“Hedge Funds Versus Kindergarten”: There’s Nothing Natural Or Moral Going On Here
The inequality issue is one in which economic and moral considerations can quickly become tangled. That’s particularly true at a time when defenders of free-market economics are increasingly prone to advance the argument that the “natural” distribution of resources via unregulated markets is a measure of the actual value of each person’s contributions to society, with any redistribution representing virtual theft.
Consider this data point from Ezra Klein today at Vox:
Alpha magazine is out with its annual “rich list” detailing the successes of the highest earning hedge fund managers in America. The news once again is that it’s good to be a successful hedge fund manager: the top 25 earned a collective $21.1 billion this year.
Even within that group there’s considerable inequality. The top earner, David Tepper, took home $3.5 billion which is about five times as much as either of the two men tied for the tenth slot.
How does that look in context? Well, it’s about 0.13 percent of total national income for 2013 being earned by something like 0.00000008 percent of the American population. Another way of looking at it is that this is about 2.5 times the income of every kindergarten teacher in the country combined.
Now I am open to the argument that hedge funds are at least a marginally useful lubricant to the efficiency of the U.S. and global economies. But you cannot tell me a handful of hedge fund managers add more to the wealth and productivity of America than all the kindergarten teachers combined. There is nothing “natural,” much less “moral,” about a system that distributes the fruits of the economy in that manner.
By: Ed Kilgore, Contributing Wroter, Washington Monthly Political Animal, May 6, 2014
“The Four Biggest Right-Wing Lies About Inequality”: Don’t Listen To All Those Right-Wing Lies
Even though French economist Thomas Piketty has made an air-tight case that we’re heading toward levels of inequality not seen since the days of the nineteenth-century robber barons, right-wing conservatives haven’t stopped lying about what’s happening and what to do about it.
Herewith, the four biggest right-wing lies about inequality, followed by the truth.
Lie number one: The rich and CEOs are America’s job creators. So we dare not tax them.
The truth is the middle class and poor are the job-creators through their purchases of goods and services. If they don’t have enough purchasing power because they’re not paid enough, companies won’t create more jobs and economy won’t grow.
We’ve endured the most anemic recovery on record because most Americans don’t have enough money to get the economy out of first gear. The economy is barely growing and real wages continue to drop.
We keep having false dawns. An average of 200,000 jobs were created in the United States over the last three months, but huge numbers of Americans continue to drop out of the labor force.
Lie number two: People are paid what they’re worth in the market. So we shouldn’t tamper with pay.
The facts contradict this. CEOs who got 30 times the pay of typical workers forty years ago now get 300 times their pay not because they’ve done such a great job but because they control their compensation committees and their stock options have ballooned.
Meanwhile, most American workers earn less today than they did forty years ago, adjusted for inflation, not because they’re working less hard now but because they don’t have strong unions bargaining for them.
More than a third of all workers in the private sector were unionized forty years ago; now, fewer than 7 percent belong to a union.
Lie number three: Anyone can make it in America with enough guts, gumption, and intelligence. So we don’t need to do anything for poor and lower-middle class kids.
The truth is we do less than nothing for poor and lower-middle class kids. Their schools don’t have enough teachers or staff, their textbooks are outdated, they lack science labs, their school buildings are falling apart.
We’re the only rich nation to spend less educating poor kids than we do educating kids from wealthy families.
All told, 42 percent of children born to poor families will still be in poverty as adults – a higher percent than in any other advanced nation.
Lie number four: Increasing the minimum wage will result in fewer jobs. So we shouldn’t raise it.
In fact, studies show that increases in the minimum wage put more money in the pockets of people who will spend it – resulting in more jobs, and counteracting any negative employment effects of an increase in the minimum.
Three of my colleagues here at the University of California at Berkeley — Arindrajit Dube, T. William Lester, and Michael Reich – have compared adjacent counties and communities across the United States, some with higher minimum wages than others but similar in every other way.
They found no loss of jobs in those with the higher minimums.
The truth is, America’s lurch toward widening inequality can be reversed. But doing so will require bold political steps.
At the least, the rich must pay higher taxes in order to pay for better-quality education for kids from poor and middle-class families. Labor unions must be strengthened, especially in lower-wage occupations, in order to give workers the bargaining power they need to get better pay. And the minimum wage must be raised.
Don’t listen to the right-wing lies about inequality. Know the truth, and act on it.
By: Robert Reich, The Robert Reich Blog, May 5, 2014
“The Return To The Roaring 20’s”: The Typical Member Of The 1 Percent Is An Old White Man
The rich are not like you and I.
It’s no secret that income inequality has been growing rapidly, with most the gains in earnings accruing to just the top one percent of Americans. But who are they? A new paper from Lisa A. Keister at Duke University looks at this question and finds that “members of the one percent are disproportionately male, white, and married.” The typical one percenter is 55, compared to about 50 for the bottom 90 percent. The one percent is about 91 percent white — just 1.8 percent of these households are Hispanic and merely 0.2 percent are black. More than half are married, versus about 30 percent for the bottom 90 percent. They are also much more likely to have a graduate degree: about 62 percent have one, compared to less than 10 percent of the bottom 90 percent.
Gender is a little harder to tease out, because the data looks at heads of households and classifies a family with a husband and wife where the husband is the head as male, so the fact that the one percent show up as about 98 percent male doesn’t mean that some rich women aren’t included. But it’s clear that few single mothers or female breadwinners are making it into this group. And we can also look at the job characteristics of the top earners to get a better sense of gender. As Mike Konczal has pointed out, the top one percent is mostly made up of executives, people who work on Wall Street, and managers. Women make up less than 15 percent of executives, while they represent 35 percent of investment banking employees and 40 percent of employees in the broader “Securities, Commodity Contracts and Other Financial Investments” category.
The 1 percent are also different in how they get their money. For the bottom 90 percent, 70 percent of our incomes from wages or salaries. But for the top 1 percent, salary accounts for just half. On the other hand, more than 30 percent of their money comes from businesses, while just 6.1 percent of the money for the bottom 90 percent is from the same source. While the 1 percent holds most of its assets in businesses, for the rest of us our houses are the most commonly held asset. The 1 percent also dominates financial assets, owning nearly 44 percent of the total financial pie, while the bottom 90 percent gets 20 percent.
And while we know that the wealthiest have been gobbling up most of the country’s income — the top 5 percent got the biggest share of income ever recorded in 2012, and the top 1 percent saw a 278 percent increase in their incomes over the last three decades while the middle saw less than a 40 percent bump — wealth concentration may be even worse. Keister’s paper finds that the 1 percent in wealth has held more than one-third of total net worth since 2001 and by 2010 had 34 percent. The bottom 90 percent, on the other hand, is left with just over a quarter of wealth. Wealth inequality is now as bad as it was during the roaring 1920s.
By: Bryce Covert, Think Progress, May 2, 2014
“They Get You Coming And Going”: In America, Being Poor Can Be An Expensive Proposition
Today I came across this very interesting, albeit depressing, bit of data. It’s an analysis by a travel site called Hopper that shows that it costs more to fly in states that have the lowest median incomes.
For example, the study found that in Mississippi, the poorest state, a “good deal” round-trip flight costs about $400, while in Maryland, the state with the highest income, an equivalent ticket costs around $300. The researchers also found that “typical round-trip airfare declines by $2.30 for every additional $1000 in median household income.” The reasons for the increased prices in the poorer states include “average distance traveled, demand density, and airline competition.” Presumably, there’s less demand and less airline competition in poor areas of the country because people there have less money for leisure travel, and also because those locales have less economic development and thus less business travel.
The higher price of air travel for low-income folks is yet another data point that paints a bigger picture: in America, being poor can be an expensive proposition. There are countless, painful examples of this. Food and other basic items tend to cost more in poor neighborhoods. The poor lack access to credit and so are easy prey for payday lenders charging exorbitant interest rates. Poor people are more apt to bounce checks; hello, fees for insufficient funds! There are also late fees for credit card payments — you know, the kind of thing listed in print so fine you need a magnifying glass to be capable of reading about it. But my personal favorites are those extra charges they tack on for restoring utilities they shut off because you couldn’t pay your bill on time in the first place. “They get you coming and going,” as my old man used to say.
In her classic book, Nickel and Dimed, Barbara Ehrenreich described a host of other expensive indignities that plague the working poor. For example, many of her low-wage co-workers were living in hotel rooms, which actually were far costlier, on a monthly basis, than local apartments. But the workers couldn’t move into the apartments because they lacked the month’s rent plus security deposit the landlord required. Many low-wage jobs also require uniforms, the cost of which comes out of the worker’s paycheck, or cars, which the workers are expected to maintain themselves.
There are even darker examples. I wonder how many Americans have put off going to the doctor because they lacked health insurance, sought treatment only when their symptoms were advanced, and ended up being bankrupted by medical bills as a result.
Many of the examples I’ve cited in this post could be greatly improved by some well-targeted regulatory fixes. The rights of workers and consumers against employers, the banks, and the credit card companies need to be vigorously championed, and in some cases, re-invented for our new digital era. There’s no earthly justification other than greed for the $35 bank overdraft ripoff, or the cell phone company gouging you to restore your service because your payment is late. It’s also long past time we bring re-regulation to the airlines. A more regulated airline industry might help bring down fares in certain overpriced markets. Our 30-year old experiment with airline deregulation has hardly been a rousing success — read the excellent 2012 Washington Monthly magazine article by Phillip Longman and Lina Khan for more information on this score.
In addition to more consumer regulation, we also need a much higher minimum wage and a far more generous safety net for poor people in this country. If poor people had more economic resources to begin with — if they simply had enough money to pay their bills on time, and to save a little money for a rainy day — they would never be forced to pay such an outrageously high price for being poor.
By: Kathleen Geier, Washington Monthly Political Animal, May 3, 2014
“How To Really Rein In The Super Rich”: Giving Everyday People Equal Input With Business And The Rich In Policy Deals
Thomas Piketty, meet Bobby Tolbert.
Piketty is the French economist who rocked the worlds of social and economic policy with his new book, Capital in the Twenty-First Century. In it, Piketty documents with meticulous detail—and data—how we are returning to an era of extreme inequality where a few dynasties amass great fortunes through inheritance and everyone else withers and suffers. Such gross inequality, Piketty argues, is not an accident but inherent in capitalism and can only be addressed through government intervention.
All of which is plainly true. As Paul Krugman has pointed out, conservatives chomping at the purse to refute Piketty have come up with nothing more than name-calling.
Pretty much everyone else agrees gaping inequality is a massive problem in the world and that something has to be done about it. Heck, even the Pope tweeted, “Inequality is the root of social evil.” Not the devil. Inequality!
What the vast majority, who agree inequality is a crisis, do not agree on is what to do about it. Piketty proposes a global wealth tax as well as a progressive income tax that approaches rates, at the top end, closer to what the United States had in place when prosperity was more broadly shared during the ’50s and ’60s. They’re good ideas, but only a start. What they’re missing is a Bobby Tolbert.
Bobby Tolbert is member of the community organization VOCAL NY—a grassroots organization that builds political power among New Yorkers affected by HIV/AIDS, drug use and mass incarceration. Tolbert was in Washington, D.C., this weekend to speak at the annual meeting of National People’s Action, a network of community organizations made up of groups like VOCAL.
Tolbert spoke eloquently about how gross inequality is destroying communities across America. [Full disclosure: I was at the event to help Tolbert and other grassroots leaders practice and deliver their speeches.] Tolbert shared his own story, one only made possible by state-funded HIV medications that are constantly threatened by budget cuts. Tolbert works as a peer health educator but is paid so little that he qualifies for public support. Recently, even those few public benefits were taken away because Tolbert transitioned from supportive housing to independent living—a move you would think everyone would be in favor of, but which meant Tolbert’s government health benefits being jeopardized. He’s currently fighting to have them reinstated.
“Big corporations and the rich are fine with people like me dying,” said Tolbert. “The only problem with that is I’m not ready to die.”
And while for Bobby Tolbert, public supports literally make the difference between life and death, the situation is pretty much as dire for millions of Americans who increasingly rely on food stamps and Medicaid and housing assistance to survive. At the same time our deliberately and aggressively unequal economy has pushed millions more Americans toward poverty and they need more help than ever, conservative corporate elites are pushing for public assistance to be slashed. Tolbert agrees with Piketty—and the majority of American voters—about taxing the wealthy to spread assistance and opportunity to the poor and working class.
But Tolbert argues for something that Piketty and most of the academic and political debate about inequality seem to miss—that the nature of our economy, the rules of the game that currently incentivize unequal distribution, will never change unless the people making those rules, the people seated at the tables of power, change as well. In other words, as long as economic policy decisions are made by Wall Street and their proxies (see, e.g., Treasury Secretaries Robert Rubin, Henry Paulson and Timothy Geithner) then Thomas Piketty’s ideas won’t be included in the discussion, let alone Bobby Tolbert’s.
“We need a new political system,” Tolbert said, “one that takes money out and puts people in.” Yes, that means campaign finance reform and reducing the barriers to voting, rather than increasing them. That would help get more everyday Americans into positions of power. But Tolbert’s vision also includes participatory budgeting in which communities, not special interests, set the government funding agenda—which is already happening in New York. And it means people’s organizations commanding and being given equal input with business interests and the rich in the smoke-filled rooms where policy deals are cut. It means that when the Federal Reserve is weighing interest rates and the Senate Budget Committee is evaluating banking regulations, they should as a matter of habit meet with economists and CEOs and the everyday Americans whom their decisions affect most.
In his speech, Tolbert pointed to the diversity of the thousand-plus community leaders from around the country gathered in the auditorium in front of him. “We represent every race, every gender, every sexual orientation—in fact, we represent America better than the people who are running it.” In front of Tolbert were family farmers and immigrants and folks on welfare and small-business leaders—all of whom have stories to share about the ravages of inequality and solutions to offer. Academic debates and data are useful and important, but until Bobby Tolbert and other everyday people like him are included in the discussion and political process, nothing will ever truly change.
By: Sally Kohn, The Daily Beast, April 29, 2014
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 