Browsing articles tagged with " inequality"
Jun 4, 2014
boyce
Comments Off on Inequality versus democracy

Inequality versus democracy

Quiz for the day: Who said this?

The 85 richest people in the world, who could fit into a single London double-decker, control as much wealth as the poorest half of the global population– that is 3.5 billion people….

A greater concentration of wealth could—if unchecked—even undermine the principles of meritocracy and democracy. It could undermine the principle of equal rights proclaimed in the 1948 Universal Declaration of Human Rights.

Pope Francis recently put this in stark terms when he called increasing inequality “the root of social evil”.

And this:

Some of the greatest problems, still outstanding today, lay with the so-called too-big-to-fail firms. In the decade prior to the crisis, the balance sheets of the world’s largest banks increased by two to four-fold. With rising size came rising risk—in the form of lower capital, less stable funding, greater complexity, and more trading.

This kind of capitalism was more extractive than inclusive. The size and complexity of the megabanks meant that, in some ways, they could hold policymakers to ransom. The implicit subsidy they derived from being too-big-too-fail came from their ability to borrow more cheaply than smaller banks—magnifying risk and undercutting competition.

Answer: IMF Managing Director Christine Lagarde, in a speech to a conference on “inclusive capitalism” on May 27. See the transcript of her speech here. For more on changing spirits of the times, see here.

May 9, 2014
boyce
Comments Off on Maximum wage legislation

Maximum wage legislation

In testimony before the Rhode Island state legislature, Econ4’s Doug Smith lays out the rationale for capping the maximum annual compensation a firm pays its CEO – based on what it pays its lowest-paid workers:

This dangerous rise in top-to-bottom pay ratios fuels a cancerous spread of business strategies obsessed with cost reductions and short-term financial performance. The result: outsourcing, offshoring, tax avoidance, downsizing, and the substitution of good-paying permanent jobs with temporary, precarious employment.

Read more here and here.

Read his New York Times op-ed piece on maximum wages for government officials and top-paid government contractors here.

May 7, 2014
boyce
Comments Off on Learning from history

Learning from history

A new animation sums up the differences between the “Golden Age”of 1948-71 and the “Great Moderation” of 1985-2007:

Source: http://www.nakedcapitalism.com/2014/05/myth-great-moderation.html.

Apr 12, 2014
boyce
Comments Off on You know it’s getting bad when …

You know it’s getting bad when …

… inequality makes the IMF sing a new tune:

[T]he newfound attention to income inequality isn’t just another facet of a more liberal, Keynesian economic worldview. The fund’s economists have been producing research that suggests that inequality could make the world economy less stable.

Read more here.

Mar 29, 2014
boyce
Comments Off on Right on the money: concentrated wealth versus democracy

Right on the money: concentrated wealth versus democracy

Quiz for today: who said this?

The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power.

Answer: Teddy Roosevelt in a 1910 speech in Osawatomie, Kansas. Paul Krugman quotes Roosevelt to make the case that taxing the rich to safeguard democracy is as American as apple pie. Krugman also quotes Irving Fisher’s 1919 presidential address to the American Economics Association, warning of the dangers of “an undemocratic concentration of wealth.”

“How,” Krugman asks,” did such views not only get pushed out of the mainstream, but come to be considered illegitimate?”

Good question. Krugman’s conclusion is right on the money:

[T]he demonization of anyone who talks about the dangers of concentrated wealth is based on a misreading of both the past and the present. Such talk isn’t un-American; it’s very much in the American tradition.

Read his column here.

Mar 9, 2014
boyce
Comments Off on “Do we invest in students, or millionaires?”

“Do we invest in students, or millionaires?”

That’s the question posed by Senator Elizabeth Warren. She will introduce a bill to levy a minimum tax on incomes above $1 million (known as the “Buffet rule”), and devote the revenue to lowering interest payments on student debt:

Warren’s plan would allow students with outstanding student loans to refinance at lower rates. The cost of the change would be covered by a “dollar for dollar” effort where for “every dollar the Buffet rule brings in, we use that dollar to refinance student loan debt.”

Learn more here.

Feb 19, 2014
boyce
Comments Off on Whose recovery?

Whose recovery?

Econ4’s Jerry Friedman looks at the changing composition of demand in America:

While Sears and J.C. Penney drift towards bankruptcy, Nordstrom and other luxury brands flourish.  Rather than depending on sales to working-class and middle-class consumers American corporations are doing very well selling to rich consumers, here and abroad.  Rather than promising workers high wages to ensure productivity, they maintain labor discipline through fear.

Read his piece here.

Feb 16, 2014
boyce
Comments Off on We’re #1!

We’re #1!

Sam Bowles and Arjun Jayadev reveal a dubious distinction of the American economy:

Another dubious first for America: We now employ as many private security guards as high school teachers — over one million of them, or nearly double their number in 1980.

And that’s just a small fraction of what we call “guard labor.” In addition to private security guards, that means police officers, members of the armed forces, prison and court officials, civilian employees of the military, and those producing weapons: a total of 5.2 million workers in 2011. That is a far larger number than we have of teachers at all levels.

Read more here.

Feb 3, 2014
boyce
Comments Off on Maximum wage?

Maximum wage?

Econ4’s Doug Smith writes in the New York Times:

The national discourse continues to sleepwalk past this out-of-the-box question: How about setting a maximum wage for government officials and top-paid government contractors?

 

Read his op-ed piece here.

Jan 20, 2014
boyce
Comments Off on Confessions of a wealth addict

Confessions of a wealth addict

In an insightful, introspective piece in yesterday’s New York Times, a recovering derivatives trader writes:

Like alcoholics driving drunk, wealth addiction imperils everyone. Wealth addicts are, more than anybody, specifically responsible for the ever widening rift that is tearing apart our once great country. Wealth addicts are responsible for the vast and toxic disparity between the rich and the poor and the annihilation of the middle class. Only a wealth addict would feel justified in receiving $14 million in compensation — including an $8.5 million bonus — as the McDonald’s C.E.O., Don Thompson, did in 2012, while his company then published a brochure for its work force on how to survive on their low wages. Only a wealth addict would earn hundreds of millions as a hedge-fund manager, and then lobby to maintain a tax loophole that gave him a lower tax rate than his secretary….

Dozens of different types of 12-step support groups — including Clutterers Anonymous and On-Line Gamers Anonymous — exist to help addicts of various types, yet there is no Wealth Addicts Anonymous. Why not? Because our culture supports and even lauds the addiction.

Read his piece here.