Archive

Author Archive

Maximum wage—or, even better, no wages

July 31, 2014 3 comments

from David Ruccio

One way of dealing with the problem of growing inequality is to establish a maximum wage. That’s what Franklin Delano Roosevelt proposed back in the early 1940s—a 100 percent marginal tax rate on incomes over$25,000 a year (roughly $350,000 in today’s dollars)—in order to “provide for greater equality in contributing to the war effort.”

Infuriated conservatives saw red, literally. The “only logical stopping place for this movement,” fumed Princeton economist Harley Lutz, would be “a completely communistic equalization of incomes.”

Simon Wren-Lewis reports his own recent suggestion for a maximum wage was greeted in much the same manner.

Well, if mainstream economists are going to howl about tinkering with tax rates, why not make them howl about a real change in the system whereby incomes are distributed? Like Filip Spagnoli’s suggestion to get rid of wage-labor entirely. Read more…

US wealth inequality increased significantly from 2003 through 2013 (2 charts)

from David Ruccio

According to a new study by Fabian T. Pfeffer, Sheldon Danziger, and Robert F. Schoeni,

Through at least 2013, there are very few signs of significant recovery from the losses in wealth experienced by American families during the Great Recession. Declines in net worth from 2007 to 2009 were large, and the declines continued through 2013. These wealth losses, however, were not distributed equally. While large absolute amounts of wealth were destroyed at the top of the wealth distribution, households at the bottom of the wealth distribution lost the largest share of their wealth. As a result, wealth inequality increased significantly from 2003 through 2013; by some metrics inequality roughly doubled.

Read more…

The gap in the USA between the rate of growth of productivity (now at 11.4 percent) and that of wages (1.5 percent) continues to widen

June 28, 2014 3 comments

from David Ruccio

productivity-growth

The gap between the growth of productivity (now 11.4 percent higher than in January 2007) and that of wages (only 1.5 percent higher) continues to widen (according to Reuters).

Is it any wonder, then, that income inequality continues to rise?

CEO-to-worker compensation ratio, USA 1965 – 2013

June 25, 2014 3 comments

from David Ruccio

CEO-worker

In charting the amount of the surplus that ends up in the hands (or, if you prefer, pockets or bank accounts) of CEOs, the Economic Policy Institute finds that:  Read more…

The Jobs Gap (3 graphs)

June 23, 2014 2 comments

from David Ruccio

Screen Shot 2014-06-06 at 11.30.08 AM

With 217,000 new jobs created in May, the U.S. economy is finally—finally, after 50 months!—back to the pre-recession employment level.

Except it isn’t. Not by a long shot. Not when we consider the “jobs gap”—which we can calculate in one of two ways: by the amount of time it will take at this rate to get back to pre-recession employment levels while also absorbing the people who enter the labor force each month (4 years) or by the difference between payroll employment and the number of jobs needed to keep up with the growth in the potential labor force (6.9 million jobs). Read more…

Categories: unemployment

Profit inflation

from David Ruccio

BN-DC653_inflat_G_20140605152620

A couple of weeks back I wrote that, when mainstream economists debate the causes of inflation, they focus only on labor costs and forget all about profits. Read more…

The US jobs-gap (3 graphs)

from David Ruccio

Screen Shot 2014-06-06 at 11.30.08 AM

Read more…

Categories: The Economy

US poverty rate, actual and simulated, 1959 – 2012 (graph)

from David Ruccio

poverty rate

One of the points Thomas Piketty makes in his new book is that mainstream economists enshrined as “laws” of capitalist development certain “facts” that only had relevance during the immediate postwar decades. Read more…

USA income redistribution chart 1964 to 2010

from David Ruccio

Screen-Shot-2014-05-29-at-9.16.53-AM

As if to illustrate the point I made the other day (about earnings at the top being themselves distributions of the income captured by capital), Seth Ackerman put together the chart above (from data in Simon Mohun’s recently published article on unproductive labor) comparing the sum of profits and managerial compensation to non-managerial compensation, both as shares of total net income.

Indeed, in a direct rebuttal of the neoclassical marginal-productivity theory of distribution, capital’s share of income has been growing at the expense of labor’s share since the late-1970s.

All inequality all the time

from David Ruccio

It’s clear we are in the midst of an acute period of inequality: not only of grotesque levels of economic inequality (which are now well documented) but also of a wide-ranging discussion of the conditions and consequences of that extreme inequality (which appears to be taking off).

There are, of course, the deniers, like my dear friend Deirdre McCloskey. What inequality, is her mantra. The only thing that matters is economic growth, such that the amount of stuff people have today is much more than they’ve had throughout much of human history. OK, but that doesn’t tell us much about how that growth took place (it’s the surplus, Deirdre) or what it’s consequences are (on the majority who actually produce the surplus versus the tiny minority who appropriate it).

And then there are those who are actually thinking seriously about inequality, some of whose work is published in the latest issue of Science (a lot of which, unfortunately, is behind a paywall). Leave aside the silly article on econophysics (really, the existing distribution of income is a kind of “natural inequality,” which is what you would get from entropy?), the article that focuses on the psychological pathologies of the poor (what about those of the rich?), and the fact that all the economics is narrowly confined to mainstream theories (which have done more to deflect attention from, as against the wide range of heterodox theories that have actually focused on, inequality over the course of the past three decades). Just the fact that a special issue of such a prestigious journal is devoted to the problem of inequality tells us something about how it has risen to the top of our agenda. Read more…

Global labour rights index map

from David Ruccio

arton14691-41cce

The International Trade Union Confederation (ITUC) [ht: hk], an alliance of regional trade confederations that advocates for labor rights around the world, debuted its Global Rights Index this week, ranking countries on a 1 (best) through 5 (worst, in darker shades of red on the map) scale on the basis of how well workers’ rights are protected.

According to the report [pdf], Read more…

Categories: The Economy

Languages of economics

May 20, 2014 1 comment

from David Ruccio

Benjamin Wallace-Wells [ht: sm] argues that the broad interest in Thomas Piketty’s book (along with the attention to Nate Silver’s data) is a sign that we’re now speaking the language of economics.

What is up isn’t a mystery. It makes perfect sense to be seeking economic explanations in the years just after the economy has imploded, and while the presidency is preoccupied with trying to fix it. I suspect there’s something else contributing, too — a desire for an objective, numerate authority when elites and their subjective authority are so broadly distrusted.

I suspect that’s true, which is one of the reasons I’ve tried to convince my colleagues that what we should be teaching is critical economic literacy—an ability to understand how economic theories work, and how dependent the conclusions are on the assumptions and concepts of different economic theories. Read more…

Change in median earnings 1998 to 2013 in USA vs. UK

from David Ruccio

blanchflower_may2014_fig1

David Blanchflower and Stephen Machin use this chart to illustrate the fact that, in the United Kingdom, “The real wages of the typical (median) worker have fallen by around 8–10% – or around 2% a year behind inflation – since 2008.”

But, as we can see, the situation for workers in the United States has been more dire, for a longer period of time: real median weekly earnings are basically unchanged for the past 25 years. Read more…

12-country 1975-2007 chart of share of income growth going to The 1%

from David Ruccio

income growth

According to a new study of top incomes by the Directorate for Employment, Labour and Social Affairs of the OECD [pdf], Read more…

Capital and distributions of the surplus in the 21st century

April 30, 2014 6 comments

from David Ruccio

onepercent_graph

Thanks to Thomas Piketty’s new book, the returns to capital are now back on the intellectual—if not the political—agenda. Read more…

The new sharing economy in the USA

April 27, 2014 2 comments

from David Ruccio

24-average-hourly-wage-growth.w1120.h750

We’re hearing a lot about the virtues of the new sharing economy these days. But Kevin Roose [ht: sm] has a different view: Read more…

Occupy the teaching of economics

April 24, 2014 2 comments

from David Ruccio

1052532_602246889808739_260457370_o

Back in 2009, in the midst of the Great Crash (and therefore at the start of the Second Great Depression), a colleague and friend asked me whether I expected the teaching of economics to change. His view was that, since mainstream economics had so miserably failed in both predicting the crash and providing a guide as to what to do once the crash occurred, it was obvious the economics being taught to students had to fundamentally change. My answer was that, while the need for a change was obvious, I didn’t see it happening—and it probably wouldn’t happen (thinking back to the emergence of the Union of Radical Political Economics in the late-1960s) unless and until students of economics demanded a different approach. Read more…

No comment

April 23, 2014 3 comments

from David Ruccio

tumblr_n4gmrxKQl01rncbh7o2_1280

Read more…

Categories: Uncategorized

2013 CEO-to-worker pay ratio in the USA

April 18, 2014 3 comments

from David Ruccio

CEO-worker-2013

According to the AFL-CIO’s latest “Executive Paywatch” report, the CEO-to-average-worker-pay ratio rose last year to 331:1. And the ratio of CEO pay to the minimum wage was much higher: 774:1.

That’s because, in both cases, workers’ wages remained more or less constant while the amount of surplus those workers created that ended up in the pockets of the CEOs of the nation’s largest corporations continued to rise.

As the AFL-CIO argues in their report: Read more…

Top 0.1% wealth share in the U.S., 1913-2012

April 4, 2014 1 comment

from David Ruccio

Roaring 20s

This chart, from the work of Emmanuel Saez and Gabriel Zucman [pdf], illustrates the large increase in top 0.1% wealth share since the 1980s (top 0.1% = wealth above $20 million today. In other words, the inequality in the distribution of wealth in the United States is back to what it was just prior to the first Great Depression.

Follow

Get every new post delivered to your Inbox.

Join 9,957 other followers