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Mind the growing retirement gap

April 27, 2017 7 comments

from David Ruccio

I find myself thinking more these days about the fairness of Social Security and other government retirement benefits.

One reason, of course, is because I’m getting close to retirement age—and, as I discover each time I raise the issue with students, young people don’t think about it much.* Another reason is because Social Security (in addition to Medicare, Disability, and other programs) is the way the United States creates a collective bond between current and former workers, by using a portion of the surplus produced by current workers to provide a safety net for workers who have retired.

That represents a kind of social fairness—that people who have spent a large portion of their lives working (most people need 40 credits, based on years of work and earnings, to qualify for full Social Security benefits) are eligible for government retirement benefits provided by current workers. Another aspect of that fairness is the system should and does redistribute from those with high lifetime incomes to those with lower lifetime incomes. While that makes the actual “rates of return” unequal across groups, it’s designed to provide a floor for the poorest workers in society.

Many people consider the U.S. Social Security system fair on those two grounds. That’s true even though some people, by random draw, may live longer than others. However, as Alan J. Auerbach et al. (pdf [ht: lw]) report, that fairness may be put into question if there are identifiable groups that vary in life expectancy, “as this introduces a non-random aspect to the inequality.”  Read more…

After the “Thirty Glorious Years”?

April 25, 2017 4 comments

from David Ruccio

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On the eve of their presidential election, the French people and politicians continue to debate how they should respond to the end of “Les Trente Glorieuses,” a period that appears to receding into ancient history.

Except, as it turns out, for those at the very top, for whom the last thirty years have been quite glorious.

According to new research by Bertrand Garbinti, Jonathan Goupille-Lebret, and Thomas Piketty, between 1983 and 2014, average per adult national income rose by 35 percent in real terms in France. However, actual cumulated growth was not the same for all income groups:  Read more…

Income and wealth—the top and the very top

April 23, 2017 4 comments

from David Ruccio

Skellington is right: in my post on Tuesday, I did not separate out people at the very top from the rest of those at the top. That’s because, in the data I presented, those in the top 0.1 percent were included in the top 1 percent.

Unfortunately, I don’t have the same kind of breakdown in the composition of incomes as I used in those charts. What I do have are data on the shares of income and wealth for the top 0.1 percent versus the remainder of the top 1 percent (so, top 1 percent to but not including the top 0. 1 percent).

Income

Read more…

The top and the very top

April 21, 2017 2 comments

from David Ruccio

average

Who’s running away with the surplus, those at the top or those at the very top?   Read more…

Left behind

April 19, 2017 14 comments

from David Ruccio

Liberal stories about who’s been left behind during the Second Great Depression are just about as convincing as the “breathtakingly clunky” 2014 movie starring Nicolas Cage.

For Thomas B. Edsall, the story is all about the people in the “rural, less populated regions of the country” who have been left behind in the “accelerated shift toward urban prosperity and exurban-to-rural stagnation” and who supported Republicans in the most recent election.  Read more…

Academic precariat

April 16, 2017 1 comment

from David Ruccio

academic L

As we know, the share of part-time faculty in U.S. higher education has increased dramatically over the past four decades.

According to the latest report from the American Association of University Professors (pdf),

Part-time faculty today comprise approximately 40 percent of the academic labor force, a slightly larger share than tenured and tenure-track faculty combined.

Read more…

Fairness and inequality

April 13, 2017 8 comments

from David Ruccio

average1

Is it any surprise, as Christina Starman, Mark Sheskin, and Paul Bloom argue, that fairness is not the same thing as equality?

There is immense concern about economic inequality, both among the scholarly community and in the general public, and many insist that equality is an important social goal. However, when people are asked about the ideal distribution of wealth in their country, they actually prefer unequal societies. We suggest that these two phenomena can be reconciled by noticing that, despite appearances to the contrary, there is no evidence that people are bothered by economic inequality itself. Rather, they are bothered by something that is often confounded with inequality: economic unfairness.

Still, I think, many people today are bothered by both—economic unfairness and grotesque levels of economic inequality.  Read more…

Why is it anyone would want to save such an economic system?

April 11, 2017 2 comments

from David Ruccio

One of the arguments I made in my piece on “Class and Trumponomics” (serialized on this blog—here, here, here, and here—and recently published as a single article in the Real-World Economics Review [pdf]) is that, in the United States, the class dynamic underlying the growing gap between the top 1 percent and everyone else was the much-less-remarked-upon divergence in the capital and wage shares of national income. Thus, I concluded, “the so-called recovery, just like the thirty or so years before it, has meant a revival of the share of income going to capital, while the wage share has continued to decline.”

Well, as it turns out, that conclusion is more general, characterizing not just the United States but much of global capitalism.

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We know that—not just in the United States, but in a wide variety of national economics—the share of income going to the top 1 percent has been rising for decades now.   Read more…

Tale of two countries

April 6, 2017 4 comments

from David Ruccio

countries

This semester, we’re teaching A Tale of Two Depressions, a course designed as a comparison of the first and second Great Depressions in the United States. And one of the themes of the course is that, in considering the conditions and consequences of the two depressions, we’re talking about a tale of two countries.

As it turns out, the tale of two countries may be even more true in the case of the most recent crises of capitalism. That’s because the two countries were growing apart in the decades leading up to the crash—and the gap has continued growing afterward.  Read more…

Love it or leave it?

April 3, 2017 7 comments

from David Ruccio

Those of us of a certain age remember the right-wing political slogan, “America, love it or leave it.” I’ve seen it credited to journalist Walter Winchell, who used it in his defense of Joseph McCarthy’s anti-communist witch hunt. But it’s heyday was in the 1960s, against the participants in the antiwar movement in the United States and (in translation, ame-o ou deixe-o) in the early 1970s, by supporters of the Brazilian military dictatorship.*

I couldn’t help but be reminded of that slogan in reading the recent exchange between the anonymous author of Unlearning Economics and Simon Wren-Lewis (to which Brad DeLong has chimed in, on Wren-Lewis’s side).

Unlearning Economics puts forward an argument I’ve made many times on this blog (as, of course, have many others), that mainstream economics deserves at least some of the blame for the spectacular crash of 2007-08 (and, I would add, the uneven nature of the recovery since then).

the absence of things like power, exploitation, poverty, inequality, conflict, and disaster in most mainstream models — centred as they are around a norm of well-functioning markets, and focused on banal criteria like prices, output and efficiency — tends to anodise the subject matter. In practice, this vision of the economy detracts attention from important social issues and can even serve to conceal outright abuses. The result is that in practice, the influence of economics has often been more regressive than progressive.

Therefore, Unlearning Economics argues, a more progressive move is to challenge the “rhetorical power” of mainstream economics and broaden the debate, by focusing on the human impact of economic theories and policies.

Who could possibly disagree?   Read more…

America’s killing fields

March 28, 2017 3 comments

from David Ruccio

mortality

We don’t need Louisiana Detective Rodie Sanchez coming out of retirement to solve the crime against the members of the working-class currently being committed in the United States.

We already know many of the details of the crime. We also know the identities of both the victims and the serial killer. The only real mystery is, what’s the country going to do about it?   Read more…

Original sin?

March 26, 2017 1 comment

from David Ruccio

fredgraph

No one ever accused American conservatives of being particularly original. They started with a story about the failure of government programs and they stick with it, against all evidence.

Originally, conservatives targeted African Americans, who (so the story goes, e.g., in the Moynihan Report) were mired in a culture of poverty and increasingly dependent on government hand-outs. In order for blacks to regain America’s founding virtues (so the story continues)—especially marriage and industriousness—well-meaning but ultimately destructive government programs should be abolished so that they would once again be able to enjoy the security of marriage and dignity of work.

That exact same story has now been transferred to the white working-class. Anyone who’s read Charles Murray and J. D. Vance will recognize the “the pejorative Moynihan report on the black family in white face.”  Read more…

We’re #1!

March 22, 2017 11 comments

from David Ruccio

wealth

According to calculations by Kenneth Thomas (based on data in the latest Credit Suisse Global Wealth Report), the United States has the most unequal distribution of wealth of any rich nation.   Read more…

Dual economies and the vanishing middle-class

March 21, 2017 3 comments

from David Ruccio

Both Peter Temin and I are concerned about the vanishing middle-class and the desperate plight of most American workers. We even use similar statistics, such as the growing gap between productivity and workers’ wages and the share of income captured by the top 1 percent.

productivity  Read more…

USA life expectancy vs. health expenditure 1970-2014 compared to other OECD nations

March 18, 2017 2 comments

from David Ruccio

ftotHealthExp_pC_USD_long-2

It is likely, if some version of Trump/Ryancare is approved in the United States, millions more people will not be able to purchase the insurance necessary to receive adequate healthcare.   Read more…

Tale of two depressions

March 15, 2017 3 comments

from David Ruccio

Men Waiting Outside Al Capone Soup Kitchen JNS.FoodGiveaway2

One of the courses I’m offering this semester is A Tale of Two Depressions, cotaught with one of my colleagues, Ben Giamo, from American Studies. It’s a comparison of the conditions and consequences of the two major crises of capitalism during the past hundred years, the 1930s and the period after the crash of 2007-08.*

It just so happens the Guardian is also right now revisiting the 1930s. Readers will find lots of interesting material, from some evocative street photography from the period (including bread lines, hunger marches, and various protests) to classics of political theater (from Bertolt Brecht and Federico García Lorca to John Dos Passos and Clifford Odets).

I’ve been writing about the Second Great Depression, in mostly economic terms, since 2010. For the Guardian, the idea is that the situation then, in the 1930s, offers lessons for us today—partly for economic reasons but, increasingly, given the victory of Donald Trump and the growth of other right-wing populist-nationalist movements in Europe, in political terms.  Read more…

Changing the story to hide the problem

March 13, 2017 5 comments

from David Ruccio

wage share

It’s obvious to anyone who looks at the numbers that the wage share of national income is historically low. And it’s been falling for decades now, since 1970.

Before that, during the short Golden Age of U.S. capitalism, the presumption was that the share of national income going to labor was and would remain relatively stable, hovering around 50 percent. But then it started to fall, and now (as of 2015) stands at 43 percent.

Read more…

New geography, old inequality

March 12, 2017 6 comments

from David Ruccio

fredgraph (2)

It’s true (as I have argued many times on this blog), the number of U.S. manufacturing jobs has been declining for decades now—and they’re not coming back. Instead, they’ve been replaced (as is clear in the chart above) by service-sector jobs.   Read more…

Hammer time

March 10, 2017 7 comments

from David Ruccio

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Millions of workers have been displaced by robots. Or, if they have managed to keep their jobs, they’re being deskilled and transformed into appendages of automated machines. We also know that millions more workers and their jobs are threatened by much-anticipated future waves of robotics and other forms of automation.

But mainstream economists don’t want us to touch those robots. Just ask Larry Summers.

Summers is particularly incensed by Bill Gates’s suggestion that we begin taxing robots. So, he trots out all the usual arguments, hoping that at least one of them will stick. It’s hard to distinguish between robots and other forms of automation. Robots and other forms of automation produce better goods and services. And, of course, automation enhances productivity and leads to more wealth. So, we shouldn’t do anything to shrink the size of the economic pie.   Read more…

Trumponomist

March 7, 2017 6 comments

from David Ruccio

james-glassman-and-kevin-hassetts-1999-book-dow-36000-predicted-that-the-dow-jones-stock-index-would-more-than-triple-in-the-years-ahead-even-now-16-years-later-the-index-is-only-just-halfway-to-36000

 

According to recent news reports, Kevin Hassett, the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (no, I didn’t make that up), will soon be named the head of Donald Trump’s Council of Economic Advisers.

Yes, that Kevin Hassett, the one who in 1999 predicted the Down Jones Industrial Average would rise to 36,000 within a few years.

060214pollock2 Read more…