A Much Bigger Income Shift To Top 1% Than Anyone Thought

Landmark Study: A Much Bigger Income Shift To Top 1% Than Anyone Thought

A new analysis by the RAND Corporation examines what rising inequality has cost Americans in lost income—and the results are even bigger than expected.

Weekend Reading: Economics Edition

Society-Wide Benefits of Raising The Minimum Wage
The Puzzle In The Labor Data
The Trump Tax Reform, As Seen In The U.S. Balance Of Payments Data
Why The 'Free-Market' Economy Is A Myth And How To Rebuild Public Power
The Failures of Neoliberalism Are Bigger Than Politics
What Kansas's Rebounding Economy Tells Us About The Farce of Republican Tax Cuts
How The Federal Government Rigs The Game Against Small Businesses
Make Corporations Pay For The Green New Deal
Rich Get Richer, Everyone Else Not So Much In Record U.S. Expansion
Unions Did Great Things For The Working Class

Sunday Reading

CEO Pay Rewards What Was Going To Happen Anyway
Refusing To Play Dead For Big Banks, Warren Gives Fellow Senators 17 Chances To Put Consumers First
Scott Walker Does Not Respect Democracy
Stock Buybacks Are Soaring To Record Levels - And Cory Booker Wants To Stop It
Neoliberalism: How Seeing Markets As Perfect Turned Into An Ideology Justifying Crony Capitalism
Republicans Say They Favor Free Markets. Yeah, Right.
Across 20,000 Pages, The Pursuit Of Foxconn Unfolds
Wisconsin Supreme Court Candidate Screnock Says He Wouldn't Hear Cases About Legislative Maps
Foxconn Deal Gets Even Worse
Hundreds Of Canadian Doctors Demand Lower Salaries (Yes, Lower.)
Larry Summers Makes The Case For A Governmental Bailout Of The American Heartland
America Is Giving Away The $30 Billion Medical Marijuana Industry
Why Is California Rebuilding In Fire Country? Because You're Paying For It

Weekend Reading

Passing Through To Corruption
Trickle Down? Not Now, And Not For A While At Best
The Uninsured Are Overusing Emergency Rooms - And Other Health Care Myths
8 Bad Science And Health Ideas That Should Die With 2017
The Places That May Never Recover From The Recession
In A 30-Minute Interview, President Trump Made 24 False Or Misleading Claims
How America Got Addicted To Road Salt - And Why It's Become A Problem
Does Social Media Make People Less Social?
Ex-Sheriff David Clarke To Receive $100,000 Per Year Government Pensions
City May Contest Foxconn Electricity Deal
City Kills Contract With American Sewer
Why Inequality Predicts Homicide Rates Better Than Any Other Variable
Economists Are Obsessed With "Job Creation." How About Less Work?
How Market Competition Really Works
Most Wealth Isn't The Result Of Hard Work. It Has Been Accumulated By Being Idle And Unproductive
If You Look Behind Neoliberal Economists, You'll Discover The Rich: How Economic Theories Serve Big Business

Sunday Reading

Trump Wants Credit For Cutting The National Debt. Economists Say Not So Fast
'Most Liberal Governor' Rights Ship In Minnesota
Best Returns Since 1900 Came From These Markets
Wisconsin Senators Approve 31% Raise In Their Per Day Expenses
State's Image Has Turned Upside Down
Revoking Trade Deals Will Not Help American Middle Class
Stop Blaming India And China For The West's 300 Years Of Destroying The Environment
Neoliberalism: The Deep Story That Lies Beneath Donald Trump's Triumph
Judicial Originalism As Myth

The False Promise Of The Entrepreneurial University

The Results Of The Reagan Revolution

The US Has the Highest Share of Employees in Low Wage Work

The Boiling Point

Republican cynicism and misdirection during a recession garnered Republican election victories and, thus, they have pushed their sweeping agenda involving voter ID, conceal and carry, and ending collective bargaining...along with more corporate tax cuts, of course. (All the while, mind you, Republicans are simultaneously accusing the Democrats of changing the country for the worse, being anti-American, and of having their own sweeping agenda. Because they tried to get all citizens health care? Because they want to invest in the nation's infrastructure?)

Public workers and concerned citizens all over the country rallied and made their voices heard regarding this outrageous power-grab. Some might even consider Madison, Wisconsin the initial spark of this, now national, activism. Primarily agitated to life in Wisconsin due to the budgetary shenanigans and anti-labor policies of Scott Walker. 

From this movement Occupy Wall Street is born. A decades-overdue opposition to neoliberal, laissez faire, deregulated, unbridled capitalism, haunting us since the Reagan administration. These policies explain much of our inequality and the primary reason people have started The Occupation.

Finally, something to thank Scott Walker for.

 

The Lean Efficiency (And Persistence) Of Private Sector Lies

More of the government is the problem meme from the Journal Sentinel in Saying 'yes' to change. As usual, more government bashing and the often parroted call for more efficiency in the public sector. I've written before on this false idea that the private sector functions perfectly while the public sector is inept. It's an endless loop among the business-worshiping press about private efficiency and government waste. Somehow the S&L scandal, the stock bubble, the real estate bubble, AIG, Enron, WorldCom, Lehman, etc. seem to slip the media's memory. The corruption and inefficiency of the private sector is evident to anyone with their eyes open. All except the media and business leaders whom want to perpetuate the myth of private sector efficiency and know-how. 

The Journal article starts off with Medicare and Social Security as two examples of ticking fiscal time bombs. First, put the Medicare issue into context. It's solvency, or lack thereof, is the result of runaway health care costs in America: twice as much per person than the next closest developed country (and those countries have universal care). Social Security is fiscally fine for decades. And, after that, if nothing in the program was changed, it would still be able to fund 80 percent of benefits. Simply removing the cap (on taxed earnings) from Social Security would resolve any possible issue from the program for the next century. 

The Journal then flippantly states, "It's not difficult to understand why taxpayers are unhappy. Many believe they aren't getting their money's worth." But, yes, it is hard to understand. Taxes have not increased. They've actually gone down for 98 percent. The size of government has not grown. And, spending, even during our second worst economic catastrophe, has not exploded. If a good media were reporting the actual facts and providing truthful insight and information to the readers and viewers, citizens would understand and they wouldn't be unhappy. Well, they may still be unhappy, but they would see the Obama administration was doing good things, they would know their taxes were lower, and they would feel slightly more hopeful about the future. Rather than thinking the constitution was being shredded, taxes and spending are increasing, and the country was being run by a Muslim communist. 

It takes time to turn around a near second Great Depression. The Obama administration has had success turning this around. We're not back at full employment, but getting there from over 10 percent unemployment in eighteen months is a pipe dream. More time, more stimulus, and the path we're on now will get us back on the road to prosperity. 

The Journal ponders, "Tax increases may be necessary as well. But, let's reimagine government." We've been reimaging government for the last four decades. All we've accomplished is crumbling infrastructure, volatility for workers, increasing inequality, and a lower quality of life. 

Listen, people, this isn't hard. Taxes must go up on the wealthiest among us. Enough of all the disincentive bullshit talk from the greedy hucksters! When taxes in this country were at their highest on the wealthiest, our middle class was created, one breadwinner could maintain a family, our economy grew at its highest rate, and inequality was shrinking. 

The knee-slapper of the article claims, "...applying 'lean' principles to government. They've worked in business." Ha, Ha! Um...no they haven't. Again, the evidence of financial chicanery, cooked books, corruption, incompetency, and profligacy of the past few decades by some of America's largest private sector companies is well documented. The efficiency of the private sector has been completely discredited. If we could just remove this paradigm from our thought- and decision-making processes, we could achieve more and better outcomes for everyone rather than a select few.

Out-Of-Control Excuses

Lest the media be able to rewrite the causes and dictate the outcomes of Greece's problems, I need to squash some misinformation and falsehoods. This latest writing was motivated by the Journal Sentinel's "Lessons from Greece" editorial. In which, they fabricate or ignore the causes, and deduce the completely wrong conclusions.

They proclaim, "The central problem in Greece was out-of-control spending on government programs for aging populations." They talk of Greece's budget deficit and their debt, but no evidence backs up the claim of "out-of-control spending" and there is no mention of the numbers concerning these programs for the aging. If that is what actually caused their fiscal worries, some data corroborating such should be presented.

In reality, average annual government expenditures in Greece totaled 50.4 percent of GDP. Total spending for the European Union as a whole equaled 50. 7 percent of GDP. As Michael Linden and Sabina Dewan state, "Over the past 10 years, Greece has consistently spent less, as a share of GDP, than the European Union as a whole."

The Journal then, typically, brings the "over spending" meme back around to gutting American programs - like Medicare, Medicaid, and Social Security. And, of course, they use the Peter G. Peterson Foundation to support such claims. Dean Baker has more on the true intentions of Mr. Peterson. [Whenever a Journal article cites the Peterson Foundation, the Wisconsin Policy Research Institute, or the Tax Foundation be very skeptical.]

The Journal creates false reasons for Greece's troubles, they then compare the U.S. to Greece. Investors will not have faith in Greece's ability to pay its debt, the U.S. has debt too, therefore, investors will soon have no faith in the U.S.. Paul Krugman explained why this connection is ridiculous and a red herring.

From here the Journal jumps ahead to an whole austerity program for the U.S. Yes, with aggregate demand stifled and the private sector neither spending nor hiring, the editors believe now would be a great time tighten our belts. WTF?! We need "prudent budgeting" to solve out debt. Whatever that nebulous statement means.

Governments must continue to spend now: repair and improve infrastructure - bridges, roads, electric grids, sewer systems, water ways, etc.. Without this necessary (and overdue) maintenance and government spending the economy would grind to a halt and unemployment would skyrocket. Spending more now to ensure growth (which enables us to pay off debt) is better than allowing unemployment to ravage a generation.

The lesson we should learn from Greece is that the neoliberal age of tax cuts and deregulation has left all nations vulnerable to the whims of bond traders.

For Further Reading:
A Principled Europe Would Not Leave Greece To Bleed
Being Rude to the Deficit Hawks
Clinton's Bequest
Deficit or Depression?
Economy Needs More Big Government
From Keynesianism to Neoliberalism
Greece's Spending Cuts Are Making The Crisis Worse
Paranoia Overdose
Social Security: The Phony Crisis
The Bubble Economy
The Debt Delusion
The Liability Con
This Time, Don't Buy What Rubin's Selling
Where Have All the Keynesians Gone?

Class Warfare

The Milwaukee Journal Sentinel’s take on the Columbian trade agreement, “In a fog over trade,” is just more refuse on the pile of globalization garbage being pushed by the free traders. “Democrats once had a reasonable trade policy. They understood that if the economic pie grows, everyone benefits,” chimes the editorial. The economic pie has grown for the last three decades. (Although this growth was not as stellar as the growth during our belittled three-decade, post WWII, high-tax, semi-protectionist days.) Yet wages over our modern, free trade, period for most Americans have stagnated. Wages have not kept pace with productivity, which was supposed to be part of the deal when it was being pushed in arrangements like the NAFTA. In reality, free trade agreements are a means of reversing the power of labor, which workers have fought decades for.

The implication is globalization is a Pareto improvement. Globalization is a change that makes some better off and only a few, so they hope, worse off. But, as we see, this isn't reality. Some are better off, but many are worse off. It's as if we're reinventing the wheel. Developed countries' workers have earned their fair share of the economic pie (fair wages) and the inherent rights from the struggle to obtain such. To simply allow other laborers (lower wage in totalitarian states) to be exploited, thereby weakening and fracturing Labor as a whole, merely redistrbutes profit upward to Capital rather than Labor. This is neither a productive nor a fair economic model the U.S. should be exporting or participating in.

The countries that have accomplished economic ascendancy have done so by fashioning policies to their own needs, not by following neo-liberal orthodoxy (aka The Washington Consensus). Today, China and India have tariffs ranging between 20 and 30 percent on manufactured goods.

The editorial states, “The United States must live in the real world - the real globalized world. Protectionism doesn't allow for that.” Japan, Canada, and most European countries enjoy a standard of living as well as if not better than ours. On numerous quality of life indicators, these places score better than the U.S. But they also pay better wages, have universal health care, and have better institutional supports for those at the lower rungs of the ladder. Protectionism does allow for that. In fact, almost all countries have used protectionist measures to protect their infant industries and to develop economically throughout time.

Our new unregulated, hyper-financialized and securitized, speculative economy is the prime culprit in the modern-day war against Labor. Capital is opening up borders around the world so they can avoid regulation, environmental concerns, and paying a decent wage. We have morphed from an economy fueled on labor and production into a capitalist casino. Today, circulating money around the world in highly dubious financial transactions is the key to wealth creation.

Unadulterated free trade, virtually non-existent taxes, and the lack of any protectionist measures, as an economic development policy is a modern scheme (neoliberalism and/or the Washington Consensus). This is a ruse that is failing miserably. Developed countries grew at 3.2 percent during the 1960-1980 period. Their growth stalled to just 2.2 percent, from 1980-2000. Over this same time, developing countries growth decreased from 3 percent to 1.5 percent.

Maybe it’s time for America to, rather than jingoism and conceding to business, start applying, again, the principles established in the late 19th and early 20th centuries and strengthened by the New Deal. The standards that allowed one to earn a living wage, afford health care, a home, and be able to retire. This, alongside stronger modernized regulations to curb the risky speculative greed culture. Trying as much as possible to follow the policies of that time of shared prosperity, such as the post WWII period, when the middle-class was created.

55 percent of Americans make under $50,000 a year; and 30 percent make under $25,000 a year. Globalization, which merely allows cheap labor to compete with well-organized labor, benefits the CEOs and shareholders, whom are few in number and contribute nothing to the productive economy. While the wages and rights of the workers, the ones actually producing the goods, are steadily undercut. So, as we see, it’s more of the same old story – the workers make the sacrifice, the rich reap the rewards. I guess this is the "real world" the Journal Sentinel wants to promote?


For Further Reading:
Crunchian Take on Globalization
Economics of Globalization
Essays on Globalization
Essence of Neoliberalism
Global Networks, Imperial Culture
Great Myths and False Promises
Great Myths of Globalization
Labor History
Myth of Foreign Investment Benefits
Rethinking the Global Political Economy
Union Movement's Proud Past
What is Neoliberalism?