Wealth inequality in America: seeing reality

Check out the differences between (i) what 9 out of 10 Americans think is the ideal degree of wealth inequality; (ii) what they think wealth inequality really is; and (iii) what it really is.

Source: New Economics Institute.

The tilted playing field

For many Americans, Nobel laureate Joe Stiglitz writes, the dream of upward mobility is being subverted by the reality of unequal opportunity:

Probably the most important reason for lack of equality of opportunity is education: both its quantity and quality. After World War II, Europe made a major effort to democratize its education systems. We did, too, with the G.I. Bill, which extended higher education to Americans across the economic spectrum. But then we changed, in several ways. While racial segregation decreased, economic segregation increased. After 1980, the poor grew poorer, the middle stagnated, and the top did better and better. Disparities widened between those living in poor localities and those living in rich suburbs — or rich enough to send their kids to private schools. A result was a widening gap in educational performance…

In some cases it seems as if policy has actually been designed to reduce opportunity: government support for many state schools has been steadily gutted over the last few decades — and especially in the last few years. Meanwhile, students are crushed by giant student loan debts that are almost impossible to discharge, even in bankruptcy. This is happening at the same time that a college education is more important than ever for getting a good job.

A level playing field is a key element of Econ4’s vision of how an economy that works for people, the planet and the future.

Family values?

Stephanie Coontz writes in the Times on family-unfriendly work-life policies:

We must stop seeing work-family policy as a women’s issue and start seeing it as a human rights issue.

Read more here.

Capitalism Unmasked

Capitalism Unmasked, a new eBook edited by Lynn Parramore, was produced in a partnership between AlterNet and Econ4 to expose the myths of unbridled capitalism and show the way to a better future. You can download the PDF here.

Benefits without responsibilities: the American way?

U.S. Senator Bernie Sanders (Ind- VT) on corporate takers:

In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.

On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country.

Read more here.

Rescuing banks, not borrowers

Gretchen Morgenson recounts Tim Geithner’s accomplishments as Treasury Secretary for Obama 1.0:

How did Treasury favor the banks? Consider its answer to the foreclosure mess. After promising to help four million borrowers, its Home Affordable Modification Program at last count had helped about one-quarter of that number.

One reason for this is that the program was flawed from the start.

First, the Treasury made the program voluntary, awarding funds to participating banks but failing to penalize those that did not. The program was all carrot, no stick.

Worse, the initial plan didn’t require the banks to write down second liens they may have held — like home equity lines — from borrowers whose original loans were modified. This let the banks put their interests ahead of both borrowers and those who held the first mortgages.

Read how HAMP was hampered here.

Good jobs first

Tracking state subsidies to corporations. Check out their latest report:

Read it here.

Take a joke

The Times reports free-market funnies from documents unearthed in a case now before the New York State Supreme Court:

On March 16, 2007, Morgan Stanley employees working on one of the toxic assets that helped blow up the world economy discussed what to name it. Among the team members’ suggestions: “Subprime Meltdown,” “Hitman,” “Nuclear Holocaust” and “Mike Tyson’s Punchout,” as well a simple yet direct reference to a bag of excrement.

Ha ha. Those hilarious investment bankers.

Then they gave it its real name and sold it to a Chinese bank.

Read here what they don’t teach about banking in B-school.

Opportunity cost

Quiz 4 the day: Who said this?

Every gun that is made, every warship launched, every rocket fired signifies in the final sense a theft from those who hunger and are not fed, those who are cold and not clothed.

 

Answer: President Dwight D. Eisenhower in 1953.

Bonus question: What was his political party?

Quoted in Jill Lepore’s short history of the military-industrial complex in this week’s New Yorker. Read it here.

The student debt trap and inequality in America

Nobel laureate Joe Stiglitz writes:

In 2010, student debt, now $1 trillion, exceeded credit-card debt for the first time.

Student debt can almost never be wiped out, even in bankruptcy. A parent who co-signs a loan can’t necessarily have the debt discharged even if his child dies. The debt can’t be discharged even if the school — operated for profit and owned by exploitative financiers — provided an inadequate education, enticed the student with misleading promises, and failed to get her a decent job.

Instead of pouring money into the banks, we could have tried rebuilding the economy from the bottom up…. We could have recognized that when young people are jobless, their skills atrophy. We could have made sure that every young person was either in school, in a training program or on a job. Instead, we let youth unemployment rise to twice the national average. The children of the rich can stay in college or attend graduate school, without accumulating enormous debt, or take unpaid internships to beef up their résumés. Not so for those in the middle and bottom. We are sowing the seeds of ever more inequality in the coming years.

Read his dissection of how economic and political inequality are poisoning opportunity in America here.