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Utopia and inequality

February 24, 2018 7 comments

from David Ruccio

graph_dl (1)

Economic inequality is arguably the crucial issue facing contemporary capitalism—especially in the United States but also across the entire world economy.   Read more…

What, us worry?

February 21, 2018 8 comments

David Ruccio

stocks

Ed Wolff is right:

For the vast majority of Americans, fluctuations in the stock market have relatively little effect on their wealth, or well-being, for that matter.

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We’re #2! – Financial Secrecy Index 2018

February 14, 2018 1 comment

from David Ruccio

US-2

According to the Tax Justice Network, the United States ranks second in the 2018 Financial Secrecy Index. This is based on a secrecy score of 59.8, which is practically unchanged from 2015. The only country ahead of the United States is Switzerland, with a secrecy score of 76. The rise of the United States continues a long-term trend, as the country was one of the few to increase their secrecy score in the 2015 index.   Read more…

Utopia and the economics of control

February 9, 2018 6 comments

from David Ruccio

I have often argued—in lectures, talks, and publications—that every economic theory has a utopian dimension. Economists don’t explicitly talk about utopia but, my argument goes, they can’t do what they do without some utopian horizon.

The issue of utopia is there, at least in the background, in every area of economics—perhaps especially on the topic of control.

Consider, for example, the theory of the firm (which I have written about many times over the years), which is the focus of University of Chicago finance professor Luigi Zingales’s lecture honoring Oliver Hart, winner of the 2016 Nobel Prize for economics, at this year’s Allied Social Science Association meeting.

One of the many merits of Oliver’s contribution is to have brought back the concept of power inside economics. This is a concept pervasive in political science and sociology, and pervasive in Marxian economics, but completely absent from neoclassical economics. In fact, Oliver’s view of the firm is very reminiscent of the Marxian view, but where Marx sees exploitation, Oliver sees an efficient allocation.

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What goes up. . .

February 6, 2018 8 comments

from David Ruccio

Must come down. . .

I’m not referring to karma or the application of Newton’s law of universal gravitation. No, it’s just the way capitalism works.

DJIA

Take the stock market, for example. Last Friday, the Dow Jones Industrial Average closed down 666 points, or 2.5 percent, its biggest percentage decline since the Brexit turmoil in June 2016 and the steepest point decline since the 2008 financial crisis.  Read more…

Utopia and populism

February 2, 2018 11 comments

from David Ruccio

Much has been made of the rise of populism in recent years and the threat it poses to liberal democracy.

My view is that liberal critics of populism, standing on their heads, get it wrong. If made to stand on their feet, they’d have to admit that populism actually represents the failure of liberal democracy.

Populism has experienced a resurgence of late—in Hungary, Britain, France, Turkey, the United States, and elsewhere—especially the form of populism variously characterized as right-wing, nationalist, or authoritarian. It has attracted increasing support and achieved notable political victories within the institutions and procedures of liberal democracy.

The problem is that liberal democracy has failed to confront, much less solve, the problems that have led to the rise of populism in the first place.

wealth-US

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Dystopia and global poverty

January 29, 2018 3 comments

from David Ruccio

poverty

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Utopia and the right to be lazy (3 charts)

January 24, 2018 21 comments

David Ruccio

Students are much too busy to think these days. So, when a junior comes to talk with me about the possibility of my directing their senior thesis, I ask them about their topic—and then their schedule. I explain to them that, if they really want to do a good project, they’re going to have to quit half the things they’re involved in.

They look at me as if I’m crazy. “Really?! But I’ve signed up for all these interesting clubs and volunteer projects and intramural sports and. . .” I then patiently explain that, to have the real learning experience of a semester or year of independent study, they need time, a surplus of time. They need to have the extra time in their lives to get lost in the library or to take a break with a friend, to read and to daydream. In other words, they need to have the right to be lazy.

So does everyone else.

As it turns out, that’s exactly what Paul LaFargue argued, in a scathing attack on the capitalist work ethic, “The Right To Be Lazy,” back in 1883.

Capitalist ethics, a pitiful parody on Christian ethics, strikes with its anathema the flesh of the laborer; its ideal is to reduce the producer to the smallest number of needs, to suppress his joys and his passions and to condemn him to play the part of a machine turning out work without respite and without thanks.

And LaFargue criticized both economists (who “preach to us the Malthusian theory, the religion of abstinence and the dogma of work”) and workers themselves (who invited the “miseries of compulsory work and the tortures of hunger” and need instead to forge a brazen law forbidding any man to work more than three hours a day, the earth, the old earth, trembling with joy would feel a new universe leaping within her”).  Read more…

42 people vs. 3.7 billion people

January 22, 2018 21 comments

from David Ruccio

Oxfam

According to Oxfam’s analysis of data produced by Credit Suisse (which I analyzed in a different manner late last year), 42 billionaires now own the same wealth as the bottom half—3.7 billion people—of the world’s population.  Read more…

What’s the matter with America?

January 17, 2018 33 comments

from David Ruccio

US-wages-bottom50-top1

Last week, Thomas Frank welcomed Paul Krugman to the ranks of those who believe that the American working-class in recent decades has often voted against its fundamental economic interests by supporting conservative Republicans.   Read more…

The elephant in the world

January 12, 2018 3 comments

from David Ruccio

E4

One of the most important stories I read, but did not write about, while I was away was the launch of the World Inequality Report 2018.*

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It’s the profits, stupid!

January 2, 2018 7 comments

from David Ruccio

profits-stocks

There’s no real mystery behind the spectacular gains in the stock market over the course of 2017. Much of it can be explained by the rise in U.S. corporate profits.  Read more…

Body parts—from gifts to exchanges

December 31, 2017 4 comments

from David Ruccio

Over the course of the last two days, I’ve discussed mean gifts (which promise significant tax relief only to a small group of corporations and wealthy individuals) and mean exchanges (which leave middle-class Americans with a declining share of national income).

Now, thanks to recently completed Reuters investigation, we’re forced to confront the reality in the United States of mean exchanges that transform generous donations into desperate, mean gifts. I’m referring to the largely unregulated trade in body parts.

The selling of body parts—heads, knees, feet, torsos, and entire bodies—actually begins with the gifting of the bodies of deceased Americans, who have decided to donate their bodies to science. But in many cases it’s a mean gift, not because of the intentions of the givers (who in many cases do want to contribute to the advancement of the scientific study of the human body), but because body brokers often prey on poor people (who can’t afford the price of a proper burial).

The industry’s business model hinges on access to a large supply of free bodies, which often come from the poor. In return for a body, brokers typically cremate a portion of the donor at no charge. By offering free cremation, some deathcare industry veterans say, brokers appeal to low-income families at their most vulnerable. Many have drained their savings paying for a loved one’s medical treatment and can’t afford a traditional funeral.

“People who have financial means get the chance to have the moral, ethical and spiritual debates about which method to choose,” said Dawn Vander Kolk, an Illinois hospice social worker. “But if they don’t have money, they may end up with the option of last resort: body donation.”

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Mean exchanges

December 29, 2017 1 comment

from David Ruccio

1-40

Yesterday, I discussed the mean-spiritedness of the Republican tax cuts—which are being sold as a gift to the middle-class but, in reality, represent a massive transfer to a small group of large corporations and wealthy individuals.

But, of course, the real violence associated with the tax-cut gift occurs before federal taxes are even levied, in the pre-tax distribution of income.

As is clear from the chart above, since the mid-1970s, the share of income captured by the top 1 percent (the red line, measured on the right-hand side) has almost doubled, rising from 10.6 percent to over 20 percent. Meanwhile, the share of income going to the middle 40 percent (the blue line, on the left) has eroded, falling from 45.2 percent to 40.4 percent.

 

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Don’t worry?!

December 16, 2017 7 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.

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Trickledown economics—then and now

December 2, 2017 4 comments

from David Ruccio

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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…