Breaking News and Updates
- Abolition Of Work
- Alternative Medicine
- Artificial Intelligence
- Atlas Shrugged
- Ayn Rand
- Basic Income Guarantee
- Conscious Evolution
- Cosmic Heaven
- Designer Babies
- Ethical Egoism
- Fifth Amendment
- Fifth Amendment
- Financial Independence
- First Amendment
- Fiscal Freedom
- Food Supplements
- Fourth Amendment
- Fourth Amendment
- Free Speech
- Freedom of Speech
- Gene Medicine
- Genetic Engineering
- Germ Warfare
- Golden Rule
- Government Oppression
- High Seas
- Hubble Telescope
- Human Genetic Engineering
- Human Genetics
- Human Longevity
- Immortality Medicine
- Intentional Communities
- Life Extension
- Mars Colonization
- Mind Uploading
- Minerva Reefs
- Modern Satanism
- Moon Colonization
- New Utopia
- Personal Empowerment
- Political Correctness
- Politically Incorrect
- Post Human
- Post Humanism
- Private Islands
- Resource Based Economy
- Ron Paul
- Second Amendment
- Second Amendment
- Socio-economic Collapse
- Space Exploration
- Space Station
- Space Travel
- Teilhard De Charden
- The Singularity
- Tor Browser
- Transhuman News
- Victimless Crimes
- Virtual Reality
- Wage Slavery
- War On Drugs
- Zeitgeist Movement
The Evolutionary Perspective
Tag Archives: america
Posted: January 10, 2017 at 2:58 am
Income inequality in the United States has increased significantly since the 1970s after several decades of stability, meaning the share of the nation’s income received by higher income households has increased. This trend is evident with income measured both before taxes (market income) as well as after taxes and transfer payments. Income inequality has fluctuated considerably since measurements began around 1915, moving in an arc between peaks in the 1920s and 2000s, with a 30-year period of relatively lower inequality between 19501980.
Measured for all households, U.S. income inequality is comparable to other developed countries before taxes and transfers, but is among the highest after taxes and transfers, meaning the U.S. shifts relatively less income from higher income households to lower income households. Measured for working-age households, market income inequality is comparatively high (rather than moderate) and the level of redistribution is moderate (not low). These comparisons indicate Americans shift from reliance on market income to reliance on income transfers later in life and less than households in other developed countries do.
The U.S. ranks around the 30th percentile in income inequality globally, meaning 70% of countries have a more equal income distribution. U.S. federal tax and transfer policies are progressive and therefore reduce income inequality measured after taxes and transfers. Tax and transfer policies together reduced income inequality slightly more in 2011 than in 1979.
While there is strong evidence that it has increased since the 1970s, there is active debate in the United States regarding the appropriate measurement, causes, effects and solutions to income inequality. The two major political parties have different approaches to the issue, with Democrats historically emphasizing that economic growth should result in shared prosperity (i.e., a pro-labor argument advocating income redistribution), while Republicans tend to downplay the validity or feasibility of positively influencing the issue (i.e., a pro-capital argument against redistribution).
U.S. income inequality has grown significantly since the early 1970s, after several decades of stability, and has been the subject of study of many scholars and institutions. The U.S. consistently exhibits higher rates of income inequality than most developed nations due to the nation’s enhanced support of free market capitalism and less progressive spending on social services.
The top 1% of income earners received approximately 20% of the pre-tax income in 2013, versus approximately 10% from 1950 to 1980. The top 1% is not homogeneous, with the very top income households pulling away from others in the top 1%. For example, the top 0.1% of households received approximately 10% of the pre-tax income in 2013, versus approximately 34% between 19511981. According to IRS data, adjusted gross income (AGI) of approximately $430,000 was required to be in the top 1% in 2013.
Most of the growth in income inequality has been between the middle class and top earners, with the disparity widening the further one goes up in the income distribution. The bottom 50% earned 20% of the nation’s pre-tax income in 1979; this fell steadily to 14% by 2007 and 13% by 2014. Income for the middle 40% group, a proxy for the middle class, fell from 45% in 1979 to 41% in both 2007 and 2014.
To put this change into perspective, if the US had the same income distribution it had in 1979, each family in the bottom 80% of the income distribution would have $11,000 more per year in income on average, or $916 per month. Half of the U.S. population lives in poverty or is low-income, according to U.S. Census data.
The trend of rising income inequality is also apparent after taxes and transfers. A 2011 study by the CBO found that the top earning 1 percent of households increased their income by about 275% after federal taxes and income transfers over a period between 1979 and 2007, compared to a gain of just under 40% for the 60 percent in the middle of America’s income distribution. U.S. federal tax and transfer policies are progressive and therefore substantially reduce income inequality measured after taxes and transfers. They became moderately less progressive between 1979 and 2007 but slightly more progressive measured between 1979 and 2011. Income transfers had a greater impact on reducing inequality than taxes from 1979 to 2011.
Americans are not generally aware of the extent of inequality or recent trends. There is a direct relationship between actual income inequality and the public’s views about the need to address the issue in most developed countries, but not in the U.S., where income inequality is worse but the concern is lower. The U.S. was ranked the 6th worst among 173 countries (4th percentile) on income equality measured by the Gini index.
There is significant and ongoing debate as to the causes, economic effects, and solutions regarding income inequality. While before-tax income inequality is subject to market factors (e.g., globalization, trade policy, labor policy, and international competition), after-tax income inequality can be directly affected by tax and transfer policy. U.S. income inequality is comparable to other developed nations before taxes and transfers, but is among the worst after taxes and transfers. Income inequality may contribute to slower economic growth, reduced income mobility, higher levels of household debt, and greater risk of financial crises and deflation.
Labor (workers) and capital (owners) have always battled over the share of the economic pie each obtains. The influence of the labor movement has waned in the U.S. since the 1960s along with union participation and more pro-capital laws. The share of total worker compensation has declined from 58% of national income (GDP) in 1970 to nearly 53% in 2013, contributing to income inequality. This has led to concerns that the economy has shifted too far in favor of capital, via a form of corporatism, corpocracy or neoliberalism.
Although some have spoken out in favor of moderate inequality as a form of incentive, others have warned against the current high levels of inequality, including Yale Nobel prize for economics winner Robert J. Shiller, (who called rising economic inequality “the most important problem that we are facing now today”), former Federal Reserve Board chairman Alan Greenspan, (“This is not the type of thing which a democratic society a capitalist democratic society can really accept without addressing”), and President Barack Obama (who referred to the widening income gap as the “defining challenge of our time”).
The level of concentration of income in the United States has fluctuated throughout its history. Going back to the early 20th Century, when income statistics started to become available, there has been a “great economic arc” from high inequality “to relative equality and back again,” in the words of Nobel laureate economist Paul Krugman. In 1915, an era in which the Rockefellers and Carnegies dominated American industry, the richest 1% of Americans earned roughly 18% of all income. By 2007, the top 1 percent account for 24% of all income. In between, their share fell below 10% for three decades.
The first era of inequality lasted roughly from the post-civil war era (“the Gilded Age”) to sometime around 1937. But from about 1937 to 1947 a period that has been dubbed the “Great Compression” income inequality in the United States fell dramatically. Highly progressive New Deal taxation, the strengthening of unions, and regulation of the National War Labor Board during World War II raised the income of the poor and working class and lowered that of top earners. This “middle class society” of relatively low level of inequality remained fairly steady for about three decades ending in early 1970s, the product of relatively high wages for the US working class and political support for income leveling government policies.
Wages remained relatively high because of lack of foreign competition for American manufacturing, and strong trade unions. By 1947 more than a third of non-farm workers were union members, and unions both raised average wages for their membership, and indirectly, and to a lesser extent, raised wages for workers in similar occupations not represented by unions. Scholars believe political support for equalizing government policies was provided by high voter turnout from union voting drives, the support of the otherwise conservative South for the New Deal, and prestige that the massive mobilization and victory of World War II had given the government.
The return to high inequality or to what Krugman and journalist Timothy Noah have referred as the “Great Divergence”, began in the 1970s. Studies have found income grew more unequal almost continuously except during the economic recessions in 199091, 2001 (Dot-com bubble), and 2007 sub-prime bust.
The Great Divergence differs in some ways from the pre-Depression era inequality. Before 1937, a larger share of top earners income came from capital (interest, dividends, income from rent, capital gains). After 1970, income of high-income taxpayers comes predominantly from labor: employment compensation.
Until 2011, the Great Divergence had not been a major political issue in America, but stagnation of middle-class income was. In 2009 the Barack Obama administration White House Middle Class Working Families Task Force convened to focus on economic issues specifically affecting middle-income Americans. In 2011, the Occupy movement drew considerable attention to income inequality in the country.
CBO reported that for the 1979-2007 period, after-tax income of households in the top 1 percent of earners grew by 275%, compared to 65% for the next 19%, just under 40% for the next 60%, 18% for the bottom fifth of households. “As a result of that uneven income growth,” the report noted, “the share of total after-tax income received by the 1 percent of the population in households with the highest income more than doubled between 1979 and 2007, whereas the share received by low- and middle-income households declined…. The share of income received by the top 1 percent grew from about 8% in 1979 to over 17% in 2007. The share received by the other 19 percent of households in the highest income quintile (one fifth of the population as divided by income) was fairly flat over the same period, edging up from 35% to 36%.”
According to the CBO, the major reason for observed rise in unequal distribution of after-tax income was an increase in market income, that is household income before taxes and transfers. Market income for a household is a combination of labor income (such as cash wages, employer-paid benefits, and employer-paid payroll taxes), business income (such as income from businesses and farms operated solely by their owners), capital gains (profits realized from the sale of assets and stock options), capital income (such as interest from deposits, dividends, and rental income), and other income. Of them, capital gains accounted for 80% of the increase in market income for the households in top 20%, in the 20002007 period. Even over the 19912000 period, according to the CBO, capital gains accounted for 45% of the market income for the top 20% households.
In a July 2015 op-ed article, Martin Feldstein, Professor of Economics at Harvard University, stated that the CBO found that from 1980 to 2010 real median household income rose by 15%. However, when the definition of income was expanded to include benefits and subtracted taxes, the CBO found that the median household’s real income rose by 45%. Adjusting for household size, the gain increased to 53%.
Just as higher-income groups are more likely to enjoy financial gains when economic times are good, they are also likely to suffer more significant income losses during economic downturns and recessions when they are compared to lower income groups. Higher-income groups tend to derive relatively more of their income from more volatile sources related to capital income (business income, capital gains, and dividends), as opposed to labor income (wages and salaries). For example, in 2011 the top 1% of income earners derived 37% of their income from labor income, versus 62% for the middle quintile. On the other hand, the top 1% derived 58% of their income from capital as opposed to 4% for the middle quintile. Government transfers represented only 1% of the income of the top 1% but 25% for the middle quintile; the dollar amounts of these transfers tend to rise in recessions.
This effect occurred during the Great Recession of 20072009, when total income going to the bottom 99 percent of Americans declined by 11.6%, but fell by 36.3% for the top 1%. Declines were especially steep for capital gains, which fell by 75% in real (inflation-adjusted) terms between 2007 and 2009. Other sources of capital income also fell: interest income by 40% and dividend income by 33%. Wages, the largest source of income, fell by a more modest 6%.
The share of pretax income received by the top 1% fell from 18.7% in 2007 to 16.0% in 2008 and 13.4% in 2009, while the bottom four quintiles all had their share of pretax income increase from 2007 to 2009. The share of aftertax income received by the top 1% income group fell from 16.7%, in 2007, to 11.5%, in 2009.
The distribution of household incomes has become more unequal during the post-2008 economic recovery as the effects of the recession reversed. CBO reported in November 2014 that the share of pre-tax income received by the top 1% had risen from 13.3% in 2009 to 14.6% in 2011. During 2012 alone, incomes of the wealthiest 1 percent rose nearly 20%, whereas the income of the remaining 99 percent rose 1% in comparison.
If the United States had the same income distribution it had in 1979, the bottom 80 percent of the population would have $1 trillion or $11,000 per family more. The top 1 percent would have $1 trillion or $750,000 less. Larry Summers
According to an article in The New Yorker, by 2012, the share of pre-tax income received by the top 1% had returned to its pre-crisis peak, at around 23% of the pre-tax income. This is based on widely cited data from economist Emmanuel Saez, which uses “market income” and relies primarily on IRS data. The CBO uses both IRS data and Census data in its computations and reports a lower pre-tax figure for the top 1%. The two series were approximately 5 percentage points apart in 2011 (Saez at about 19.7% versus CBO at 14.6%), which would imply a CBO figure of about 18% in 2012 if that relationship holds, a significant increase versus the 14.6% CBO reported for 2011. The share of after-tax income received by the top 1% rose from 11.5% in 2009 to 12.6% in 2011.
Inflation-adjusted pre-tax income for the bottom 90% of American families fell between 2010 and 2013, with the middle income groups dropping the most, about 6% for the 40th-60th percentiles and 7% for the 20th-40th percentiles. Incomes in the top decile rose 2%.
The top 1% captured 91% of the real income growth per family during the 2009-2012 recovery period, with their pre-tax incomes growing 34.7% adjusted for inflation while the pre-tax incomes of the bottom 99% grew 0.8%. Measured from 20092015, the top 1% captured 52% of the total real income growth per family, indicating the recovery was becoming less “lopsided” in favor of higher income families. By 2015, the top 10% (top decile) had a 50.5% share of the pre-tax income, close its highest all-time level.
Tax increases on higher income earners were implemented in 2013 due to the Affordable Care Act and American Taxpayer Relief Act of 2012. CBO estimated that “average federal tax rates under 2013 law would be higher relative to tax rates in 2011 across the income spectrum. The estimated rates under 2013 law would still be well below the average rates from 1979 through 2011 for the bottom four income quintiles, slightly below the average rate over that period for households in the 81st through 99th percentiles, and well above the average rate over that period for households in the top 1 percent of the income distribution.” In 2016, the economists Peter H. Lindert and Jeffrey G. Williamson contended that inequality is the highest it has been since the nation’s founding. French economist Thomas Piketty attributed the victory of Donald Trump in the 2016 presidential election, which he characterizes as an “electoral upset,” to “the explosion in economic and geographic inequality in the United States over several decades and the inability of successive governments to deal with this.”
U.S. income inequality is comparable to other developed countries measured before taxes and transfers, but is among the worst after taxes and transfers.
According to the CBO and others, “the precise reasons for the
Paul Krugman put several of these factors into context in January 2015: “Competition from emerging-economy exports has surely been a factor depressing wages in wealthier nations, although probably not the dominant force. More important, soaring incomes at the top were achieved, in large part, by squeezing those below: by cutting wages, slashing benefits, crushing unions, and diverting a rising share of national resources to financial wheeling and dealing…Perhaps more important still, the wealthy exert a vastly disproportionate effect on policy. And elite priorities obsessive concern with budget deficits, with the supposed need to slash social programs have done a lot to deepen [wage stagnation and income inequality].”
There is an ongoing debate as to the economic effects of income inequality. For example, Alan B. Krueger, President Obama’s Chairman of the Council of Economic Advisors, summarized the conclusions of several research studies in a 2012 speech. In general, as income inequality worsens:
Among economists and related experts, many believe that America’s growing income inequality is “deeply worrying”, unjust, a danger to democracy/social stability, or a sign of national decline. Yale professor Robert Shiller, who was among three Americans who won the Nobel prize for economics in 2013, said after receiving the award, “The most important problem that we are facing now today, I think, is rising inequality in the United States and elsewhere in the world.” Economist Thomas Piketty, who has spent nearly 20 years studying inequality primarily in the US, warns that “The egalitarian pioneer ideal has faded into oblivion, and the New World may be on the verge of becoming the Old Europe of the twenty-first century’s globalized economy.”
On the other side of the issue are those who have claimed that the increase is not significant, that it doesn’t matter because America’s economic growth and/or equality of opportunity are what’s important, that it is a global phenomenon which would be foolish to try to change through US domestic policy, that it “has many economic benefits and is the result of … a well-functioning economy”, and has or may become an excuse for “class-warfare rhetoric”, and may lead to policies that “reduce the well-being of wealthier individuals”.
Economist Alan B. Krueger wrote in 2012: “The rise in inequality in the United States over the last three decades has reached the point that inequality in incomes is causing an unhealthy division in opportunities, and is a threat to our economic growth. Restoring a greater degree of fairness to the U.S. job market would be good for businesses, good for the economy, and good for the country.” Krueger wrote that the significant shift in the share of income accruing to the top 1% over the 1979 to 2007 period represented nearly $1.1 trillion in annual income. Since the wealthy tend to save nearly 50% of their marginal income while the remainder of the population saves roughly 10%, other things equal this would reduce annual consumption (the largest component of GDP) by as much as 5%. Krueger wrote that borrowing likely helped many households make up for this shift, which became more difficult in the wake of the 20072009 recession.
Inequality in land and income ownership is negatively correlated with subsequent economic growth. A strong demand for redistribution will occur in societies where a large section of the population does not have access to the productive resources of the economy. Rational voters must internalize such issues. High unemployment rates have a significant negative effect when interacting with increases in inequality. Increasing inequality harms growth in countries with high levels of urbanization. High and persistent unemployment also has a negative effect on subsequent long-run economic growth. Unemployment may seriously harm growth because it is a waste of resources, because it generates redistributive pressures and distortions, because it depreciates existing human capital and deters its accumulation, because it drives people to poverty, because it results in liquidity constraints that limit labor mobility, and because it erodes individual self-esteem and promotes social dislocation, unrest and conflict. Policies to control unemployment and reduce its inequality-associated effects can strengthen long-run growth.
Concern extends even to such supporters (or former supporters) of laissez-faire economics and private sector financiers. Former Federal Reserve Board chairman Alan Greenspan, has stated reference to growing inequality: “This is not the type of thing which a democratic society a capitalist democratic society can really accept without addressing.” Some economists (David Moss, Paul Krugman, Raghuram Rajan) believe the “Great Divergence” may be connected to the financial crisis of 2008. Money manager William H. Gross, former managing director of PIMCO, criticized the shift in distribution of income from labor to capital that underlies some of the growth in inequality as unsustainable, saying:
Even conservatives must acknowledge that return on capital investment, and the liquid stocks and bonds that mimic it, are ultimately dependent on returns to labor in the form of jobs and real wage gains. If Main Street is unemployed and undercompensated, capital can only travel so far down Prosperity Road.
He concluded: “Investors/policymakers of the world wake up you’re killing the proletariat goose that lays your golden eggs.”
Among economists and reports that find inequality harming economic growth are a December 2013 Associated Press survey of three dozen economists’, a 2014 report by Standard and Poor’s, economists Gar Alperovitz, Robert Reich, Joseph Stiglitz, and Branko Milanovic.
A December 2013 Associated Press survey of three dozen economists found that the majority believe that widening income disparity is harming the US economy. They argue that wealthy Americans are receiving higher pay, but they spend less per dollar earned than middle class consumers, the majority of the population, whose incomes have largely stagnated.
A 2014 report by Standard and Poor’s concluded that diverging income inequality has slowed the economic recovery and could contribute to boom-and-bust cycles in the future as more and more Americans take on debt in order to consume. Higher levels of income inequality increase political pressures, discouraging trade, investment, hiring, and social mobility according to the report.
Economists Gar Alperovitz and Robert Reich argue that too much concentration of wealth prevents there being sufficient purchasing power to make the rest of the economy function effectively.
Joseph Stiglitz argues that concentration of wealth and income leads the politically powerful economic elite seek to protect themselves from redistributive policies by weakening the state, and this leads to less public investments by the state roads, technology, education, etc. that are essential for economic growth.
According to economist Branko Milanovic, while traditionally economists thought inequality was good for growth, “The view that income inequality harms growth or that improved equality can help sustain growth has become more widely held in recent years. The main reason for this shift is the increasing importance of human capital in development. When physical capital mattered most, savings and investments were key. Then it was important to have a large contingent of rich people who could save a greater proportion of their income than the poor and invest it in physical capital. But now that human capital is scarcer than machines, widespread education has become the secret to growth.” He continued that “Broadly accessible education” is both difficult to achieve when income distribution is uneven and tends to reduce “income gaps between skilled and unskilled labor.”
Robert Gordon wrote that such issues as ‘rising inequality; factor price equalization stemming from the interplay between globalization and the Internet; the twin educational problems of cost inflation in higher education and poor secondary student performance; the consequences of environmental regulations and taxes…” make economic growth harder to achieve than in the past.
In response to the Occupy movement Richard A. Epstein defended inequality in a free market society, maintaining that “taxing the top one percent even more means less wealth and fewer jobs for the rest of us.” According to Epstein, “the inequalities in wealth … pay for themselves by the vast increases in wealth”, while “forced transfers of wealth through taxation … will destroy the pools of wealth that are needed to generate new ventures. Some researchers have found a connection between lowering high marginal tax rates on high income earners (high marginal tax rates on high income being a common measure to fight inequality), and higher rates of employment growth. Government significant free market strategy affects too. the reason is there is a failure in the US political system to counterbalance the rise in unequal distribution of income amongst the citizens.
Economic sociologist Lane Kenworthy has found no correlation between levels of inequality and economic growth among developed countries, among states of the US, or in the US over the years from 1947 to 2005.Jared Bernstein found a nuanced relation he summed up as follows: “In sum, I’d consider the question of the extent to which higher inequality lowers growth to be an open one, worthy of much deeper research”.Tim Worstall commented that capitalism would not seem to contribute to an inherited-wealth stagnation and consolidation, but instead appears to promote the opposite, a vigorous, ongoing turnover and creation of new wealth.
Income inequality was cited as one of the causes of the Great Depression by Supreme Court Justice Louis D. Brandeis in 1933. In his dissent in the Louis K. Liggett Co. v. Lee (288 U.S. 517) case, he wrote: “Other writers have shown that, coincident with the growth of these giant corporations, there has occurred a marked concentration of individual wealth; and that the resulting disparity in incomes is a major cause of the existing depression.”
Central Banking economist Raghuram Rajan argues that “systematic economic inequalities, within the United States and around the world, have created deep financial ‘fault lines’ that have made [financial] crises more likely to happen than in the past” the Financial crisis of 200708 being the most recent example. To compensate for stagnating and declining purchasing power, political pressure has developed to extend easier credit to the lower and middle income earners particularly to buy homes and easier credit in general to keep unemployment rates low. This has given the American economy a tendency to go “from bubble to bubble” fueled by unsustainable monetary stimulation.
Greater income inequality can lead to monopolization of the labor force, resulting in fewer employers requiring fewer workers. Remaining employers can consolidate and take advantage of the relative lack of competition, leading to less consumer choice, market abuses, and relatively higher prices.
Income inequality lowers aggregate demand, leading to increasingly large segments of formerly middle class consumers unable to afford as many luxury and essential goods and services. This pushes production and overall employment down.
Deep debt may lead to bankruptcy and researchers Elizabeth Warren and Amelia Warren Tyagi found a fivefold increase in the number of families filing for bankruptcy between 1980 and 2005. The bankruptcies came not from increased spending “on luxuries”, but from an “increased spending on housing, largely driven by competition to get into good school districts.” Intensifying inequality may mean a dwindling number of ever more expensive school districts that compel middle class or would-be middle class to “buy houses they can’t really afford, taking on more mortgage debt than they can safely handle”.
The ability to move from one income group into another (income mobility) is a means of measuring economic opportunity. A higher probability of upward income mobility theoretically would help mitigate higher income inequality, as each generation has a better chance of achieving higher income groups. Conservatives and libertarians such as economist Thomas Sowell, and Congressman Paul Ryan (R., Wisc.) argue that more important than the level of equality of results is America’s equality of opportunity, especially relative to other developed countries such as western Europe.
Nonetheless, results from various studies reflect the fact that endogenous regulations and other different rules yield distinct effects on income inequality. A study examines the effects of institutional change on age-based labor market inequalities in Europe. There is a focus on wage-setting institutions on the adult male population and the rate of their unequal income distribution. According to the study, there is evidence that unemployment protection and temporary work regulation affect the dynamics of age-based inequality with positive employment effects of all individuals by the strength of unions. Even though the European Union is within a favorable economic context with perspectives of growth and development, it is also very fragile. 
However, several studies have indicated that higher income inequality corresponds with lower income mobility. In other words, income brackets tend to be increasingly “sticky” as income inequality increases. This is described by a concept called the Great Gatsby curve. In the words of journalist Timothy Noah, “you can’t really experience ever-growing income inequality without experiencing a decline in Horatio Alger-style upward mobility because (to use a frequently-employed metaphor) it’s harder to climb a ladder when the rungs are farther apart.”
The centrist Brookings Institution said in March 2013 that income inequality was increasing and becoming permanent, sharply reducing social mobility in the US. A 2007 study (by Kopczuk, Saez and Song in 2007) found the top population in the United States “very stable” and that income mobility had “not mitigated the dramatic increase in annual earnings concentration since the 1970s.”
Economist Paul Krugman, attacks conservatives for resorting to “extraordinary series of attempts at statistical distortion”. He argues that while in any given year, some of the people with low incomes will be “workers on temporary layoff, small businessmen taking writeoffs, farmers hit by bad weather” the rise in their income in succeeding years is not the same ‘mobility’ as poor people rising to middle class or middle income rising to wealth. It’s the mobility of “the guy who works in the college bookstore and has a real job by his early thirties.”
Studies by the Urban Institute and the US Treasury have both found that about half of the families who start in either the top or the bottom quintile of the income distribution are still there after a decade, and that only 3 to 6% rise from bottom to top or fall from top to bottom.
On the issue of whether most Americans do not stay put in any one income bracket, Krugman quotes from 2011 CBO distribution of income study
Household income measured over a multi-year period is more equally distributed than income measured over one year, although only modestly so. Given the fairly substantial movement of households across income groups over time, it might seem that income measured over a number of years should be significantly more equally distributed than income measured over one year. However, much of the movement of households involves changes in income that are large enough to push households into different income groups but not large enough to greatly affect the overall distribution of income. Multi-year income measures also show the same pattern of increasing inequality over time as is observed in annual measures.
In other words, “many people who have incomes greater than $1 million one year fall out of the category the next year but that’s typically because their income fell from, say, $1.05 million to 0.95 million, not because they went back to being middle class.”
Several studies have found the ability of children from poor or middle-class families to rise to upper income known as “upward relative intergenerational mobility” is lower in the US than in other developed countries and at least two economists have found lower mobility linked to income inequality.
In their Great Gatsby curve,White House Council of Economic Advisers Chairman Alan B. Krueger and labor economist Miles Corak show a negative correlation between inequality and social mobility. The curve plotted “intergenerational income elasticity” i.e. the likelihood that someone will inherit their parents’ relative position of income level and inequality for a number of countries.
Aside from the proverbial distant rungs, the connection between income inequality and low mobility can be explained by the lack of access for un-affluent children to better (more expensive) schools and preparation for schools crucial to finding high-paying jobs; the lack of health care that may lead to obesity and diabetes and limit education and employment.
Krueger estimates that “the persistence in the advantages and disadvantages of income passed from parents to the children” will “rise by about a quarter for the next generation as a result of the rise in inequality that the U.S. has seen in the last 25 years.”
Greater income inequality can increase the poverty rate, as more income shifts away from lower income brackets to upper income brackets. Jared Bernstein wrote: “If less of the economy’s market-generated growth i.e., before taxes and transfers kick in ends up in the lower reaches of the income scale, either there will be more poverty for any given level of GDP growth, or there will have to be a lot more transfers to offset inequality’s poverty-inducing impact.” The Economic Policy Institute estimated that greater income inequality would have added 5.5% to the poverty rate between 1979 and 2007, other factors equal. Income inequality was the largest driver of the change in the poverty rate, with economic growth, family structure, education and race other important factors. An estimated 16% of Americans lived in poverty in 2012, versus 26% in 1967.
A rise in income disparities weakens skills development among people with a poor educational background in term of the quantity and quality of education attained. Those with a low level of expertise will always consider themselves unworthy of any high position and pay
Lisa Shalett, chief investment officer at Merrill Lynch Wealth Management noted that, “for the last two decades and especially in the current period, … productivity soared … [but] U.S. real average hourly earnings are essentially flat to down, with today’s inflation-adjusted wage equating to about the same level as that attained by workers in 1970. … So where have the benefits of technology-driven productivity cycle gone? Almost exclusively to corporations and their very top executives.” In addition to the technological side of it, the affected functionality emanates from the perceived unfairness and the reduced trust of people towards the state. The study by Kristal and Cohen showed that rising wage inequality has brought about an unhealthy competition between institutions and technology. The technological changes, with computerization of the workplace, seem to give an upper hand to the high-skilled workers as the primary cause of inequality in America. The qualified will always be considered to be in a better position as compared to those dealing with hand work leading to replacements and unequal distribution of resources.
Economist Timothy Smeeding summed up the current trend:
Americans have the highest income inequality in the rich world and over the past 2030 years Americans have also experienced the greatest increase in income inequality among rich nations. The more detailed the data we can use to observe this change, the more skewed the change appears to be … the majority of large gains are indeed at the top of the distribution.
According to Janet L. Yellen, chair of the Federal Reserve,
…from 1973 to 2005, real hourly wages of those in the 90th percentile where most people have college or advanced degrees rose by 30% or more… among this top 10 percent, the growth was heavily concentrated at the very tip of the top, that is, the top 1 percent. This includes the people who earn the very highest salaries in the U.S. economy, like sports and entertainment stars, investment bankers and venture capitalists, corporate attorneys, and CEOs. In contrast, at the 50th percentile and below where many people have at most a high school diploma real wages rose by only 5 to 10% 
Economists Jared Bernstein and Paul Krugman have attacked the concentration of income as variously “unsustainable” and “incompatible” with real democracy. American political scientists Jacob S. Hacker and Paul Pierson quote a warning by Greek-Roman historian Plutarch: “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.” Some academic researchers have written that the US political system risks drifting towards a form of oligarchy, through the influence of corporations, the wealthy, and other special interest groups.
Rising income inequality has been linked to the political polarization in Washington DC. According to a 2013 study published in the Political Research Quarterly, elected officials tend to be more responsive to the upper income bracket and ignore lower income groups.
Paul Krugman wrote in November 2014 that: “The basic story of political polarization over the past few decades is that, as a wealthy minority has pulled away economically from the rest of the country, it has pulled one major party along with it…Any policy that benefits lower- and middle-income Americans at the expense of the elite like health reform, which guarantees insurance to all and pays for that guarantee in part with taxes on higher incomes will face bitter Republican opposition.” He used environmental protection as another example, which was not a partisan issue in the 1990s but has since become one.
As income inequality has increased, the degree of House of Representatives polarization measured by voting record has also increased. The voting is mostly by the rich and for the rich making it hard to achieve equal income and resource distribution for the average population (Bonica et al., 2013). There is a little number of people who turn to government insurance with the rising wealth and real income since they consider inequality within the different government sectors. Additionally, there has been an increased influence by the rich on the regulatory, legislative and electoral processes within the country that has led to improved employment standards for the bureaucrats and politicians. Professors McCarty, Pool and Rosenthal wrote in 2007 that polarization and income inequality fell in tandem from 1913 to 1957 and rose together dramatically from 1977 on. They show that Republicans have moved politically to the right, away from redistributive policies that would reduce income inequality. Polarization thus creates a feedback loop, worsening inequality.
Several economists and political scientists have argued that economic inequality translates into political inequality, particularly in situations where politicians have financial incentives to respond to special interest groups and lobbyists. Researchers such as Larry Bartels of Vanderbilt University have shown that politicians are significantly more responsive to the political opinions of the wealthy, even when controlling for a range of variables including educational attainment and political knowledge.
Historically, discussions of income inequality and capital vs. labor debates have sometimes included the language of class warfare, from President Theodore Roosevelt (referring to the leaders of big corporations as “malefactors of great wealth”), to President Franklin Roosevelt (“economic royalists…are unanimous in their hate for me–and I welcome their hatred”), to more the recent “1% versus the 99%” issue and the question of which political party better represents the interests of the middle class.
Investor Warren Buffett said in 2006 that: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” He advocated much higher taxes on the wealthiest Americans, who pay lower effective tax rates than many middle-class persons.
Two journalists concerned about social separation in the US are economist Robert Frank, who notes that: “Today’s rich had formed their own virtual country .. [T]hey had built a self-contained world unto themselves, complete with their own health-care system (concierge doctors), travel network (Net jets, destination clubs), separate economy…The rich weren’t just getting richer; they were becoming financial foreigners, creating their own country within a country, their own society within a society, and their economy within an economy.
George Packer wrote that “Inequality hardens society into a class system … Inequality divides us from one another in schools, in neighborhoods, at work, on airplanes, in hospitals, in what we eat, in the condition of our bodies, in what we think, in our children’s futures, in how we die. Inequality makes it harder to imagine the lives of others.
Even these class levels can affect the politics in certain ways. There has been an increased influence by the rich on the regulatory, legislative and electoral processes within the country that has led to improved employment standards for the bureaucrats and politicians. They have a greater influence through their lobbying and contributions that give them an opportunity to immerse wealth for themselves.
Loss of income by the middle class relative to the top-earning 1% and 0.1% is both a cause and effect of political change, according to journalist Hedrick Smith. In the decade starting around 2000, business groups employed 30 times as many Washington lobbyists as trade unions and 16 times as many lobbyists as labor, consumer, and public interest lobbyists combined.
From 1998 through 2010 business interests and trade groups spent $28.6 billion on lobbying compared with $492 million for labor, nearly a 60-to-1 business advantage.
The result, according to Smith, is a political landscape dominated in the 1990s and 2000s by business groups, specifically “political insiders” former members of Congress and government officials with an inside track working for “Wall Street banks, the oil, defense, and pharmaceutical industries; and business trade associations.” In the decade or so prior to the Great Divergence, middle-class-dominated reformist grassroots efforts such as civil rights movement, environmental movement, consumer movement, labor movement had considerable political impact.
“We haven’t achieved the minimalist state that libertarians advocate. What we’ve achieved is a state too constrained to provide the public goods investments in infrastructure, technology, and education that would make for a vibrant economy and too weak to engage in the redistribution that is needed to create a fair society. But we have a state that is still large enough and distorted enough that it can provide a bounty of gifts to the wealthy.”
Economist Joseph Stiglitz argues that hyper-inequality may explain political questions such as why America’s infrastructure (and other public investments) are deteriorating, or the country’s recent relative lack of reluctance to engage in military conflicts such as the 2003 invasion of Iraq. Top-earning families, wealthy enough to buy their own education, medical care, personal security, and parks, have little interest in helping pay for such things for the rest of society, and the political influence to make sure they don’t have to. So too, the lack of personal or family sacrifice involved for top earners in the military intervention of their country their children being few and far between in the relatively low-paying all-volunteer military may mean more willingness by influential wealthy to see its government wage war.
Economist Branko Milanovic argued that globalization and the related competition with cheaper labor from Asia and immigrants have caused U.S. middle-class wages to stagnate, fueling the rise of populist political candidates such as Donald Trump.
The relatively high rates of health and social problems, (obesity, mental illness, homicides, teenage births, incarceration, child conflict, drug use) and lower rates of social goods (life expectancy, educational performance, trust among strangers, women’s status, social mobility, even numbers of patents issued per capita), in the US compared to other developed countries may be related to its high income inequality. Using statistics from 23 developed countries and the 50 states of the US, British researchers Richard G. Wilkinson and Kate Pickett have found such a correlation which remains after accounting for ethnicity, national culture, and occupational classes or education levels. Their findings, based on UN Human Development Reports and other sources, locate the United States at the top of the list in regards to inequality and various social and health problems among developed countries. The authors argue inequality creates psychosocial stress and status anxiety that lead to social ills. A 2009 study conducted by researchers at Harvard University and published in the British Medical Journal attribute one in three deaths in the United States to high levels of inequality. According to The Earth Institute, life satisfaction in the US has been declining over the last several decades, which has been attributed to soaring inequality, lack of social trust and loss of faith in government.
It is claimed in a 2015 study by Princeton University researchers Angus Deaton and Anne Case that income inequality could be a driving factor in a marked increase in deaths among white males between the ages of 45 to 54 in the period 1999 to 2013.
Paul Krugman argues that the much lamented long-term funding problems of Social Security and Medicare can be blamed in part on the growth in inequality as well as the usual culprits like longer life expectancies. The traditional source of funding for these social welfare programs payroll taxes is inadequate because it does not capture income from capital, and income above the payroll tax cap, which make up a larger and larger share of national income as inequality increases.
Upward redistribution of income is responsible for about 43% of the projected Social Security shortfall over the next 75 years.
Disagreeing with this focus on the top-earning 1%, and urging attention to the economic and social pathologies of lower-income/lower education Americans, is conservative journalist David Brooks. Whereas in the 1970s, high school and college graduates had “very similar family structures”, today, high school grads are much less likely to get married and be active in their communities, and much more likely to smoke, be obese, get divorced, or have “a child out of wedlock.”
The zooming wealth of the top one percent is a problem, but it’s not nearly as big a problem as the tens of millions of Americans who have dropped out of high school or college. It’s not nearly as big a problem as the 40 percent of children who are born out of wedlock. It’s not nearly as big a problem as the nation’s stagnant human capital, its stagnant social mobility and the disorganized social fabric for the bottom 50 percent.
Contradicting most of these arguments, classical liberals such as Friedrich Hayek have maintained that because individuals are diverse and different, state intervention to redistribute income is inevitably arbitrary and incompatible with the concept of general rules of law, and that “what is called ‘social’ or distributive’ justice is indeed meaningless within a spontaneous order”. Those who would use the state to redistribute, “take freedom for granted and ignore the preconditions necessary for its survival.”
The growth of inequality has provoked a political protest movement the Occupy movement starting in Wall Street and spreading to 600 communities across the United States in 2011. Its main political slogan “We are the 99%” references its dissatisfaction with the concentration of income in the top 1%.
Posted: December 29, 2016 at 4:05 am
These are lines from my asteroid-impact novel, Regolith: Just because there are no laws against stupidity doesnt mean it shouldnt be punished. I havent faced rejection this brutal since I was single. He smelled trouble like a fart in the shower. If this was a kiss of gratitude, then she must have been very grateful. Not since Bush and Cheney have so few spent so much so fast for so long for so little. As a nympho for mind-fucks, Lisa took to politics like a pig to mud. She began paying men compliments as if she expected a receipt. Like the Aerosmith song, his get-up-and-go just got-up-and-went. You couldnt beat the crap out of a dirty diaper! He embraced his only daughter as if she was deploying to Iraq. She was hotter than a Class 4 solar flare! If sex was a weapon, then Monique possessed WMD I havent felt this alive since I lost my virginity. He once read that 95% of women fake organism, and the rest are gay. Beauty may be in the eyes of the beholder, but ugly is universal. Why do wives fart, but not girlfriends? Adultery is sex that is wrong, but not necessarily bad. The dinosaurs stayed drugged out, drooling like Jonas Brothers fans. Silence filled the room like tear gas. The told him a fraction of the truth and hoped it would take just a fraction of the time. Happiness is the best cosmetic, He was a whale of a catch, and there were a lot of fish in the sea eager to nibble on his bait. Cheap hookers are less buck for the bang, Men cannot fall in love with women they dont find attractive, and women cannot fall in love with men they do not respect. During sex, men want feedback while women expect mind-reading. Cooper looked like a cow about to be tipped over. His father warned him to never do anything he couldnt justify on Oprah. The poor are not free — theyre just not enslaved. Only those with money are free. Sperm wasnt something he would choose on a menu, but it still tasted better than asparagus. The crater looked alive, like Godzilla was about to leap out and mess up Tokyo. Bush follows the Bible until it gets to Jesus. When Bush talks to God, its prayer; when God talks to Bush, its policy. Cheney called the new Miss America a traitor apparently she wished for world peace. Cheney was so unpopular that Bush almost replaced him when running for re-election, changing his campaign slogan to, Aint Got Dick. Bush fought a war on poverty and the poor lost. Bush thinks we should strengthen the dollar by making it two-ply. Hurricane Katrina got rid of so many Democratic voters that Republicans have started calling her Kathleen Harris. America and Iraq fought a war and Iran won. Bush hasnt choked this much since his last pretzel. Some wars are unpopular; the rest are victorious. So many conservatives hate the GOP that they are thinking of changing their name to the Dixie Chicks. If Saddam had any WMD, he would have used them when we invaded. If Bush had any brains, he would have used them when we invaded. Its hard for Bush to win hearts and minds since he has neither. In Iraq, you are a coward if you leave and a fool if you stay. Bush believes its not a sin to kill Muslims since they are going to Hell anyway. And, with Bushs help, soon. In Iraq, those who make their constitution subservient to their religion are called Muslims. In America theyre called Republicans. With great power comes great responsibility unless youre Republican. Brent Reilly
View original post here:
Posted: December 26, 2016 at 2:54 pm
Gene Policinski, Inside the First Amendment 9:30 a.m. MST December 25, 2016
Gene Policinski writes the First Amendment column distributed by Gannett News Service. (Gannett News Service, Sam Kittner/First Amendment Center/File)(Photo: GNS)
Our First Amendment freedoms will work if we still have them around to use.
Those five freedoms religion, speech, press, assembly and petition have been challenged at various times in our nations history, as many would say they are today.
But the very freedoms themselves provide the means and mechanisms for our society to self-correct those challenges, perhaps a main reason why the First Amendment has endured, unchanged, since Dec. 15, 1791.
Case in point: The tragic mass shooting in Orlando, Florida, on June 12 was followed by a burst of anti-Islamic rhetoric across the country after the killer declared allegiance to ISIS. The speech, however hateful, generally was protected by the First Amendment.
But in turn, those attacks were followed by pushback in the other direction. Muslim leaders decried the use of their faith to justify hatred of the United States or homophobic terrorism. Opposition was ramped up to the idea of increased surveillance of Muslims in America and now-President-elect Donald Trumps suggestion for a temporary ban on Muslims entering the United States.
In two rounds of national polling in the Newseum Institutes annual State of the First Amendment survey, support for First Amendment protection for fringe or extreme faiths actually increased after the Orlando attack, compared with sampling done in May.
The number of people who said First Amendment protection does not extend to such faiths dropped from 29 to 22 percent. In both surveys, just over 1,000 adults were sampled by telephone, and the margin of error in the surveys was plus or minus 3.2 percentage points.
The First Amendment is predicated on the notion that citizens who are able to freely debate without government censorship or direction will exchange views, sometimes strongly and on controversial subjects, but eventually find common ground.
Of course, that kind of vigorous and robust exchange in the marketplace only can happen if there is a marketplace freedom for all to speak and a willingness to join with others in serious discussion, debate and discourse that has a goal of improving life for us all.
Heres where the survey results turn ominous: Nearly four in 10 of those questioned in the 2016 State of the First Amendment survey, which was released July 4, could not name unaided a single freedom in the First Amendment.
Perhaps not identifying by name even one of the five freedoms is not the same as not knowing you have those core freedoms. But neither does the result build confidence that, as a nation, we have a deep understanding of what distinguishes our nation among all others and is so fundamental to the unique American experience of self-governance.
We have thrived as a nation with a social order and a government structure in which the exchange of views is a key to solving problems. The nations architects had a confidence and optimism that such exchanges in the so-called marketplace of ideas would ultimately work for the public good.
What would those founders think of a society in which so many seem to favor the electronic versions of divided marketplaces that permit only that speech of which you already approve or that confirms your existing views?
Or worse yet, a society in which the five freedoms are used as weapons from cyberbullying to mass Twitter attacks to deliberate distribution of fake news to figuratively set ablaze or tear down an opponents stand?
As a nation, we cannot abandon the values of our First Amendment freedoms that protect religious liberty, that defend free expression at its widest definition and that provide a right to unpopular dissent, without fundamentally changing the character of our nation.
As a people, we must stand in defense of the values set out in the First Amendment and Bill of Rights some 225 years ago, even as we face one of the deepest public divides on a range of issues in our history.
And we must revisit and renew our faith in a concept expressed in 1664 by English poet and scholar John Milton and later woven deep into the institutional fabric of America: that in a battle between truth and falsehood, who ever knew truth put to the worse in a free and open encounter?
Gene Policinski is chief operating officer of the Newseum Institute and senior vice president of the Institutes First Amendment Center. He can be reached at email@example.com. Follow him on Twitter: @genefac.
Read or Share this story: http://www.thespectrum.com/story/opinion/2016/12/25/first-amendment-works-and-if-we-still-have/95705830/
The rest is here:
First Amendment works and will if we still have it
Posted: December 24, 2016 at 1:45 pm
Well, folks. Ive gone off and done it.
Ive managed to create the most politically incorrect Christmas show in America. My two-hour Fox Radio extravaganza declares that Jesus is the reason for the season loud and proud.
Click here for a FREE subscription to Todds newsletter: a must-read for Conservatives!
The Todd Starnes Christmas Show will air on hundreds of radio stations around the nation and FoxNews.com has a broadcast version which you can watch here.
The show includes a Living Nativity, flying angels, shepherds and the Christmas story delivered directly from the New Testament at Bellevue Baptist Church in Memphis, Tennessee.
We also have a stage full of line dancing Santa Clauses, celebrity singers like Jason Crabb, Meredith Andrews and the Mylon Hayes Family.
Oh, and theres a massive Christmas tree filled singing young people. You have to watch the video to truly appreciate the magnitude of 140,000 sparkling lights. It makes the Rockefeller Christmas Tree look like that scrawny Charlie Brown tree.
As you can tell, my show has high concentrations of cultural appropriation that could cause severe microaggressions among some millennials and free-thinkers. I posted a warning at the beginning of the program urging fragile snowflakes to seek shelter in a safe space until after the angels have harkened the herald.
It’s beyond reason that a season celebrating peace on earth is so despised by secular humanists. Before grandpa can swipe the last piece of pumpkin pie, the atheists and agnostics and free-thinkers are waging battles over Santa Claus and reindeer, candy canes and Christmas Choirs.
This year, schools took issue with A Christmas Carol and A Charlie Brown Christmas and one university published a screed urging people to host all-inclusive holiday parties.
Meanwhile, the atheists and agnostics doubled down on their efforts to eradicate town square Nativities from sea to shining sea. And dont even get me started with the Satanists.
The motley crew of godless Grinches have shown no mercy to either the sacred or the secular.
But when it comes to protesting the holy days of other religions, the atheists and agnostics and Satanists are curiously quiet. I dont seem to recall the Satanists posting a Satanic pentagram outside a mosque.
Some call it a war on Christmas — but it goes much deeper than just hating a holiday. It’s a war on the very foundation of our nation — the essence of who we are as a people.
We are one nation under God.
A God who sent his son to be born in the city of David — a savior — who is Christ the Lord. That is what Christmas is all about — and that is why the secular humanists so despise this Yuletide season.
Todd Starnes is host of Fox News & Commentary, heard on hundreds of radio stations. His latest book is “God Less America: Real Stories From the Front Lines of the Attack on Traditional Values.” Follow Todd on Twitter@ToddStarnes and find him on Facebook.
Read this article:
This may be the most politically incorrect Christmas show in …
Posted: December 16, 2016 at 12:17 pm
Catch up with the nations in this latest season where we have more silly shenanigans. Germany and Italy are going on and on aboutcanned food? Ugh, are you sure that’s safe to eat?! In between the fun, we have something super special! Watch little America in a totally adorable flashback that is going to make your heart swell. Sh-Shut up, I’m not crying, you’re crying!And don’t forget to check in on the Nordic nations and see what’s going on with all those blondes. Wait Estonia, what are you doing there? And there’s even more adventure to be had when we go on a hunt for more micronations. Yay! Who will join Sealand in his journey to bring attention to the micros?But make sure you don’t miss out on the four extra special OVAs, including a Halloween special. Oh my gosh, everyone looks so cute in their costumes! Look at America dressed as and oh, look at you, England! Squee!!Hetalia is back and bringing the full twinkle!
Posted: at 12:20 pm
Washington Post Peddles Tarring of Ron Paul Institute as Russian Propaganda, via The Ron Paul Institute for Peace & Prosperity,
The Washington Post has a history of misrepresenting Ron Pauls views. Last year the supposed newspaper of record ran a feature article by David A. Fahrenthold in which Fahrenthold grossly mischaracterized Paul as an advocate for calamity, oppression, and poverty the opposite of the goals Paul routinely expresses and, indeed, expressed clearly in a speech at the event upon which Fahrentholds article purported to report. Such fraudulent attacks on the prominent advocate for liberty and a noninterventionist foreign policy fall in line with the newspapers agenda. As Future of Freedom Foundation President Jacob G. Hornberger put it in a February editorial, the Posts agenda is guided by the interventionist mindset that undergirds the mainstream media.
On Thursday, the Post published a new article by Craig Timberg complaining of a flood of so-called fake news supported by a sophisticated Russian propaganda campaign that created and spread misleading articles online with the goal of punishing Democrat Hillary Clinton, helping Republican Donald Trump and undermining faith in American democracy, To advance this conclusion, Timberg points to PropOrNot, an organization of anonymous individuals formed this year, as having identified more than 200 websites as routine peddlers of Russian propaganda during the election season. Look on the PropOrNot list. There is the Ron Paul Institute for Peace and Prosperitys (RPI) website RonPaulInstitute.org listed among websites termed Russian propaganda outlets.
What you will not find on the PropOrNot website is any particularized analysis of why the RPI website, or any website for that matter, is included on the list. Instead, you will see only sweeping generalizations from an anonymous organization. The very popular website drudgereport.com even makes the list. While listed websites span the gamut of political ideas, they tend to share in common an independence from the mainstream media.
Timbergs article can be seen as yet another big media attempt to shift the blame for Democratic presidential nominee Hillary Clintons loss of the presidential election away from Clinton, her campaign, and the Democratic National Committee (DNC) that undermined Sen Bernie Sanders (I-VT) challenge to Clinton in the Democratic primary.
The article may also be seen as another step in the effort to deter people from looking to alternative sources of information by labeling those information sources as traitorous or near-traitorous.
At the same time, the article may be seen as playing a role in the ongoing push to increase tensions between the United States and Russia a result that benefits people, including those involved in the military-industrial complex, who profit from the growth of US national security activity in America and overseas.
This is not the first time Ron Paul and his institute has been attacked for sounding pro-Russian or anti-American. Such attacks have been advanced even by self-proclaimed libertarians.
Expect that such attacks will continue. They are an effort to tar Paul and his institute so people will close themselves off from information Paul and RPI provide each day in furtherance of the institutes mission to continue and expand Pauls lifetime of public advocacy for a peaceful foreign policy and the protection of civil liberties at home. While peace and liberty will benefit most people, powerful interests seek to prevent the realization of these objectives. Indeed, expect attacks against RPI to escalate as the institute continues to reach growing numbers of people with its educational effort
Read the original:
Ron Paul Lashes Out At WaPo’s Witch Hunt: "Expect Such …
Posted: November 27, 2016 at 9:53 am
Infrastructure Build or Privatization Scam?
Trumpists are touting the idea of a big infrastructure build, and some Democrats are making conciliatory noises about working with the new regime on that front. But remember who youre dealing with: if you invest anything with this guy, be it money or reputation, you are at great risk of being scammed. So, what do we know about the Trump infrastructure plan, such as it is?
Crucially, its not a plan to borrow $1 trillion and spend it on much-needed projects which would be the straightforward, obvious thing to do. It is, instead, supposed to involve having private investors do the work both of raising money and building the projects with the aid of a huge tax credit that gives them back 82 percent of the equity they put in. To compensate for the small sliver of additional equity and the interest on their borrowing, the private investors then have to somehow make profits on the assets they end up owning.
You should immediately ask three questions about all of this.
First, why involve private investors at all? Its not as if the federal government is having any trouble raising money in fact, a large part of the justification for infrastructure investment is precisely that the government can borrow so cheaply. Why do we need private equity at all?
One answer might be that this way you avoid incurring additional public debt. But thats just accounting confusion. Imagine that youre building a toll road. If the government builds it, it ends up paying interest but gets the future revenue from the tolls. If it turns the project over to private investors, it avoids the interest cost but also loses the future toll revenue. The governments future cash flow is no better than it would have been if it borrowed directly, and worse if it strikes a bad deal, say because the investors have political connections.
Second, how is this kind of scheme supposed to finance investment that doesnt produce a revenue stream? Toll roads are not the main thing we need right now; what about sewage systems, making up for deferred maintenance, and so on? You could bring in private investors by guaranteeing them future government money say, paying rent in perpetuity for the use of a water system built by a private consortium. But this, even more than having someone else collect tolls, would simply be government borrowing through the back door with much less transparency, and hence greater opportunities for giveaways to favored interests.
A lot of people in politics and the media are scrambling to normalize what just happened to us, saying that it will all be OK and we can work with Trump. No, it wont, and no, we cant. The next occupant of the White House will be a pathological liar with a loose grip on reality; he is already surrounding himself with racists, anti-Semites, and conspiracy theorists; his administration will be the most corrupt in America history.
How did this happen? There were multiple causes, but you just cant ignore the reality that key institutions and their leaders utterly failed. Every news organization that decided, for the sake of ratings, to ignore policy and barely cover Trump scandals while obsessing over Clinton emails, every reporter who, for whatever reason often sheer pettiness played up Wikileaks nonsense and talked about how various Clinton stuff raised questions and cast shadows is complicit in this disaster. And then theres the FBI: its quite reasonable to argue that James Comey, whether it was careerism, cowardice, or something worse, tipped the scales and may have doomed the world.
No, Im not giving up hope. Maybe, just maybe, the sheer awfulness of whats happening will sink in. Maybe the backlash will be big enough to constrain Trump from destroying democracy in the next few months, and/or sweep his gang from power in the next few years. But if thats going to happen, enough people will have to be true patriots, which means taking a stand.
And anyone who doesnt who plays along and plays it safe is betraying America, and mankind.
As I said in todays column, nobody who thought Trump would be a disaster should change his or her mind because he won the election. He will, in fact, be a disaster on every front. And I think he will eventually drag the Republican Party into the abyss along with his own reputation; the question is whether he drags the rest of the country, and the world, down with him.
But its important not to expect this to happen right away. Theres a temptation to predict immediate economic or foreign-policy collapse; I gave in to that temptation Tuesday night, but quickly realized that I was making the same mistake as the opponents of Brexit (which I got right). So I am retracting that call, right now. Its at least possible that bigger budget deficits will, if anything, strengthen the economy briefly. More detail in Mondays column, I suspect.
On other fronts, too, dont expect immediate vindication. America has a vast stock of reputational capital, built up over generations; even Trump will take some time to squander it.
The true awfulness of Trump will become apparent over time. Bad things will happen, and he will be clueless about how to respond; if you want a parallel, think about how Katrina revealed the hollowness of the Bush administration, and multiply by a hundred. And his promises to bring back the good old days will eventually be revealed as the lies they are.
But it probably wont happen in a year. So the effort to reclaim American decency is going to have to have staying power; we need to build the case, organize, create the framework. And, of course, never forget who is right.
Its going to be a long time in the wilderness, and its going to be awful. If I sound calm and philosophical, Im not like everyone who cares, Im frazzled, sleepless, depressed. But we need to be stalwart.
Anyone who claims to be philosophical and detached after yesterday is either lying or has something very wrong with him (or her, but I doubt many women are in that camp.) Its a disaster on multiple levels, and the damage will echo down the decades if not the generations. And like anyone on my side of this debate, I keep feeling waves of grief.
Its natural, only human, to engage in recriminations, some of which are surely deserved. But while a post-mortem is going to be necessary, lashing out doesnt seem helpful or good for the lashers-out themselves.
Eventually those of us on the center-left will have to talk about political strategy. For now, however, I want to share some thoughts on how we should deal with this personally.
First of all, its always important to remember that elections determine who has the power, not who has the truth. The stunning upset doesnt mean that the alt-right is correct to view nonwhites as inferior, that voodoo economics works, whatever. And you have to hold to the truth as best you see it, even if it suffers political defeat.
That said, does it make sense on a personal level to keep struggling after this kind of blow? Why not give up on trying to save the world, and just look out for yourself and those close to you? Quietism does have its appeal. Admission: I spent a lot of today listening to music, working out, reading a novel, basically taking a vacation in my head. You cant help feeling tired and frustrated after this kind of setback.
But eventually one has to go back to standing for what you believe in. Its going to be a much harder, longer road than I imagined, and maybe it ends in irreversible defeat, if nothing else from runaway climate change. But I couldnt live with myself if I just gave up. And I hope others will feel the same.
I tweeted this out earlier, but for blog readers here it is in this form.
Some morning-after thoughts: what hits me and other so hard isnt just the immense damage Trump will surely do, to climate above all. Theres also a vast disillusionment that as of now I think of as the end of the romantic vision of America (which I still love).
What I mean is the notion of US history as a sort of novel in which there may be great tragedy, but theres always a happy ending. That is, we tell a story in which at times of crisis we always find the leader Lincoln, FDR and the moral courage we need.
Its a particular kind of American exceptionalism; other countries dont tell that kind of story about themselves. But I, like others, believed it.
Now it doesnt look very good, does it? But giving up is not an option. The world needs a decent, democratic America, or were all lost. And theres still a lot of decency in the nation its just not as dominant as I imagined. Time to rethink, for sure. But not to surrender.
Binyamin Appelbaum has a nice piece about the stall in world trade growth, which I (and many others) have been tracking for a while. And I thought Id write a bit more about this, if only to serve as a much-needed distraction from the election.
If theres a problem with the Appelbaum piece, it is that on casual reading it might seem to suggest that slowing trade growth is (a) necessarily the result of protectionism and (b) necessarily a bad thing. Neither of these is right.
I found myself thinking about this some years ago, when teaching trade policy at the Woodrow Wilson School. I was very struck by a paper by Taylor et al on the interwar decline in trade, which argued that much of this decline reflected rising transport costs, not protectionism. But how could transport costs have gone up? Was there technological regress?
The answer, as the paper correctly pointed out, is that real transport costs will rise even if there is continuing technological progress, as long as that progress is slower than in the rest of the economy.
To clear that story up in my own mind, I wrote up a little toy model, contained in these class notes from sometime last decade (?). Pretty sure I wrote them before the global trade stagnation happened, but theyre a useful guide all the same.
As I see it, we had some big technological advances in transportation containerization, probably better communication making it easier to break up the value chain; plus the great move of developing countries away from import substitution toward export orientation. (Thats a decline in tau and t in my toy model.) But this was a one-time event. Now that its behind us, no presumption that trade will grow faster than GDP. This need not represent a problem; its just the end of one technological era.
It is kind of ironic that globalization seems to be plateauing just as the political backlash mounts. But were not going to talk about the election.
Both Ross Douthat and David Brooks have now weighed in on the state of conservative intellectuals; both deserve credit for taking a critical look at their team.
But of course theres a but Id argue that they and others on the right still have huge blind spots. In fact, these blind spots are so huge as to make the critiques all but useless as a basis for reform. For if you ignore the true, deep roots of the conservative intellectual implosion, youre never going to make a real start on reconstruction.
What are these blind spots? First, belief in a golden age that never existed. Second, a simply weird refusal to acknowledge the huge role played by money and monetary incentives promoting bad ideas.
On the first point: Were supposed to think back nostalgically to the era when serious conservative intellectuals like Irving Kristol tried to understand the world, rather than treating everything as a political exercise in which ideas were just there to help their team win.
But it was never like that. Dont take my word for it; take the word of Irving Kristol himself, in his book Neoconservatism: The Autobiography of an Idea. Kristol explained his embrace of supply-side economics in the 1970s: I was not certain of its economic merits but quickly saw its political possibilities. This justified a cavalier attitude toward the budget deficit and other monetary or financial problems, because political effectiveness was the priority, not the accounting deficiencies of government.
In short, never mind whether its right, as long as its politically useful. When David complains that conservative opinion-meisters began to value politics over everything else, hes describing something that happened well before Reagan.
But shouldnt there have been some reality checks along the way, with politically convenient ideas falling out of favor because they didnt work in practice? No because being wrong in the right way has always been a financially secure activity. I see this very clearly in economics, where there are three kinds of economists: liberal professional economists, conservative professional economists, and professional conservative economist the fourth box is more or less empty, because billionaires dont lavishly support hacks on the left.
There was a time, not long ago, when deficit scolds were actively dangerous when their huffing and puffing came quite close to stampeding Washington into really bad policies like raising the Medicare age (which wouldnt even have saved money) and short-term fiscal austerity. At this point their influence doesnt reach nearly that far. But they continue to play a malign role in our national discourse because they divert and distract attention from much more deserving problems, depriving crucial issues of political oxygen.
You saw that in the debates: four, count them, four questions about debt from the CRFB, not one about climate change. And you see it again in todays Times, with Pete Peterson (of course) and Paul Volcker (sigh) lecturing us about the usual stuff.
Whats so bad about this kind of deficit scolding? Its deeply misleading on two levels: the problem it purports to lay out is far less clearly a major issue than the scolds claim, and the insistence that we need immediate action is just incoherent.
So, about that supposed debt crisis: right now we have a more or less stable ratio of debt to GDP, and no hint of a financing problem. So claims that we are facing something terrible rest on the presumption that the budget situation will worsen dramatically over time. How sure are we about that? Less than you may imagine.
Yes, the population is getting older, which means more spending on Medicare and Social Security. But its already 2016, which means that quite a few baby boomers are already drawing on those programs; by 2020 well be about halfway through the demographic transition, and current estimates dont suggest a big budget problem.
Why, then, do you see projections of a large debt increase? The answer lies not in a known factor an aging population but in assumed growth in health care costs and rising interest rates. And the truth is that we dont know that these are going to happen. In fact, health costs have grown much more slowly since 2010 than previously projected, and interest rates have been much lower. As the chart above shows, taking these favorable surprises into account has already drastically reduced long-run debt projections. These days the long-run outlook looks vastly less scary than people used to imagine.
Like Claudia Sahm, I was struck by polling results indicating that around half of Trump supporters completely distrust official data although maybe a bit less surprised, since Ive been living in that world for years. In particular, the failure of high inflation to materialize led quite a few people on the right side of the political spectrum including the likes of Niall Ferguson to insist that the numbers were being cooked, so this is neither a new phenomenon nor one restricted to Trump types.
As it happened, there was a very easy answer to the inflation truthers: quite aside from the absurdity of claiming a conspiracy at the BLS, we had independent estimates such as the Billion Prices Index that closely matched official data. And theres similar independent evidence for a lot of the things where people now claim that official numbers are skewed. For example, the Gallup Healthways index provides independent confirmation of the huge gains in insurance coverage under the Affordable Care Act.
But aside from validity, what explains this distrust of statistics? Is it because peoples own experience clashes with what theyre being told? I dont think so. In fact, when people are asked about personal outcomes, not about the economy, the story they tell is a lot like the official numbers. From that poll about Trumpian distrust of the data:
So people are feeling better, in line with what the data say, but claim that the economy is getting worse. Hard to believe that this isnt political, a case of going with the party line in the teeth of personal experience.
Ive posted other performances of this song by this band, but this is a good one and topical this week!
The much-hyped severe Brexit recession does not, so far, seem to be materializing which really shouldnt be that much of a surprise, because as I warned, the actual economic case for such a recession was surprisingly weak. (Ouch! I just pulled a muscle while patting myself on the back!) But we are seeing a large drop in the pound, which has steepened as it becomes likely that this will indeed be a very hard Brexit. How should we think about this?
Originally, stories about a pound plunge were tied to that recession prediction: domestic investment demand would collapse, leading to sustained very low interest rates, hence capital flight. But the demand collapse doesnt seem to be happening. So what is the story?
For now, at least, Im coming at it from the trade side especially trade in financial services. It seems to me that one way to think about this is in terms of the home market effect, an old story in trade but one that only got formalized in 1980.
Heres an informal version: imagine a good or service subject to large economies of scale in production, sufficient that if its consumed in two countries, you want to produce it in only one, and export to the other, even if there are costs of shipping it. Where will this production be located? Other things equal, you would choose the larger market, so as to minimize total shipping costs. Other things may not, of course, be equal, but this market-size effect will always be a factor, depending on how high those shipping costs are.
In one of the models I laid out in that old paper, the way this worked out was not that all production left the smaller economy, but rather that the smaller economy paid lower wages and therefore made up in competitiveness what it lacked in market access. In effect, it used a weaker currency to make up for its smaller market.
In Britains case, Id suggest that we think of financial services as the industry in question. Such services are subject to both internal and external economies of scale, which tends to concentrate them in a handful of huge financial centers around the world, one of which is, of course, the City of London. But now we face the prospect of seriously increased transaction costs between Britain and the rest of Europe, which creates an incentive to move those services away from the smaller economy (Britain) and into the larger (Europe). Britain therefore needs a weaker currency to offset this adverse impact.
So, now were supposed to feel sorry for Paul Ryan?
For years, Ryan has cultivated a reputation on both sides of the aisle as a paragon of decency, earnestness, and principle; that rare creature of D.C. who seems genuinely guided by good faith. To many in Washington including no small number of reporters Ryans support for Trump is not merely a political miscalculation, but a craven betrayal.
Ugh. Ryan is not, repeat not, a serious, honest man of principle who has tainted his brand by supporting Donald Trump. He has been an obvious fraud all along, at least to anyone who can do budget arithmetic. His budget proposals invariably contain three elements:
1. Huge tax cuts for the wealthy. 2. Savage cuts in aid to the poor. 3. Mystery meat claims that he will raise trillions by closing unspecified tax loopholes and save trillions cutting unspecified discretionary spending.
Taking (1) and (2) together that is, looking at the policies he actually specifies his proposals have always increased the deficit, while transferring income from the have-nots to the haves. Only by invoking (3), which involves nothing but unsupported and implausible assertion, does he get to claim to reduce the deficit.
Yet he poses as an icon of fiscal probity. That is, he is, in his own way, every bit as much a fraud as The Donald.
So how has he been able to get away with this? The main answer is that he has been a huge beneficiary of false balance. The media narrative requires that there be serious, principled policy wonks on both sides of the aisle; Ryan has become the designated symbol of that supposed equivalence, even though actual budget experts have torn his proposals to shreds on repeated occasions.
And my guess is that the media will quickly forgive him for the Trump episode too. They need him for their bothsidesism. After all, its not as if there are any genuine honest policy wonks left in the party that nominated Donald Trump.
Simon Wren-Lewis has an excellent new paper trying to explain the widespread resort to austerity in the face of a liquidity trap, which is exactly the moment when such policies do the most harm. His bottom line is that
austerity was the result of right-wing opportunism, exploiting instinctive popular concern about rising government debt in order to reduce the size of the state.
I think this is right; but I would emphasize more than he does the extent to which both the general public and Very Serious People always assume that reducing deficits is the responsible thing to do. We have some polling from the 1930s, showing a strong balanced-budget bias even then:
I think Simon would say that this is consistent with his view that large deficits grease the rails for deficit phobia, since FDRs administration did run up deficits and debt that were unprecedented for peacetime. But has there ever been a time when the public favored bigger deficits?
Meanwhile, as someone who was in the trenches during the US austerity fights, I was struck by how readily mainstream figures who werent especially right-wing in general got sucked into the notion that debt reduction was THE central issue. Ezra Klein documented this phenomenon with respect to Bowles-Simpson:
For reasons Ive never quite understood, the rules of reportorial neutrality dont apply when it comes to the deficit. On this one issue, reporters are permitted to openly cheer a particular set of highly controversial policy solutions. At Tuesdays Playbook breakfast, for instance, Mike Allen, as a straightforward and fair a reporter as youll find, asked Simpson and Bowles whether they believed Obama would do the right thing on entitlements with the right thing clearly meaning cut entitlements.
Meanwhile, as Brad Setser points out, the IMF whose research department has done heroic work puncturing austerity theories and supporting a broadly Keynesian view of macroeconomics is, in practice, pushing for fiscal contraction almost everywhere.
Again, this doesnt exactly contradict Simons argument, but maybe suggests that there is a bit more to it.
Ive been writing about Donald Trumps claim that Mexicos value-added tax is an unfair trade policy, which is just really bad economics. Heres Joel Slemrod explaining that a VAT has the same effects as a sales tax. Now, nobody thinks that sales taxes are an unfair trade practice. New York has fairly high sales taxes; Delaware has no such tax. Does anyone think that this gives New York an unfair advantage in interstate competition?
But it turns out that Trump wasnt saying ignorant things off the top of his head: he was saying ignorant things fed to him by his incompetent economic advisers. Heres the campaign white paper on economics. The VAT discussion is on pages 12-13 and its utterly uninformed.
And its not the worst thing: theres lots of terrible stuff in the white paper, at every level.
Should we be reassured that Trump wasnt actually winging it here, just taking really bad advice? Not at all. This says that if he somehow becomes president, and decides to take the job seriously, it wont help because his judgment in advisers, his notion of who constitutes an expert, is as bad as his judgment on the fly.
Last nights debate was an incredible blowout yet both candidates were pretty much who we already knew they were. This was the Hillary Clinton of the Benghazi hearing confronting the Donald Trump weve seen at every stage of the campaign.
But this then raises a question: how did the race get so close? Why, on the eve of the debate, did polls show at best a narrow Clinton lead? What happened to the commanding lead Clinton held after the conventions?
You might say that Clinton ran a terrible campaign but what, exactly, did she do? Trump may have learned to read from a TelePrompter, but was that such a big deal?
Well, my guess is that it was the Goring of Hillary: beginning in late August, with the AP report on the Clinton Foundation, the mainstream media went all in on abnormalizing Mrs. Clinton, a process that culminated with Matt Lauer, who fixated on emails while letting grotesque, known, Trump lies slide. Heres a graphic, using the Upshots estimate of election probabilities (which is a useful summary of what the polls say):
The thing is, it was all scurrilous. The AP, if it had been honest, had found no evidence of wrongdoing or undue influence; if meeting a Nobel Peace Prize winner who happened to be a personal friend was their prime example But dinging the Clintons was what the cool kids were supposed to do, with normal rules not applying.
And this media onslaught pushed the race quite close on the eve of the first debate. It was feeling like 2000 all over again; and I think Jamelle Bouie got this exactly right:
But it all went off script last night, partly because HRC did so well and DJT so badly but also, I think, because pressure from progressives ensured that there was a lot of real-time fact-checking.
Whether it turns out to have been enough to turn the tide remains to be seen. But anyone in the media who participated in the razzing of Hillary Clinton should think about what we saw on that stage, and ask himself what the hell he thought he was doing.
Read this article: