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Don’t worry?!

December 16, 2017 4 comments

from Daivd Ruccio

Liberal mainstream economists all seem to be lip-synching Bobby McFerrin these days.

Worried about automation? Be happy, write Laura Tyson and Susan Lund, since “these marvelous new technologies promise higher productivity, greater efficiency, and more safety, flexibility, and convenience.”

Worried about the different positions in current debates about economic policy? Be happy, writes Justin Wolfers, and rely on the statistics produced by government agencies and financial firms and the opinions of mainstream economists.

Me, I remain worried and I have no reason to accept mainstream economists’ advice for being happy.

Sure, new forms of automation might lead to higher productivity and much else that Tyson and Lund find so alluring. But who’s going to benefit? If we go by the last few decades, large corporations and wealthy individuals are the ones who are going to capture most of the gains from the new technologies. Everyone else, as I have written, is going to be forced to have the freedom to either search for new jobs or deal with the fundamental transformation of the jobs they manage to keep.  Read more…

How low can it go?

December 8, 2017 6 comments

from David Ruccio

labor share

The United States is now more than eight years out from the end of the Great Recession and the one-side nature of the recovery is, or at least should be, clear for all to see.   Read more…

Whose recovery?

December 7, 2017 4 comments

from David Ruccio

fredgraph

If you read the business press in the United States (e.g., the Wall Street Journal), you’ll find something along the lines of the following argument: the fact that U.S. worker productivity rebounded in the third quarter while hourly wages rose moderately is a sign “the economy is strengthening.”

But look at the numbers. Nonfarm business sector productivity (the blue line in the chart above) rose 1.5 percent (from the same quarter a year ago) while real hourly compensation (the green line) fell 1.1 percent.* The result is that unit labor costs (the red line) fell 0.7 percent.  Read more…

How low can they go?

December 6, 2017 5 comments

from David Ruccio

corp taxes

One of the rationales for the great Republican tax heist of 2017 is that American corporations desperately need tax relief.  Read more…

Lines

December 4, 2017 33 comments

from David Ruccio

How bad have things gotten in the United States? Nitin Nohria [ht: ja], the dean of Harvard Business School, is sounding the alarm that “class lines. . .have become far more distinct and visible in recent years.”

Nohria published his essay at the end of the same week that the U.S. Senate passed its version of the “Tax Cuts and Jobs Act,” which is nothing more than an enormous boon to large corporations and wealthy individuals under the guise of trickledown economics,  and Philip Aston, the United Nations monitor on extreme poverty and human rights, has embarked on a coast-to-coast tour to investigate the widespread existence of extreme poverty in the United States.

The inspiration for Nohria’s reference to class lines is Arlie Hochschild’s Strangers in Their Own Land (which we taught in the spring, as the final text of A Tale of Two Depressions)According to Hochschild, the U.S. class structure once resembled an orderly queue: the premise and promise of economic and social institutions were that, if you worked hard, you would achieve the American Dream.

productivity-wage-share

Read more…

Trickledown economics—then and now

December 2, 2017 4 comments

from David Ruccio

top01

Robert McElvaine, premier historian of the first Great Depression (whose books we have used to teach A Tale of Two Depressions), argues that Republicans today are repeating the same mistakes as the Republicans who were in charge during the 1920s, whose trickledown policies led to the spectacular crash of 1929.  Read more…

The poor and unequal die younger

November 29, 2017 Leave a comment

from David Ruccio

SP Read more…

The arc of (pre)history bends towards greater inequality

November 27, 2017 8 comments

from David Ruccio

wealth-2014

The United States, as I have shown over the past week (e.g., herehere, and here), has an obscenely unequal distribution of wealth.

Read more…

U.S. Wealth Pyramid

November 25, 2017 Leave a comment

from David Ruccio

pyramid

On Wednesday, I referred to the wealth pyramid in the United States. But I didn’t really represent that pyramid in the chart I provided.   Read more…

At the bottom of the wealth pyramid in the United States

November 22, 2017 Leave a comment

from David Ruccio

wealth shares

Yesterday, I looked at the enormous wealth of U.S. billionaires and the growing gap between them and the rest of the American people.

Today, I want to examine what’s happened in recent years at the bottom of the wealth pyramid.

Read more…

Monopoly men*

November 20, 2017 5 comments

from David Ruccio

Wealth inequality in the United States has reached such extreme levels it is almost impossible to put it into perspective.

But the folks at the Institute for Policy Studies (pdf) have found a novel way, by comparing the fortunes of the 400 wealthiest Americans to the meager assets of everyone else.

Forbes

Here’s what they found:   Read more…

Desperately seeking a link between wages and productivity

November 17, 2017 5 comments

from David Ruccio

productivity

Everyone, it seems, now agrees that there’s a fundamental problem concerning wages and productivity in the United States: since the 1970s, productivity growth has far outpaced the growth in workers’ wages.*

Even Larry Summers—who, along with his coauthor Anna Stansbury, presented an analysis of the relationship between pay and productivity last Thursday at a conference on the “Policy Implications of Sustained Low Productivity Growth” sponsored by the Peterson Institute for International Economics.

Thus, Summers and Stansbury (pdf) concur with the emerging consensus,   Read more…

Where has all the surplus gone?

November 15, 2017 6 comments

from David Ruccio

profits abroad

Thanks to the release of the so-called Paradise Papers, and the additional research conducted by Gabriel Zucman, Thomas Tørsløv, and Ludvig Wier, we know that a large share of the surplus captured by corporations is artificially shifted to tax havens all over the world. This, of course, is on top of the conspicuous tax evasion practiced by the individual holders of a large portion of the world’s wealth.   Read more…

Conspicuous tax evasion

November 12, 2017 4 comments

from David Ruccio

The release of the so-called Paradise Papers confirms, with additional names and more salacious details, what we already knew from the Panama Papers and other sources: the world’s wealthy increasingly use offshore tax havens to engage in conspicuous tax evasion.

That’s on top of their participation in conspicuous consumptionconspicuous philanthropy, and conspicuous productivity.

According to Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman, in a study published before the release of the Paradise Papers, the equivalent of 10 percent of world GDP is held in tax havens globally—and that’s only counting bank deposits, not the portfolios of equities, bonds, and mutual fund shares that wealthy individuals entrust to offshore banks.

And, as it turns out, offshore wealth is extremely concentrated: the top 0.1 percent of richest households own about 80 percent of it, while the top 0.01 percent own about 50 percent of offshore wealth.

So, how does it work? There is a great deal of evidence that the vast majority of offshore wealth, both legal and illegal, is not reported on tax returns. That’s because offshore wealth is done “by combining trusts, foundations, and holding companies, so as to disconnect assets from their beneficial owners.” Thus, tax authorities won’t be able to observe or collect taxes on either the wealth or investment income earned or reported offshore, except in rare circumstances (e.g., a taxable and properly declared inter-generational transfer of assets).   Read more…

Waiting for Godot

November 9, 2017 7 comments

from David Ruccio

The official unemployment rate continues to fall in the United States. And everyone, at least among top policymakers and the business press, has been promising that workers’ wages will finally break out.

As it turns out, the unemployment rate (the red line in the chart above) in September was 4.1 percent, far below the high of 10 percent in October of 2009 and a new low for the so-called recovery from the Second Great Depression. However, hourly wages (for production and nonsupervisory workers, the blue line) rose only 2.5 percent on an annual basis, even less than the 2.7 percent workers were gaining at the height of the depression.

The only possible conclusion is that, in the United States, expecting workers’ wages to finally begin to catch up is like Vladimir and Estragon waiting below a leafless tree for the arrival of someone named Godot.

Global rentier capitalism

November 7, 2017 9 comments

from David Ruccio

Mainstream economics lies in tatters. Certainly, the crash of 2007-08 and the Second Great Depression called into question mainstream macroeconomics, which has failed to provide a convincing explanation of either the causes or consequences of the most severe crisis of capitalism since the Great Depression of the 1930s.

But mainstream microeconomics, too, increasingly appears to be a fantasy—especially when it comes to issues of corporate power.

perfect_competition_long_run

Neoclassical microeconomics is based on a set of models that assume perfect competition. Read more…

Haunted by surplus

November 4, 2017 8 comments

from David Ruccio

income  wealth

Inequality in the United States is now so obscene that it’s impossible, even for mainstream economists, to avoid the issue of surplus.   Read more…

The gilded age: a tale of today*

November 2, 2017 5 comments

from David Ruccio

billionaires

The timing could not have been better, at least for me. It just so happens I’m teaching Thorsten Veblen’s Theory of the Leisure Class this week. It should become quickly obvious to students that, as I have argued before on this blog, we’re now in the midst of a Second Gilded Age.   Read more…

Reconcile this!

October 31, 2017 Leave a comment

from David Ruccio

SAfr

The world joined most South Africans in cheering when Nelson Mandela was finally released from prison, the apartheid regime was largely dismantled, and multiracial elections were eventually held.

Read more…

Growing old unequally

October 28, 2017 2 comments

from David Ruccio

fig1-18

Social Security may have decreased the rate of poverty among retirees in the United States.* But it certainly hasn’t solved the problem of inequality.

As is clear from the chart above, from a recent report from the Organisation for Economic Co-operation and Development, old-age inequality among current retirees in the United States is higher than in all other OECD countries, except Chile and Mexico.

But wait, it’s probably going to get worse. That’s because, within each generation of workers, inequality has been rising. For example, researchers tracked U.S. income inequality for four different generations—people born in 1920, 1940, 1960, and 1980. For each group, inequality has been more extreme than the previous generation.

Read more…