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Showing posts with label Wealth Inequality. Show all posts
Showing posts with label Wealth Inequality. Show all posts

Friday, October 03, 2014

Increasing Inequality

Check this out...


























So, right around the time regulations started to loosen up in the late 1970s, things seemed to switch quite a bit, didn't they? When the economy grows, Pavlina R. Tcherneva illustrates quite cleary who benefits.

Monday, August 11, 2014

Putting the Investment Lie To Bed

For the past six years, Wall Street has enjoyed one of its longest bull markets (64 months at an increase of 191%). This is fourth on the list behind Dec 1987-March 2000 (150 months, 582%), June 1949-August 1956(87 months, 267%), and Oct 1974-Nov 1980 (75 months, 126%). While the top 7 percent of our country have seen a 28 percent increase in their net worth, the rest of us in the 93 percent have lost 4 percent of our net worth. The gap between the top one percent of earners and everyone else is the widest its been since 1928.

According to conservative ideology, all of this wealth at the top should pay off in our economy in the form of investments, right? We should be seeing massive job increases and a ton of economic growth. We are told, time and again, that wealth increase at the top means better days for everyone else.

Where are the better days?

Apparently, they only exist inside of the right wing bubble because the last six years should illustrate to everyone that this assertion is a complete fucking lie.

Sunday, July 13, 2014

Well Said, Bernie!


Saturday, July 05, 2014

Billionaire Once Again Warns The One Percent

Nick Hanauer has done it again. His recent open memo to his fellow zillionaires is exceptional. Here are a few great pulls...

At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent. 

But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution. 

And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.

Of course, it's not just his fellow zillionaires that need to wake up. It's the 30 percent or so of voters who still buy into supply side economics. These are the people who believe that our nation is divided into two parts: the haves and the soon to haves. It's also no coincidence that these same people would like to see a return to the Antebellum South and its aristocratic framework. That's why the are fighting so hard to maintain the status quo. As Hanauer notes, however, it never works.

If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when. 

When, indeed. I challenge anyone to find an historical example that refutes Hanauer.

The most ironic thing about rising inequality is how completely unnecessary and self-defeating it is. If we do something about it, if we adjust our policies in the way that, say, Franklin D. Roosevelt did during the Great Depression—so that we help the 99 percent and preempt the revolutionaries and crazies, the ones with the pitchforks—that will be the best thing possible for us rich folks, too. It’s not just that we’ll escape with our lives; it’s that we’ll most certainly get even richer.

This is where the whole issue of hubris comes into play. Conservatives just don't want to admit that liberal policies will make wealthy people wealthier. They ignore how a minimum wage hike will give people more money to spend in the economy which will, in turn, lead to more hiring and more wealthy for the wealthy. It's as if the word "demand" has been excised from their brain stems.

I wanted to try to change the conversation with ideas—by advancing what my co-author, Eric Liu, and I call “middle-out” economics. It’s the long-overdue rebuttal to the trickle-down economics worldview that has become economic orthodoxy across party lines—and has so screwed the American middle class and our economy generally. 

Middle-out economics rejects the old misconception that an economy is a perfectly efficient, mechanistic system and embraces the much more accurate idea of an economy as a complex ecosystem made up of real people who are dependent on one another. Which is why the fundamental law of capitalism must be: If workers have more money, businesses have more customers. Which makes middle-class consumers, not rich businesspeople like us, the true job creators. Which means a thriving middle class is the source of American prosperity, not a consequence of it. The middle class creates us rich people, not the other way around. 

Exactly right and props to him for coining middle out economics. It's exactly the kind of focus we need on demand.

So, Hanauer asserts that we need to dramatically raise the minimum wage.

The standard response in the minimum-wage debate, made by Republicans and their business backers and plenty of Democrats as well, is that raising the minimum wage costs jobs. Businesses will have to lay off workers. This argument reflects the orthodox economics that most people had in college. If you took Econ 101, then you literally were taught that if wages go up, employment must go down. The law of supply and demand and all that. That’s why you’ve got John Boehner and other Republicans in Congress insisting that if you price employment higher, you get less of it. Really?

Because here’s an odd thing. During the past three decades, compensation for CEOs grew 127 times faster than it did for workers. Since 1950, the CEO-to-worker pay ratio has increased 1,000 percent, and that is not a typo. CEOs used to earn 30 times the median wage; now they rake in 500 times. Yet no company I know of has eliminated its senior managers, or outsourced them to China or automated their jobs. Instead, we now have more CEOs and senior executives than ever before. So, too, for financial services workers and technology workers. These folks earn multiples of the median wage, yet we somehow have more and more of them. 

Fucking. Brilliant.

Next, Hanauer turns to the size of government and, again, makes a brilliant point.

I’d ask my Republican friends to get real about reducing the size of government. Yes, yes and yes, you guys are all correct: The federal government is too big in some ways. But no way can you cut government substantially, not the way things are now. Ronald Reagan and George W. Bush each had eight years to do it, and they failed miserably. 

Republicans and Democrats in Congress can’t shrink government with wishful thinking. The only way to slash government for real is to go back to basic economic principles: You have to reduce the demand for government. If people are getting $15 an hour or more, they don’t need food stamps. They don’t need rent assistance. They don’t need you and me to pay for their medical care. If the consumer middle class is back, buying and shopping, then it stands to reason you won’t need as large a welfare state. And at the same time, revenues from payroll and sales taxes would rise, reducing the deficit. 

This may seem hard to grasp for those individuals who have a pathological hatred of the federal government but we can make laws that actually reduce the size and influence of our national governing body.

Hanauer closes with an argument I have made many times.

Capitalism, when well managed, is the greatest social technology ever invented to create prosperity in human societies. But capitalism left unchecked tends toward concentration and collapse. It can be managed either to benefit the few in the near term or the many in the long term. The work of democracies is to bend it to the latter. That is why investments in the middle class work. And tax breaks for rich people like us don’t. Balancing the power of workers and billionaires by raising the minimum wage isn’t bad for capitalism. It’s an indispensable tool smart capitalists use to make capitalism stable and sustainable.  

Amen. Let's get started!!

Wednesday, May 07, 2014

CEOs and the Minimum Wage


Tuesday, March 18, 2014

A Downton Abbey Economy

Looks like Lawrence Summers is saying the same things I have been saying about inequality. He's even echoing the realization that the Right opines for aristocracy as he correctly notes in the title of the piece. His conclusion is excellent.

It is ironic that those who profess the most enthusiasm for market forces are least enthusiastic about curbing tax benefits for the wealthy. Sooner or later inequality will have to be addressed. Much better that it be done by letting free markets operate and then working to improve the result. Policies that aim instead to thwart market forces rarely work, and usually fall victim to the law of unintended consequences.

Yep.

Saturday, March 15, 2014


Monday, February 10, 2014

Wal Mart Takes A Hit

Wal Mart is closing stores and has a dim outlook for the future. The primary reason for this is the reduced food stamp benefits to millions of Americans. Competition from other big box stores like Costco and Amazon (where they pay their employees a decent wage) are also causes for bearish view of Wal Mart's future finances.

I wonder if the execs at Wal Mart are going to get the message. If you pay your employees more money, they will spend more money, not simply at Wal Mart, but in the economy at large. This will, in turn, lead to more people being hired at other firms and then...spending more money at Wal Mart. This means that the execs make more money anyway.

Perhaps a review of Adam Smith is in order for them.

Friday, February 07, 2014

America Is Owed An Explanation

I think America needs an explanation as to why it's so difficult to raise the minimum wage yet incredibly easy to raise the pay of CEOs. Take a look at this recent piece in the LA times about CEO pay.

The great management guru Peter Drucker advised companies to stick to a ratio of about 20 to 1 between the pay of the CEO and that of the average worker. That's "the limit beyond which they cannot go if they don't want resentment and falling morale to hit their companies," Drucker wrote, according to a comment on the CEO pay rule submitted to the SEC by Rick Wartzman, executive director of the Drucker Institute at Claremont Graduate University. Drucker's standard was in line with the ratios of the 1970s and early '80s, when he wrote those words. Today they seem positively quaint. 

The average CEO-to-worker pay ratio in 2012 was about 350 to 1. That's down somewhat from where it was before the 2008 recession, but it would have to come down a great deal more to return to the non-obscene range. It's plain that this ratio typically has little to do with an executive's performance. The CEO-to-average-worker pay ratio of the 250 largest companies in the Standard & Poor's 500 index ranges from 1,795 to 1 (J.C. Penney's Ron Johnson) to 173 to 1 (Agilent Technologies' William Sullivan), according to Bloomberg, which ran the data for 2012. 

My wife used to work for Supervalu. They went through a few CEOs during her tenure there and it was always the same thing. Somebody would be brought in to "fix" the company. They would be paid millions of dollars. They would fail. And then they would leave with their millions, accomplishing nothing, with dozens (if not more) of average workers being laid off. The information in this link details how something similar happened with JC Penney. In so many ways, this is complete bullshit. If the CEO fails to do is or her job or makes it worse, they shouldn't get any amount of money. Take the money you are paying the CEOs and keep the average workers longer.

At least the SEC seems to be doing something about it.

I wholeheartedly support this new rule and think that the public (especially the investing public) needs to be aware of how these companies are doing business. Firms like Penney's don't seem to understand, as Drucker noted above, that the health of a company springs from its employees, not from the top. They aren't going to be successful unless they start paying better wages to everyone. Worse, the social cohesion in our society is fraying as a result. There are a lot of people hurting out there and seeing wealthy people bitch about poor people while they themselves are getting something for nothing is really FUBAR.

The Right likes to scream about "class warfare" but that's really code for desperately wanting to maintain aristocracy.

Tuesday, February 04, 2014


Sunday, February 02, 2014


Friday, January 31, 2014

Another 1 Percenter Comes Around

As I have previously predicted, the wealthy are starting to come around on inequality. Bill Gross, the most powerful bond manager of his generation and co-head of a $2 trillion investment management firm, has joined Nick Hanauer and other members of the 1 percent on the perils of this much inequality.

"We're not just experiencing a new Gilded Age, but a Bitcoin Age," says Mr. Gross, referring to the digital currency. "Artificial money, corporate K Street, and Wall Street interests are producing one world for the rich and an entirely different world for the working class," says the founder and co-chief investment officer of PIMCO in Newport Beach, Calif. "It can't go on like this, either from the standpoint of the health of the capitalist system itself or the health of individuals and the family," he adds.

Why not, Bill?

"For the past 10, 20, 30 years, capital has moved away from labor and towards corporations and investors," Gross says. "I'm not sure capitalism can thrive in a system in which ... [labor] has a declining interest, in terms of percentage of the pie. Then ultimately the pie itself can't grow, because consumption can't be supported."

Exactly right. Capitalism can't thrive, most lose their percentage of the pie and the pie itself can't grow. And to think someone as wealthy and knowledgeable about finance as Gross is saying the same things I am...what on EARTH is going on??!!??:)

So what do we need to do?

When Gross highlighted many of these trends and others in an investment outlook piece posted on his company's website in late October, he told his peers that maybe they should be willing to pay higher taxes. More provocatively, he challenged the orthodoxy on capital gains taxes, saying they should be taxed at rates as high as that for income.

Oh no he DI INT!!!

Based on some of the other testimonials in the article, it seems like we have finally turned a corner and that makes me very happy.

One other part of this piece I found interesting...

Just over two years ago, growing inequality was the rallying cry of the "Occupy" movement. Its "we are the 99 percent" slogan has since become part of the cultural lexicon, and many of its members have moved on to fast-food strikes and protests calling for a higher minimum wage.

Again, just as I have been saying..

Thursday, January 30, 2014

The Nazi Attack on the 1 Percent

I guess recent attacks on the wealthy are just like the Nazis. Look out!!

 "Writing from the epicenter of progressive thought, San Francisco, I would call attention to the parallels of fascist Nazi Germany to its war on its 'one percent,' namely its Jews, to the progressive war on the American one percent, namely the 'rich,'" he wrote, opening a letter to the editor of the Wall Street Journal. This is a very dangerous drift in our American thinking. Kristallnacht was unthinkable in 1930; is its descendent 'progressive' radicalism unthinkable now?" he concluded.

Yes, Tom, it is just like Kristallnacht. Just the other day I saw my wealthy friends being hauled off to the local internment camp for reprogramming, experimentation, and ultimately execution. Good grief, what a fucking moron...

Tuesday, January 28, 2014

Scuhmer V The Cult

Senator Charles Schumer has a great piece up on the Tea Party which is a nice front loader to the SOTU tonight. Here are some of the highlights.

The tea party elites -- with little rebuttal -- have been able to make "government" the boogeyman. They have convinced too much of America that government is the explanation for their ills. Even though most Americans and even most tea party adherents like much of what the government does, the tea party elites proclaim that everything that is wrong, even non-economic and private sector problems, can be blamed on the government.

Yep, it's all the government. And don't you forget it, mister!! In fact, I think it's somehow the government's fault that conservatives have such poor relationships with their parents:)

So, how why are they really like this?

The first and most important force is a phenomenon that Democrats have recently begun to address: the decline in middle-class incomes. It's time we deal with the reality that, for the first time in American history, middle-class American incomes have declined for almost a generation. If middle-class incomes continue to decline, we will have a dramatically different America, a less optimistic, more sour America. 

The second deep-seated force that fueled the emergence of the tea party is the rapid pace of change in America's cultural, technological and demographic makeup. Tea party adherents see an America that's not reflective of themselves, and the America they have known, and they just don't like it. We have entered "the second machine age," a transformation of work, leisure, and life that wouldn't have been recognizable when Reagan entered the White House. The distribution of power is changing to include more women, more African-Americans, and more Latinos.

Those two issues have created the atmosphere we have today. As Senator Schumer notes, we are doing something about the first point. Of course, the resistance to his first point speaks volumes. Take away this inequality and you take away what little raison d'etre the leaders of the conservative movement have. The second point is where the fear comes from. They just can't accept change of any kind and the new world is very, very frightening to them. Schumer draws a correlation to the shift from an agrarian society to a industrial one and I think he is right on the mark here.

Look for the president to hit inequality hard tonight in his speech, touching on the points that Senator Schumer mentions in this piece.

Thursday, January 23, 2014


Tuesday, January 21, 2014

Unsustainable

OXFAM International just released a staggering report on inequality in the world. Here are the highlights.

• Almost half of the world’s wealth is now owned by just one percent of the population.

• The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.

• The bottom half of the world’s population owns the same as the richest 85 people in the world.

• Seven out of ten people live in countries where economic inequality has increased in the last 30 years.

• The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.

• In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

The world economy simply cannot be sustained with this level of inequality. Demand is not where it should be and this is exactly why. If this gap continues to widen, demand will fall and more people will have less money as smaller businesses collapse.

Check out this video clip below from "Morning Joe" which illustrates how this is no longer a left-right divide.

 

Joe sounds quite a bit like Ronald Reagan in that 1986 speech I cite often. Note that they discuss how it isn't simply one issue like the tax code or the minimum wage but many issues that have coalesced into a fundamental systemic failure.

Barack Obama came to Washington to change it and this could be just the issue to do it. My colleagues on the Right and in the Tea Party assure me that they loathe the political and aristocratic class and its rent seeking as much as I do. So, what are we going to do about it?

Friday, January 03, 2014


Saturday, December 14, 2013


Thursday, December 12, 2013


Tuesday, December 10, 2013

Citizens of the World

The recent cover story in the Christian Science Monitor illustrates just how much the world is changing. Retirees in this country are leaving the Unite States for Latin America in their golden years. Why? Their money lasts longer there with cheaper goods and more affordable health care.

The exodus south is being driven by a confluence of factors. The baby boom generation – the largest in history – is reaching retirement age, and millions are looking for places to spend the next phase of their lives. As the most educated, well-traveled, and adventurous generation in history, many of these boomers are deciding to retire outside the country – including in Latin America. They're also looking for places that will allow them to stretch their 401(k)s after they lost a lot of money in the last stock market collapse. With the US economy remaining so tentative, and health-care costs so aggressive, retirees want to live where they can afford greens fees and where a trip to the emergency room won't bankrupt them. 

It really helps to live in countries where the opposition party isn't trying to actively sabotage your health care system.

The bigger view of all of this, though, is how people are moving to consider themselves citizens of the world and not citizens of a particular country. I was particularly stuck by the story of James Cummiskey, the 20 year marine veteran who now owns his own coffee exporting business in Columbia. In the age of globalization, business can be conducted virtually anywhere so it makes sense to live in a country where you can make your dollars last longer.

As the article indicates, it isn't just Latin America. American retirees are moving all over the world. Perhaps that should tell us something about our current standard of living.