Inequality surges
The latest inequality numbers are out, and they’re obscene:
According to Oxfam’s annual inequality report, released to coincide with the World Economic Forum meetings in Davos, the richest 1% of people have captured nearly twice as much new wealth as the rest of the world combined since the pandemic. Their fortune soared by $26tn, increasing their share of new wealth from 50% to two-thirds.
The breakdown of these figures exposes how on a global basis, extreme wealth is accumulated not by innovating or increasing production, but by taking advantage of rising prices and exploiting labour. In this effort, wealthy people are enabled by lack of regulation and taxation. The result is a bonanza of plunder with no sheriff in town.
This has been happening for a while, but the pandemic accelerated the trend. Rich people benefited from everything – every positive intervention from the state and negative impact of the crisis somehow still ended up increasing their wealth. They benefited from rising costs by using them as an alibi to charge higher-than-inflation prices, then distributing the rewards as dividends instead of higher wages. Food and energy corporations made a killing, making $306bn in windfall profits in 2022, then distributing 84% to shareholders.
Read more here.
Thinking – that’s right – about inflation
In The American Prospect‘s Great Inflation Myths series, Josh Bivens writes:
The inflation of 2021-2022 has sparked furious debate over the proper policy response. It also exposed how little innovative thinking has been done on inflation by either macroeconomists or policy analysts since the 1980s price acceleration was ended by the “Volcker shock”—when the Federal Reserve (led by chair Paul Volcker) raised short-term interest rates to 20 percent and threw the economy into its worst recession since the end of World War II.
Check out the series here.
Inflation: a look at the numbers
US consumer price index, quarterly change, October 2021 through September 2022:
Source: US Bureau of Labor Statistics.
How to Unf*ck America, Episode 1: Intellectual Property
Check out this new series featuring economist Dean Baker, brought to you by the Institute for New Economic Thinking:
See more about the “Unf*ck America” series here.
Roots of addiction
In a remarkable and impassioned speech to the UN General Assembly, Colombia’s President Gustavo Petro had this to say:
Behind the bonfires that burn it, behind its poisoning, there is an integral, civilizational failure of humanity. Behind the addiction to cocaine and drugs, behind the addiction to oil and coal, there is the real addiction of this phase of human history: the addiction to irrational power, to profit and money. This is the enormous deadly machinery that can extinguish humanity.
Watch his entire 20-minute speech: in Spanish here and in English translation here.
Standing up to power and plunder
In this must-see video, Robert Reich makes the fossil-fuel connections between standing up to Putin and saving the Earth’s climate:
Malfunctioning market signals
Cautionary lessons from Germany’s plight:
The shifting landscape raises pointed questions: Is an economy built on energy-hungry industries sustainable when fuel is very expensive? Can an export-driven strategy succeed when major trading partners are vulnerable to sanctions, and when countries are more keenly attuned to the security risks of globalized trade?
Some economists have argued that the German business models were partly based on an erroneous assumption and that cheap Russian gas wasn’t as cheap as it looked.
The economist Joseph Stiglitz, a Nobel laureate, said the market failed to accurately price in the risk — however unlikely it may have seemed at the time — that Russia could decide to reduce or withhold gas to apply political pressure.
It would be like figuring the costs of building a ship without including the cost of lifeboats.
“They didn’t take into account what could happen,” Mr. Stiglitz said.
Read more here.
