this country living on $5,500 a year or less now totals 733,000.
Other key findings in the report were that the poverty rate - $11,720 or less in annual income for single adults - among adult women was 14.5% in 2012, compared to 11% for adult men. The poverty rate for single-mother families with children was 40.9% compared to 22.6% for single fathers with children and 8.9% for families with children headed by a married couple.
Pro Publica:
The Expendables: How the Temps Who Power Corporate Giants Are Getting Crushed
In cities all across the country, workers stand on street corners, line up in alleys or wait in a neon-lit beauty salon for rickety vans to whisk them off to warehouses miles away. Some vans are so packed that to get to work, people must squat on milk crates, sit on the laps of passengers they do not know or sometimes lie on the floor, the other workers' feet on top of them. This is not Mexico. It is not Guatemala or Honduras. This is Chicago, New Jersey, Boston.
The people here are not day laborers looking for an odd job from a passing contractor. They are regular employees of temp agencies working in the supply chain of many of America's largest companies – Walmart, Macy's, Nike, Frito-Lay. They make our frozen pizzas, sort the recycling from our trash, cut our vegetables and clean our imported fish. They unload clothing and toys made overseas and pack them to fill our store shelves. They are as important to the global economy as shipping containers and Asian garment workers.
Many get by on minimum wage, renting rooms in rundown houses, eating dinners of beans and potatoes, and surviving on food banks and taxpayer-funded health care. They almost never get benefits and have little opportunity for advancement.
Across America, temporary work has become a mainstay of the economy, leading to the proliferation of what researchers have begun to call "temp towns." They are often dense Latino neighborhoods teeming with temp agencies. Or they are cities where it has become nearly impossible even for whites and African-Americans with vocational training to find factory and warehouse work without first being directed to a temp firm.
In June, the Labor Department reported that the nation had more temp workers than ever before: 2.7 million. Overall, almost one-fifth of the total job growth since the recession ended in mid-2009 has been in the temp sector, federal data shows. But according to the American Staffing Association, the temp industry's trade group, the pool is even larger: Every year, a tenth of all U.S. workers finds a job at a staffing agency.
[..] The temp system insulates the host companies from workers' compensation claims, unemployment taxes, union drives and the duty to ensure that their workers are citizens or legal immigrants. In turn, the temps suffer high injury rates, according to federal officials and academic studies, and many of them endure hours of unpaid waiting and face fees that depress their pay below minimum wage.
The rise of the blue-collar permatemp helps explain one of the most troubling aspects of the phlegmatic recovery. [..] … many workers are returning to temporary or part-time jobs. This trend is intensifying America's decades-long rise in income inequality …
[..] The day after Thanksgiving 1960, Edward R. Murrow broadcast a report called "Harvest of Shame," documenting the plight of migrant farmworkers. Temp workers today face many similar conditions in how they get hired, how they get to work, how they live and what they can afford to eat. Adjusted for inflation, those farmworkers earned roughly the same 50 years ago as many of today's temp workers, including Rosa. In fact, some of the same farm towns featured in Murrow's report have now been built up with warehouses filled with temps.
[..] The temp industry boomed in the 1990s, as the rise of just-in-time manufacturing drove just-in-time labor. But it also gained by promoting itself as the antidote to bad publicity over layoffs. If a company laid off a large portion of its workforce, it could make big news and leave customers feeling sour. But if a company simply cut its temps, it was easy to write it off as seasonal - and the host company could often avoid the federal requirement that it notify workers of mass layoffs in advance.
More recently, temp firms have successfully lobbied to change laws or regulatory interpretations in 31 states, so that workers who lose their assignments and are out of work cannot get unemployment benefits unless they check back in with the temp firm for another assignment.
Suburban poverty across the country grew 53% between 2000 and 2010, more than twice the rate of urban poverty, according to a recent report by the Brookings Institution. For the first time, more poor people live in the suburbs than in cities. "I think suburban poverty is here to stay," says Alan Berube, one of the authors. "It's not going to revert back to the cities."
… the 400 wealthiest Americans now have more money [over $2 trillion] than the poorest 50% of all Americans combined.
US News:
Even though we don't have starvation, we do have an amount of poverty that leads to malnutrition, that leads to a series of diseases that we don't tend to associate with First World countries, that leads to massively truncated life expectancy, and all but guarantees that from one generation to the next, poverty is going to be transmitted.
There are a lot of people with an awful lot of money, but there are an awful lot of people with absolutely nothing. And then there's a lot of people in the middle who, as the economic recession deepened in 2008-10, experienced downward mobility. Maybe that's one of the differences. In the 1960s, the country was clearly on an upward trajectory.
The bottom 20% of the workforce has seen a real income decline by double-digit amounts since the Nixon years. The 1% at the top, or the 0.1% – or if you go even higher, the 0.01%, the billionaires – have seen their income increase by not just 1, 2 or 3%, but by thousands of%[s]. What it means is political access is concentrated at the top, and as soon as that happens you end up with a political class that doesn't respond to the needs of ordinary people.
Everybody who is poor is overlooked because everybody who is poor in America is reduced to a set of stereotypes.
America is the wealthiest nation in the world, yet it has higher levels of poverty than any other western democracy. Its poverty rates compare more with a country like Romania than with countries like Canada, France or Germany.
New York Times:
House Republicans Pass Deep Cuts in Food Stamps
House Republicans narrowly pushed through a bill on Thursday [Sep 19] that slashes billions of dollars from the food stamp program, over the objections of Democrats and a veto threat from President Obama.
[..] Republican leaders, under pressure from Tea Party-backed conservatives, said the bill was needed because the food stamp program, which costs nearly $80 billion a year, had grown out of control. They said the program had expanded even as jobless rates had declined with the easing recession.
[..] even with the cuts, the food stamp program would cost more than $700 billion over the next 10 years.
[..]The bill, written under the direction of the House majority leader, Eric Cantor, Republican of Virginia, would cut $40 billion from the food stamp program over the next 10 years. It would also require adults between 18 and 50 without minor children to find a job or to enroll in a work-training program in order to receive benefits.
[..] According to the Congressional Budget Office, nearly four million people would be removed from the food stamp program under the House bill starting next year. The budget office said after that, about three million a year would be cut off from the program.
The budget office said that, left unchanged, the number of food stamp recipients would decline by about 14 million people - or 30% - over the next 10 years as the economy improves. A Census Bureau report released on Tuesday found that the program had kept about four million people above the poverty level and had prevented millions more from sinking further into poverty. The census data also showed nearly 47 million people living in poverty - close to the highest level in two decades.
Washington Times:
One in four kids in poverty, despite U.S. gains
The White House may be touting a message of an improved economy - and claiming on its website that President Obama is all about helping those of lesser financial means - but meanwhile, nearly one-quarter of America's youth are struggling in poverty, a new report reveals.
Nearly one in four children lived in poverty in 2012 [..]
New Hampshire's childhood poverty numbers rose significantly in just a year's time - and what's worse, the state bragged on the lowest child poverty rate in the entire nation for a full decade. In 2011, the rate of poverty for that age group was 12%. A year later, it rose to 15.6%. And in all the years from 2007 to 2012, that figure jumped more than 75% …
Meanwhile, around the nation, 16.4 million children were reported to be living in poverty in 2012. Of that, six million are aged 6 and younger. That comes in comparison to 2007 numbers, when the national poverty rate for youth stood at 18%, or 13.1 million children, UPI reported.
The researchers used the federal definition of poverty - a family of four with less than $23,283 a year.
On the White House website, Mr. Obama is described as a "lifelong advocate for the poor" …
And it's not as if America is the only place where the inequality process plays out. Even if we leave southern Europe alone for the moment, a country like Britain is pretty bad, for example, with a government that invites rich foreigners to buy up the nation's assets while it leaves its own citizens in the cold, often literally, as the Guardian reported yesterday:
British Gas raises energy prices by 9.2%
British Gas will raise energy prices by an average of 9.2% next month, piling further financial pressure on 7.8 million households and reigniting the political row over soaring gas and electricity prices. Parent company Centrica became the second of the big six energy firms to announce a price rise after SSE raised prices last week. The average annual dual-fuel bill with British Gas will increase by £107 to £1,297 ($2,100).
Centrica blamed the above-inflation hike on higher costs for wholesale energy and delivering gas and electricity to homes, and government's "social and environmental programmes" which are paid for through customers' bills.
Also from The Guardian this week:
Food poverty is an attack on society
[UK] food banks are now helping three times as many people as they were a year ago. Oxfam and the Red Cross are both supporting food programmes. Another British charity, Save the Children, has launched a UK campaign expressly to raise awareness of the issues behind the steep rise in numbers of young people caught up in poverty. This cannot be what David Cameron's "big society" was supposed to look like.
The government is in denial. Ministers talk of chaotic families, of individuals making bad choices. They suggest the underlying reason for the trebling of the numbers receiving food parcels from the Trussell Trust in the six months to September – to an astonishing 355,000 people – was a spread in the number of food banks. Of course, each of these is a factor. But even taken together, they don't begin to account for the surge of desperation represented by the figures.
People on the ground tell a different story. Roughly a third of their clients are driven to desperation by delays in benefit – no change in proportion, only in the numbers. The new factor is the impact of changes in benefit, as the bedroom tax and sanctions bite, and councils get to grips with ever tighter budgets and smaller crisis funds. That now accounts for a fifth of those entitled to food parcels (which are only available to those with a formal referral).
Politicians cannot simply dismiss the evidence of spreading poverty, or treat it as some kind of macho proof of the success of their policies. Nor can they, in all conscience, go on talking about cutting back on benefits without understanding what it actually means. They need to know that this is what George Osborne's tough love looks like on the ground.
There was a time when to see a rough sleeper was unusual. Now it is impossible to ignore the number of people who have no other option but to huddle in a doorway. There are a lot of explanations for that, not all of them instantly fixable – family breakdown, mental illness – but that is no excuse for the normalisation of homelessness as part of the pattern of urban life. How much worse if the kind of extreme poverty that means relying on food handouts were also to become normal.
… it's wider than the individual or the family. Every hungry person is an attack on society.
And even in Germany, the one remaining – western -stalwart of growth fanatics, it's the people who pay the price. from Al Jazeera:
Does Germany have a poverty problem?
"It's a fact that differences between those who have lots and those who have little have been growing wider," Templin Mayor Detlef Tabbert, a member of the Left party, told Al Jazeera in his office. He blames German tax policy and employers who pay wages "that are below the level of dignity" for the gap.
The gap between the haves and have-nots is more substantial if one looks at wealth instead of income: A government report published earlier this year found the richest 10% of German households own about 53% of the country's wealth – with the bottom half holding a scant one%.
Unlike most European countries, Germany has no national minimum wage. Instead, there's a complex patchwork of about 480 minimum wages, depending on the type and location of the job. These can vary from 7.50 euros ($10) to 13.70 euros ($18.50) an hour.
In Berlin's Neukolln neighbourhood, Betul – a young woman of Turkish background who did not give her last name – said she works at a bakery for just 5 euros ($6.80) an hour. "So I would be very happy with 8.50," she told Al Jazeera, referring to the minimum wage proposed by the centre-left Social Democratic Party and the Green Party. Betul has worked there for just six months, but her friend Sibel, a 21-year-old, said she had been working at the bakery for five years at the same rate of 5 euros an hour.
"In Germany, you can work and you can [still be] poor," said Lisa Paus, a Greens member serving in the Bundestag. "There are seven million people in Germany which have to work and [also] have to go to the job centre" to get additional benefits from the government, she said.
[Unemployed Alexandra Grube] says she always voted for the Greens in the past, but this time around she's fed up with all of Germany's major parties, describing them as out of touch with her needs. "Even parties who have been fighting for the poor," she said, "don't know how much milk costs."
This development, this process, is not going to go away by itself, inequality in wealth and income will keep increasing, and ever more people will end up under the bus. It's a choice we make as a society. Even if we do somehow achieve a period of real economic growth, it will make little difference anymore for the poorer: it will be swallowed up whole by the demand for growth embedded in the richer parts of society.
The desire for growth has become a sort of auto-immune disease, in which the body, the society, in the absence of external food sources, preys upon itself. We need to consider the potential consequences of this, and ask ourselves if they add up to the kind of society we wish to live in, and we want our children to grow up in. Right now, we're choosing poverty, and we should ask ourselves why we do that.
There are millions of Americans who've been unemployed so long they no longer even count as unemployed. There are millions more working jobs that don't pay the bills. This can and will not simply be undone by a growing economy. Many are scarred for life, and that certainly goes for the huge numbers of children growing up in poverty and now seeing their food stamps cut to boot. Leaving aside whether we see rising inequality as a good or a bad thing, we need to realize that it is a choice we make for ourselves and others: there is no need for 25% of our children to be too poor to function well, there is enough wealth in our societies to provide for them. We would just need to redistribute that wealth, and to limit inequality to the levels we had when our economies were doing better than they ever have, before or since. Would that really be such a bad thing? Are we truly better off creating this fake Darwinian jungle we have today? Just asking.
And then of course there's that last remaining question: "How long do you think such a society can last?"
Massinissa, October 19, 2013 at 10:48 am
Dave.
When exactly has capitalism, uh, worked 'correctly'?
Because, Capitalism has ALWAYS been like that. Capitalism by its nature facilitates the transfer of economic power to a certain section of society, which they ALWAYS use to subvert societies rules to benefit themselves.
The very logic of capitalism makes 'crony capitalism' inevitable, as inevitable as a half life occurs to an unstable isotope!
DaveOctober 20, 2013 at 9:12 am
All systems breed corruption (capitalism, communism, socialism). The common thread is human weakness, corruption, greed and self interest.
ALL political systems eventually become corrupt and destroy the lives of the people to advance the needs of the few who are well connected. This is proven out time and time again through history.
Ando Arike
October 20, 2013 at 12:05 pm
I'd hate to believe that our failure to create an equitable and democratic polity is inevitable, that we're hardwired to default to various types of fascism. In the Seventies, when both the U.S. and the S.U. seemed equally depraved, many in the socialist Left looked to various forms of decentralism as the answer to system-failure. The idea being that any politico-economic system that grows past a certain point will become oligarchic or autocratic…
Indeed, one intention of the U.S. Constitution was to prevent the consolidation of power. But, of course, this consolidation became unstoppable once large corporations saw that military imperialism would be needed for expansion. Local self-rule quickly went out the window.
Cynthia
from Mexico October 19, 2013 at 9:07 amOctober 19, 2013 at 4:31 pm
Also, small business is the enemy of the soul-less corporations. Just look at WalMart and the bling franchise eateries.
Corporations set up layers of bureaucracy, a cultish culture, and an army of lawyers. They can grind an individual into dust and break their spirit with their gutless, heartless, mind-numbing procedures, paperwork, and HR departments.
This is why government and corporations collude; they understand each other. A small business with ties to a community is their worst enemy.
Banger October 19, 2013 at 10:01 amWithout growth, capitalism loses any moral raison d'être, and all that's left is the greed, self-interest and maximizing profits part.
skippy October 19, 2013 at 10:36 amThere are two reasons we are kind of stuck with this situation: 1) because Marxism is largely forbidden as subject outside some universities and journals in the U.S., we analyze capitalism with a severe limp as is shown by the comment above that "this is not capitalism"; and 2) Americans don't like history and always want to "end" it because of the bizarre ideas that surround American Exceptionalism even on the side of the mainstream left thus no one sees history in a larger frame of reference but, rather, as Churchill described it as "one damn thing after another."
The fact of the matter is that capitalism is unsustainable over the long haul because it, by definition, demands not just growth but the destruction of communities and the idea of communitarianism. Without community and community values we cannot maintain social cohesion if we can't do that we enter into our current situation which is a kind of "rougue capitalism" which rewards dishonest and criminal behavior. Eventually that leads to social disruption. Eventually the masses catch on that the rich don't follow the rules so why should they?
As Marx noted capitalism is an important stage in the development of human society but it's inherent contradictions demand a move towards a more collectivist future which is, according both social- and neuro-science the sort of arrangement human beings prefer and are hard-wired to thrive in.
From a historical POV, this period of growth is much like a very interesting and wild party with heavy drinking, hilarity, excitement that many of us have experienced as profoundly satisfying as we stumble into bed it the light of day–but over the long haul leads to severe problems if you try to recapture it in subsequent nights (purely for scientific reasons I attempted that experiment and got the predicted results which I've never published).
Did someone say Marx? History sure is funny…
Written: by Marx between November 22 & 29, 1864
First Published: The Bee-Hive Newspaper, No. 169, November 7, 1865;
Transcription/Markup: Zodiac/Brian Baggins;
Online Version: Marx & Engels Internet Archive (marxists.org) 2000.Sir:
We congratulate the American people upon your re-election by a large majority. If resistance to the Slave Power was the reserved watchword of your first election, the triumphant war cry of your re-election is Death to Slavery.
From the commencement of the titanic American strife the workingmen of Europe felt instinctively that the star-spangled banner carried the destiny of their class. The contest for the territories which opened the dire epopee, was it not to decide whether the virgin soil of immense tracts should be wedded to the labor of the emigrant or prostituted by the tramp of the slave driver?
When an oligarchy of 300,000 slaveholders dared to inscribe, for the first time in the annals of the world, "slavery" on the banner of Armed Revolt, when on the very spots where hardly a century ago the idea of one great Democratic Republic had first sprung up, whence the first Declaration of the Rights of Man was issued, and the first impulse given to the European revolution of the eighteenth century; when on those very spots counterrevolution, with systematic thoroughness, gloried in rescinding "the ideas entertained at the time of the formation of the old constitution", and maintained slavery to be "a beneficent institution", indeed, the old solution of the great problem of "the relation of capital to labor", and cynically proclaimed property in man "the cornerstone of the new edifice" - then the working classes of Europe understood at once, even before the fanatic partisanship of the upper classes for the Confederate gentry had given its dismal warning, that the slaveholders' rebellion was to sound the tocsin for a general holy crusade of property against labor, and that for the men of labor, with their hopes for the future, even their past conquests were at stake in that tremendous conflict on the other side of the Atlantic. Everywhere they bore therefore patiently the hardships imposed upon them by the cotton crisis, opposed enthusiastically the proslavery intervention of their betters - and, from most parts of Europe, contributed their quota of blood to the good cause.
While the workingmen, the true political powers of the North, allowed slavery to defile their own republic, while before the Negro, mastered and sold without his concurrence, they boasted it the highest prerogative of the white-skinned laborer to sell himself and choose his own master, they were unable to attain the true freedom of labor, or to support their European brethren in their struggle for emancipation; but this barrier to progress has been swept off by the red sea of civil war.
The workingmen of Europe feel sure that, as the American War of Independence initiated a new era of ascendancy for the middle class, so the American Antislavery War will do for the working classes. They consider it an earnest of the epoch to come that it fell to the lot of Abraham Lincoln, the single-minded son of the working class, to lead his country through the matchless struggle for the rescue of an enchained race and the reconstruction of a social world. [B]
Signed on behalf of the International Workingmen's Association, the Central Council:
Longmaid, Worley, Whitlock, Fox, Blackmore, Hartwell, Pidgeon, Lucraft, Weston, Dell, Nieass, Shaw, Lake, Buckley, Osbourne, Howell, Carter, Wheeler, Stainsby, Morgan, Grossmith, Dick, Denoual, Jourdain, Morrissot, Leroux, Bordage, Bocquet, Talandier, Dupont, L.Wolff, Aldovrandi, Lama, Solustri, Nusperli, Eccarius, Wolff, Lessner, Pfander, Lochner, Kaub, Bolleter, Rybczinski, Hansen, Schantzenbach, Smales, Cornelius, Petersen, Otto, Bagnagatti, Setacci;
George Odger, President of the Council; P.V. Lubez, Corresponding Secretary for France; Karl Marx, Corresponding Secretary for Germany; G.P. Fontana, Corresponding Secretary for Italy; J.E. Holtorp, Corresponding Secretary for Poland; H.F. Jung, Corresponding Secretary for Switzerland; William R. Cremer, Honorary General Secretary.
18 Greek Street, Soho.
[A] From the minutes of the Central (General) Council of the International - November 19, 1864:
"Dr. Marx then brought up the report of the subcommittee, also a draft of the address which had been drawn up for presentation to the people of America congratulating them on their having re-elected Abraham Lincoln as President. The address is as follows and was unanimously agreed to."
[B] The minutes of the meeting continue:
"A long discussion then took place as to the mode of presenting the address and the propriety of having a M.P. with the deputation; this was strongly opposed by many members, who said workingmen should rely on themselves and not seek for extraneous aid…. It was then proposed… and carried unanimously. The secretary correspond with the United States Minister asking to appoint a time for receiving the deputation, such deputation to consist of the members of the Central Council."
Ambassador Adams RepliesLegation of the United States
London, 28th January, 1865Sir:
I am directed to inform you that the address of the Central Council of your Association, which was duly transmitted through this Legation to the President of the United [States], has been received by him.
So far as the sentiments expressed by it are personal, they are accepted by him with a sincere and anxious desire that he may be able to prove himself not unworthy of the confidence which has been recently extended to him by his fellow citizens and by so many of the friends of humanity and progress throughout the world.
The Government of the United States has a clear consciousness that its policy neither is nor could be reactionary, but at the same time it adheres to the course which it adopted at the beginning, of abstaining everywhere from propagandism and unlawful intervention. It strives to do equal and exact justice to all states and to all men and it relies upon the beneficial results of that effort for support at home and for respect and good will throughout the world.
Nations do not exist for themselves alone, but to promote the welfare and happiness of mankind by benevolent intercourse and example. It is in this relation that the United States regard their cause in the present conflict with slavery, maintaining insurgence as the cause of human nature, and they derive new encouragements to persevere from the testimony of the workingmen of Europe that the national attitude is favored with their enlightened approval and earnest sympathies.
I have the honor to be, sir, your obedient servant,
Charles Francis Adams
http://www.marxists.org/archive/marx/iwma/documents/1864/lincoln-letter.htm
skippy… maybe the left hand… doesn't want too touch… the right hand… infected.
Fiver
October 21, 2013 at 4:15 am
The ballot box is of limited utility when the State has been completely captured. The point of this piece is that a non-violent, cultural change towards minimalist consumption would do more to really change this world than electing someone that Real Power will ignore, dismiss, play with, terminate, whatever.Similarly, the concept of a general strike has every bit as much validity now as it ever has in terms of expressing the public's true mood – we are dealing with sociopaths, remember, who sign-off on murder, drone kids, suck the life out of the poor and working poor, destroy entire nations for no reason whatever, who throw money at big everything to turn our planet into a chemical dump.
We cannot survive past mid-century on this trajectory. And yes, I'd rather see humanity voided rather than the entire living world because we could not figure out that we can all live good, healthy, comfortable, interesting, rewarding lives on a fraction of what we now consume and spew, and can within a handful of generations head our global population back down to the roughly 1 billion the planet can actually support over the longer haul allowing the rest of life on earth full play to work its miracles.
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dearieme, November 20, 2014 at 2:24 pm
"It's hard to say just when it began, the unravelling of the American Dream. Did it start in the '70s,…"
Isn't it a little odd not to consider the possibility that it started with the Vietnam War?
David Lentini, November 20, 2014 at 8:36 pm
If by "start", you mean the first obvious signs, then the early '70s-especially the mid-third of the decade, when the oil embargo and stagflation hit &mda share reasonable from my memories as a young teen.
But if your looking for a sort of prima causa, then I think you have to go back the decisions made in the late '40s to abandon the New Deal, the Economic Bill of Rights, and single-payer health care, in favor of a consumption-driven economy. That started the US on a path that led by the late '50s to consumer credit, the begining of technology-driven unemployment and a reduction in the share of labor-generated wealth. By 1966, according to a number of commentators including Kevin Phillips, the US economy crossed over from an industrial economy to a financialized economy. I recall one board member of GM saying that he knew to the day when GM was lost-the day the board lifted its rule against discussing GM's stock price at board meetings.
The Cold War, Viet Nam, the social movements, and the oil crisis and inflation, all contributed to a growing frustration with US society in general and government, and a lack of faith in the ability of government to solve our economic problems. The steel mill closings, the bankruptcy of the Penn Central Railroad, the blowback from our various adventures in the '50s and '60s, like the Iranian Revolution, all hit around the same time. But the seeds of those events had been planted decades earlier, ironically by the Greatest Generation.
LifelongLib, November 21, 2014
The "Greatest Generation" refers to people like my dad, born in the early to mid-1920s who served as (sometimes very) young adults in WW 2. The New Deal was the responsibility of my great-grandparents' generation member FDR (born 1882) and to a lesser extent members of my grandparents' generation like LBJ (born 1908).
The "Greatest Generation" can hardly be blamed for any abandonment of the New Deal in the late 1940s, since they were still in their 20s at the time and had little political power.
psychohistorian, November 20, 2014
Maybe the answer to when it started unraveling has to do with your age.
I think the biggest turning point in my life was changing the US Motto from E Pluribus Unum to In God We Trust……gotta fight that godless communism by becoming hypocritical godless fascists to the max….and blur that separation of church and state thing.
VietnamVet, November 20, 2014
The Silent Mutiny in Vietnam proved that a draft army would not fight the Empire's colonial wars. The oligarchs no longer required a people's mass army to defend their possessions thanks to nuclear weapons.
Volunteers and mercenaries would fight their unwinnable wars for profit. Greed triumphed and the people were dumped into the trash; starting in the 70's.
We are useless marks to the masters of the universe to be conned till broke and then utilized to fill their for profit jails.
Kaiser Wilhelm, November 20, 2014 at 3:13 pm
Some say that the fabric started to fray with the Bay of Pigs, while others go back to events in WWII or earlier, but in any event to get things rolling, look at the vote on the incident in the Gulf of Tonkin, which picked up speed with the Vietnam War protests, and of course that led to the counter-measure of the Powell Memo.
By that time the gloves were off, but not everyone realized what had been set in motion.
Overlay the above with the 1965 Immigration Act, and the various Rights measures, which were put in place to ensure that there would Never Again be resistance to acceptance of our wandering Chosen being able to find sanctuary and a home to expand.
When everyone becomes special, with all the rights in the world to demand, and without commensurate responsibilities to oneself, let alone fellow humans, then in the US of A that means acceptance of a life of no consequences.
psychohistorian, November 20, 2014I think that we have historically had exceptions to the rule of law by the fetid upper crust but, in the past, those exceptions were stage managed better to keep up a facade of justice.
As we moved along this path more exceptions became necessary to maintain control and as the numbers increased it became harder to stage manage them all to keep up the facade.
So now we have the iron fist coming out of the velvet glove and being stage managed as necessary to PROTECT us from those we must fear/hate today. And of course the stage management includes covering the real perps with a layer of doing God's work teflon…..the they DESERVE to rule the world LIE.
Oregoncharles, November 20, 2014
" and his actions could be reversed by a new president after he leaves office." [San Antonio Express News]."
Remember: the next President will be a Republican, because that's their little arrangement, and it's now Obama's job to insure that.
Which casts an ugly light on all the Democrats excusing his usurpations of dictatorial power – who do they think will be wielding those powers in 2 years?psychohistorian, November 20, 2014
I would suggest you think of the two parties as really of one hive mind at the core with a few outliers on both sides to make it sound like all positions are represented…..all the while the Overton window of fascism is fully in control.
TulsaTime, November 20, 2014
The country is picking up speed in the circling of the drain. I have seen new local ads with the 'new improved car leasing', increased ads from the state pushing 'college savings accounts', and many more examples of the sleaze bubbling more to the top. The new congress is another case in point, with the worst corruption walking around in plain view. I'm waiting for the Big One out of the financial markets soon, and a major war shortly after. So much for growing old….
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Nov 17, 2014 | fortune.com
The billionaire philanthropist wants to distinguish between the wealthy who are using their money for good and those who are merely consuming it.
It might not come as a surprise to many that Bill Gates, whom Forbes' magazine ranks as the second wealthiest man in the world, doesn't agree with the ideas of French economist Thomas Piketty.
It's Piketty, after all, who made a big splash this year with his book Capital in the 21st Century, which argued that it is a fundamental law of capitalism that wealth will grow more concentrated absent destabilizing events like global wars. Piketty's solution? A global tax on capital that could help governments better understand how wealth is distributed and stem the tide of inevitably increasing inequality, which Piketty believes is socially destabilizing.
If you believe the Forbes list, there is nobody in the world besides Carlos Slim who has more to lose than Bill Gates if Piketty's global tax on wealth were to be instituted. But Gates' critique of Piketty's work, published Monday on his personal blog, isn't completely self-interested. After all, Gates has already pledged to give away half his fortune over the course of his lifetime, a much larger amount than the 1% or 2% wealth tax, proposed by Piketty, would confiscate. His problem isn't with the idea that the super wealthy should spread their fortunes around, but ratherwith Piketty's mechanism and the incentives it would create:
Imagine three types of wealthy people. One guy is putting his capital into building his business. Then there's a woman who's giving most of her wealth to charity. A third person is mostly consuming, spending a lot of money on things like a yacht and plane. While it's true that the wealth of all three people is contributing to inequality, I would argue that the first two are delivering more value to society than the third. I wish Piketty had made this distinction, because it has important policy implications.
Gates shares Piketty's goal of spreading wealth, yet he doesn't want to discourage the uber wealthy (like Gates) who are taking risks, investing in value-creating businesses, and helping the world through philanthropy. Gates' solution? Shift the American tax code from one that taxes labor to one that taxes consumption. Now, this sounds like standard, right-wing economic theory. Consumption taxes are usually favored by the wealthy and by conservative economists because they tend to be regressive in nature. Since everyone-rich and poor-have to consume some amount of goods and services, and because the proportion of income spent is much higher for the poor than the rich, consumption taxes like state and local sales tax burden the poor more than the rich.
But this doesn't necessarily have to be the case. Economists like Cornell University's Robert Frank have long advocated for progressive consumption taxes that could do much to solve what they perceive as the ills of growing income inequality. As Frank writes:
Under such a tax, people would report not only their income but also their annual savings, as many already do under 401(k) plans and other retirement accounts. A family's annual consumption is simply the difference between its income and its annual savings. That amount, minus a standard deduction-say, $30,000 for a family of four-would be the family's taxable consumption. Rates would start low, like 10 percent. A family that earned $50,000 and saved $5,000 would thus have taxable consumption of $15,000.
Consider a family that spends $10 million a year and is deciding whether to add a $2 million wing to its mansion. If the top marginal tax rate on consumption were 100 percent, the project would cost $4 million. The additional tax payment would reduce the federal deficit by $2 million. Alternatively, the family could scale back, building only a $1 million addition. Then it would pay $1 million in additional tax and could deposit $2 million in savings. The federal deficit would fall by $1 million, and the additional savings would stimulate investment, promoting growth. Either way, the nation would come out ahead with no real sacrifice required of the wealthy family, because when all build larger houses, the result is merely to redefine what constitutes acceptable housing. With a consumption tax in place, most neighbors would also scale back the new wings on their mansions.
As you can see, one of the strategies behind this tax regime is to reduce the incentive to consume. With less conspicuous consumption, the poor would suffer from the negative effects of having less than those around them. As many behavioral studies have shown, relative wealth has more of an impact on personal happiness than absolute wealth.
Such a regime could appeal to both the right and left sides of the political spectrum. For those on the left, who are sometimes uncomfortable with the effects of a culture based around consumption, this tax would discourage such behavior. Meanwhile, a regime that encourages savings and investment would appeal to conservatives.
But for a progressive consumption tax to be truly progressive, there would need to be a hefty estate tax to prevent the rich from simply letting their wealth grow over generations through interest income. But Gates argues this is not a problem, because we have the ability to institute estate taxes, a policy which he is a "big believer" in.
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Nov 15, 2014 | Economist's View
This is a small part of Irving Fisher's presidential address to the American Economic Association in 1919 (it is worth reading in its entirety, via Piketty's book and online notes):Economists in Public Service: Annual Address of the President: ... The real scientific study of the distribution of wealth has, we must confess, scarcely begun as yet. The conventional academic study of the so-called theory of distribution into rent, interest, wages, and profits is only remotely related to the subject. This subject, the causes and cures for the actual distribution of capital and income among real persons, is one of the many now in need of our best efforts as scientific students of society. I shall here merely throw into the discussion a few tentative thoughts which seem to me to be now either completely overlooked or only dimly appreciated.There are, I believe, two master keys to the distribution of wealth: the Inheritance system and the Profit system.The practices which happen to be followed by men of great wealth in making wills is certainly the chief determinant of the distribution of their wealth after their death. Mr. Albert G. Coyle, one of my former students, has estimated that four-fifths of the one hundred and fifty or more fortunes in the United States having incomes of over $1,000,000 a year have been accumulating for two generations or more. It is interesting to observe that, although the formulae expressing distribution by Pareto's logarithmic law are similar for the United States and England, the number of wealthy men at the top is two and a quarter times as great, in proportion to population, in England as in the United States, presumably because the number of generations through which fortunes have been inherited are much greater there than here.Yet the man who wills property does so without regard to its effect on the social distribution of wealth. In fact even from the private point of view careful thought is seldom bestowed on the solemn responsibility of bequeathing property. The ordinary millionaire capitalist about to leave this world forever cares less about what becomes of the fortune he leaves behind than we have been accustomed to assume. Contrary to a common opinion, he did not lay it up, at least not beyond a certain point, because of any wish to leave it to others. His accumulating motives were rather those of power, of self-expression, of hunting big game.I believe that it is very bad public policy for the living to allow the dead so large and unregulated an influence over us. Even in the eye of the law there is no natural right, as is ordinarily falsely assumed, to will property. "The right of inheritance," says Chief Justice Coleridge of England, "a purely artificial right, has been at different times and in different countries very variously dealt with. The institution of private property rests only upon the general advantage." And again, Justice McKenna of the United States Supreme Court says: "The right to take property by devise or descent is the creature of the law and not a natural right-a privilege, and therefore the authority which confers it may impose conditions on it."The disposal of property by will is thus simply a custom, one handed down to us from Ancient Rome. ...Sandwichman -> anne...
"The Emperor's New Clothes," Hans Christian Anderson.
The esteemed economists mentioned by Farmer are transparent swindlers. But that is not the scandal. The scandal lies with a profession so intellectually insecure and morally indecisive that it could be intimidated by the braggadocio and bullying of these Nobel-prize winning confidence men.
John Kenneth Galbraith called such obeisance to elite-serving fictions "the economics of innocent fraud." I'm not so sure about the "innocent" part.
anne -> Sandwichman...
The esteemed economists mentioned by Farmer are transparent swindlers. But that is not the scandal. The scandal lies with a profession so intellectually insecure and morally indecisive that it could be intimidated by the braggadocio and bullying of these Nobel-prize winning confidence men. John Kenneth Galbraith called such obeisance to elite-serving fictions "the economics of innocent fraud." I'm not so sure about the "innocent" part.
[ Understood and nicely explained, which leaves the question as to why the profession could be so easily intimidated. I would ask the question, what is it about the prospect of necessary economic planning that so frightens economists? ]
Gibbon -> anne...
I'll give you my answer. Before WWII it was okay for a science to be verbose, descriptive, and a bit mushy. After WWII when the physicists figured out how to convert a few grams of Plutonium into raw energy, hard science was all the rage.
So in comes Prescott and what not with their equations and rigor and they muscled out everyone else.
Though from someone (me) with a passing understanding of computer science. I look at their models and I see what amounts to the claim that the market can solve an NP problem instantaneously.
http://en.wikipedia.org/wiki/NP-hard
Thus I'm left with two options. A couple of mathematically illiterate economists discovered something that eludes real mathematicians to this day. Or they are fools.
anne -> Sandwichman...
http://delong.typepad.com/sdj/2012/08/should-erskine-bowles-be-treasury-secretary-i-say-no.html
August 10, 2012
My judgment isn't a left-wing judgment: it is a technocratic-political judgment. I speak as a card-carrying neoliberal long-run budget-balancer....
-- Brad DeLong
[ I would ask the question, what is it about the prospect of necessary economic planning that so frightens economists? I take the self-description of the University of California economist as an example of how risky, how dangerous it is for an economist to intimate that planning may ever be necessary. As though this were the era of Joseph McCarthy. ]
The Raven -> anne...
Responsibility. Once one acknowledges that society has a role in managing the economy, one has to admit that the people who run the system, not only government officials but also the very wealthy, and the managers who run large institutions of production, have social responsibilities.
Economists, it seems, have a fiduciary responsibility similar to that of architects or lawyers. This comes as a heavy and uncomfortable shock.
Darryl FKA Ron -> Sandwichman...
John Kenneth Galbraith called such obeisance to elite-serving fictions "the economics of innocent fraud."
[That was mighty big of him :<) ]
I'm not so sure about the "innocent" part.
[Me too.]
anne -> Julio...If labor is a commodity like any other, who is the idiot in charge of inventory management?
[ Comical, however, as I have written several times, a critically important insight of Alan Greenspan during the 1980s was that the nature of the business cycle in the United States had changed from inventory adjustment to labor adjustment in the course of the Reagan recession of 1981-1982.
The recessions of 1990-1991, 2001 and 2007-2009 showed just how right Greenspan was. ]
Darryl FKA Ron -> anne...
a critically important insight of Alan Greenspan during the 1980s was that the nature of the business cycle in the United States had changed from inventory adjustment to labor adjustment in the course of the Reagan recession of 1981-1982.
[Yes, the perfect alibi. Who needs any other reason for wage suppression and exorbitant returns to capital? THe business cycle made me do it! I couldn't help myself!]
anne -> anne...
http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
September 13, 1970
The Social Responsibility of Business is to Increase its Profits
By Milton Friedman - New York Times
http://www.sciencedirect.com/science/article/pii/0304405X7690026XOctober, 1976
Theory of the firm: Managerial behavior, agency costs and ownership structure
By Michael C. Jensen and William H. MecklingDarryl FKA Ron -> anne...
I am more interested in whether Alan Greenspan was actually Ayn Rand's boy toy for a while than white washing the sychophant from his shorts.
anne -> Julio...
http://www.bls.gov/webapps/legacy/cesbtab1.htm
January 3, 2014
Recessions and Total Employment Cycles, 1981-2014: Recovery
Recovery in employment from the 18 month recession of 2007-2009, coming in May 2014 or 76 months.
Recovery in employment from the 8 month recession of 2001, coming in February 2005 or 48 months.
Recovery in employment from the 8 month recession of 1990-1991, coming in February 1993 or 32 months.
Recovery in employment from the 16 month recession of 1981-1982, coming in November 1983 or 28 months.
anne -> Julio...
If labor is a commodity like any other, who is the idiot in charge of inventory management?
[ I consider this an important comment indeed, the answer being distinctly different before and after 1981-1982. Greenspan thought business cycles led by the United States would become labor adjustment rather than inventory adjustment cycles in capitalist economies abroad as well.
That is why we need to look at the ways in which employment-population ratios for men and women 25 to 54 have been kept significantly higher in a range of developed countries than in the United States in the wake of this last recession. ]
mrrunangun -> anne...
Interesting thought about seeking reasons for lower employment/population ratios in US.
Relative to baseline, more offshoring of US jobs than other countries' jobs? Perhaps due to less inhibition of offshoring in US from laws and customs? Have seen a set of graphs somewhere lately that suggest this possibility comparing US, German, Italian, Spanish, and Austrian total offshoring and relative offshoring to East Asia, Eastern Europe, and Mexico-Brazil.
More rapid application of technological and capital substitution for labor as solutions to cost containment problems in the business units of public and private sectors in the US?
US unions being less extensive, and in its private sector less powerful, inhibiting labor's ability to preserve employment in firms?
Darryl FKA Ron -> mrrunangun...
REnt collecting capital owners becoming addicted to gambling in derivatives "markets". A casino by any other name...
anne:
http://krugman.blogs.nytimes.com/2014/11/15/the-unwisdom-of-crowding-out-wonkish/November 15, 2014
The Unwisdom of Crowding Out (Wonkish)
By Paul KrugmanI am, to my own surprise, not too happy with the defense of Keynes * by Peter Temin and David Vines. Peter and David are of course right that Keynes has a lot to teach us, and are also right that the anti-Keynesians aren't just making really bad arguments; they're making the very same really bad arguments Keynes refuted 80 years ago.
But the Temin-Vines piece seems to conflate several different bad arguments under the heading of "Ricardian equivalence", and in so doing understates the badness.
The anti-Keynesian proposition is that government spending to boost a depressed economy will fail, because it will lead to an equal or greater fall in private spending - it will crowd out investment and maybe consumption, and therefore accomplish nothing except a shift in who spends. But why do the AKs claim this will happen? I actually see five arguments out there - two (including the actual Ricardian equivalence argument) completely and embarrassingly wrong on logical grounds, three more that aren't logical nonsense but fly in the face of the evidence.
Here they are:
First, there's the Say's Law argument: because spending must equal income, any increase in government spending must be matched by a fall in private spending. "This is just accounting," declared John Cochrane. No, it isn't - and it was the remarkable fact that prominent economists were saying things like this, as if none of the debates of the 1930s had happened, that led me to proclaim a Dark Age of macroeconomics. **
Second, there's the misuse of Ricardian Equivalence. It's important to understand that we're not debating about whether Ricardian equivalence is right; even if it were (it isn't), what the anti-Keynesians were saying was wrong, as I tried to explain *** a number of times. It's crucial, I'd argue, to realize that what the people invoking Ricardo were saying was wrong even in terms of their own model. If you don't get that, you don't appreciate the depths to which all too many economists sank.
Third, there's the standard textbook crowding out story, in which increased government spending in the face of a fixed money supply, or maybe a nominal income target, causes interest rates to rise and private investment to fall. The money supply argument doesn't work when we're at the zero lower bound, which is after all why we're talking about fiscal policy in the first place; but there is a school of thought that insists that the Fed and the ECB and the BoJ could achieve full employment if only they wanted to. I disagree, and I think this is mostly wishful thinking, but at least it's not the kind of raw nonsense involved in arguments #1 and #2.
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Nov 13, 2014 | The Guardian
Not since the Great Depression has wealth inequality in the US been so acute, new in-depth study finds
Wealth inequality in the US is at near record levels according to a new study by academics. Over the past three decades, the share of household wealth owned by the top 0.1% has increased from 7% to 22%. For the bottom 90% of families, a combination of rising debt, the collapse of the value of their assets during the financial crisis, and stagnant real wages have led to the erosion of wealth.
The share of wealth owned by the top 0.1% is almost the same as the bottom 90%
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Nov 16, 2014 | http://www.zerohedge.com
According to the International Centre for Prison Studies, nearly a third of all female prisoners worldwide are incarcerated in the United States of America. There are 201,200 women in US prisons, representing 8.8% of the total American prison population. As Forbes' Niall McCarthy reports, China comes a very distant second to the US with 84,600 female prisoners in total or 5.1% of the overall Chinese prison population. Russia is in third position – 59,000 of its prisoners are women and this comes to 7.8% of the total. Either American women are the worst-behaved in the world, or the politically-expedient "prisons-first" culture has gone too far.
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Nov 15, 2014 | finance.yahoo.com
Where do you fit on the earnings scale?
According to data compiled by Goldman Sachs, most American workers earn below $20 per hour. Goldman Sachs economists David Mericle and Chris Mischaikow crunched Labor Department data that is used to generate the monthly jobs report that the market closely watches, in particular from the survey of employers.
The chart, shown above, shows that 19% of workers make less than $12.50 per hour, 32% of workers make between $12.50 and $20 per hour, 30% make between $20 and $30 an hour, 14% make between $30 and $45 per hour, and 5% make over $45 an hour.
The economists also found that, while wage growth has been soft, the fastest growth in income has come to the lowest-paid workers.
And they found that the biggest driver to income growth has been rising employment, with help from rising wages and more hours worked.
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... ... ...
Peter Turchin notes that inequality is cyclical:
In his book Wealth and Democracy (2002), Kevin Phillips came up with a useful way of thinking about the changing patterns of wealth inequality in the US. He looked at the net wealth of the nation's median household and compared it with the size of the largest fortune in the US. The ratio of the two figures provided a rough measure of wealth inequality, and that's what he tracked, touching down every decade or so from the turn of the 19th century all the way to the present. In doing so, he found a striking pattern.
From 1800 to the 1920s, inequality increased more than a hundredfold. Then came the reversal: from the 1920s to 1980, it shrank back to levels not seen since the mid-19th century. Over that time, the top fortunes hardly grew (from one to two billion dollars; a decline in real terms). Yet the wealth of a typical family increased by a multiple of 40. From 1980 to the present, the wealth gap has been on another steep, if erratic, rise. Commentators have called the period from 1920s to 1970s the 'great compression'. The past 30 years are known as the 'great divergence'. Bring the 19th century into the picture, however, and one sees not isolated movements so much as a rhythm. In other words, when looked at over a long period, the development of wealth inequality in the US appears to be cyclical. And if it's cyclical, we can predict what happens next.
***
In our book Secular Cycles (2009), Sergey Nefedov and I applied the Phillips approach to England, France and Russia throughout both the medieval and early modern periods, and also to ancient Rome. All of these societies (and others for which information was patchier) went through recurring 'secular' cycles, which is to say, very long ones. Over periods of two to three centuries, we found repeated back-and-forth swings in demographic, economic, social, and political structures. And the cycles of inequality were an integral part of the overall motion.
***
Our historical research on Rome, England, France, Russia and now the US shows that these complex interactions add up to a general rhythm.
***
It looks like the pattern that we see in the US is real. Ours is, of course, a very different society from ancient Rome or medieval England. It is cut off from them by the Industrial Revolution and by innumerable advances in technology since then. Even so, a historically based model might shed light on what has been happening in the US over the past three decades.
So what accounts for the periods of rising equality? Turchin gives a number of factors. One is revolution, when inequality became too extreme. Turchin writes:
History provides another clue. Unequal societies generally turn a corner once they have passed through a long spell of political instability. Governing elites tire of incessant violence and disorder. They realise that they need to suppress their internal rivalries, and switch to a more co-operative way of governing, if they are to have any hope of preserving the social order. We see this shift in the social mood repeatedly throughout history - towards the end of the Roman civil wars (first century BC), following the English Wars of the Roses (1455-85), and after the Fronde (1648-53), the final great outbreak of violence that had been convulsing France since the Wars of Religion began in the late 16th century. Put simply, it is fear of revolution that restores equality. And my analysis of US history in a forthcoming book suggests that this is precisely what happened in the US around 1920.
Indeed, it is well-documented that runaway inequality leads to unrest and revolution. And as Turchin notes, – unrest and revolution in turn leads the powers-that-be to stop hogging all of the wealth.
The journal Nature writes:
Perhaps revolution is the best, if not the only, remedy for severe social stresses. [Herbert Gintis, a retired economist who is still actively researching the evolution of social complexity at the University of Massachusetts Amherst] points out that he is old enough to have taken part in the most recent period of turbulence in the United States, which helped to secure civil rights for women and black people. Elites have been known to give power back to the majority, he says, but only under duress, to help restore order after a period of turmoil. "I'm not afraid of uprisings," he says. "That's why we are where we are."
We have repeatedly noted that we are opposed to violent revolution. Activists like David DeGraw point out that things are going to dramatically change one way or the other … through a huge change for the better, or a descent into violence and chaos. John F. Kennedy said:
Those who make peaceful revolution impossible will make violent revolution inevitable.
Sadly, the government is doing everything it can to crush peaceful change, treating peaceful protesters, whistleblowers and investigative reporters as terrorists. And the big banks are joining in the effort to make peaceful revolution impossible.
Postscript: Turchin notes that another factor which at times reduces inequality is a pandemic. For example, the survivors of the Black Plague could demand higher wages, since labor was scarce.
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October 29, 2014 | theguardian.com
Since the financial crisis, the number of billionaires in the world has more than doubled, according to research by Oxfam which warns that economic inequality has "reached extreme levels".
According to the charity, the number of billionaires (US$) worldwide totalled 1,645 people by March 2014 - up from 793 billionaires in March 2009.
Calculations by Oxfam, which were published earlier this year, found that the 85 richest individuals in the world owned the same amount of wealth as the poorest half of the global population.
This figure was based on the total wealth of the 85 billionaires at the time of the annual Forbes list in March 2013. According to Oxfam's latest research, in the 12-month period since the last Forbes report, their wealth has increased by 14%, or $244bn - equating to a $668m-a-day increase.
The global report on inequality released by the charity on Wednesday, warns that the "billionaire boom is not just a rich country story". India, which had two billionaires in the 1990s now has 65, while by March 2014 there were 16 billionaires in sub-Sharan Africa.
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economistsview.typepad.com
Janet Yellen at the Conference on Economic Opportunity and Inequality, FRB Boston, Boston:
Perspectives on Inequality and Opportunity from the Survey of Consumer Finances, by Janet Yellen, Chair, FRB: The distribution of income and wealth in the United States has been widening more or less steadily for several decades, to a greater extent than in most advanced countries.1 This trend paused during the Great Recession because of larger wealth losses for those at the top of the distribution and because increased safety-net spending helped offset some income losses for those below the top. But widening inequality resumed in the recovery, as the stock market rebounded, wage growth and the healing of the labor market have been slow, and the increase in home prices has not fully restored the housing wealth lost by the large majority of households for which it is their primary asset.The extent of and continuing increase in inequality in the United States greatly concern me. The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression. By some estimates, income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then.2 It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity.Some degree of inequality in income and wealth, of course, would occur even with completely equal opportunity because variations in effort, skill, and luck will produce variations in outcomes. Indeed, some variation in outcomes arguably contributes to economic growth because it creates incentives to work hard, get an education, save, invest, and undertake risk. However, to the extent that opportunity itself is enhanced by access to economic resources, inequality of outcomes can exacerbate inequality of opportunity, thereby perpetuating a trend of increasing inequality. Such a link is suggested by the "Great Gatsby Curve," the finding that, among advanced economies, greater income inequality is associated with diminished intergenerational mobility.3 In such circumstances, society faces difficult questions of how best to fairly and justly promote equal opportunity. My purpose today is not to provide answers to these contentious questions, but rather to provide a factual basis for further discussion. I am pleased that this conference will focus on equality of economic opportunity and on ways to better promote it.In my remarks, I will review trends in income and wealth inequality over the past several decades, then identify and discuss four sources of economic opportunity in America--think of them as "building blocks" for the gains in income and wealth that most Americans hope are within reach of those who strive for them. The first two are widely recognized as important sources of opportunity: resources available for children and affordable higher education. The second two may come as more of a surprise: business ownership and inheritances. Like most sources of wealth, family ownership of businesses and inheritances are concentrated among households at the top of the distribution. But both of these are less concentrated and more broadly distributed than other forms of wealth, and there is some basis for thinking that they may also play a role in providing economic opportunities to a considerable number of families below the top.In focusing on these four building blocks, I do not mean to suggest that they account for all economic opportunity, but I do believe they are all significant sources of opportunity for individuals and their families to improve their economic circumstances. ...[continue]...See also Neil Irwin, "What Janet Yellen Said, and Didn't Say, About Inequality," who says:
If there was any doubt that Janet Yellen would be a different type of Federal Reserve chair, her speech Friday in Boston removed it. ...Ms. Yellen's speech is a thorough airing of some of the latest research on how much inequality has widened in recent years and why. ...It seems like Ms. Yellen offered this speech as a way to use her bully pulpit to cast public attention on an issue she cares about deeply, deliberately avoiding areas where inequality intersects with the policy areas under which she has direct control. And it is true that the future of inequality in the United States is surely shaped more by decisions on the levels of certain taxes and the size of the social welfare state more than by anything that the Fed does.Perhaps in future appearances, Ms. Yellen will give us a sense not just of what is wrong with inequality, but what it might mean for the policies over which she has some control.Cyril Morong:anne -> Cyril Morong...I looked for Yellen to address something like how Gini coefficients are related to economic growth or incomes of the bottom 20%. How much does growth change for every, say, .01 gain in Gini. Maybe growth rises but once Gini gets to a certain number additional increases mean less growth. I did not see any statement like that or one about incomes for the bottom 20%.
She did say
"However, to the extent that opportunity itself is enhanced by access to economic resources, inequality of outcomes can exacerbate inequality of opportunity, thereby perpetuating a trend of increasing inequality. Such a link is suggested by the "Great Gatsby Curve," the finding that, among advanced economies, greater income inequality is associated with diminished intergenerational mobility."
There she has a footnote to a paper by Krueger. One thing he said there was
"In a seminal paper, Torsten Persson and Guido Tabellini argued that in a society where income inequality is greater, political decisions are likely to result in policies that lead to less growth. They provided evidence supporting this conclusion. A new IMF paper also finds that more equality in the income distribution is associated with more stable economic growth."
Not more growth but more stable growth. So I don't see any clear statement on the statistical relationship. Exactly how much does growth change when inequality changes. And we have to balance that against what happens to growth if we increase tax rates on high income people (will it affect incentives?)
She also discussed opportunities yet did not mention licensing. I have read that about 30% of jobs now require a license and in the 1950s it was only 5%
anne -> Cyril Morong...http://www.whitehouse.gov/sites/default/files/krueger_cap_speech_final_remarks.pdf
January 12, 2014
The Rise and Consequences of Inequality in the United States
By Alan B. KruegerDimensions of Rising Income Inequality
Denis Drew:http://www.nber.org/papers/w3599
January, 1991
Is Inequality Harmful for Growth? Theory and Evidence
By Torsten Persson and Guido TabelliniIs inequality harmful for growth? We suggest that it is. To summarize our main argument: in a society where distributional conflict is more important, political decisions are more likely to produce economic policies that allow private individuals to appropriate less of the returns to growth promoting activities, such as accumulation of capital and productive knowledge. In the paper we first formulate a theoretical model that formally captures this idea. The model has a politico-economic equilibrium, which determines a sequence of growth rates depending on structural parameters, political institutions, and initial conditions. We then confront the testable empirical implications with two sets of data. A first data set pools historical evidence-which goes back to the mid 19th century-from the US and eight European countries. A second data set contains post-war evidence from a broad cross-section of developed and less developed countries. In both samples we find a statistically significant and quantitatively important negative relation between inequality and growth. After a comprehensive sensitivity analysis, we conclude that our findings are not distorted by measurement error, reverse causation, hetroskedasticity, or other econometric problems.
DrDick:CROSS-POSTING MY COMMENT FROM AN AFL-CIO SITE -- might suggest how little we have to do, how very teeny weeny little we have to do, to reverse the Great Wage Depression; been done almost everywhere else in the Western world (and elsewhere):
"The average hourly Wal-Mart worker is paid $11.83 an hour. That's below the average hourly earnings of $14.46 for all non-supervisor retail employee last month, according to the Labor Department."
http://blogs.wsj.com/economics/2014/10/16/wal-mart-looks-to-bump-all-workers-pay-above-the-minimum-wage/"Note that labor costs for its non-supervisory staff account for less than 7% of its total sales."
[from EPI -- afraid to use two links at once]Let's play a game. DOUBLE Walmart's $12 an hour non-supervisory pay to $24 an hour -- THROW ON 25% extra for benefits: we get $30 an hour. How much do Walmart's prices go up? 7% + 7% + 3.5% + 10.5% price rise.
Even if Walmart lost some business its workers would come out way ahead. If there were an EFFECTIVE union in there that could ACTUALLY withhold labor to bargain for a better deal this would have happened long ago. I emphasize the words effective and actual because that would have to mean that Walmart could not point to another store across the shopping mall or down the road that was paying much less -- IOW something would have to be in place to hold off the RACE-TO-THE-BOTTOM.
IDEALLY that would mean a labor market setup in place around the world in the most successful -- and democratic economies -- for generations. And put in place by the most successful labor union in the US with its National Master Freight Agreement here -- the International Brotherhood of Teamsters. IDEALLY, that would be the labor market setup called centralized bargaining where everybody doing the same type of work (e.g., retail clerk) for different firms (e.g., Safeway, Best Buy, Walmart) negotiate one common labor contract. Works fine in French-Canada, Germany, France, Nordic countries, all known for fair and balanced societies, and other continental economies, even Argentina and Indonesia. That's IDEALLY (hopefully not too many years away here).
The IMMEDIATE way to fend off the race-to-the-bottom here is of course a federal minimum wage raise to $15 an hour. Would raise Walmart's prices 3.5% -- and all Walmart's competition's prices too, so it shouldn't even lose Walmart any business (should do just the opposite as we are about to see). To use eighth-grade math: Walmarts sales of $260 billion a year would "spike" (if you could call it "spike") an extra $9 billion (3.5%). To use more eighth-grade math: A $15 an hour federal minimum wage would also just happen to shift $560 billion dollars of buying power into the pockets of the poorest paid 45% of the workforce: Walmart's best customers.
[Final note: Average raise of $8,000 a year X 70 million workers (45% of the workforce averaging a half raise + 5% now at minimum getting a full $16,000 raise) = $560 billion out of a $16,000 billion dollar economy = a shift of 3.5% of income out of the pockets of the 55% who now get 90% share of income to the 45% who now get only 10% of income.]
WAWWF (what are we waiting for)
Charles Peterson:Even as a socialist, I would agree with Yellen that some degree of inequality is desirable for the reasons she cites, though we may well differ on the acceptable degree. It is, however, clear that current levels strongly limit equality of opportunity and with it intergenerational mobility. This is simply unacceptable. I defy any rational human being to try to justify the wealth and power of George W. Bush or Donald Trump.
This part about highly unequal distribution of inheritances nevertheless contributing to equality sounds positively bogus, and the kind of thing that fits nicely with a continuing neoliberal agenda.
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Economistsview
Guess I should post something on the Piketty data controversy (please feel free to post links to additional discussion in comments). This is Paul Krugman:
Is Piketty All Wrong?: Great buzz in the blogosphere over Chris Giles's attack on Thomas Piketty's Capital in the 21st Century. Giles finds a few clear errors, although they don't seem to matter much; more important, he questions some of the assumptions and imputations Piketty uses to deal with gaps in the data and the way he switches sources. Neil Irwin and Justin Wolfers have good discussions of the complaints; Piketty will have to answer these questions in detail, and we'll see how well he does it.But is it possible that Piketty's whole thesis of rising wealth inequality is wrong? Giles argues that it is...OK, that can't be right - and the fact that Giles reaches that conclusion is a strong indicator that he himself is doing something wrong.I don't know the European evidence too well, but the notion of stable wealth concentration in the United States is at odds with many sources of evidence. ... [discusses several sources]...The point is that Giles is proving too much; if his attempted reworking of Piketty leads to the conclusion that nothing has happened to wealth inequality, what that really shows is that he's doing something wrong.None of this absolves Piketty from the need to respond to each of the individual questions. But anyone imagining that the whole notion of rising wealth inequality has been refuted is almost surely going to be disappointed.anne:
anne:http://eml.berkeley.edu/~saez/piketty-saezScience14.pdf
May 23, 2014
Inequality in the long run
By Thomas Piketty and Emmanuel SaezThis Review presents basic facts regarding the long-run evolution of income and wealth * inequality in Europe and the United States. Income and wealth inequality was very high a century ago, particularly in Europe, but dropped dramatically in the first half of the 20th century. Income inequality has surged back in the United States since the 1970s so that the United States is much more unequal than Europe today. We discuss possible interpretations and lessons for the future.
The distribution of income and wealth is a widely discussed and controversial topic. Do the dynamics of private capital accumulation inevitably lead to the concentration of income and wealth in ever fewer hands, as Karl Marx believed in the 19th century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the 20th century? What do we know about how income and wealth have evolved since the 18th century, and what lessons can we derive from that knowledge for the century now under way? For a long time, social science research on the distribution of income and wealth was based on a relatively limited set of firmly established facts together with a wide variety of purely theoretical speculations. In this Review, we take stock of recent progress that has been made in this area. We present a number of basic facts regarding the longrun evolution of income and wealth inequality in advanced countries. We then discuss possible interpretations and lessons for the future....
Reply Saturday, May 24, 2014 at 01:18 PMhttp://eml.berkeley.edu/~saez/piketty-saezScience14.pdf
May 23, 2014
Beezer:Data and Methods
Modern data collection on the distribution of income begins in the 1950s with the work of Kuznets. Shortly after having established the first national income time series for the United States, Kuznets set himself to construct time series of income distribution. He used tabulated income data coming from income tax returns-available since the creation of the U.S. federal income tax in 1913-and statistical interpolation techniques based upon Pareto laws (power laws) to estimate incomes for the top decile and percentile of the U.S. population. By dividing by national income, Kuznets obtained series of U.S. top income shares for 1913 to 1948.
In the 1960s and 1970s, similar methods using inheritance tax records were developed to construct top wealth shares. Inheritance declarations and probate records dating back to the 18th and 19th centuries were also exploited by a growing number of scholars in France, the United States, and the United Kingdom....
* Income and wealth: definitions
Income is a flow. It corresponds to the quantity of goods and services produced and distributed each year. Income can be decomposed as the sum of labor income (wages, salaries, bonuses, earnings from nonwage labor, and other remuneration for labor services) and capital income (rent, dividends, interest, business profits, capital gains, royalties, and other income derived from owning capital assets). In this Review, we focus on the long-run evolution of the inequality of primary income, defined as income before taxes and government transfers. In contrast, disposable income is defined as income after taxes and government transfers. Although we do not analyze disposable income in this article, comparing inequality of primary income and inequality of disposable income is useful to assess the role of the government in reducing income inequality.
Wealth (or capital) is a stock. It corresponds to the total wealth owned at a given point in time.This stock comes from the wealth appropriated or accumulated in the past. In the context of this article, wealth is defined as nonhuman net worth, i.e. the sum of nonfinancial and financial assets, net of financial liabilities (debt). National wealth is the sum of private wealth (net worth owned by private individuals) and public wealth (net worth owned by the government and other public agencies). In this article, we focus on the level and distribution of private wealth....
Fred C. Dobbs:For the first time someone has accumulated a truly impressive amount of information about income and wealth distribution. Over 20 nations, some going back three centuries. I think Piketty will face a two kinds of criticisms, neither of which are substantive; One it's not 'science' level, when of course almost nothing in economics is 'science' level--a point Piketty makes right up front and I'm sure POs a ton of math economists; and two, from the far right which cannot face the truth.
anne -> Fred C. Dobbs...Why didn't Piketty's Harvard publisher spot
the errors which the FT has exposed? http://specc.ie/1gqNZ1Q via @spectator_ch
Fraser Nelson - May 24While Americans swooned over Thomas Piketty and his thesis about ever-rising inequality it has taken a Brit, the FT's Chris Giles, to expose the corruptions in his data. What he has found – on the cover of today's FT and in detail on a blog here – is shocking because the errors are so basic. And yet on this, Piketty has built a manifesto for all kinds of tax rises. It makes you wonder how his publisher, Harvard University Press, allowed such flaws to enter print.
Chris Giles' report is worth reading in full, but here are a couple of examples should give you a flavour of what he has found. It started when he came across a fairly major mistake. As he says in his blog:
'Piketty cited a figure showing the top 10% of British people held 71% of total national wealth. The Office for National Statistics latest Wealth and Assets Survey put the figure at only 44%. This is a material difference and it prompted me to go back through Piketty's sources.' ...
As he started to go through the data, he spotted a number of striking anomalies. For example:-
"In [Piketty's] UK data, instead of using his sources for figures on wealth of the top 10% of the population during the 19th century, Prof Piketty inexplicably adds 26 percentage points to the wealth share of the top 1% for 1870 and 28 percentage points for 1810."
Then take Piketty's estimates for inequality in modern Europe:-
"Piketty gives the same weight to Sweden as to France and the UK, even thought it has only one-seventh of the population… For Sweden, he uses data from 2004 to represent those from 2000, even though the source data include an estimate for 2000."
Any sixthformer would know that you can't average out results between a massive country and a tiny one. You need to produce a "weighted average," a concept with which a GCSE maths student ought to be familiar, let alone an economics professor. Average figures for any European metric (i.e., health spending as a share of GDP) need to take account for such population variations.
And where on earth did Piketty get his UK data from? Chris Giles checked his sources, and found no relation between the source and what Piketty published.
"His original sources show consistently very large declines of close to 10 percentage points in wealth held by the rich in the highly inflationary 1970s. Conversely, Piketty shows the super-rich held a greater share of wealth by 1980….The official data series which he says he used for the UK after 1980 shows little increase in inequality over the next 30 years, while Prof Piketty's figures show a steep rise."
So where did this "steep rise" come from? The FT asked Piketty to respond, and printed his reply here. It dodges the question. "I have no doubt that my historical data series will be improved in the future," he says – but we're not talking about 'improving' methodology. We're talking about simple errors, and seemingly groundless claim of rising inequality in Britain. Where on earth did he get an actual data series purporting to show a steep rise in UK inequality after 1980?
As Chris Giles says, if you run the correct figures – a tiresome, but fairly basic exercise – then Piketty's thesis collapses. ...
But what about Harvard University Press? Piketty's publisher there, Ian Malcolm, is interviewed here (*). From the sounds of it, he just reprinted the French version without applying the checks and balances that you'd hope would be applied to a Harvard economics book. He says how much money Piketty has made his company, and concluded by saying:
"As long as there is bullshit and inequality, we won't go out of business."
*- Being Thomas Piketty's Publisher
http://shar.es/Vhwqz via @chronicleQ. This isn't your first experience with a breakout best seller. You were also the editor behind Harry Frankfurt's On Bullshit, a huge hit for Princeton University Press in 2005. Any similarities between the two books?
A. They both have a strange connection to French theory. Frankfurt's book originated as a critique of French cultural theory, which in its heyday was taking over literature departments and which (Frankfurt) thought was bullshit in its indifference to the truth. Now (Piketty) turns around and tells American economists that their theories are too abstract and not really concerned with the real world. The kind of critique (Frankfurt) leveled against French theory is the kind of critique (Piketty) is leveling against American theory.
Q. And there is the fact that bullshit and inequality are perennial concerns.
A. Publishers can profit from negative things about the world. As long as there is bullshit and inequality, we won't go out of business.
anne:Merely hateful, this is what lying by tone alone amounts to.
anne:So that we keep in mind, the top 10% of families went from an income share of 34.63 in 1980 to 50.42 in 2012. The top 5% of families went from a share of income of 23.17 in 1980 to 38.56 in 2012.
The top 1% of families went from 10.02 in 1980 to 22.46 in 2012. The top .5% went from 7.15 in 1980 to 18.22 in 2012. The top .1% went from 3.41 in 1980 to 11.33 in 2012. Finally, the top .01% went from 1.28 in 1980 to 5.47 in 2012.
anne:Summarizing:
- The top 10% of families went from an income share of 34.63 in 1980 to 50.42 in 2012.
- The top 5% went from 23.17 in 1980 to 38.56 in 2012.
- The top 1% went from 10.02 in 1980 to 22.46 in 2012.
- The top .5% went from 7.15 in 1980 to 18.22 in 2012.
- The top .1% went from 3.41 in 1980 to 11.33 in 2012.
- The top .01% went from 1.28 in 1980 to 5.47 in 2012.
- Top .01 percent or 16,068 families in 2012 had market income above $10,256,235
- Top .1-.01% families had income between $1,906,047 and $10,256,235
- Top .5-.1% families had income between $611,805 and $1,906,047
- Top 1-.5% families had income between $393,941 and $611,805
- Top 5-1% families had income between $161,438 and $393,941
- Top 10-5% families had income between $113,820 and $161,438
anne:
Owen Paine -> anne...As for control of corporate income, which means wealth control, the top 1% of households went from 27.6 in 1980 to 49.5 in 2010. The top 5% went from 45.2 in 1980 to 63.2 in 2010. The top 10% went from 55.0 in 1980 to 70.3 in 2010. *
* http://www.cbo.gov/publication/44604
December 4, 2013
Owen Paine -> Owen Paine ...Sub tract the 5% shares of corporate income from the 10% shares
In 1980 and in 2010
The top 90 thru 94.9 % lost share all the increase in share is 95% and upThe 90 to 94.9 % share of corporate income
Went down
From
above 9%
to
under 7%The top 1% from the top 5% leads to a fall in share in the 95 to 98.9 %
From above 18% to below 14%
Owen Paine -> Owen Paine ...Justin Cidertrades:Everyone lost share below the top one percent
"Piketty uses to deal with gaps in the data"
Economists do need to tidy up this data thing. Ceu!
Should we use better comparisons? Everyone here agrees on what median home price is. Agrees on what average home price is. Should we use ratio? Median / average ratio? Median / average for things describing human inequality? Median means the gal and the guy who see half of other people wealthier but other half of other people not as wealthy as self. Ceu!
Check out this ratio of median/average here :
2.bp.blogspot.com/-lle1z6uAZvw/U3-ZGP_FtnI/AAAAAAAAfJM/z_srjnfSF9s/s1600/NHSAverageApr2014.jpg
Does this chart give you an idea of where we have been with inequality? Where we will end up? Tell me something!
Do we have a worse problem with this than other nations
?
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RT Op-Edge
Even Lord Rothschild, who invests over 2 billion pounds of his own dynasty's and other depositors' cash through RIT Capital Partners, is ringing alarm bells this week: "With the world recovery still fragile and reliant to a large extent on policy support [QE/money printing]", he warns, "it is not hard to envisage markets having to deal with shocks in the coming year." Yes, "shocks."
... ... ...
Abandoning a domesticated animal or withdrawing its supply of food can end in criminal convictions here in the UK, yet the duty of care and animal cruelty legislation does not, it seems, apply to human beings. This government has taken Britain over the line into barbarism, around 5 million Britons, if they get their way, are headed for the Tory party knacker's yard.
Cameron seems fixated on trying to stop the unemployed or other victims of his money laundering fraudster City funders from eating and sleeping. The Britain he wants to see is a sadistic place where, as US writer Gore Vidal mockingly commented: "It is not enough to succeed, others must fail." Only the selfish, the ignorant and the rich count as human in Cameron's financial determinism.
... ... ...
London media look the other way
When introduced in the 1940s, Britain's flagship Social Security system was the envy of the civilized world, but as it begins its painful descent to the ocean depths, Fleet Street made a politically-charged decision to leave human interest stories of death and horror to Britain's local media. Not being 'celebrities' those dead or ruined by 'austerity' have, like the victims of tyranny before them, become 'Untermensch' in the London newsrooms.
There is the case of former Bristol nurse, Jacqueline Harris, who spent the best years of her life caring for National Health Service (NHS) patients. Half-blind, arthritic with a disabled arm and crippled with back pain in her 50s she suffered daily agony which even strong pain relief could not ease. Told by privatized Work Capability Assessment firm ATOS for the DWP that she was 'fit to work', Jacqueline quickly had her benefits cut and - according to her sister - finding it impossible to cope, 'killed herself' by taking an overdose.
... ... ...
Karl Marx explained in Das Kapital back in 1867 that Plutocracy requires a 'Reserve Army of Labor', an industrial reserve of surplus population. This has been British government policy ever since the Callaghan's Labour government gave up on the policy of Full Employment in the late 1970s.
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January 22, 2014 | Economist's View
I like this as far as it goes, but why not make the point that there is a role for government in solving the market failures that lead to the lack of job insurance for vulnerable workers (and *perhaps* for solving the inequality problem as well if it progresses beyond some threshold)?:
Inequality in Adam Smith's World, by Chris House: Inequality is a fact of economic life and it is becoming more and more pronounced over time. ...There are many forces in our economy that create income inequality. The most basic of these forces however, is tied to the nature of trade itself and can be traced all the way back to Adam Smith and the division of labor. If you read the Wealth of Nations (something I told you not to do a few blog posts back …) you will find that Smith begins by marveling at the incredible increases in productivity that can be obtained by exploiting the division of labor, that is, by specializing. ... A jack-of-all-trades is simply not valued in a market system. ...
The way you get the division of labor to work is by combining it with trade. ... A physician cannot consume only her own medical advice – she must draw on the productivity of the many other specialists in society. If you are willing to do trade, you can, by specializing, reach incredible levels of productivity. As populations grow, and as the ability to trade grows, you should see more and more specialization and higher and higher productivity. (Obviously the division of labor is not the only source of increases in productivity.)
However, there is a downside... Adam Smith's plan exposes people to incredible variations in income and thus a market system possesses and important force which causes inequality. Specialization ties your entire wellbeing to a single industry. If you decide that you are going to become a web designer, your fate is very closely tied to the market for web designers. As a result, while Smith's plan dramatically increases overall productivity, it also exposes us to incredible risk.
Of course, markets do have responses to risk. The typical response is for the market to provide insurance contracts to reduce risk. In this case however, the type of insurance needed is actually income or job insurance. These types of insurance contracts are not typically available. ...
I don't mean to imply that all or even most of the alarming increase in inequality is due to the division of labor and trade. I would guess that modern technology (which allows people to leverage luck to extreme degrees by cheaply reproducing and transmitting ideas and information) and inheritance, both play a significant role in creating inequality. However, living with income inequality is an implicit part of the deal we made with Adam Smith and it will be with us in some form for a long time.
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January 23, 2014 | Economist's View
The topic of the day seems to be the new study on income mobility:
- Upward Mobility Has Not Declined, Study Says - NYTimes.com
- Stable Income Mobility: Not a Muddle At All - Jared Bernstein
- Did We Need a Landmark Study to Tell Us Mobility Didn't Decrease Between 1990 and 2007? - Dean Baker
- Upward mobility in the United States is not declining as many citizens think - Tyler Cowen
- What If Social Mobility Is Never High Anywhere? - Matthew Yglesias
My take is similar to Kevin Drum's, who manages to separate the level of mobility (very low) to the rate of change (one study, the latest, says mobility is unchanged):
This response emphasizes the geographic variation -- where you are born appears to matter quite a bit:
Perspective:
Beating a dead horse, but... This is where a robust estate tax can help alleviate some of the issues related to lack of mobility (up and down the income ladder).
rjs:
re: "there are five main factors that contribute to higher mobility:
High mobility areas have (1) less residential segregation, (2) less income inequality, (3) better primary schools, (4) greater social capital, and (5) greater family stability."i'd add a 6th, being born on an oil field, since the odds of reaching the top quintile in western north dakota are around 35%...
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At MoneyWatch:
What's the best way to help the poor?, by Mark Thoma
Minimum wage, the EITC, or some combination of the two?
DeDude:Tyler Cowen is right that the problem today is purely one of (lack of) demand. He just doesn't get what kind of demand. Demand for gods and services are the ONLY real driver of demand for minimum wage employees. You cannot manipulate demand for employees in any meaningful and effective way by changing the price of employing people. Burger king would not hire twice as many people if you cut the minimum wage in half – because it would not increase the demand for burgers. They would actually fire people because a lot of their regular costumers would no longer be able to afford their burgers. In the economic sense the product "minimum wage worker" does not follow the same rules as other products because it actually has a positive feed-back loop on its own demand.
bakho:
Matt Young:The minimum wage is only partly paid by higher prices. It can be paid by a slight reduction in obscene profits.
The minimum wage preforms another function that is not discussed. Higher MinWage is an incentive for employers to make the employees they do have more productive. If wages are too low, investments in productivity are not worthwhile. This is not good because low productivity workers are low wage workers and business lacks incentive to invest if equipment and training to increase productivity. This last, worker training results in a less educated workforce as most job training is "on the job". I rarely see these considerations in discussion of MinWage.
http://www.ssc.wisc.edu/econ/archive/wp2011-1.pdf
'This study empirically investigates the extent of non compliance with the tax code and the determinants of federal income tax evasion in the U.S. Employing the most recent data we find that 18-19% of total reportable income is not properly reported to the IRS.'
--------------The fastest way to get money to the poor is to pay them cash for labor.
---------
Another:
http://www.edd.ca.gov/payroll_taxes/Underground_Economy_Cost.htmBarron's Online featured the article, Going Underground, on January 3, 2005. This article states in part:
"America has two economies, and one is flourishing at the expense of the other. First, there's the legitimate economy, in which craftsmen are licensed and employers and employees pay taxes. Then there's the fast-growing underground economy, where millions of workers are paid off-the-books, their incomes largely untaxed."
-------------Break the law and help the poor. Simple, that is how we do it in Central Valley California.
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Economist's View
Paul Krugman: The Undeserving Rich The rise in inequality is being met with "a determined campaign of statistical obfuscation":
The Undeserving Rich, by Paul Krugman, Commentary, NY Times: The reality of rising American inequality is stark. ... While we can and should have a serious debate about what to do about this situation, the simple fact - American capitalism as currently constituted is undermining the foundations of middle-class society - shouldn't be up for argument.But it is, of course..., class warfare is already underway, with the plutocrats on offense. The result has been a determined campaign of statistical obfuscation. ... The story goes like this: America's affluent are affluent because they made the right lifestyle choices. They got themselves good educations, they got and stayed married, and so on. Basically, affluence is a reward for adhering to the Victorian virtues.
What's wrong with this story? Even on its own terms, it postulates opportunities that don't exist. For example, how are children of the poor, or even the working class, supposed to get a good education in an era of declining support for and sharply rising tuition at public universities? Even social indicators like family stability are, to an important extent, economic phenomena: nothing takes a toll on family values like lack of employment opportunities.
But the main thing about this myth is that it misidentifies the winners from growing inequality. White-collar professionals, even if married to each other, are only doing O.K. The big winners are a much smaller group. ...
And who are these lucky few? Mainly they're executives of some kind, especially, although not only, in finance. You can argue about whether these people deserve to be paid so well, but one thing is clear: They didn't get where they are simply by being prudent, clean and sober.
So how can the myth of the deserving rich be sustained? Mainly through a strategy of distortion by dilution. You almost never see apologists for inequality willing to talk about the 1 percent, let alone the really big winners. Instead, they talk about the top 20 percent, or at best the top 5 percent. These may sound like innocent choices, but they're not, because they involve lumping in married lawyers with the wolves of Wall Street. ...
Again, I know that these realities make some people, not all of them hired guns for the plutocracy, uncomfortable, and they'd prefer to paint a different picture. But even if the facts have a well-known populist bias, they're still the facts - and they must be faced.
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Project SyndicatThe strange case of American inequality. "When income inequality began to rise in the 1980's and 1990's, those of us who cut our teeth on the long march of North Atlantic history expected to see a political reaction. Democratic politics, we thought, would check the rising power of a largely parasitic economic over-class, especially if its influence caused governments to fail to live up to their commitments to provide full employment with increasing – and increasingly shared – prosperity...Why can't America launch similar movements today?
To the extent that this has become a valid question, most Americans should be as worried today about the quality of their democracy as they are about the inequality of their incomes."
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Last modified: March, 01, 2020
