1% chart

from David Ruccio

Guard labor (chart)

from David Ruccio

Income redistribution in the USA 1992 to 2012 – (3 charts)

from David Ruccio

As the New York Times reports, based on a recent paper by Barry Cynamon and Steven Fazzari [pdf],

Anything but. . .

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):

And here are the profit and wage shares (from FRED, the Economic Research unit of the St. Louis Fed, where blue represents the profit share and red the wage share):

Labor surplus vs. efficiency wages in th United States

from David Ruccio

source

The current situation—what I continue to refer to as the Second Great Depression—presents a real problem for mainstream economists. 

The 40-year disconnect (USA) (chart)

from David Ruccio

As Steven Rattner explains,

Economic winners and losers in the US since 2007

from David Ruccio

As Steven Rattner explains,

Walking and chewing gum at the same time

from David Ruccio

Clearly, liberal economists and columnists are having a difficult time making sense of two key problems at the same time: unemployment and inequality.

Some (like Ezra Klein) think we need to focus on unemployment right now, and leave the issue of inequality until later. Others (like Dean Baker) argue that, since unemployment is a main cause of inequality, economic growth and tighter labor markets will reduce the unequal distribution of gains in the current economy. And then, of course, there are still others (like Paul Krugman) who, while they consider inequality to be a “Big Something Deal,” still think the real issue is how it negatively influences politics and thus prevents policymakers from enacting the obvious unemployment-reducing policies. 

US public sector payroll under 5 presidents – graph

from David Ruccio

‘Tis the season—for inequality

from David Ruccio
USA

Pope Francis challenged the theory of trickledown economics. Now, President Obama has announced his intention to focus on the problem of inequality.

On my reading, Obama’s speech borrows heavily from the ideas in Jacob Hacker and Paul Pierson’s Winner-Take-All Society and Joseph Stiglitz’s The Price of Inequality. Both the best and the worst parts. 

“Such an economy kills”

from David Ruccio

The other day, I posted a few paragraphs from the new Roman Catholic Pope Francis’s apostolic exhortation Evangelii Gaudium (which translates as “The Joy of the Gospel”).

I’ve now had a chance to read the entire text (available here), which seems to have gotten some notice around the world (although, best I can tell, there’s still no comment from the likes of Paul Ryan, who would steal bread from the mouths of the poor in the name of saving them from anything but the market).

The document as a whole is a call to a new kind of evangelization on the part of Catholics, both clerical and lay. (On Michael Sean Winters’s interpretation, “The Pope is calling the Church to be a missionary Church, an evangelizing Church, and the privileged path of fidelity to the Gospel is service to the poor.”) The main sections on economics are located in chapter 2 (“Amid the Crisis of Communal Commitment”) and chapter 4 (“The Social Dimension of Evangelization”).

The paragraphs I posted before are from chapter 2, in which Francis identifies the nature of the world in which he is making his call for a new missionary church. Permit me to repeat them here:

39 country chart of life expectancy and health spending per captia

from David Ruccio

source

As Aaron Carroll observes

Chart of the day – Young and jobless across Europe

from David Ruccio

As the door turns

from David Ruccio

We can now add former Treasury Secretary Tim Geithner to the long list of those who have walked through the revolving door between Wall Street and the White House, which makes Noam Scheiber just a bit worried.

All in the family: Krugman, Summers, Fisher, . . . .

from David Ruccio

My better half has insisted for years that I not be too hard on Paul Krugman. The enemy of my enemy. Popular Front. And all that. . .

But enough is enough.

I simply can’t let Krugman [ht: br] get away with writing off a large part of contemporary economic discourse (not to mention of the history of economic thought) and with his declaration that Larry Summers has “laid down what amounts to a very radical manifesto” (not to mention the fact that I was forced to waste the better part of a quarter of an hour this morning listening to Summers’s talk in honor of Stanley Fischer at the IMF Economic Forum, during which he announces that he’s finally discovered the possibility that the current level of economic stagnation may persist for some time).

Krugman may want to curse Summers out of professional jealousy. Me, I want to curse the lot of them—not only the MIT family but mainstream economists generally—for their utter cluelessness when it comes to making sense of (and maybe, eventually, actually doing something about) the current crises of capitalism.

So, what is he up to?

Horns of a dilemma

from David Ruccio

The Wall Street Journal notes that rising inequality may pose a problem—because of issues like fairness, political dysfunction, and financial instability.

Warning signs

from David Ruccio

The signs are ominous: more than four years into the supposed recovery and average incomes of the majority of the population remain far below their peak. in 2012 (the last year for which data are available at the World Top Incomes Database), the average income of the bottom 90 percent was $30,439, much lower than it was just before the crash ($34,816, in 2007) and lower still than it was at the beginning of the millenium ($35,800, in 2000). It’s no wonder, then, that the share of national income going to the bottom 90 percent continues to fall: from a peak of 56.89 percent in 2000 to 54.33 percent in 2007; now it’s down to 51.84 percent. With no signs that it’s going to turn around anytime soon.

The warning signs of rising inequality are now so stark even the Economist has focused on “labour’s share lost” and the difficult decisions it poses:

Economics after the crash

from David Ruccio

Last week in class, after explaining to students that graduate students in economics no longer study either the history of economic thought or economic history, they asked me if I thought, in the wake of the crash of 2007-08, the training of students in economics—at either the undergraduate or graduate levels—would change.

My answer was, “I don’t know. But, the last time ‘business as usual’ in economics was challenged, in the late 1960s and early 1970s, it was students in economics—at the University of Michigan and elsewhere—who were the ones to initiate the change.”

There are signs that it is happening again today—at Cambridge University, University College London, the London School of Economics, and now at the University of Manchester.

USA’s U3 unemployment rate through 11 recessions

from David Ruccio

source

The new unemployment numbers (for September) are out and, well, they’re not pretty.

What did we learn?

The innocent eye test?

from David Ruccio

I’ve been around economics long enough now that, upon reading the latest defense of economics as a science, I just have to chuckle. Or I would, if the implications were not so devastating.

The latest comes from Harvard professor Raj Chetty, who