Category Archives: Income disparity

Why is No One Fighting the New Robber Barons?

Last week, Bill Moyers interviewed historian Steve Fraser on what he calls our Second Gilded Age. Despite the anodyne title of the segment, The New Robber Barons, it was really about why the American public has been so quiescent in the face of rapidly rising income inequality, while during the first Gilded Age, a wide range of groups rebelled against the wealth extraction operation. I encourage you to watch the segment in full or read the transcript.

Read more...

Joseph Stiglitz: Economics Must Address Wealth and Income Inequality

Yves here. This interview with Joesph Stiglitz is pretty subversive for a talk with a Serious Economist. Stiglitz doesn’t simply talk about the problem of inequality, but the drivers that most mainstream economists choose to ignore, such as the rise of monopoly/oligopoly power, worker exploitation, and how central banks have allowed banks to engage increasingly in speculative rather than productive lending.

Read more...

Peter Temin: Lessons From the Great Depression

In this video, Peter Temin, a highly respected expert on the Great Depression*, discusses some of the revealing parallels between that era and our current financial and economic plight with Marshall Auerback. Don’t be deceived by the leisurely pacing of this conversation and Temin’s soft-spoken manner. Temin in his measured way sets the stage for discussing how the trajectory we are on, which is undoing more and more social safety nets and job security, which are fundamental to trust, does not merely lead to lower productivity and hence hurts everyone, including the wealthy, but also puts us on a trajectory towards a dystopian future.

Read more...

Quiet Distress Among the (Ex) Rich

While the wealthy don’t get much sympathy on this website, the restructuring of the economy to save the banks at the expense of pretty much everyone else has hurt some former members of the top 1% and even the 0.1%. And it’s also worth mentioning that some of the former members of the top echelon occupied it when the distance between the rich and everyone else was much narrower than it is now.

The fact that economic distress has moved pretty high up the food chain is a sign that this recovery isn’t all that it is cracked up to be.

Read more...

Bill Moyers on The Lives of the Very Very Rich

Yves here. While this site talks regularly about the 1% and the 0.1%, we don’t often give a more specific idea of who they are. A recent Bill Moyers show gave a vignette of the super-rich, not just the 0.1%, but the 0.01%, who as we know all too well are playing a vastly disproportionate role in reshaping politics and our society.

Read more...

Suit on Animator Wage Suppression Shows Another Face of How Capital Squeezes Labor

Mark Ames reports on the latest revelations in a major anti-trust case against Silicon Valley giants including Disney, Sony, Dreamworks, Lucasfilm, and Pixar. For tech titans, enough is apparently never enough.

The earlier chapters of this sorry saga exposed a long-standing scheme by which major tech companies including Apple, Google, Adobe, Intuit, Intel, Lucasfilm and Pixar colluded to suppress wages of an alleged one million workers. The collusion was agreed at the CEO level of all the participants and memorialized through written agreements.

A related private suit was filed last September by animator against nine movie industry heavyweights including Walt Disney Animation, Dreamworks Animation, Sony Pictures, LucasFilm and Pixar. It alleged similar conduct to the bigger Silicon Valley wage-suppression suit. Among other things, the companies not just compared pay levels but agreed to fix them, and also signed agreements not to recruit from each other.

An amended complaint in the animator suit added two studios to the complaint and far more important, exposed that the wage-fixing scheme was far longer standing that previously thought. K

Read more...

Workers vs. Undocumented Immigrants: The Politics of Divide & Conquer

Yves here. Obama’s plan to give 4 million illegal immigrants temporary suspension from deportation has amped up the intensity of the already-heated debate over immigration and competition for US jobs from foreign workers.

This Real News Network interview with Bill Barry, who has organized documented and undocumented workers in the textile industry, makes an argument at a high level that many will find hard to dispute: that the fight over immigration reform and the status of undocumented immigrants diverts energy and attention from the ways in which a super-rich class is taking more and more out of the economy, to the detriment of laborers.

Read more...

High Marginal Tax Rates on the Top 1%

Optimal tax rates for the rich are a perennial source of controversy. This column argues that high marginal tax rates on the top 1% of earners can make society as a whole better off. Not knowing whether they would ever make it into the top 1%, but understanding it is very unlikely, households especially at younger ages would happily accept a life that is somewhat better most of the time and significantly worse in the rare event they rise to the top 1%.

Read more...

Masaccio: Piketty Shreds Marginal Productivity as Neoclassical Justification for Supersized Pay

Yves here. One of the main agendas of neoclassical economics is to give Panglossian defenses of the current order a veneer of intellectual legitimacy. If our system is the result of individuals and businesses behaving in logical ways, at least in the minds of economists, surely the outcome is inevitable, and therefore virtuous, or else those operators would do things differently. The Big Lie in all of this is that neoclassical economics takes power completely out of the equation. While it does assume selfishness, in that everyone is out or himself to maximize his utility, it also assumes atomized actors who lack the power to influence markets.

One instructive way to see how these arguments break down is by looking at neoclassical economists justify large disparities in pay. Piketty shows that the idea that people are paid what they are worth, or in neoliberal-speak, according to their marginal productivity, to be a sham

Read more...

Corporate Profit Margins vs. Wages in One Disturbing Chart

Yves here. This brief post by Doug Short is even more important than it appears to be. We had an outburst of neoliberal orthodoxy in comments yesterday on a post that discussed how wealth of most households had fallen since 1987. Some readers assigned blame for stagnant average worker wages (which was a big contributor to the lack of growth in household wealth) to immigrants, particularly Mexicans and H1-B visa workers.

The Doug Short chart below looks at corporate profit share versus labor share. This pinpoints the degree to which wage stagnation is the result of corporate managers and executives succeeding in cutting the pie to favor themselves (executive pay has become increasingly linked to stock prices, and relentless focus on short-term earnings, as well as stock buybacks, do wonders for earnings per share).

Read more...

Wealth of Most US Households Has Fallen Over the Last 25 Years

Yves here. This Real News Network interview on the results of the latest Survey of Consumer Finances paint a picture familiar to most readers: the rich are becoming richer while those with less wealth are falling further and further behind.

David Rosnick of CEPR makes an important observation in passing. The decline in the position of typical households is even worse the the Consumer Finances survey indicates. In 1989, many workers had pensions. Far fewer do now. The value of pensions isn’t included in these surveys due to the difficulty of determining what they are worth on a current basis. But they clearly are significant assets that relatively few working age people have now.

Read more...

Matt Stoller: Why the Democratic Party Acts The Way It Does

There is no end to the whining from Democratic activists after a rotten election, and no end to finger pointing after legislative defeats on contentious questions. This story in the Washington Post is the tell-all of the 2014 wipe-out, featuring the standard recriminations between the President and Congress. In it, the chief of staff of the Senator Majority Leader Harry Reid, David Krone, attacks the White House. “We were never going to get on the same page… We were beating our heads against the wall.” The litany of excuses is long. Democratic candidates were arrogant. The White House failed to transfer money, or stump effectively. The GOP caught up in the technology race, or the GOP recruited excellent disciplined candidates.

Everything is put on the table, except the main course — policy. Did the Democrats run the government well? Are the lives of voters better? Are you as a political party credible when you say you’ll do something?

This question is never asked, because Democratic elites — ensconced in the law firms, foundations, banks, and media executive suites where the real decisions are made — basically agree with each other about organizing governance around the needs of high technology and high finance. The only time the question even comes up now is in an inverted corroded form, when a liberal activist gnashes his or her teeth and wonders — why can’t Democrats run elections around populist themes and policies?

This is still the wrong question, because it assumes the wrong causality.

Read more...