Engineers think water flows downhill. Economists think it flows to money. We think they’re right, and it’s wrong. Read what’s happening in California here:
APPLE VALLEY, Calif. — Outside her two-story tract home in this working-class town, Debbie Alberts, a part-time food service worker, has torn out most of the lawn. She has given up daily showers and cut her family’s water use nearly in half, to just 178 gallons per person each day.
A little more than 100 miles west, a resident of the fashionable Los Angeles hills has been labeled “the Wet Prince of Bel Air” after drinking up more than 30,000 gallons of water each day — the equivalent of 400 toilet flushes each hour with two showers running constantly, with enough water left over to keep the lawn perfectly green.
Only one of them has been fined for excessive water use: Ms. Alberts.
A new study reveals rising mortality among whites in the United States:
Between 1978 to 1998, the mortality rate for U.S. whites aged 45 to 54 fell by 2 percent per year on average, which matched the average rate of decline in the six countries shown, and the average over all other industrialized countries. After 1998, other rich countries’ mortality rates continued to decline by 2 percent a year. In contrast, U.S. white non-Hispanic mortality rose by half a percent a year. No other rich country saw a similar turnaround.
Read more here.
In his column in the business pages of the New York Times, Eduardo Porter writes that discredited notions still guide policy on aid to the poor:
Actual experience, from the richest country in the world to some of the poorest places on the planet, suggests that cash assistance can be of enormous help for the poor. And freeing them from what President Ronald Reagan memorably termed the “spider’s web of dependency” — also known as forcing the poor to swim or sink — is not the cure-all for social ills its supporters claim….
Abhijit Banerjee, a director of the Poverty Action Lab at the Massachusetts Institute of Technology, released a paper with three colleagues last week that carefully assessed the effects of seven cash-transfer programs in Mexico, Morocco, Honduras, Nicaragua, the Philippines and Indonesia. It found “no systematic evidence that cash transfer programs discourage work.”
A World Bank report from 2014 examined cash assistance programs in Africa, Asia and Latin America and found, contrary to popular stereotype, the money was not typically squandered on things like alcohol and tobacco.
Still, Professor Banerjee observed, in many countries, “we encounter the idea that handouts will make people lazy.”
Professor Banerjee suggests the spread of welfare aversion around the world might be an American confection. “Many governments have economic advisers with degrees from the United States who share the same ideology,” he said. “Ideology is much more pervasive than the facts.”
Read more here.
Writing in the New Yorker, George Packer dissects America’s political conundrum:
[T]here’s a reason to look up as well as down the economic ladder, and it has nothing to do with envy or with punishing the rich. Economic stratification, and the rise of a super-wealthy class, threatens our democracy. Americans are growing increasingly separated from one another along lines of class, in every aspect of life: where they’re born and grow up, where they go to school, what they eat, how they travel, whom they marry, what their children do, how long they live, how they die. What kind of “national community” built on “mutual obligation” is possible when Americans have so little shared experience? The Princeton economist Alan Krueger has demonstrated that societies with higher levels of income inequality are societies with lower levels of social mobility. As America has grown less economically equal, a citizen’s ability to move upward has fallen behind that of citizens in other Western democracies. We are no longer the country where anyone can become anything.
Read his piece here.
Interesting numbers from the New York Times:
The top 1 percent includes about 1.13 million households earning an average income of $2.1 million.
Raising their total tax burden to, say, 40 percent would generate about $157 billion in revenue the first year. Increasing it to 45 percent brings in a whopping $276 billion. Even taking account of state and local taxes, the average household in this group would still take home at least $1 million a year.
If the tax increase were limited to just the 115,000 households in the top 0.1 percent, with an average income of $9.4 million, a 40 percent tax rate would produce $55 billion in extra revenue in its first year.
That would more than cover, for example, the estimated $47 billion cost of eliminating undergraduate tuition at all the country’s four-year public colleges and universities, as Senator Bernie Sanders has proposed, or Mrs. Clinton’s cheaper plan for a debt-free college degree, with money left over to help fund universal prekindergarten.
Read more here.
Econ4’s Doug Smith writes for Naked Capitalism on the hypocrisy of celebrating Labor Day while screwing workers:
You, my friends, are truly champion asset creators! Your long-suffering self-denial of working for crap wages contributes to massive corporate profits that executives tap to buy-back company stock in order to keep those asset values high. Your low-to-no wages give you as consumers the God-given freedom to borrow and, thereby, fund securitized assets. And, when those asset values get threatened, your taxes come to the rescue through bailouts and mumbo jumbo (“quantitative easing”).
Read his piece here.
Price is not the same as value. Check out this un-drug commercial:
Bill Lazonick writes in the Harvard Business Review:
The debate over how to reverse ever-increasing income inequality has moved front and center in the Democratic presidential campaign. In speeches on July 13 and July 24, front-runner Hillary Clinton first outlined and then elaborated upon her policy agenda for combating what she calls “quarterly capitalism.” In emphasizing the need for value-creating business investment in an economy in which value-extracting financial interests are driving corporate resource-allocation decisions, the Clinton economic reform package is novel and refreshing for a Democratic presidential contender….
But perhaps the most elegant solution is one Clinton has not yet advocated: simply banning corporations from making open-market repurchases of their shares.
Econ4’s Gar Alperovitz and Thomas Hanna write in the New York Times:
THE great 20th-century conservative economist Joseph Schumpeter thought the left had overlooked a major selling point in pressing the case for public — i.e., government — control over productive capital. “One of the most significant titles to superiority,” he suggested, was that public ownership produced profits, which means not having to depend on taxes to raise money.
The bulk of the left never took up Schumpeter’s argument. But in an oddly fitting twist, these days the mantra of public control in exchange for lower taxes has been embraced by a surprising quarter of the American political leadership: conservatives.
The most well-known case is Alaska. The Alaska Permanent Fund, established by a Republican governor in 1976, combines not one, but two socialist principles: public ownership and the provision of a basic income for all residents. The fund collects and invests proceeds from the extraction of oil and minerals in the state. Dividends are paid out annually to all state residents….
Read their oped piece here.
Econ4’s Gerald Friedman spells out the ABC’s of the health care economy in the U.S. [Viewer discretion advised: The information in this video may tick you off.]