Comments on: The Policy Backdrop of Inequality and Its Implications for “Class Warfare”

By: D. C. Sessions

D. C. Sessions — Tue, 06 Dec 2011 22:05:49 +0000

The thing is, we mostly have had full employment. If, that is, you define “full employment” as the level of employment just short of pushing up wages.

That’s what happens when you leave the terms undefined: somebody figures out how to define them to suit themselves — or, in this case, to suit the suits.

By: confused

confused — Sat, 15 Oct 2011 14:21:13 +0000

If high unemployment leads to higher wage inequality, why is wage inequality much lower in Europe where unemployment is higher ? I am not sure that the argument would still hold after a careful international comparison…

By: reflectionephemeral

reflectionephemeral — Tue, 27 Sep 2011 20:58:11 +0000

This is the important point here. About 40% of our economic growth comes in the financial industry. As Paul Volker has put it, the only financial innovation that’s contributed to growth in the past thirty years is the ATM.

And the Kaufmann Foundation found that the nonproductive but lucrative financial sector is sucking up talented folks who might otherwise do worthwhile things like start businesses or invent new technologies.

Longstanding restrictions on activities of firms were repealed or ignored– places like Sweden & Texas, which had strong banking & home lending regulations, respectively– were spared much of the worst of the financial crisis.

Let banking be boring again.

By: Ben Leet

Ben Leet — Tue, 27 Sep 2011 20:43:51 +0000

Lawrence Mishel recently reported on wealth gains since 1983, and they match your graph on income gains. The top 5% received 81.7% of gains. The lower 60% of households showed a loss in wealth. See http://www.epi.org/publication/large-disparity-share-total-wealth-gain/ — You might add that the shift in post-tax income since 1979. The post-tax share to the top 1% was 7.5%, and has grown to 17.1% — this from Tax Policy Center — http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=458 —-
And to change the topic, in China the manufacturing worker receives $1.36 an hour vs. the U.S. manufacturing worker wage of $34 an hour, or $2,800 a year vs. $70,000 a year. (Monthly Labor Review, D. of Labor, 3.2011) It is past time for protectionism and a new trade paradigm. As you say, we need to remedy the imbalance of income distribution, and structurally change to the economy especially in manufacturing. Reducing the financial system debt to 10% of GDP as it was in 1970, instead of 123% of GDP in 2007 would also rebalance a wobbly economy.

By: perplexed

perplexed — Sun, 25 Sep 2011 17:36:23 +0000

-”But it also doesn’t mean we can meaningfully correct the problem with tax policy alone.”

We can if we get over our aversion to and lack of discussion of wealth and inheritance taxes. Its not self correcting. If you use the wrong tax policy for 30 years in a row it doesn’t somehow reverse itself; it just continues to get worse. But if we just focus on income taxes (and crowd any discussion of wealth taxes)it would take many, many years (probably would take the long run), to correct the damage from so many years of wrong-headed tax policies. We aren’t even discussing marginal rates that would do much to slow the progress of wealth concentration, let alone reverse it. This focus on income taxes just enables the “drift” politics that prevents the government from taking any real corrective action. The fact that wealth and income are already so concentrated is doing more to slow the progress of wealth concentration than government tax policies are.

The republicans have succeeded in neutering the government’s ability to address wealth and income concentration problems through tax policy. The problem this creates is that there is no other way to correct it that we know of and so we’re left with laissez-faire; the anarchists have succeeded. As we continue to talk, the wealth concentration marches on.

We need to do more to get the public to understand what a .84 Gini coefficient for wealth really means, how close it is to .99, and how damaging it is to the country’s prospects for getting out of this crises and being competitive in the future. All of this largely pointless discussion about who pays what % of total income taxes does nothing but obscure the real issues; its what the republicans and the rentiers they represent want. We need to start driving the agenda. Let’s force the media to Google Gini coefficient for wealth and make them discuss the implications of it on air. What happens when we get to .90? What can we do to change it? (If nothing else it will be fun to watch & entertainment is what they’re really about anyway isn’t it?)

By: Phillip Wynn

Phillip Wynn — Sun, 25 Sep 2011 01:20:49 +0000

Damn you! Damn you! You keep using these fact things, and graph thingees that illustrate that reality thing. Are you some kind of communist?

By: Padraic

Padraic — Sat, 24 Sep 2011 21:37:40 +0000

1. Much of the lucky 1 percent are in the financial industry. Money has increasingly flowed to the profits and compensation of financiers.
2. Corporations are run now for the benefit of management . Stockholders not so much. While management has payed itself handsomely for the past decade the investors have in aggregate made next to nothing. If we have more of this trend for another decade it will not make sense to invest in American stocks

By: jfb2252

jfb2252 — Sat, 24 Sep 2011 21:11:32 +0000

Prof. Elizabeth H. Bradley (Yale) has a recent publication showing that most OECD countries spend about the same on (social services + health care) but the ratio in all the others is about 2:1 social:health where for US the ratio is under 1:1. The higher the spending on health, the worse the health outcome. Spending on social services, e.g. housing, employment training, unemployment benefits, etc., appeared to have greater health benefit than direct spending. This suggests that the discretionary spending cuts will hurt overall US health in spite of the ACA, giving its opponents another club to beat it with.

By: Michael

Michael — Sat, 24 Sep 2011 20:12:59 +0000

The conservative project for America will be complete when the first Chinese factory moves here to take advantage of low wages and lax environmental standards.

By: Jim Edwards

Jim Edwards — Sat, 24 Sep 2011 19:14:39 +0000

As I’ve said before, I live and work in India as a games developer. I’m always struck by this notion that technology is some bugaboo to the middle class as if only everyone would learn to program wages would be all right. But the money is not going to programmers. It’s going to MBAs and hedge fund managers, and the same crowd who could have given James Fisk or Jay Gould a run for their money back in the robber baron days.

I compete for online bids against people from all over the world and the truth is we cannot out bid a group from Germany or one from the US. They cannot out bid us either. Indian game developers make much less than the US equivalent, but they produce much less as well. I’ve been here over 5 years and have seen this to be the case everywhere I’ve gone. Just as with developers in the US, when you get a great developer you do whatever it takes to keep them. Eventually their salary rises to roughly the percentage of work they do regardless of location.

Where there is an unfair advantage in India is the cost of non developer costs. My rent is almost free. I pay less than $10 a month for unlimited cell calls anywhere in India. I get a dedicated T1 line with static IPs for less than $30 per month. Employee lunches are $1 per person.

An employee here makes about 1/5th the salary and lives just as well as in the US. When I look at my life here and my life in the US, I wonder where all my money goes in the US. It’s simple. The rentiers. If you look at who that top 1% is, it’s the rentiers. Who gambled away the finacial security of the US? The rentiers. And who does not want a weak dollar or inflation reduced debt regardless of the impact on the US economy? The rentiers.