from Lars Syll
As we’ve been aware of lately there isn’t much trickle-down going on in the USA. Unfortunately we can also see the same pattern developing in many other countries. Take for example Sweden. The figure below shows how the distribution of mean income and wealth (expressed in year 2009 prices) for the top 0.1% and the bottom 90% has changed in Sweden for the last 30 years: Read more…
from Peter Radford
I am preparing a talk on inequality here in America, and so have been re-reading the Piketty and Saez work. Amongst the more eye-opening facts I have come across is the assertion, by Saez, that the surge in the top 1% incomes is so large that the growth of the bottom 99% amounts to only half the average [mean].
Think about that for a moment.
It would be like walking into a room full of people two feet tall with one thirty footer in the corner. The mean average is meaningless in such circumstances. We are all taught that in statistics class, but to come across such an egregious example in a dataset as large as all US tax returns is astonishing. Read more…
from Thomas Palley
Larry Summers (HERE) and Paul Krugman (HERE) have recently identified the phenomenon of stagnation. Given that they are giants in today’s economic policy conversation, their views have naturally received enormous attention. That attention is very welcome because the issue is so important. However, there is also a danger that their dominance risks crowding out other explanations of stagnation, thereby short-circuiting debate.
Krugman has long emphasized the liquidity trap – zero lower bound to interest rates which supposedly prevents spending from reaching a level sufficient for full employment. Summers has added to this story by saying we have been in the throes of stagnation for a long while, but that has been obscured by years of serial asset price bubbles.
That is a good start to the conversation, but there are other views that dig deeper regarding the causes of stagnation. Read more…
from David Ruccio
from David Ruccio
from Jim Stanford
My union Unifor is currently undertaking an important “Rights at Work” campaign, which involves a national tour of meetings with our officers and local leaders and stewards, followed by a membership canvass and community outreach effort, all aimed at beating back the current attack on fundamental labour rights coming from conservatives at all levels in Canada. So far the campaign has had a very strong reception. Ontario will be a key battleground, of course, since the future of the Rand Formula will be decided in the next election (as early as this spring), but similar attacks on labour rights are being experienced at the federal level and in many other provinces.
A key argument in winning this battle will be showing how important unions and collective bargaining are to the health of broader society. This helps to defeat conservative attempts to portray organized labour as self-interested and removed from the overall workforce. In our materials and presentations we have been marshalling arguments to show that unions lift up wages, standards, and security for all workers, not just their own members, through their influence on the actions of non-union employers, their influence on policy and politics, and their ability to provide a collective voice for workers’ interests on all issues.
The powerpoint show we are presenting on our leadership tour makes many of these arguments. In our internal dress rehearsals, however, my colleague Jordan Brennan suggested that a graph comparing poverty or inequality rates across countries, and linking those differences to unionization, might help tell the story. He was right, and we included a simple scatter plot in our show, which has consequently generated many inquiries. So I will use this blog entry to describe the data more fully and formally, and consider its implications. Read more…
from Dean Baker
The retrospectives of Ben Bernanke on his leaving the Fed seem to be coming in overly positive. While there is much that is positive about his tenure as Fed chair, many of these accounts have a rather selective view of history.
The part that is clearly wrong is treating Bernanke as a bookish academic who got plucked down in the middle of a financial crisis that was not his making. While Bernanke had a distinguished academic career, he had been in the middle of the action in Washington since 2002. That was when he was selected to be a governor of the Fed. He served as a governor at Greenspan’s side until he went to serve as head of President Bush’s Council of Economic Advisers in June of 2005. After a brief stint as the chief economist in the Bush administration he returned to take over as chair of the Fed in January of 2006.
It was during the period that Bernanke was at the Fed and his tenure in the Bush administration that the housing bubble grew to such dangerous levels. Read more…
from David Ruccio
from Peter Radford
America is in such a funk nowadays that sometimes it can get exasperating. The disconnect between what average people believe and hope for, and what seems to dominate our political class is gaping wide open. To me the cause for this disconnect is obvious, and our rampant inequality sits squarely at the heart of the problem. Yet getting some of my erstwhile progressive friends to utter the word inequality has proven to be extremely difficult.
Because, to their ear it renders a harsh image of envy. And, as we are all taught, since America has no class system, and since America is the land of opportunity, and since in America hard work can get you anything, envy is simply that: a venal sentiment that debases the person harboring it and signifies that they are, somehow, un-American.
This is, of course, twaddle.
Until we are able to talk about inequality without immediately plunging into apologies for being envious we are stuck with what appears to be our favorite surrogate: opportunity. We need, apparently, to restore opportunity in this land of opportunity. Presumably between now and that restoration we are the land of something else, but we won’t give it a name just in case it sounds bad. Read more…
Below is an excerpt from a theRealNews.com interview today with Heiner Flassbeck
JAY: Now, we’ve talked a bit about this before, and I know this issue of exchange rates is quite complicated. There’s many factors involved. But one of the main factors, it seems to me, if I’m understanding it correctly, is interest rates are so low in the United States because the Fed is making sure they stay as low as possible, but to a large extent because there’s so little real demand in the United States, wages are so stagnant and so low, that they’re doing everything they can to kind of keep, you know, as much as they can, boosting the economy with cheap credit. And then this has global consequences, not just American domestic consequences. Do I have it right?
FLASSBECK: Yeah, that’s one thing, that’s one factor that’s very important. But, as I said before, it’s not only the U.S. We have zero interest rates in Japan. When the U.S. still had higher interest rate, the hedge funds went through Japan, borrowed money in Japan, and carried it to Brazil and other countries. So it’s always–there’s always a low interest rate country. Or it was done through Switzerland. So it’s not important how it is done. Read more…
The latest (February) issue of Harpers’ Magazine has an interesting discussion of Europe and the eurozone, “How Germany Reconquered Europe: the Euro and its Discontents.” Some of the big questions of European unity, democracy, and national sovereignty are debated in broad and direct terms not often seen in other analyses:
“The basic lesson of the past ten, twenty years – even of the past hundred years – is that the upper limit, not only of democracy but of political legitimacy, is the nation-state…” (John N. Gray, London School of Economics.)
Then there is the Franco-German relationship, which is central to the eurozone: Read more…
from David Ruccio
You have to give credit to mainstream economists: they’ll do anything to avoid talking about class.
Take the current discussion about inequality. Right now, eyes are clearly focused on two major trends: the share of national income going to the top 1 percent (and therefore the gap between them and the other 99 percent) and the share of profits and wages in national income (and therefore the growing gap between capital and labor). The issues are on the agenda, the data are easily accessible, and the charts are dramatic.
Here’s what the share going to the top 1 percent looks like (from the World Top Incomes Database):
from Mark Weisbrot
The U.S. economy is still weak, with 7 percent unemployment, many millions more underemployed and less people employed in November than there were six years ago. At the same time – and not unrelated – we are still devolving along a path toward increasingly ugly inequality, with 95 percent of the income gains since the Great Recession going to the top 1 percent of the income distribution.
Meanwhile, the crisis of global climate change is moving toward more irreversible catastrophic damage each year that the United States, which is responsible for more of the cumulative carbon emissions than any other country, procrastinates in making the necessary changes to reduce fossil fuel consumption.
There are feasible policy changes that can address all of these problems – and we don’t have to sacrifice employment or a more just and decent society in order to make progress on climate change. Here are five of them: Read more…
from Peter Radford
Rumor has it that Obama’s next State of The Union address will focus heavily on inequality which has become quite a vogue issue in some Washington DC circles. I doubt anything will come of his speech, these obligatory speeches get swamped by politics the moment they end, but it will be interesting to hear what he has to say, because it is, as you all now, an issue that I have been prattling on about for some time now.
Let’s take a look at some background.
All economies, ours included, ration stuff. That’s what they do. In more polite circles this rationing is called allocation or distribution. We don’t use the rationing word because it makes people uneasy and conjures up Soviet era images of bureaucrats mucking around in the minutiae of our lives in ways we resent.
But rationing is rationing by any other name.
By this I mean that the economy and its institutions, and particularly its rules, set the context within which we all buy and sell things, and acquire what we can from the very long list of the things that we want. Read more…
from Mark Weisbrot
It was nearly four years ago that the Greek government negotiated its agreement with the IMF for a harsh austerity program that was ostensibly designed to resolve its budget problems. Many economists, when we saw the plan, knew immediately that Greece was beginning a long journey into darkness that would last for many years. This was not because the Greek government had lived beyond its means or lied about its fiscal deficit. These things could have been corrected without going through six or more years of recession. It was because of the “solution” itself.
Four years later, Greece is down about a quarter of its pre-recession national income – one of the worst outcomes of a financial crisis in the past century, comparable to the worst downturn of the United States’ Great Depression. Unemployment has passed [PDF] 27 percent and more than 58 percent for youth (under 25). There are fewer Greeks employed than there have been at any time in the past 33 years. And real public health care spending has been cut [PDF] by more than 40 percent, at a time when people have needed the public health system more than ever.
The IMF is the subordinate partner in the “troika” (including the European Central Bank and the European Commission) that has been calling the shots for the Greek economy these past four years, but it is the one in charge of putting numbers on the page. It repeatedly projected economic recoveries for 2011, 2012, and 2013 that did not materialize.
Now the IMF is projecting economic growth for 2014. But this time they are probably, finally, going to be right. It is vitally important that we understand why. Read more…
from Lars Syll
The 85 richest people on the planet have accumulated as much wealth between them as half of the world’s population, political and financial leaders have been warned ahead of their annual gathering in the Swiss resort of Davos.
The tiny elite of multibillionaires, who could fit into a double-decker bus, have piled up fortunes equivalent to the wealth of the world’s poorest 3.5bn people, according to a new analysis by Oxfam. The charity condemned the “pernicious” impact of the steadily growing gap between a small group of the super-rich and hundreds of millions of their fellow citizens, arguing it could trigger social unrest.
It released the research on the eve of the World Economic Forum, starting on Wednesday, which brings together many of the most influential figures in international trade, business, finance and politics including David Cameron and George Osborne. Disparities in income and wealth will be high on its agenda, along with driving up international health standards and mitigating the impact of climate change.
Oxfam said the world’s richest 85 people boast a collective worth of $1.7trn (£1trn). Top of the pile is Read more…
from Edward Fullbrook
In the run-up to the annual Davos get-together of the world’s hyper-rich and their most-favoured agents, OXFAM has issued a report titled “Working For The Few”. Commenting on it, today’s Guardian notes that
. . . if they fancied a change of scene then the richest 85 people on the globe – who between them control as much wealth as the poorest half of the global population put together – could squeeze onto a single double-decker.
The OXFAM report emphasizes how democracies round the world are increasingly under threat due their subversion by the ultra-rich. Here is a key passage from the report. Read more…
from Dean Baker
The headline unemployment rate fell sharply to 6.7 percent in December. However, this is not good news. The drop was almost entirely due to people leaving the labor force as the number of people reported employed in December only rose by 143,000, just enough to keep the employment-to-population ratio constant.
Blacks disproportionately left the labor market, with the labor force participation rate for African Americans dropping by 0.3 percentage points to 60.2 percent, the lowest rate since December of 1977. The rate for African American men fell 0.7 percentage points to 65.6 percent, the lowest on record.
The data on the establishment side was not any brighter with the survey reporting an increase of just 74,000 jobs. Some of this weakness was due to unusually slow growth in health care and restaurant employment. This is likely an anomaly that will be reversed in future months. However, there was also a decline in the index of average weekly hours. This suggests that the economy may be weaker than some of the more recent optimistic accounts indicated.
from David Ruccio
The current situation—what I continue to refer to as the Second Great Depression—presents a real problem for mainstream economists. Read more…