How Much Inequality?

A brief essay by Daniel Little on the website UnderstandingSociety asks the following questions, examining the issues of inequality in income and opportunity from moral, social justice, social cohesiveness, and utilitarian perspectives, with links to additional writings on each view.

How much inequality is too much?  Answers range from Gracchus Babeuf (all inequalities are unjust) to Ayn Rand (there is no moral limit on the extent of inequalities a society can embody). Is there any reasoned basis for answering the question?  What kinds of criteria might we use to try to answer this kind of question?

Ayn Rand’s novels appear to have infected a large number of people with the notion that moral considerations of inequality in a society are inappropriate when compared to the rights and motivations of the individual, which argument is helping fuel the divisive gridlock on economic matters policy makers are facing in States and the Federal government. The author of a budget proposal lacking a moral compass, Paul Ryan, is awarded a “fiscal responsibility” award, while legislation to aid job creation and to continue benefits for millions of the long-term unemployed is routinely blocked, growing an underclass of otherwise productive workers unable to return to their former areas of expertise or income levels. The States under growing budget constraints choose to cut revenues, primarily for those at the top of the income scale, while they reduce spending, placing the burden of strangled government on the shoulders of the unemployed, the elderly, children, the sick, and the disabled. It is not hard to see the moral inequality of these actions, and as Joseph Stiglitz in his commentary and latest book, The Price of Inequality, How Today’s Divided Society Endangers Our Future, points out social cohesiveness is at risk as those in the vice of unequal policy and advantage in society reject and resist such policy. (More here.)

America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from “food insecurity”)—given all this, there is ample evidence that something has blocked the vaunted “trickling down” from the top 1 percent to everyone else. All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.

And the driver of this alienation…? The “anything goes” philosophy from the right that has promoted security force violence against students and demonstrators protesting the effects of inequality, too big to fail industries that privatize their profits while socializing the risks they take to realize their profits, and unresponsive government unwilling and unable to represent the vast majority of people in their societies. Can we do better? Let us hope so…

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Growth, Inequality, Policy, and Power: Connecting the Dots

Another new Teach-In addition comes by way of a slideshow presentation given by Jared Bernstein of the Center on Budget and Policy Priorities during a talk in the Daniel Thursz Distinguished Professor of Social Justice Lecture series at the University of Maryland in March 2012. This is an easy to follow discussion of the causes of our present inequality and how the prevalent economic policy agenda is exacerbating inequality, a growth in poverty as opposed to fair economic growth, and a rise in children living in poverty.

Paul Krugman’s Playboy Interview

Paul Krugman speaks with Playboy about the financial crisis and why the ongoing slow recovery is unnecessary, the result of politics, not economics. Read the entire article, but here are a few of the “money” quotes:

PLAYBOY: Some of [the] debate is irrelevant to the average person. All they know is they don’t have a job or they don’t have a job that pays enough.

KRUGMAN: The point is there’s a tremendous amount of suffering. A lot of America is much worse off than it was four years ago. I think the main reason you should be angry about it is that it’s gratuitous. This doesn’t have to be happening. We actually have the tools to make most of this go away. If we could throw aside the political prejudices and bad ideas that are crippling us, in 18 months we could be back to something that feels like a much better economy.

On the utility of union organizing:

PLAYBOY: Is it accurate to simplify our modern economy as a choice between working for a high-wage General Motors model versus the low-wage Walmart strategy?

KRUGMAN: I think the choice we made, really without understanding that we were making the choice, was to make Walmart jobs low paying. They didn’t have to be. In a different legal environment, a megacorporation with more than a million employees might well have been a company with a union that resulted in decent wages. We think of Walmart jobs as being low wage with 50 percent turnover every year because that’s the way we’ve allowed it to develop. But it didn’t have to be that way. If the rise of big-box stores had not taken place under the Reaganite rules of the game, with employers free to do whatever they wanted to block union organizing, we might have had a different result. Part of the hysterical opposition to the auto-industry bailout was the notion that we were bailing out well-paid workers with union jobs.

On the policy failures that have prolonged unemployment at demoralizing low levels that hurt the country, its labor force, based on backward political thinking:

PLAYBOY: So people in America today are suffering when they don’t have to be because of policy makers who won’t do the right thing?

KRUGMAN: That’s right. I’ve gotten some grief for my remark that if it were announced that we faced a threat from space aliens and needed to build up to defend ourselves, we’d have full employment in a year and a half. But that’s true. Why couldn’t we do that to repair our sewer systems and put an extra tunnel under the Hudson instead of to fight imaginary space aliens? Everybody in the world except us is doing a lot of investment in infrastructure and education. This is the country of the Erie Canal and the Interstate Highway System. The Erie Canal was a huge public infrastructure project financed with no private or public-private partnership. Can you imagine doing that in 21st century America? We really have slid backward for the past 200 years from the kinds of things we used to understand needed to be done now and then. And all of that because we are shackled to the wrong ideas.

(The interview that appears in the link above in a recent edition of Playboy, so if a little suggestive skin is offensive to you, reader beware.)

Jefferson vs Lincoln: On Inequality and the Lack of Social Mobility

America’s failed promise of equal opportunity

By Alex Gourevitch and Aziz Rana

Americans are increasingly aware that the ideal of equal opportunity is a false promise, but neither party really seems to get it.

Republicans barely admit the problem exists, or if they do, they think tax cuts are the answer. All facts point in the opposite direction. Despite various tax cuts over the past 30 years, not only have income and wealth inequality dramatically increased, but the ability of individuals to rise out of their own class has declined. Social stagnation is increasingly the norm, with poverty rates the highest in 15 years, real wage gains worse even than during the decade of the Great Depression, average earnings barely above what they were 50 years ago, and more than 80 percent of the income growth of the past 25 years going to the top 1 percent. In fact, since 1983, the bottom 40 percent of households have seen real declines in their income and the same goes for the bottom 60 percent when it comes to wealth. We know what the economic status quo does: It redistributes upwards.

Continue reading here:

V Recessions, U Recessions, and L Recessions

Jared Bernstein does a nice job showing the relative recovery dynamics of several recessions suffered in the US since June of 1969. As he briefly explains the role of business cycles on his blog, and with a great graphic showing employment as a share of population (from the Bureau of Labor Statistics), recoveries take form based on how quickly employment numbers rebound. V recessions hit bottom with recovery in jobs showing a relatively quick rebound. Re-hires or easier mobility between jobs tend to work to the benefit of the unemployed here after the initial storm is weathered and the economic adjustment kicks in. U recessions rebound more slowly, and in the early 90’s and 00’s were viewed as “jobless” recoveries. Not as easily explained, but clear to have been the dynamic for these two recoveries.

Where we are now is in one of the more insidious recoveries, described by the L profile. The long-term unemployment in this dynamic is ensuring for some, especially for older workers, that they will not enter the workforce again at the same level of income or with the same level of work as when they left it. That is the tragedy of such a loss of utilizable capacity, or in more human terms, a tragedy of the loss in terms of human dignity for those that have worked all their lives, played by the rules, only to be pushed out of the job market as they approach their retirement and are unlikely to be able to return to meaningful work.

For those in that case, without sufficient savings with which to retire, either through a loss of savings in the financial crash, not having been able to save, a divorce, foreclosure, or medical crisis that ate up savings, this portends a difficult end of life scenario for those caught on the foot of the L…

Look around. Many of your neighbors are in just this predicament. Connect the dots as to why: a failure to enact effective fiscal and monetary policy to speed recovery (thanks to anti-revenue, “business-friendly” corporatists), off-shoring of jobs to boost profits, reliance on automation to boost profits, down-sizing and consolidation to boost profits, technological advances that make re-training difficult for many. Efforts to weaken already weak safety nets leave these under-utilized workers scrambling at the end of their lives (also thanks to anti-revenue, “business-friendly” corporatists). While Bernstein doesn’t delve into the role of inequality in our current L shaped recovery neither the preferential tax benefits for those making a living from capital gains and dividends (the corporatists), nor the race to maximize profits is to be ignored.

Source: BLS

Let Mitt Show You How It’s Done: The Bain Capital Film, or, One Way the 1% do it to the Middle Class.

(Disclaimer: This is not an endorsement of Barak Obama. I didn’t vote for Barak Obama, and while I may have to this November as the lesser of two evils, thanks to our broken electoral system, I would almost prefer to sit out the whole macabre, money-soaked spectacle were it not so important to participate.)

When Mitt Romney Came to Town is, as advertised, a devastating expose of the business ethic behind this major presidential candidate, Mitt Romney. But it is much more than that. Former associate of Romney’s top strategists, Jason Killian Meath, produced the film and as the very effective former ad man for George W. Bush, is much, much less a populous advocate for the middle class as he is a political opportunist who trolled among Romney’s opponent’s campaigns looking for someone, anyone, to take up this film.

The failing Gingrich campaign reportedly paid top dollar for the rights as it now disingenuously turns to strong populous rhetoric trying to present a populous message to America’s failing middle class and regain some of the campaign’s former traction. But the import of this film is more than just an attack by an opportunistic former insider,  this is a how-to film exposing the ways the 1% have put it to, and continue to put it to, the American middle class.  Mitt is just a symptom of this much larger disease.

“We don’t have middle class people no more; rich and poor, that is it.”

The 2010 Census: One in three Americans is poor, or near poor…

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