Category Archives: Income disparity

Chicago Mayor Rahm Emanuel Forced Into Historic Runoff

This Real News Network interview describes why the coming mayoral runoff in Chicago is in many ways a referendum on failed neoliberal policies, such as privatizing schools. The very fact that this race is taking place at all reveals an unexpectedly large degree of popular discontent with misrule by what passes for our elites

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What Thomas Piketty and Larry Summers Don’t Tell You About Income Inequality

In a new paper for the Institute For New Economic Thinking’s Working Group on the Political Economy of Distribution, economist Lance Taylor and his colleagues examine income inequality using new tools and models that give us a more nuanced — and frightening —picture than we’ve had before.  Their simulation models show how so-called “reasonable” modifications like modest tax increases on the wealthy and boosting low wages are not going to be enough to stem the disproportionate tide of income rushing toward the rich. Taylor’s research challenges the approaches of American policy makers, the assumptions of traditional economists, and some of the conclusions drawn by Thomas Piketty and Larry Summers. Bottom line: We’re not yet talking about the kinds of major changes needed to keep us from becoming a Downton Abbey society.

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Wolf Richter: In Search of Cheap Labor in Tech – Behind the H1-B Visa Scenes

his post focuses on how the procedures in the H1-B visa process that are meant to protect workers from unfair competition from foreign workers and contractors are a joke. And this is one of the reasons that the calls by disconnected Beltway pundits and technocrats for American students to get more technically oriented education, most of all in STEM fields, is hopelessly misguided. Companies are more and more refusing to supply much if anything in the way of entry-level jobs, sending yeoman’s work in former white collar professions, including accounting and the law, to outsources in India. And the fix of having more specialized training is just as unrealistic. The more specialized the training, the more at risk you are that those skills will prove to be useless. That is why so many mid-career professionals fall far when they lose their perch, since if they can’t use the narrow expertise that they’ve accumulated, they have to fall back on their generalist skills, which means low-level jobs like call center work, retail, or if they are lucky, a position like an office manager in a small business.

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Can Fast Food Afford a $15 Minimum Wage Without Cutting Jobs?

Yves here. One of the oft-made assertions is that increasing wages in low-wage positions will lead to job losses. But in many industries, direct labor is a not all that large a proportion of total product cost. And with corporate profits at record highs, the immediate impact would normally be to trim profit levels, which have risen to be such a high proportion of GDP as to be deemed by Warren Buffet as well higher than sustainable levels.

Moreover, as this Real News Network segment points out, businesses that pay only minimum wage or barely above it have lots of turnover. That is costly in terms of managerial time. Having a minimum wage that was more like a living wage would reduce employee churn, offsetting some of the cost of the pay increase. Costco has demonstrated that this approach works. It pays more than other discount retailers, and not only does it have less turnover, but it enjoys another gain: less inventory shrinkage, which is often due to theft by employees.

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Satyajit Das: The Art of Destructive Capital

In truth, art and money have never been far apart. The wealthy have always collected art. Joseph Henry Duveen, the legendary dealer who in the early twentieth century masterminded the sale of Old Masters to wealthy Americans with little knowledge of art, observed that: “Europe has plenty of art while America has plenty of money and large empty mansions and I bring them together.” Richard Rush in his 1961 book Art as an Investment doubted that “collectors have ever been unmindful of the investment value of art”.

But the market rather than the art itself is now the centre of this universe.

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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.

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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.

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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.

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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.

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