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United States of inequality

from David Ruccio

Obscene levels of economics inequality in the United States are now so obvious they’ve become one of the main topics of public and political discourse (alongside and intertwined with two others, the climate crisis and the impeachment of Donald Trump).*

Most Americans, it seems, are aware of and increasingly incensed by the grotesque and still-growing gap between a tiny group at the top—wealthy individuals and large corporations—and everyone else. And this sense of unfairness and injustice is reflected in both the media and political campaigns. For example, Capital & Main, an award-winning nonprofit publication that reports from California, has launched a twelve-month long series on economic inequality in America, “United States of Inequality: 2020 and the Great Divide,” leading up to next year’s presidential election. And two of the leading presidential candidates in the Democratic Party, Bernie Sanders and Elizabeth Warren, have responded by making economic inequality one of the signature issues of their primary campaigns, regularly describing the devastating consequences of the enormous gap between the haves and have-nots and proposing policies (such as a wealth tax) to begin to close the gap and mitigate at least some of its effects.**

As if on cue, we’re also seeing a pushback. It should come as no surprise that America’s billionaires—from Starbucks CEO Howard Schultz to multi-billionaire hedge-fund manager Leon Cooperman—have gone on the offensive, complaining about how the various tax proposals, if enacted, would reduce what they consider to be the fortunes they’ve earned and undermine two areas they alone control: private philanthropy and corporate innovation.*** And ironically, as Paul Waldman has claimed,

the more billionaires keep talking about how their taxes shouldn’t be raised, the more likely it is that their taxes will in fact be raised, one way or another.

Similarly predictable is the attempt to rejigger the numbers so that inequality in the United States appears to be much less than official sources report. For example, according to the Census Bureau [pdf], in 2018, the top quintile of households (with an average income of $233.9 thousand) had 17 times more than the bottom quintile (whose average income was only $13.8 thousand).**** Phil Gramm and John F. Early argue that “this picture is false” because it focuses only on money income and excludes both taxes and transfer payments.***** Their conclusion?

America already redistributes enough income to compress the income difference between the top and bottom quintiles. . .down to 3.8 to 1 in income received.

There is one kernel of truth in Gramm and Early’s analysis: while the rich pay more in taxes, government transfers make up a much larger share of income of those at the bottom.****** But their calculations dramatically overstate the extent to which taxes and transfers decrease the degree of economic inequality in the United States. That’s because they fail to include unreported capital income, including dividends and interest paid to tax-exempt pension accounts and corporate retained earnings (which are included in other data sets, such as G. Zucman, T. Piketty, and E. Saez, “Distributional National Accounts: Methods and Estimates for the United States” [http://gabriel-zucman.eu/usdina/]).

Tax

As is clear in the table above, in 2014 (the last year for which data are available), the system of taxes and transfers only reduces the degree of inequality (measured as the ratio of top 10 percent average incomes to bottom 50 percent average incomes) from 18.7 to 1 to 10.1 to 1. And if we focus on post-tax cash incomes (thus excluding non-cash transfers, essentially Medicaid and Medicare), the resulting correction is even less: to 11.8 to 1. In both cases, the decrease in inequality is much less than in the Gramm and Early calculations.

The fact is, there are severe limits on what taxes and transfers can achieve in the face of the massive changes in the pre-tax distribution of income that have occurred in the United States since 1979.

Pre-tax

As readers can see in the table above, while the average pre-tax incomes of the bottom 50 percent of Americans stagnated from 1979 to 2014, those of the top 10 percent increased by 100 percent and the incomes of the top 1 percent soared by even more, 183 percent.

If we compare the real incomes of the same groups after taxes and transfers, it’s clear that while the incomes of the bottom 50 percent of Americans did in fact inch upward from 1979 to 2014 (by a total of 18 percent, or only 0.5 percent a year), progressive taxes and transfers did not hamper the upsurge of income at the top: the average post-tax incomes of the top 10 percent doubled (by 2.86 percent a year) and those of the top 1 percent grew by more than 160 percent (by 4.8 percent a year).*******

The small group at the top continues to pull away from everyone else, both before and after taxes and transfers.

In my view, the degree of economic inequality in the United States is so severe that it can’t be sidetracked by billionaire complaints or swept away by the calculations of conservative economists. And, for that matter, it can’t be solved by enacting more taxes on the ultra-rich and more transfer payments for the rest of Americans. The problem is simply too large and systemic.

Only by understanding and attacking the roots of the inequality that has characterized the U.S. economy for decades now will we be able to close the enormous gap that has undermined the American Dream and shredded the fabric of political and social life in the United States.

 

*But, contra New York University historian Timothy Naftali, this is not the first time “we are having a national political conversation about billionaires in American life.” In fact, I’d argue, it’s a recurring debate in American history, stretching back at least to the rise of populism in the late-nineteenth century (and perhaps earlier, for example, to Shays’ Rebellion) and including the strike wave after the Panic of 1873, the anti-trust movement of the early-twentieth century, the crash of 1929 and the First Great Depression, and most recently the attacks on finance and the Occupy Wall Street movement during the Second Great Depression. In all those cases, Americans engaged in an intense national discussion of inequality and the role of the economic elite in political and social life.

**Even centrist Democrats have taken up, if only timidly, the banner of the anti-inequality campaign. For example, Rep. Brendan Boyle (D-PA), who has endorsed Joe Biden for the Democratic nomination, told The Washington Post he is crafting a new wealth tax proposal to introduce in the House of Representatives. And Rep. Don Beyer (D-VA), who last month endorsed South Bend Mayor Pete Buttigieg, has released a plan (with Sen. Chris Van Hollen of Maryland) for a new surtax on incomes over $2 million.

***The one area they don’t mention, which they also seek to control, is American politics—through lobbying, campaign donations, and the like. Wealthy individuals and large corporations attempt to exert such control although, as we just saw in Seattle—with Amazon’s $1.5 million campaign to unseat a socialist member of Seattle’s city council, Kshama Sawant—they’re not always successful.

****Money income includes the following categories: earnings; unemployment compensation; workers’ compensation; Social Security; supplemental security income; public assistance; veterans’ payments; survivor benefits; disability benefits; pension or retirement income; interest; dividends; rents, royalties, and estates and trusts; educational assistance; alimony; child support; financial assistance from outside of the household; and other income. The ratio of top to bottom rises to an astounding 60 to 1 in terms of only earnings.

*****The Wall Street Journal column doesn’t explain how the alternative calculations were conducted. But Early, in a Cato Institute report [pdf], does explain their methodology.

******According to my calculations from the most comprehensive source (from G. Zucman, T. Piketty, and E. Saez, “Distributional National Accounts: Methods and Estimates for the United States” [http://gabriel-zucman.eu/usdina/]), in 2014, the bottom 50 percent of Americans received 74 percent of their post-tax income from transfers while, for the top percent, it was 19.5 percent.

*******What of the billionaires? Between 1979 and 2014, the average real post-tax incomes of the top .001 percent grew by 387 percent (or 11.1 percent a year), almost as much as their pre-tax incomes.

  1. John deChadenedes
    November 13, 2019 at 1:09 am

    Billionaire complaints should be ridiculed or at least ignored. Our economic system is designed to create and increase income disparity. I have spent the last 15 years working to help provide housing and services for people who are homeless. Economists who argue that “this is just how things work” should also be marginalized and ignored. A small wealth tax on excessively large fortunes would more than pay for universal healthcare, education, and other essential social benefits that are provided in every other “advanced” economy. Anyone who argues that this is not a good idea has completely slipped his or her moorings.

  2. November 13, 2019 at 2:15 am

    Good for you, John. Poignant well written article, David.

  3. ghholtham
    November 13, 2019 at 3:26 pm

    Elizabeth Warren’s wealth tax proposals are for 2 percent on total assets over $50 million and another 1 per cent for billionaires, What percentage of the population would that hit? Not the top 10 per cent, fewer than the top 1 per cent? It would be very good if she could get it to work.

  4. Ken Zimmerman
    November 17, 2019 at 1:39 pm

    Most well-off Americans even today are blind to the inequality you describe. As most Americans over the history of the nation have been blind to poverty in America. Severe as it is this blindness is not mean spirited, in most instances but as Edith Wharton points out, “Affluence, unless stimulated by a keen imagination, forms but the vaguest notion of the practical strain of poverty.” This ignorance of poverty and the poor leads to many other problems. Chief among these is making the poor into something they are not and expecting them to perform in ways comfortable for the non-poor. Disapproving looks aside, why shouldn’t poor and working Americans expect more than mere subsistence? Why should it be ludicrous that they demand some measure of joy in their lives? And why should we accept the easy and arrogant presumption that philanthropists and relief agents should substitute their own judgment for that of their clients? Historian Stephen Pimpare reports these words from a homeless man regarding a new program in New York City that pays welfare recipients and others for certain “responsible” behaviors, “I’m not stupid, I’m just poor. People don’t seem to get the difference.”

    This struggle between the deliberately misunderstood and denigrated poor and all the “right living” citizens is the context for all economic inequality in America. America’s relentless creed of individualism may well suit the better off, but it’s a danger to the more fragile in American society, who must share their resources and pool their need. Their interdependence is a necessity and a balm, and another constant throughout American history. Those with ample funds, a bountiful table, and a stable, secure life can afford to be independent, alone even. The rest cannot and must form communities of shared need. The complex webs of dependency that poor people have formed in order to survive have been mostly absent from our histories of poverty and welfare. And of America in general. Government is the largest of those communities, and the welfare state its most salutary ideal, a “compromise between capitalism and democracy,” in the words of philosopher Eva Feder Kittay. The independence that is hailed by so many, particularly on the right refers to independence from government aid, not independence from grueling labor or loveless marriage or capricious charity. It is a mirage and a trap. The wise person will seek out those dependencies that will ease their struggle, enrich their lives, and comfort their neighbors and children. An imposed independence can be antisocial, alienating, and dangerous; it should not be made a cultural, social, or political goal or any sort of model. There is no necessary virtue in autonomy. But there can be value in dependence, and public welfare is a requirement—the requisite dependency—for a moral and humane society. Thomas Paine wrote these words as the US was fighting for independence in his “Agrarian Justice.” Paine makes a deceptively simple argument for public relief: “It ought not to be left to the choice of detached individuals whether they will do justice or not.” But generally, Paine’s recommendations have been ignored, as have many of those by the founders of the US. Makes one wonder if the members of the Federalist Society have even read the writings of the founders whose pictures hang on the walls of the Society’s headquarters. This disregard has had predictable results. Among “advanced” nations, the US has the highest or almost the highest rates of poverty (highest), childhood poverty (highest), elderly poverty (second highest), long-term poverty (highest), permanent poverty (highest), and income inequality (highest); we can boast of our rates of incarceration (highest), health-care costs (highest), CEO pay (highest), average hours worked (it’s more only in Australia and New Zealand), and infant mortality (among the highest—it’s lower in Taiwan, Belgium, Cuba, and the Czech Republic, among others). Seven advanced countries nonetheless have higher productivity than the United States, many with shorter work weeks. At the same time, the US ranks among the lowest for high school graduation, health-care coverage, mandated vacation and paid parental leave, voter participation, women in the national legislature, working-class wages, living standards among those at the bottom, and life expectancy. As social-welfare analyst David Wagner has observed, it may be that our self-congratulatory rhetoric, what he calls our “virtue talk,” obscures the less noble reality: Americans do less for the least among us than do other Western industrialized nations. American perspectives and responses toward poverty and welfare have been constant for most of American history, with deep and long roots. In 13th century Europe, one prominent theologian cited the “habitual idleness, debauchery and drunkenness” of poor people as their chief failing, much as the Hudson Institute’s Joel Schwartz argues in his book, “Fighting Poverty with Virtue: Moral Reform and America’s Urban Poor, 1825-2000,” that the remedy for modern urban poverty is to “remoralize” the poor to the “three cardinal virtues” of “diligence, sobriety and thrift.” Enduring, widespread, and poverty effecting a large share of the population of a nation, along with such responses to this poverty as these endangers democracy. Often makes democracy impossible.

    The ‘new’ poor gained that status from the work of neoliberal libertarians over the last 50 years. They are treated as the poor have always been treated in America. Which understandably angers them. But the ‘well-off’ have no intention of changing their ways to accommodate the newly poor. As the rolls of the poor swell and today’s well-off gather ever greater wealth and income, will there come a point when the pressure can no longer be contained? That’s the proposition that Trump and associates are testing right now. Including many mainstream economists. For example, this interesting piece from Harvard economist N. Gregory Mankiw just yesterday.

  5. Ken Zimmerman
    November 17, 2019 at 1:42 pm

    Link missing from my post.

  6. charlie thomas
    November 18, 2019 at 9:09 pm

    an acolyte of Friedman, he is on my short list for destroyer of democracy prize.

    • Ken Zimmerman
      November 19, 2019 at 1:39 pm

      Thanks for the attachment. Here’s my next contribution. Much less than 5,400 words.

      America is a nation, of sorts in turmoil today. And its citizens are worried about its and their futures. But America has always been in turmoil. It began in turmoil and has not changed much in nearly 300 years. It began with inequality in wealth and income staggering even by European standards of the time. It began as a democratic republic founded by American aristocrats. With a perpetual struggle, and often outright brawl, if not war over which of the two terms really defined America. It began as a nation dependent on slavery. One section of which created an especially lethal form of racism to explain, justify, and continue slavery of Africans, even after the rest of the European world had rejected and outlawed it. Which points up the outlawry and unbending obstinacy of most of the cultures that between 1789 and 2019 lived within the border of America but could never actually create a culture for the new nation, apart from individualism and private wealth. Not that there weren’t many efforts to create a culture by those piled onto the real estate. The most successful of these was probably during the period after the Constitution was enacted. When admiration for Washington and the other “national fathers” created a rampant nationalism, if not always a common feeling of personhood in a nation. The fight over slavery after 1809 ended even this American semi-culture. This fight highlighted the stark differences between Puritan and Quaker cultures on one side and the Southern Anglican culture on the other. Along with the increasing rift between the original 13 states and the new states west of the Alleghanies. This increased after the Mexican War and the statehood of Texas, California, and other western states. Political leadership began to reflect these differences after the founding fathers left the scene. So much so that by the 1830s Andrew Jackson could be elected President. A violent racist with little belief in the Constitution or politics, he preferred to settle disputes with threats and the Army. But unlike Trump, his current greatest admirer, Jackson was not either a huckster or a coward. The four Presidents after Jackson were a waste of skin. During their terms only the Congress staved off civil war, till it could no longer do so. The Civil War changed America by making all the historical hatreds, cultural divisions, and “lines in the sand” obsessions, where no compromise could be offered or accepted. So, between 1877 and 1965 America was in almost every respect two nations, with the west rejecting both and choosing its own way with little input from the national government. While the Midwest decided neither side gave a damn about it, leading it to become angry and then adopt a radical revolutionary stance that fluctuated over time between radical movements of nearly every form and political philosophy. During the period 1965 to 1980, laws, shifts in government control, and particularly the efforts to end segregation (racial, ethnic, class, and gender) forced moves in all parts of America. These efforts showed signs of setting the conditions for a single American culture. Which might have come to pass. But during the 1970s the single faction that worried and frightened the American founders most, plutocrats (the wealthy) asserted themselves to a degree they had not since just before and after the Civil War. Their strategy was not new but now they had new tools to implement it. They would create a single American culture in their own image. And they would kill or have ostracized any who opposed that work. The new tools began with television, in almost every home by the 1970s, social manipulations through television and later movies, music, and today the internet created through the application of strategies behavioral scientists had proven effective, and alliances with other nations friendly to their efforts (going back to the Spanish Civil War and WWII). And none of this is new. If the rich had had these tools and no watch dog (as is the case today) they would have made this coup attempt in 1789, and every few years thereafter till they got it right. Today we’re all playing their game, with their rules, and we’re losing. I guess that makes this question number one – how does America win? How does it overcome the rich?

      • November 20, 2019 at 1:41 am

        Ken, the central struggle today, on this posting, is what can be done about our human economic inequality and the inequality in Nature’s standing before our economic “laws,” or rather, assumptions.

        The main challenger before the American people, and our status quo in political economy, is the Green New Deal, the 14 page Resolution from Feb. of this year, and Bernie Sanders more detailed 35 pages from August.

        The question is can the nation handle the projected costs, Sanders being $16.3 trillion over 10 years, and the costs of his Medicare for All where the estimates are all over the place.

        L. Randall Wray, a founding member of the WEA, has a long 56 page essay at the Levy Institute of Bard College which came out in May of this year, Working Paper No. 931 “How to Pay for the Green New Deal,” which uses Keynes methodology in shaping England’s WWII response to taking on the enormous challenge of “standing alone.” Wray’s estimate for all the major programs of the Green New Deal and Medicare for all is that would consume 1.3% of US GDP per year. The methodology relies heavily on the extra growth the spending proposals would add, especially the Jobs Guarantee and the work called for in retrofitting every building in the nation. Judge for yourselves here at http://www.levyinstitute.org/pubs/wp_931.pdf The Paper is co-authored by Yeva Nersisyan of Franklin and Marshall College.

        And then Wray, one of the leaders of MMT, leads off this organization’s own Real World Economic Review, Issue No. 89 from one month ago, and there are more than two hundred pages arguing over the premises of MMT and what I have put in front of this audience now: can the US economy afford it.
        Here at http://www.paecon.net/PAEReview/issue89/whole89.pdf

        As if this wasn’t enough, a surprising, to me at least, front page article in the latest print edition of the New York Review of Books features a color picture of a house on fire, and the house is the House of Economics, and the title under author David Graeber’s name is Economics vs Reality, and inside the cover the title is “Against Economics.” The reason for the article is a review of Robert Skidelsky’s “Money and Government: The Past and Future of Economics.

  7. November 20, 2019 at 1:57 am

    I neglected to add an important point about Wray’s methodology in showing the Green New Deal’s impact on the nation’s resources as a percentage cost of GDP; it is based not only on the new income generated by the spending going into the programs, pulling in 15 million more workers with new or higher incomes and then spending, but also the cost savings from energy efficiency and Medicare for All, to give the two or three most obvious and consequential ones.

    But there are savings in costs of existing programs up and down the Green New Deals premises and objectives: genuine full employment saving on a variety of other already existing “safety net” programs.

    I should add that, in my take, for Wray’s analysis to work and to pull it off politically, we will need recognition of our existential moment for the planet fighting off climate chaos, and the energy which comes from the pent up yearnings of more than 30 years for a more egalitarian society economically.

    So far, these two waves of emotional intensity have not yet swayed the budgetary hearts of the Democratic Party, much less the Libertarians or the Republican Right.

    And to show you that what I am placing front and center – the affordability question for government in a sea of Neoliberal denials, the echoes of the American Green New Deal battle are in every paragraph of the this article about Labour’s proposal for Broad Band in the UK: from the London review of books blog, please note the title: “We Can Afford This” …https://www.lrb.co.uk/blog/2019/november/we-can-afford-this?utm_source=LRB+blog+email&utm_medium=email&utm_campaign=20191119+blog&utm_content=usca_nonsubs_blog

    And perhaps it will take the modern day equivalent to put us on Wray’s wavelength in his long article on paying for the Green New Deal, the equivalent of Sept. 1, 1939 for Britain, and Dec. 7, 1941 for the US, when the question wasn’t “how will we pay for it” but rather “we will win at any cost.”

    None of us know what the environmental equivalent of that will be; for me it was the destruction of “Paradise” Calif. last fall…and this fall, the Bahamas still haven’t totaled up their missing as dead…bad for tourism…

    On the economy, all Wray’s considerations will look better and more reasonable when the longest expansion since the Economist has been publishing finally ends…over ten years now…to mixed, very mixed outcomes. Then we in the US will face another Fall of 2008 stark moment…when almost two centuries of conventional accounting will face what the MMTers have found behind the Green Curtain of the Federal Reserve…the precedents reserved only for parts of the population.

  8. Craig
    November 20, 2019 at 6:10 am

    MMT is a tweaking of Keynesianism parading itself as a major reform if not a paradigm change. I’m all for more fiscal spending of course, a lot more….like trillions for new infrastructure and for the mega projects that will enable us to skirt disaster from climate change, or if you don’t believe in that, the necessity of finding re-newable energy resources because petroleum, upon which the entirety of modern civilization is currently dependent, is obviously not unlimited.

    But without a true monetary and financial paradigm change that a 50% discount/rebate monetary policy at retail sale will all by itself effect, you’ll just get 4-5% inflation instead of 1-2%. Then the regressives will harp and scream and the individual will too.

    No, the 50% discount/rebate policy and the other policies, structural reforms, regulations and tax changes I’ve posted here many times IS an actual monetary and financial paradigm change. They will totally invert current realities and deliver what both the individual and enterprise want….the stability of secure prosperity and individual monetary and financial abundance.

    Break up your intellectual fallow ground and actually look at what a new monetary and financial paradigm can do for us all.

  9. Ken Zimmerman
    November 20, 2019 at 2:47 pm

    A theme heard again and again in times of crisis in America: Americans have become divided on account of having strayed from the core principles on which their country was founded. Problem is, Americans can’t agree on what these principles are. And they likely do not exist. Colin Woodward argues in his book, “American Nations: A History of the Eleven Rival Regional Cultures of North America” that America is not now and never has been one culture or one nation. Such calls for unity overlook a glaring historical fact. Americans have been deeply divided since the days of Jamestown and Plymouth. The original North American colonies were settled by people from distinct regions of the British Islands, and from France, the Netherlands, and Spain, each with their own religious, political, and ethnographic characteristics. Throughout the colonial period, they regarded one another as competitors—for land, settlers, and capital—and occasionally as enemies, as was the case during the English Civil War, when Royalist Virginia stood against Puritan Massachusetts, or when New Netherland and New France were invaded and occupied by English-speaking soldiers, statesmen, and merchants. Only when London began treating its colonies as a single unit—and enacted policies threatening to nearly all—did some of these distinct societies briefly come together to win a revolution and create a joint government. Nearly all of them would seriously consider leaving the Union in the eighty-year period after Yorktown; several went to war to do so in the 1860s. All these centuries-old cultures are still with us today, and have spread their people, ideas, and influence across mutually exclusive bands of the continent. There isn’t and never has been one America, but rather several Americas. Any effort to “restore” fundamental American values runs into an even greater obstacle. Each of our founding cultures has its own set of cherished principles, and they often contradict one another. By the middle of the 18th century, eight discrete Euro-American cultures had been established on the southern and eastern rims of North America. For generations these distinct cultures developed in remarkable isolation from one another, consolidating characteristic values, practices, dialects, and ideals. Some championed individualism, others utopian social reform. Some believed themselves guided by divine purpose, others championed freedom of conscience and inquiry. Some embraced an Anglo-Saxon Protestant identity, others ethnic and religious pluralism. Some valued equality and democratic participation, others deference to a traditional aristocratic order. All of them continue to champion some version of their founding ideals in the present day. The United States had Founding Fathers, to be sure, but they were the grandfathers, great-grandfathers, or great-great-grandfathers of the men who met to sign the Declaration of Independence and to draft our first two constitutions. Our true Founders didn’t have an “original intent” we can refer to in challenging times; they had original intents. America’s most essential and abiding divisions are not between red states and blue states, conservatives and liberals, capital and labor, blacks and whites, the faithful and the secular. Rather, our divisions stem from the fact that the US is a federation comprised of the whole or part of eleven regional nations, some of whom truly do not see eye to eye with one another. These nations respect neither state nor international boundaries, bleeding over the U.S. frontiers with Canada and Mexico as readily as they divide California, Texas, Illinois, or Pennsylvania. Six joined together to liberate themselves from British rule. Four were conquered but not vanquished by English-speaking rivals. Two more were founded in the West by a mix of American frontiersmen in the second half of the nineteenth century. Some are defined by cultural pluralism, others by their French, Spanish, or “Anglo-Saxon” heritage. Few have shown any indication that they are melting into some sort of unified American culture. On the contrary, since 1960 the fault lines between these nations have been growing wider, fueling culture wars, constitutional struggles, and ever more frequent and fervent pleas for unity. I have purposely used the term nations to describe these regional cultures, for by the time they agreed to share a federated constitution state, each had long exhibited the characteristics of nationhood. Americans—because of this historical circumstance—often confuse the terms state and nation and are among the only people in the world who use statehood and nationhood interchangeably. A state is a sovereign political entity like the United Kingdom, Kenya, Panama, or New Zealand, eligible for membership in the United Nations and inclusion on the maps produced by Rand McNally or the National Geographic Society. A nation is a group of people who share—or believe they share—a common culture, ethnic origin, language, historical experience, artifacts, and symbols. Some nations are presently stateless—the Kurdish, Palestinian, or Québécois nations, for instance. Some control and dominate their own nation-state, which they typically name for themselves, as in France, Germany, Japan, or Turkey. Conversely, there are plenty of states—some of them federated—that aren’t dominated by a single nation, like Belgium, Switzerland, Malaysia, Canada and, indeed, the United States. North America’s eleven nations are all stateless, though at least two currently aspire to change that, and most of the others have tried to at one time or another.

    Disregard the conventional map of North America, with its depiction of a continent neatly divided into three federations, thirteen Canadian provinces and territories, thirty-one Mexican states, and fifty American ones. For the most part, those boundaries are as arbitrary as those chosen by European colonial powers to divide up the African continent. The lines on the map slash through cohesive cultures, creating massive cultural fissures in states like Maryland, Oregon, or New York, whose residents have often found they have more in common with their neighbors in other states than they do with one another. Banish the meaningless “regions” with which we try to analyze national politics—“the Northeast,” “the West,” “the Midwest,” or “the South”—whose boundaries are marked by those of their constituent states in complete disregard for the continent’s actual settlement history and sectional rivalries. The continent’s states, provinces, and federations do matter, of course, as they are the official forums through which political power is exercised and expressed. But on careful examination of events of the past four centuries, one realizes these jurisdictions are illusions that mask the real forces that have always driven the affairs of our sprawling continent: the eleven stateless nations of North America.

    The bigger issue, at least for those who frequent economics blogs like this one, carry out the academic discipline of economics for America, and claim to show the way to economic prosperity in America is that neither economists nor the theories to which they cling recognize any of this. In other words, by and large American economists are culturally illiterate about America. This has and continues to create massive errors and great suffering. Furthermore, American economists, acting in sheer ignorance have signed on to theories consistent with only two of America’s cultures. Not just ignoring the others, but actively attempting to force them to accept these theories. It’s little wonder that large sections of America believe capitalism is not just nonsense but actively out to harm them. This is nothing more than cultural imperialism hidden under a veneer of academic language and rituals.

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