Archive for the ‘upward income and wealth redistribution’ Category

Wealth and income redistribution by race and ethnicity in the US from 2007 to 2013

August 20, 2015 1 comment

from David Ruccio


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The shifting battleground

May 11, 2015 5 comments

from Asad Zaman

The bull charges the red flag being waved by the matador, and is killed because he makes a mistake in recognising the enemy. Samuel Huntington argued that the era of the clash of nations is over. However, he created a red flag when he painted the civilisation of Islam as the new enemy. Trillions of dollars have been spent in fighting this enemy, created to distract attention from the real enemy.

The financial deregulation initiated in the Reagan-Thatcher era in the 1980s was supposed to create prosperity. In fact, it has resulted in a sky-rocketing rise in inequality. The gap between the richest and the poorest has become larger than ever witnessed in history. Countless academic articles and books have been written to document, explain and attempt to provide solutions to the dramatic increase in inequality. The American public does not need these sophisticated data and theories; it experiences the fact, documented in The Wall Street Journal, that the quality of jobs and wage earnings are lower today than they were in the 1970s. Growing public awareness is reflected in several movies about inequality. For instance, Elysium depicts a world where the super-rich have abandoned the ruined surface of the planet Earth to the proles, and live in luxury on a satellite.  Read more…

Conspicuous construction

March 27, 2015 1 comment

from David Ruccio


The high times aren’t going away in New York.

The city of just six years from now will be dramatically taller, with a series of luxury high-rises towering above Central Park, a new West Side development and downtown spires.

Read more…

Efficient Allocations?

March 25, 2015 9 comments

from Peter Radford

Willford King has written:

“It is easy to find a man in almost any line of employment who is twice as efficient as another employee, but it is very rare to find one who is ten times as efficient. It is common, however, to see one man possessing not ten times but a thousand times the wealth of his neighbor … Is the middle class doomed to extinction and shall we soon find the handful of plutocrats, the modern barons of wealth, lined up squarely in opposition to the propertyless masses with no buffer between to lessen the chances of open battle? With the middle class gone and the laborer condemned to remain a lifelong wage-earner with no hope of attaining wealth of even a competence in his old age, all the conditions are ripe for a crowning class-conflict equaling in intensity and bitterness anything pictured by the most radical follower of Karl Marx. Is this condition soon coming to pass?” [Emphasis in original]

That was in 1915. My how times change.

Well maybe not. That comment about the middle class has a very contemporary ring to it.

A couple of things pop out at me when I read that quote – no doubt you will find your own emphasis.  Read more…

The rise and decline of US median family income

March 23, 2015 Leave a comment
Economic Policy Institute

Downton Abbey economics

March 3, 2015 8 comments

from David Ruccio


If you watched the Downton Abbey Season 5 finale, you will have seen the elaborately staged grouse shoot: Read more…

The current conflict is not between nations, but between classes (2 graphs)

February 9, 2015 7 comments

from David Ruccio

Most of the commentary on the ongoing euro crisis, especially the current Greek debt negotiations, has been couched in terms of a conflict between nations. This is particularly true of mainstream economists, whose nation-state-based models downplay or ignore class, even as the policies they advocate have tremendous class implications.

So, it’s fallen to—however ironically—financial strategist and professor of finance Michael Pettis to remind us the current conflict is not between nations, but between classes.

The whole piece, beginning with the French indemnity of 1871-73, is worth a careful read. But I want to focus here on what Pettis writes about the class conditions that led to and follow on from the current crisis.

First, Pettis makes the important point that the capital flows from north to south within the euro zone were based on important class changes within Germany (he uses his native Spain throughout as his example in the south but most of his analysis follows for Greece and other countries): Read more…

Will market forces solve the problem of stagnant wages and growing inequality?

January 24, 2015 8 comments

from David Ruccio


Will market forces solve the problem of stagnant wages and growing inequality?  Read more…

USA wealth gap

December 26, 2014 Leave a comment

from David Ruccio


Pew refers to it as a “nest egg.” The rest of us call it net worth, the difference between total assets and outstanding debt. Whatever name we give it, the problem is the same: the wealth gap between those at the top and everyone else continues to grow. Read more…

Household wealth trends in the United States, 1962-2013

December 16, 2014 Leave a comment

from David Ruccio

mean-median-net worth

The chart comes from Ed Wolff’s latest, “Household Wealth Trends in the United States, 1962-2013: What Happened over the Great Recession?”—another in a growing list of investigations into the declining fortunes of the American middle-class. Read more…

In the USA the already huge wealth gap between whites and non-whites is growing. (2 graphs)

December 13, 2014 Leave a comment

from David Ruccio


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The top 0.1% is overtaking the bottom 90%

November 13, 2014 Leave a comment

from David Ruccio


This chart is another illustration of the report I discussed a couple of weeks ago, according to which the share of total wealth owned by the top 0.1 percent—roughly 160,000 families with total net assets of more than $20 million in 2012—has risen to the point (22 percent of total U.S. wealth) where it is almost the same as the share owned by the bottom 90 percent (23 percent of the total).

Roaring 1980s, 1990s, 2000s, and 2010s (2 graphs)

October 29, 2014 5 comments

from David Ruccio


In the United States, we’ve witnessed a return of the Roaring Twenties—for the past three and a half decades.

As Emmanuel Saez and Gabriel Zucman show, the share of wealth (defined as total assets, including real estate and funded pension wealth, net of all debts) held by the top 0.1 percent of families is now almost as high as it was in the late 1920s. Read more…

World’s richest man tries to defend wealth inequality

October 24, 2014 4 comments

from Dean Baker

A review of French economist Thomas Piketty’s best-selling book “Capital in the 21st Century” by the world’s richest man is too delicious to ignore. The main takeaway from Piketty’s book, of course, is that we need to worry about the growing concentration of capital, in which people like Microsoft co-founder turned megaphilanthropist Bill Gates and his children will control the bulk of society’s wealth. Gates, however, doesn’t quite see it this way.

From his evidence, he actually has a good case. If the issue is the superrich passing their wealth to their children, who will become the next generation’s superrich, he is right to point out that the biographies of the Fortune 400 — the richest 400 Americans — don’t seem to support this concern. We find many people like Gates, who started life as the merely wealthy (his father was a prosperous corporate lawyer), who parlayed their advantages in life into enormous fortunes. The ones who inherited their vast wealth are the exception, not the rule.

Gates tells readers of his plans to give away the bulk of his fortune. His children will have to get by with the advantages that accrue to the children of the ultrarich, along with whatever fraction of his estate he opts to give them. That will undoubtedly ensure that Gates’ kids enjoy a far more comfortable life than the bottom 99 percent can expect, but it likely will not guarantee a place among the Fortune 400.

Read more…

The median net worth in the United States is, in real terms, lower today than it was in 1989.

October 7, 2014 1 comment

from David Ruccio

median net worth

The median net worth in the United States is, in real terms, lower today than it was in 1989.  Read more…

The revolt of (part of) the top 1% of the top 1%

July 29, 2014 1 comment

from Steve Keen

What are your preconceptions about the author of a book with the title The Next Economic Disaster: Why It’s Coming and How to Avoid It? Academic? Leftist? Anti-capitalist? Anti-banker certainly?

Prepare to drop them all, because the author is none of the above. Taking the last first, the majority of his career has been in banking — and as a founder and CEO.

To put it in his own words: Read more…

US median wealth is down by 20 percent since 1984

July 29, 2014 7 comments

from Dean Baker

A NYT article reported on a study from Russell Sage reporting that median household wealth 36 percent lower in 2013 than 2003. While this is disturbing, an even more striking finding from the study is that median wealth is down by around 20 percent from 1984.

This is noteworthy because this cannot be explained as largely the result of the collapse of house prices that triggered the Great Recession. This indicates that we have gone thirty years, during which time output per worker has more than doubled, but real wealth has actually fallen for the typical family. It is also important to realize that the drop in wealth reported in the study understates the true drop since a typical household in 1984 would have been able to count on a defined benefit pension. This is not true at present, so the effective drop in wealth is even larger than reported by the study. (Defined benefit pensions are not included in its measure of wealth.)

US wealth inequality increased significantly from 2003 through 2013 (2 charts)

from David Ruccio

According to a new study by Fabian T. Pfeffer, Sheldon Danziger, and Robert F. Schoeni,

Through at least 2013, there are very few signs of significant recovery from the losses in wealth experienced by American families during the Great Recession. Declines in net worth from 2007 to 2009 were large, and the declines continued through 2013. These wealth losses, however, were not distributed equally. While large absolute amounts of wealth were destroyed at the top of the wealth distribution, households at the bottom of the wealth distribution lost the largest share of their wealth. As a result, wealth inequality increased significantly from 2003 through 2013; by some metrics inequality roughly doubled.

Read more…

More effective remedies for inequality than Piketty’s

April 19, 2014 28 comments

from Geoff Davies

I have read only reviews of Thomas Piketty’s Capital in the Twenty-First Century, but clearly it is valuable for documenting the nature and history of inequality over the past century or three, and for highlighting the excessive political power that flows from super-wealth.  Yet he frames it in terms of capital and capitalism and, for all the quality of his diagnosis, his main prescription evidently is just to tax the wealthy, through income and inheritance taxes.

The trouble is, capital and capitalism are very ill-defined.  To speak of capitalism is to invite an un-constructive shouting match.  Capitalism has caused great harm to people and the world!  Yes but capitalism is what has made us rich!

A more useful framing is that there have been, and can be, many ways to structure a market economy.  When one looks into the mechanisms that have operated in market economies, one can readily identify mechanisms that pump wealth from the 99% to the 1%.  One can then think of ways to stop or reverse these flows, so wealth flows more fairly to everyone involved in its generation.  It will be much more effective to fix the problems at the source than just to apply traditional retro-active bandaids like taxes.

In my own book Sack the Economists, I identified seven fairly obvious such mechanisms.  Below is an edited excerpt that summarises mechanisms identified in the course of the book’s analyses.  (Dean Baker has also made lists, short and longer, which are a little more detailed and only partly overlapping with mine.) Read more…

Krugman on Piketty

April 15, 2014 14 comments

from Edward Fullbrook

Now Paul Krugman has gotten into the Piketty act.  The just published issue of the New York Review of Books features a long  review essay by Krugman (it’s open-access) on Capital in the Twenty-First Century.   Here is how it begins.

Thomas Piketty, professor at the Paris School of Economics, isn’t a household name, although that may change with the English-language publication of his magnificent, sweeping meditation on inequality, Capital in the Twenty-First Century. Yet his influence runs deep. It has become a commonplace to say that we are living in a second Gilded Age—or, as Piketty likes to put it, a second Belle Époque—defined by the incredible rise of the “one percent.” But it has only become a commonplace thanks to Piketty’s work. In particular, he and a few colleagues (notably Anthony Atkinson at Oxford and Emmanuel Saez at Berkeley) have pioneered statistical techniques that make it possible to track the concentration of income and wealth deep into the past—back to the early twentieth century for America and Britain, and all the way to the late eighteenth century for France.

Read more…