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Who are the 1 percent in the USA and how much do they make? (2 charts)

August 25, 2012 17 comments

Power Politics vs. American Prosperity

August 23, 2012 6 comments

from Ian Fletcher

“every idea in this article is stolen straight from Thorstein Veblen.”

I had one of those “Aha!” moments recently.

I was engaged in an e-mail dialogue with a moderately prominent individual active in America’s international trade relations. He’s a former high-ranking public official, important enough to matter but not a household name. You might recognize him if you follow trade politics closely. Democrat, left-of-center, but nothing radical.

Anyhow, what I realized, in the course of this discussion, was that we were, in fact, arguing at cross purposes.

I viewed the American economy as a thing whose purpose is to provide income and a living standard to Americans.

He viewed it as a thing whose purpose was to provide a platform for projecting power in the world.

I mean, he didn’t say it quite so explicitly, but that was the bottom line of every train of argument we pursued. It was the only interpretation of his words under which they made any sense.

I can’t give you any more details because of my need to respect confidentiality. But I think his attitude explains a lot about how we are governed, because I think this is how America’s ruling elite really thinks.

I believe our ruling elite isn’t merely greedy for money. I believe they’re also greedy for something far worse. I believe they’re also greedy for world power beyond any extent to which this either serves American national security—or, for that matter, makes them richer.

I believe they privately view this country as their horse, upon which they ride in a global jousting tournament with rival elites. And they only really care about America, and the strength of its economy, insofar as it gives them a better horse to ride on. Read more…

“The average income of the bottom 90 percent fell 13.5 percent.”

August 13, 2012 1 comment

from David Ruccio

David Leonhardt, in an otherwise interesting post on slow economic growth and increasing inequality in the United States, “which has concentrated the economy’s modest gains among a small share of the population,” actually underestimates the increase in inequality over the course of the past three decades.  Read more…

Real World Economists Must Lead

August 7, 2012 22 comments

from Robert R Locke

I think the people in this blog need to show more leadership. That might be hard to understand for those who are use to thinking of the economy as a self-regulating mechanism and of economists as observers and thinkers. But the economic crisis is too important to be left to passivity.

The problem area is not difficult to identify. It is not socialism versus capitalism or free enterprise versus government, as neoliberal, tea party ideologues would have it. The problem that real world bloggers need actively to investigate and manage is a massive system of private investor capitalism at the heart of today’s economy. It emerged from five post WWII mostly noneconomic phenomena: First the information revolution that spun out of the Pentagon during the Cold War, which allows twenty-four hour a day trading of financial packages on money markets worldwide. Two, the end of the Cold War, which opened up vast stretches of the former Communist world to private investor capitalism in an integrated system of stock markets and financial service, Three, the growth of institutional investors in associations like private pension funds that funnel unprecedented amounts of money into private equities, hedge funds, and investment banks. Four, the rapid growth of business schools and departments of finance economics that preach an ideology of unrestrained private investor capitalism and furnish investor capitalism’s skilled labor force, and Five, the development of neoliberalism in economics that justifies the ethical bankruptcy of investor capitalism.  Read more…

Weekend Thoughts

July 22, 2012 8 comments

from Peter Radford

Some quick thoughts for a summer weekend:

I am reading Richard Posner’s book: “The Crisis of Capitalist Democracy”. He and I do not agree on much, if anything, but the book is s decent read and gives a perspective worth knowing. But I could not avoid choking on my coffee when he describes the activities and policy decisions way back during the height of the crisis. Various actions were considered, most dismissed as inappropriate. My favorite, nationalization, was knocked down early. Why? Let Posner tell us:  Read more…

Inequality—missing the story twice over

July 21, 2012 5 comments

from David Ruccio

According to David Rosnick and Dean Baker, the OECD misses the story about inequality. But so do Rosnick and Baker.

The OECD misses the story because of (a) how they measure inequality—they focus on the gap between the top and bottom deciles (the richest 10 percent of the population versus the bottom 10 percent) and forget about the growing inequality within the top 10 percent, especially the share of income going to the top 1 percent—and (b) how they determine the causes of inequality—focusing too much attention on the effects of technology and not enough on changing labor market institutions and the growth of finance.  Read more…

Inequality and American exceptionalism

July 19, 2012 5 comments

from David Ruccio

American exceptionalism has long been a contested notion.

But there is one area in which the United States has been exceptional from the very declaration of independence: the relative inequality of the distribution of income.

In 1774, the United States was much more equal than England and Wales (and more equal, it seems, than other western societies, such as the Netherlands). Today, more than 200 hundred years later, the United States is more unequal than any of the other advanced capitalist nations.

Thanks to recent research by Peter H. Lindert and Jeffrey G. Williamson, we know that in 1774 the top 1 percent of households had about 9 percent of income—compared to 17.5 percent in England and Wales, and 17 percent in the Netherlands.  Read more…

And the rich get richer

July 17, 2012 4 comments

from Susan Feiner

A camel and a rich man walked into a fun house. Reflections bend. Turning to each other they asked, “Mirror, mirror on the wall, who’s unfairest of them all?” 

Camel said: “Dude. Unfairest? That’s easy. It’s this country’s economy.”

Rich man: “Say what? This is the fairest place in the world. America is the land of opportunity.”

Camel said: “Not now. Things have changed. In America if you’re born poor, you’ll probably stay poor. Sixty-five percent of Americans born into the bottom fifth of the population stay there, and only 8 percent of the men born at the bottom make it to the top. But 12 percent of British men, and 14 percent of Danish men climb to the highest strata of their societies. Don’t believe me? International comparisons ‘shocked’ John Ridgeland, former aide to President George W. Bush. He said Republicans should talk about the ‘lack of access to the American Dream.’ “

Rich man: “Pshaw. Put your shoulder to the boulder. Work harder.” Read more…

Wage labor and capital (2 charts)

from David Ruccio

The profit share (in the second chart) is the highest it’s been in the postwar period, while the labor share (in the first chart) has fallen to its lowest level.

This is precisely what mainstream economists—both neoclassical and Keynesian—don’t want to talk about: the profit share is high because the labor share is low. The data indicate that, both in the run-up to the crash of 2007-08 and now during the Second Great Depression, the rate of exploitation in the United States has been increasing. Read more…

Categories: Plutonomy

Fed survey shows middle class took a big hit

June 14, 2012 1 comment

from Dean Baker

The Federal Reserve Board’s newly released triennial Survey of Consumer Finance (SCF) confirmed what most of us already knew: The middle class has taken a really big hit. It showed that between the 2007 survey and the 2010 survey, the typical family had lost 38.8 percent of their wealth. In fact, the wealth of the typical family was down 27.1 percent from where it had been a decade ago in 2001. This is in spite of the fact that the economy was more than 15 percent larger than in 2010 than it had been 2001.

It wasn’t just wealth that had dropped; the survey showed that income had fallen as well. Median family income in 2010 was down by 7.7 percent from its 2007 level and 6.3 percent from its level a decade ago. Read more…

Mind the Gap

April 28, 2012 3 comments

from David Ruccio

Read more…

Forbes’ update on the state of plutonomy or “democracy for the few”

March 30, 2012 15 comments

from Edward Fullbrook

The current Forbes, the bi-weekly of The One Percent, features an update on the current state of what it, like Citigroup, calls plutonomy.  Also called by its insiders “democracy for the few”, this is the basic economic-political reality of our time, which one-percenters chat about daily and which the rest of us generally pretend doesn’t exist.  Skeptics of the analysis of plutonomy offered in “The Political Economy of Bubbles” in the current issue of RWER are encouraged to read Forbes’ plutonomy update.   Below is a taster. 

The new “us versus them” is not like the racism of colonial times. This is starkly different. It’s the 99% versus the 1%, . . . Read more…

Top .01%, Top 1%, Bottom 99%

March 27, 2012 15 comments

from David Ruccio (and the New York Times

Read more…

Plutonomy Bubble Number Three

March 24, 2012 15 comments

“toxic and destructive” Goldman Sachs and the Obama administration

March 15, 2012 13 comments

from Edward Fullbrook

As you may have heard in the news, yesterday one of the key directors of Goldman Sachs, Greg Smith, published in the New York Times his long letter of resignation.  It begins:

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

Given the degree of attention that the international media is today giving this mini event, it seems appropriate to republish here a table from my RWER paper, published on Monday, “The Political Economy of Bubbles”.  The table below, which is largely based on an article by fflambeau, details 32 relationships, financial and otherwise, between Goldman Sachs people (“morally bankrupt” says Smith) and the Obama Administration. Read more…

Captain America?

January 18, 2012 6 comments

from Peter Radford

The Economist’s astonishingly tone deaf editorial on Mitt Romney – “America’s next CEO?” – is partisan, wong-headed, and naive. The very title gives away the fundamental error: America does not need a CEO. The popular notion that business experience somehow makes for a more productive president is horribly misguided and displays a misunderstanding of politics that, frankly, the Economist ought to know how to avoid. Read more…

Republican tax plans to date in one convenient graphic

January 8, 2012 6 comments

from David Ruccio

Kevin Drum has collected charts showing all the Republican tax plans to date in one convenient graphic.

It’s really pretty spectacular seeing them all together like this. It’s not just the amount of pandering to the super-rich that’s so breathtaking, it’s the lockstep unanimity. At all costs, every single Republican candidate knows that he has to promise the ultra-wealthy a huge tax break as the price of staying in the race. This, ladies and gentlemen, is the modern Republican Party in a nutshell.  Read more…

Categories: Plutonomy, taxes

Chart of the day: US profit and wage shares 1970 – 2011

January 4, 2012 17 comments

This graph shows that:

  1. since the early 1980s the underlying trend in the United States has been for a bigger share of national income going to corporate profits and less to employees, and
  2. now under Obama the rate of redistribution has reached an unprecedented level.    Read more…

Mis and mins (graph)

December 29, 2011 2 comments

from David Ruccio

I have no particular objection to highlighting “the vast shift in national income toward our richest 1 percent,” even if it means focusing, for the umpteenth time, on the fate of the “middle-class” instead of on workers and the working-class.

That’s what Ian Ayres does, in utilizing the Brandeis Ratio to measure the growing gap between the average income of the richest 1 percent and median household income. Read more…

US corporate profits after tax, as a percentage of GDP

December 27, 2011 Leave a comment

from David Ruccio

source

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