Both official data and numerous news stories confirm how badly average citizens have fared in the wake of the global financial crisis. Food stamp use has fallen only a tad from record high levels. WalMart has reinstituted layaway. The average home with a mortgage has no equity in it.
Further confirmation comes via the Census Bureau release that showed the US poverty rate has risen a full percent in the last year to 15.1%, a level not seen since 1993, the end of a short but nasty downturn. And 1/4 of American children are living in poverty. Fewer young adults are able to start households. 14.2% of Americans between the ages of 22 and 34 are living with their parents, up from 11.8% before the downturn. As the Financial Times noted:
“To have hit 15.1 per cent is truly extraordinary,” said Alice O’Connor, a professor who studies poverty at the University of California, Santa Barbara.
“We are entering territory which looks like the period before we even started fighting a ‘War on Poverty’ in the 1960s. It’s quite stunning. This is a terrible statement about the depths of the Great Recession but, even more, about the recovery, which has clearly left the poorest out completely.”
Median income plunged 2.3% in 2010, is are down a full 7% from their high in 1999. Inflation adjusted median income is at the 1996 level. That makes it the first decade since the Great Depression in which inflation-adjusted median income has failed to increase. IN addition, Americans without health insurance reached 49.9 million, an increase of 1 million in the last year.
But focusing on the median as the American middle class is being hollowed out may be the wrong focus. Tech Ticker discusses how marketing giant Procter & Gamble has decided there is no future in the middle class (hat tip reader Valissa):
By contrast, the top 1% now pulls down a full 25% of all income in the US, and their lives are predictably unaffected by the downturn. Again from the Financial Times:
Ipsos Mendelsohn, the media research group, released figures that show things are apparently looking up for the top tier of US earners.
The group’s annual survey of affluent Americans found that the number of households making more than $100,000 a year was 44.2m in 2011, compared with 44.1m the previous year. Their spending held steady at $1,400bn after previously falling…
The survey, which polled 14,405 wealthy adults, found “almost all affluents are planning a wide range of activities in the next year, with travelling, remodelling, and investing topping this list”.
What is distressing is the lack of any sense of noblesse oblige. Those at the top of the food chain for the most part seem to have no concern about the damage income inequality does to broader society, and to them (we’ve discussed how unequal societies produce worse outcomes in health and happiness even for those at their apex). Unfortunately, the lesson of history is that little pigs get fed and big pigs get slaughtered,. These big pigs may have to learn their lesson the hard way.
The Economist recently ran a story about youth joblessness…
Those at the top of the food chain for the most part seem to have no concern about the damage income inequality does to broader society
I’m not sure that this is a valid conclusion. Those at the top could very well be giving a lot more money to charities, for example (or donating their time to what they believe to be worthwhile causes). Or they may not be–but your conclusion lacks evidence.
Alternatively (and I’ve heard this from quite a few affluent people, btw), the currently affluent may feel too insecure in their current position and pessimistic about their futures to feel like they can do a whole lot at the moment.
Charity is not going to make a difference. Redistribution is.
The data shows the overwhelming majority of the top rich (the top 1/2 of 1%) are in finance or CEOs. Most of the ones in finance are either at major banks or in private equity firms or hedge funds.
The major banks have fought reforms (which would have a redistributive effect and separately be the socially responsible thing to do) tooth and nail. The PE firms and hedgies have fought having their carried interest (which is labor income) taxed at ordinary income rates (as opposed to capital gains tax rates).
Just look at the lobbying in DC and consider how much of it is to preserve the privileges of the wealthy. Criminey, the government has adopted a ton of capital friendly policies, including “no bondholder writedowns”
Similarly, I have to tell you that everyone involved in charity in my cohort is NOT doing it primarily or even significantly for noble reasons. They are doing it for the networking.
I don’t need to prove my statement because the evidence is overwhelming and you don’t have to look hard to find it.
Voluntary redistribution is the best kind of charity. Not the cynical income-bracket strategizing, but the kind that says “my neighbor’s problems are my problems too”.
And in my opinion, it is our only chance.
Private charity = humiliation of accepting alms
Income redistribution = security of receiving gov cheque
Galbraith had it right. He wrote that most of the poor do not want a free lunch, just a fair chance. IR accomplishes that.
Voluntary will never get you to the scale needed to make a dent in income inequality. Bear Stearns was considered to be very charitable. Partners were under pressure to give 5% of their income to charity.
By contrast, the top Federal tax rate in the 1950s was 91%. Even as of the early 1980s it was 70%.
Look at how Buffett talks about people like him needing to be taxed more. Does he voluntarily write a big check to the government instead? No. I similarly have a VERY wealthy PE buddy who says he is a socialist, donates heavily to candidates who will raise taxes, says he ought to be taxed a ton more, but also says he will take advantage of the current system until it changes.
You forget conspicuous consumption. As long as the wealthy feel the need to prove their social standing via ostentatious displays of wealth, you will see not much in the way of giving. You need consistent action across the entire income stratum.
As to your last paragraph Yves…
I remember reading about a man arguing with a rich person about the necessity of higher taxes. The man gave a laundry list of the things he “needed” to justify the position that he couldn’t afford it. His opponent countered that all his friends would make less too. They wouldn’t have the money to spend on the private jets, enormous yachts etc.
This was the only argument that gained traction with him.
Yves, have you read Dean Baker’s new book, Loser Liberalism? Its available at CEPR as a free download and worth every penny. :o)
Conservatives rely on the government all the time, most importantly in structuring the market in ways that ensure that income flows upwards. The framing that conservatives like the market while liberals like the government puts liberals in the position of seeming to want to tax the winners to help the losers.
This “loser liberalism” is bad policy and horrible politics. Progressives would be better off fighting battles over the structure of markets so that they don’t redistribute income upward.
The system is hopefully hitting it’s limits. Greed is not good. It’s called greed for exactly that reason. Greed has always had negative associations. The question is how the rest of us deal with the greedy when they obviously become overly dysfunctional for the rest of us.
America looks like it might just be getting ready. The rest of the world has given on the good ole USA. You’re all becoming risible. You can’t even sort out your own back yard, and that is the leader of the free world. I think there is a lot more mess coming. No easy answer.
Tax the rich. The answer is that simple. They don’t like it. Well yes a given proportion don’t. Democracy is the name given to the institutionalised way of resolving misbehaviour/disagreements. How ugly do Ameicans want to appear? You want to be the same as Pakistan?
There should be no “free riders” among the wealthy enjoying the benefits of civilization.
Exactly. This whole issue is rendered moot by free riding. I can’t believe the discussion thread went on as long as it did.
I certainly give of my time and money to charities, but at some point, the disgust with others’ free riding is too much. I am not going to give 25% of my income when others are giving none and simultaneously enjoying the externalities of my efforts. It’s an absurd proposition. Even for those who are almost completely selfless, it is absurd, because frankly, that personality type is rare in our society.
We work in different sectors, Yves, and will therefore have different anecdotes. The wealthy people that I know are engineers who have started their own companies or are partners in them. That would make them CEOs, and they are really raking in incredible amounts of money for the moment. With a few exceptions, they are also pretty gloomy about their next few years.
In any case, at least some of them are helping in some ways (eg: by donating money, or by providing a lot of expensive and time-consuming consulting to third world country for free knowing that they will *never* get an actual job with that country, etc). They are not all heartless bastards–they just happen to be lucky at the moment, and they are somewhat antsy as to how long their moment will last.
Just look at the lobbying in DC and consider how much of it is to preserve the privileges of the wealthy.
I didn’t say that they are all saints–I just don’t believe that there is any data to suggest that they are all trying to be demons. I certainly hope to join that high income group at some point, and it’s not so that I can have no concern with the broader economy or lobby against bond writedowns.
There was a poll recently(ish) that I’m sure many of you have seen, that found four out of ten millionaires don’t feel rich.
If you don’t feel rich with $1m to spend (and we’re talking liquid assets, not cash tied up in property) then you will be saving and not spending – which is no use to the economy at the moment.
I do feel that redistribution through the tax system is the only practical way to fix that. Even in the US which has a longer and better tradition of philanthropy than here in the UK. Recent(ish) reports suggest that giving to charity by the wealthy is on the slide:
If you don’t feel rich with $1m to spend (and we’re talking liquid assets, not cash tied up in property) then you will be saving and not spending – which is no use to the economy at the moment
1. GDP = Gov’t spending + Net investment + consumption +(X-M).
If consumption increases, investment decreases, so GDP remains unchanged.
2. As to the “not feeling rich with $1m” part, remember that’s only 40% of them. Having talked with someone like that earlier this month, I can repeat what she told me (don’t shoot the messenger–I’m just a Typing Parrot):
$1m comes out to about $100k in annual earnings (her figures, not mine–she’s clearly not putting her cash into Treasurys…). Out of that goes money to her kids, expenses such as food, her vacations (yes, she travels quite a bit), trying to put more money aside for any future problems, and whatever else I forgot. Yes, she is comfortable. No, she does not feel “wealthy” because she still has to do the mundane things that most people have to do, such as draw up a budget and watch her expenses.
From the link you posted:
For the 35 percent of households that stopped giving to at least one organization, the majority said the reason was because of too frequent solicitations or inappropriate amounts requested, the Bank of America report said.
I gotta admit, I too would probably stop giving to an organization that tried to annoy me with those methods.
It is that blindness which is the problem, typing monkey. If $1m comes to about $100k, then what does $25k “come to” for the 47percent of our population? What does $50K “come to” for the 75percent?
As to charities being inappropriately pushy…awww those dear tender rich people! Since we all know that the rich got their money because of their gentleness and sensitivity, it is no wonder that they’d object to overly-large/frequent requests for generosity. And we all know that their beautiful retiring natures keep them from calling the charities about when and for how much the requests should come.
Charities feel like pariahs because of guilt which, in order to manage, they alchemize into helplessness and self-righteousness.
This is human nature. It is best to set up some kind of societal structures that intrinsically limits the flowering of that rather unpleasant aspect in us all.
Whether you are a rich giver or a poor giver, charities take a huge chunk off the top of your donations so that they can run all those campaigns to harass you.
More efficient to redistribute the money up front.
Charity is not going to make a difference. Redistribution is.
You seem to have bought into the notion that taxation equals “redistribution.” It doesn’t. Taxation merely adjusts the incentive to re-invest the profits of a business into continuing to grow the business over pocketing the profits and gambling with them in the casino that is the secondary equity market.
A progressive tax system is the difference between the productive capitalism of theory, and the parasitic financial capitalism we have today. Once you criminalize leveraged financial speculation, you’ll truly euthanize financial capitalism. Unfortunately, all current schools of economic thought seek to perpetuate leveraged financial speculation while ameliorating its adverse consequences (which includes killing people).
I like what you said. It’s not the complete picture, but it’s an important part.
Higher taxes nessesarily increases velocity, and if there’s one thing EVERYBODY benefits from, it’s velocity.
I’m not exactly sure what Yves “seemed” to buy into, but she clearly didn’t actually say that taxation equaled redistribution.
And further, regardless of the many effects of taxation, surely *all* taxation has redistributive effects, whether it is regressive, progressive, or effective (on intended behavior which would have altered distribution of consumption). It is almost impossible to conceive of real world taxation that does not have a redistributive effect. That is only for textbooks and ivory towers.
So taxation may not = redistribution, but it certainly includes it.
Redistribution is not the correct word. Theft is a better word. The rich have been stealing from the masses well, forever. But the mid-20th century was different, and lo and behold, Europe and the USA became the greatest civilization the world has ever seen. This difference was due to people, labor organizing, and government all working together to stop the theft of workers earnings and rights. This magical period is being torn away because the rich hate the rest of us having anything more than their leavings.
The ongoing class war is violent and extreme. The masses of the people have forgotten the lessons of the past (said lessons should’ve been taught in public school and were not for obvious reasons), and are confused and in disarray. If they hadn’t forgotten they would never have let the government of and by the people take sides against them in the class war: unenforced anti-trust law, ending the fairness doctrine, corporatist monopoly control of media and large industries, legislation written by multinational corporations, the corporate takeover of intellectual and artistic production, destruction of worker bargaining power and union-busting. These are all the result of a plutocracy that has stolen the wealth of the people. The disgusting greed and gluttony of this class of scum knows no bounds. The people used to believe this class were our betters. We know now they are not — that they are in fact beneath us in all ways except for power: they are less ethical, more selfish, less imaginative and intelligent (is it any wonder that the greatest period of human innovation and artistic production occurred when the plutocrats did NOT control society?), less beautiful both spiritually and physically, and less connected to the wisdom and beauty of the world.
I don’t want to hear about charity or redistribution. I want to hear and see the people stand up and take back what is ours from the rich who have always, and apparently will always, try steal the birthright of the people if we are not constantly vigilant. There was a time when I could understand why the aristocracy thought it was superior — the world was poorer and more desperate. Disease was rampant and life was short and brutal. Society had for centuries been extremely hierarchical and rigid. But that was before the modern era. Now they have been shown a better world — a world of equality where everyone has a chance at a good and beautiful life. To choose to go back to that awful world when they have seen paradise is one of the worst sins imaginable.
I believe they are paying for it already, in spiritual emptiness and guilt. But they will pay a much harsher price if they don’t give up their war.
Sing it brother!
Redistribution is temporary. The money quickly find’s it’s way back to the top.
The goal should be to teach people how to succeed, not how to get by.
After the money is transferred, it creates a pop in economic activity, then a boost in confidence, followed by increased leverage in the form of loans and debt and ends with the formation of the next bubble, leaving people in worse condition than before we started.
And the cycle goes on and on and on and on…
“The goal should be to teach people how to succeed, not how to get by.”
There are plenty of people who do things that are worthwhile to society, in a larger or a smaller sense, but whose activities do not constitute “success.”
Consider the researcher who treats of an obscure subject, the utility of which is only recognized after the fact, if at all. Consider the person who cares humanely for children, the elderly, the infirm, or even prisoners. These kind of people generally are not considered “successful,” in the profit-making sense of the term (the one that counts), are they?
“Success” is so highly ambiguous a term that it is really quite meaningless.
You seemed to understand the implied sense of the word success.
Rich and poor can both feel helpless, but they definitely do different things about it. Can you guess which sits at home in despair, and which one buys a jetski?
Well, of course there are advantages to being wealthy–that’s why people try to become so.
I’m not debating that–I am just amazed that anybody can paint all high income earners with the same brush of ruthlessness and callousness.
As to your other post: Voluntary redistribution is the best kind of charity […] the kind that says “my neighbor’s problems are my problems too”.
LOL! Their neighbours all do have the same type of problems–however, the wealthy tend to have the wealthy as neighbours :)
While I understand your desire to empathize with people like me, you really don’t understand what we’re asked to decide on a daily basis. Executives are required to be ruthless and callous. That’s why we’re paid what we’re paid.
That being said, many (if not most) of us don’t truly appreciate the full import of what it is that we do. I, like you (apparently), know a lot of “nice” people who are executives. But they (we) are executives because they (we)are ready, willing and able to do what is necessary to “win” under the rules established under the neoliberal paradigm that rules all public companies under the auspices of modern finance.
We really need to start distinguishing between the nature of a person and the nature of his/her actions from a societal point of view. A good person can do evil things and should be punished for doing so.
Charity as national policy is a Texas-sized smiley. The executive who donates a million ot the Sierra Fund and a minute later signs off on an SPE that has nothing to do with construction and everything to do with alchemy (someone like you?) is the purely economic individual, dutifully budgetting and optimizing her returns. You can’t criticize her – she’s done and is doing everything right, everything an American should do.
To effectively redistribute wealth in the US you need to change this widely held perception. Actualizing yourself as Economic Man whenever and whereever is not right. The executive above must be seen as a someone who is acting irresponsibly. Therefore progressive taxation falls short. You have to change core beliefs about what it means to be an American. This could be done through the educational system, by making education free at all levels for example, and by adopting proportional representation, at the national level if not at state and larger locality levels.
Quoting Tao Jonesing
“We really need to start distinguishing between the nature of a person and the nature of his/her actions from a societal point of view. A good person can do evil things and should be punished for doing so.”
That is absurd. Please tell me how to tell the difference between an evil person who does evil things and a good person who does evil things. Evil is as evil does and the pitchforks won’t be making whatever distinction you are trying to make.
You CANNOT be a good person if you do evil things.
I cannot even believe you posted what you did for the world to see? How idiotic.
No evidence? Who exactly created this hydra-headed, epochal, global disaster (financial/economic, societal, geopolitical, ecological) if NOT those who owned and managed it over the last 30 years?
“Unfortunately, the lesson of history is that little pigs get fed and big pigs get slaughtered,. These big pigs may have to learn their lesson the hard way.”
Is that really the case? You can make a counterargument that the existence of the middle class in the second half of the twentieth century was an anomaly. The anomaly was created by the fact that nineteenth and twentieth warfare required mass armies formed by arming and training most of the able bodied young men in the population. This historical norm has been lords and peasants.
That said, even in the bad old days there is ample precedent for incompetent elites falling, and being replaced by newer and more competent elites.
“Competent” elites? How are today’s elites more competent than those of yesteryear? Right now I see a race for rentier opportunities, and the prize goes to the one with the best political connections.
That takes a sort of competence, I suppose. Before too long the requisite competence will be Putin-style.
Right now I see a race for rentier opportunities, and the prize goes to the one with the best political connections.
That’s because, like Yves, you are only considering the financial sector. You might see something different if you look at, say, the technology sector.
“…you are only considering the financial sector. You might see something different if you look at, say, the technology sector.”
As someone who works in the technology sector, I can tell you that the rentier mindset is alive and doing very well. Anyone who “owns” any Apple Product is well aware of this. And anyone who works in a large IT environment knows that it is not just Apple that rents the primary and most expensive products that must be maintained on a daily basis (and justifies their job).
Look at other developed economies: Europe, the Scandinavian countries, Australia, Japan. All have more equal income distributions that we do. Even the financialized UK has a lower Gini coefficient than we do (lower means less unequal).
The US is the outlier here, and the one bucking the pattern of history.
The pigs reference is a bit cryptic. I am a (fortunate) engineer and would not mind paying higher taxes. But could I get a Scandinavian style social safety net in return? Not that I want to use it. But having one would relax the mind and make it less of an imperative to save for rainy days. Unfortunately I already pay a German tax rate (in CA) and all I get in return are wars on the other side of the globe and fanatics in the middle of the country. Considering US society seemingly got what it wanted (it controls a world reserve currency printing press and I don’t have a vote on how it is used) it seems hard to justify donations for anything but environmental or third world humanitarian causes.
Amen. As my wife likes to say regarding taxes–it’s not what you pay but what you get. I for one wouldn’t mind paying more in taxes if I received more in return (single-payer catastrophic health coverage anyone?).
To focus solely on the price of an item leads to buying bad quality. . .
Given the disproportionate political power of the upper middle class, along with (occasionally) a greater knowledge of the ways of the world, I once proposed, entirely seriously, that it be levied a very hefty war tax to pay for the wars.
You would use your disproportionate political power to stop them then, no? Maybe a mass movement in that direction would get the so-called “knowledge economy” off its collective rear end?
I predict all of this is going to end up in your lap sooner or later, MMT notwithstanding.
“This is a terrible statement about the depths of the Great Recession but, even more, about the recovery, which has clearly left the poorest out completely.”
She refers to a ‘recovery’ that can be no recovery as evidenced by the very data she references. This is typical of mainstream output; cowardly, obfuscating, beholden to a corrupt state and corporate apparatus, and utterly devoid of any creative thinking.
“What is distressing is the lack of any sense of noblesse oblige.”
In an ‘I’m all right, Jack!’ paradigm, why should there be any noblesse oblige? The Invisible Hand is supposed to do all that, right? The Free Market delivers, automatically, the best of all possible worlds. Lean back and enjoy the ride.
Meanwhile, Rome is in flames, decadence and societal decay run amok, and the rich crush the rest to ‘save’ themselves. What’s surprising about any of this?
If one has taken the time to understand human nature and history Toby, nothing happening now is a surprise. Unfortunately, only a small percentage of the world’s population can extrapolate proper future direction from learning from the past.
If the West wants to stop the influence peddling causing the problems then you shame the officials being bought repeatedly and loudly which requires an independent media service to act connect with other groups for mass syndication, like an amplifier for a stereo.
As you know, I have attempted this with some limited success. The tough reality for someone like me to face is that it does require much more personal sacrifice (difficult with family), not because of the technical or communication work itself but because groups of people require a ‘leader’.
How come us media people are willing to run for national politics? Next to none. That is because the odds are stacked against us so it is the local level where we can play and win. The solutions for rebuilding the economy start at the local level in any event.
At the national level the Fascists will do what they always do, take the nations to war instead of face revolution. But myself and sons will not participate unless combatants are in our front yard.
i quite see TalkingMonkey and IFs viewpoint. Not all these loaded guys are gouging. Actually, i think this diverge in incomes and winner-take-all outcomes comes from the technological productivity and branded-ness that we see in the world economy. The same situation prevails in India, where I come from.
Only when we have a deflation in the brand-equity and return to value, that we will see a redistribution. Also, so far, energy prices have been low enough for the customer to indulge in brand-consumption. Once these rise, the customer may become more discerning.
Till then, it will be the Harvards and Chanels and MITs and Goldmans and Googles who will control the distribution.
Of course, the energy boom may never end-nuclear energy etc., may come in in a big way. Well, then we are Matrix-Relaoded world.
We have had the reports about the very slow growth in the first two quarters.
We have had worsening jobs reports with the last showing job creation grinding to a halt.
We now have this Census report which is a threefer of bad news on income, poverty, and healthcare. Its data covers the period from March 2010 to March 2011. It is especially damning because of the timing. This was supposed to be the period when the recovery was sufficiently advanced to grow on its own.
Put simply Obama’s economic policies have failed. What we are looking at is a failed Presidency. The 2012 election cycle has begun with this succession of reports on Obama’s economic failures. With Obama’s embrace of austerism, the petty ante nature of his jobs program, we are looking at another 14 months of bad economic news (not counting the real possibility of another bank crash here, or a collapse in Europe or China). At the end of that, I see the American electorate rather like a trapped animal that would rather gnaw its own paw off than vote for Obama.
It’s sad, sick, and absurd. Obama’s sole campaign strategy is that the Republican candidate will be too crazy to vote for. The Republican strategy is that the electorate will be too sick of Obama to vote for him. Beyond that, there are no real differences between the two parties or a single good reason why anyone should vote for either of them.
True dat. I tell my colleagues in Ukraine that almost noone in the US votes for a candidate because they actually like or support him/her/it. Instead, we hold our collective nose and vote for a candidate because we loathe the other cretin in the race even more than we despise our choice.
Even professional political agitators spend more effort insulting the other candidate, as trying to praise up their own jackass defies credulity even for professional spin-doctors.
Then, as part of this penitential rite, every four years the nation asks itself why it is apparently impossible to source up one competent, intelligent, humane candidate, preferably somewhat in touch with reality, out of 300 million US citizens to choose from? We understand that two candidates would be unrealistic, but one would be nice.
By these measures, the 2012 election will be one of the most depressing yet.
Why are you spinning this?
The poverty rate is the worst it’s been for FIFTY-TWO (52) YEARS!!
Boy, those Reagan-era and other so-called “conservative” economic policies are really starting to show their true worth now, you betcha! All those needed was a decade or three to work their “magic”!
Conclusion: the right-wing is simply incompetent when it comes to maintaining (never mind increasing!) the prosperity laboured for and achieved by previous generations of Americans.
Re-regulate interest rates, and tax ALL personal income ( income of all kinds, cap gain, earnings, dividends, interest – a buck ought to be a buck as far as taxes are concerned) over $500 K at no less than 80%.
Evidence for saying that the US poverty rate is the worst it’s been in 52 years:
The headline says it clearly.
The evidence keeps mounting as to how crackpot “Ayn Randian” and Hayekian economics turns out to be in the real world!
Maybe the right wing can start another war to distract people from how badly things ALWAYS turn out whenever they are in charge.
I am going to be harsh because I’ve been up all night and you made TWO comments incorrectly hectoring me.
Read the damned article, which you CLEARLY did not bother to do. It confirms what I said:
The 2010 U.S. poverty rate of 15.1 percent was the highest since 1993
You evidently cannot tell the difference between the poverty level (gross #s) and rate (% of population).
Apologies for the indirect hectoring; but I’m truly astonished at the numbers as reported. Their indictment of the policies followed, for several decades now, in the USA as to the poor is so very clear, so very stark.
And the US Congress even now seeks to cut the programs which aid the poor!
There’s good reason to talk about the past 15-20 years, going back to the Bush I (it’s the economy, stupid) recession, and not just throw everything back in Reagan’s lap.
Since that recession, there’s been a remarkable amount of corporate consolidation, downsizing, offshoring, etc most of it to the *direct benefit* of the MBA and finance boyz special interest faction, as discussed in the associated post using Bank of America as an example.
Although there were takeovers (and downsizing) in the 80s, I think this particular special interest faction is relatively newer and hyperpredatory because it works with its knowledge of finance and executive compensation arrangements to generate payouts to executive level management that are difficult for those real economy executives to resist, regardless of the actual state of their businesses.
(Although not so in the case of BAC because it already eff-ed it up being greedy all on its own, which means it should have failed outright several years ago).
This is something that the liberal leaning and middle class public across the political spectrum is impressionistically aware of, and likely even has personal experience with (and surely know someone who has), but HAS NOT put together into a narrative story in the way that liberals throw everything into the lap of Reagan and the Republicans.
Those promoting these practices both through “consulting” businesses and general “professional” ethos, meanwhile, attribute everything that is done to the consequences of increased competition from globalization. People who are under attack by this special interest faction, meanwhile, have been eating this sh**t up like it was chocolate and personally sucking up the costs.
To the extent that the political parties are both servicing this predatory special interest faction, it is time to transcend the defunct liberal political narrative and delineate the full outlines of the class war.
As far as the welfare state is concerned, it’s a nice afterthought, but maintaining people on benefits in permanent poverty is ultimately not going to cut it.
Conclusion: the right-wing is simply incompetent when it comes to maintaining (never mind increasing!) the prosperity laboured for and achieved by previous generations of Americans.
The right-wing has been very effective at their actual goal, which is increasing the prosperity of that small sliver of the income distribution at the very top.
As for the prosperity of Americans as a whole, they don’t give a crap. Anyone making less than multiple six figures who votes Republican needs to admit they are economically punching themselves in the face.
I had a car once some 20 odd years ago… damn oil light keep coming on for no reason. The mechanic, not the service manager, took me aside and said there is a known problem with the oil pump with this model year.
The solution, then, was not to replace the oil pump and fix the problem, but instead, was to change the sending unit out for one with a lower pressure threshold.
This is my long winded way of saying I can see the political solution coming, simply lower (raise the threshold) poverty line. Problem solved right?
How long before we see the powers that be make this happen?
The oil light coming on did not keep your car from operating.
Enough poor people, and the economy stops functioning.
Some things can be covered over with lipstick and powder; but the underlying dis-ease continues to progress, unseen but still felt.
Still, it wont stop someone from pulling out a tube of lipstick, and trying to create a perception that becomes the Americans reality, a perception, that, all is well, nothing to see here.
What a brilliant [sarcasm] use of the stoke of a pen it would be to drop the poverty line in the country from 46m to say 35m or 20m, right?
I have become so cynical I fully expect an attempt at this at some point.
I ought to add that I was bought up to judge a society – any society – by how its members treat the least (that is, the most damaged, the weakest, the poorest, the sickest) of their number.
I’m astonished that one-fifth of all American children are poor.
It all happend over 30 years.
Little red flags: public schools went from lunch, to lunch and breakfast. And now, lunch, breakfast and dinner is served in our public schools. The fact we need to serve breakfast and dinner at public schools, to ensure children are fed, speaks volumes as to how far we have come.
If 70-90% of your income is “redistributed” over a certain figure you’ll either hide it (like people did when these rates existed) or let someone else earn the excess while you relax (which is the point I guess). Also, at that marginal rate, you just preserve the wealth of the existing rich and eliminate income mobility to becoming wealthy (at least until the wealthy have the savings confiscated at death). Income redistribution is a palliative not a cure.
People hide their income at 30% tax rate, too. But it is harder to hide as much when more of it is taxable.
Yes, the marginal tax rate preserves existing great wealth til death, but eventually existing great wealth is less common.
It is not true that marginal tax “eliminates” income mobility but yes, it decreases it. So how much money do we need in order to be ok? If instead, you mean that marginal tax rates lessen ambition or accomplishment, then you are declaring that personal progress is only real through financial acquisition. In a society where economics is theology and money is god, this is true.
Of course income redistribution is palliative. Do you know a cure? I’m supposing there isn’t one.
Regarding your statement “(we’ve discussed how unequal societies produce worse outcomes in health and happiness even for those at their apex)” . . . could you please reference/link those previous discussions.
see, e.g., this
There would be little need for redistribution in the US IF the chief cause of income and wealth inequality, the government backed banking system, was abolished.
The current system is the rich steal from the poor via banking and the poor steal some back via socialism.
These big pigs may have to learn their lesson the hard way.
I fully agree with Yves on this point. Many of the above comments argue using linear patterns. I think in terms of cycles and I am convinced that the looters had their best days. Soon they will be running.
Yves, your last paragraph tells the tale. Unfortunately, the present crop of idiots are beating each other up over who can look like the biggest idiot of them all. This includes both politicians as well as business types. I wonder if the “Phoenix” will be able to rise after the present debacles, or will it die from the poison that is increasingly circulating the planet?
This is what happends when you fire the subway token booth attendants and replace them with stupid machines that take your money after you scroll through 15 menus to get your stupid card, which doesn’t work either, espeically at rush hour.
It used to be a token. And they used to have people in the booths and the stations, with blue uniforms and MTA badges and flashlights and black shoes with rubber soles. Ready for action.
Ready to help. It wasn’t always perfect. Sometimes they were lazy and gave you an attitude. But they’re better than the machines. And the tokens are better than the cards. And some of them were almost heroic, there in the station at 3 am, when you’re a little lost and drunk and don’t quite know where to go and the light of the booth eases your mind and the attendant there, in the uniform with the flashlight, in the booth, is like a lifegaurd in front of the ocean,
What can a machine do at 3 am? It can’t even help itself if it doesn’t work and you’re stuck by then in the dark. Thank you “efficiency”, you’re really a wonderful idiot.
Your plaint struck a chord, crazyman. I finally started reading Yves’ book (takes me a while to get through my long long reading list) and was musing yesterday on a plane from Pittsburgh about her section on systems: “Efficiency” versus “stability.”
And how increasing the former can lead to reductions in the latter. Can this apply to societal systems? Our ruthless pursuit of “efficiency” in the workplace has resulted, among other things, in the laying off of millions of workers. We are now burdened with an unsustainable number of unemployed or under-employed people, which will eventually lead to social instability.
Perhaps a period of mental realignment would be beneficial. Is efficiency to the nth degree really good for society as a whole? And how much of the push toward efficiency is really an excuse for the additional extraction of rents?
Do we need to start thinking that it is better for a business to hire additional workers to produce the same amount of goods? To have a less efficient, but more socially stable world?
In addition to the low income tax rates on the wealthy (actually capital gains rates), the more important issue to resolve is asset taxation. We need a mechanism to reverse the past 30 years of wealth inequality growth. I propose a significant tax on assets and even better a 100% tax on inheritance. Inter-generational transfers of wealth are highly uncapitalist, in fact they are feudal, and highly inefficient.
To Chow’s point,the Steve Jobs article from 1985 that has been widely recirculated recently makes an interesting observation … that in 1985, it was very rare to have a newcomer in the “Forbes 400” (richest Americans). The list changed very little from 1930-1980 (sorry Patricia above … it doesn’t go away). 26 years later, however, “old money” has become the exception on that same list. Re-read the 50s classic, “Man in the Gray Flannel Suit”. This was ancillary to the book, but one thing I found striking was that working for someone’s private foundation was considered a top, “aspirational”, job/career. If we massively increase income taxes, and do nothing about wealth, that’s what our children will have to aspire to … working for the private foundation of some financier who made their fortune in the 80s/90s/00s. Whether increasing the top marginal tax rate from 35% to 40% has any impact on incentives is debatable. However, increasing it 75%, for example, clearly does. Save for those who pine for the good old days of only 100 years or so ago when life expectancy even in the US was about 40, eliminating incentives to make money is really not a good thing. Easiest (and most self-serving) thing in the world for those who have already accumulated wealth to advocate for higher income taxes for the next generation (thanks Warren).
” …eliminating incentives to make money is really not a good thing…” But eliminating incentives to make money just by manipulating money is a good thing.
Sorry, WDWDN, but I’m not sure what you think I believe will go away….the extremely wealthy? Or that a high marginal tax rate alone would make them go away eventually? I think a high marginal tax rate is a helpful element. Also required is a high marginal tax rate on inheritance. Etc.
I think the exceedingly wealthy, like the poor, we always have with us. We haven’t managed a system yet that has avoided an ever-deepening division over time (in pyramidal shape *not* the hour-glass shape that has been recently mentioned in the media). Maybe attempter could come up with a novel system but I don’t feel sanguine about society’s willingness to try alternatives.
I’m not doubting the recent trend is for an increase in poverty, but some of the language used in the post is muddled.
First, the poverty rate is before benefits. So 25% of children are in poverty, before benefits. The number is smaller post-benefits.
Second, the poverty rate was calculated post-benefits in the 60s. In that sense, it is not a consistent time series, so you can only compare the history since the change.
Hence, the basic conclusion of more poverty holds, but some of the conclusions drawn are misleading.
‘Ron Haskins, an aide in the George W. Bush White House who’s now a senior fellow at the center-left Brookings Institution, said likewise: “The main message of today’s release from the Census Bureau is that if we don’t like the way things are now, we better get used to it.”‘
If you don’t like it, better learn to like it. Why does this moron have a job? Ah yes, Brookings, the center-my-left-nut “Institution”.
The US as a society hates children. Perhaps if we were less Christian we would be more compassionate. Rest assured, the cited poverty and median income stats will be used by the GOP, with Obama’s blessing, as reasons to further cut safety net and social welfare programs.
I’m confused by your emotionally charged statement. The people having children are mostly poor. The career demands of the middle and upper class households has tempered the the number of children that they have or Are you saying that the working class hate children because they choose to have them with little means of providing for them or are you saying the middle and upper classes collectively dislike working class children?
In any case, where’s your proof?
You are beginning to sound a bit like a ‘LEFTIE’, nothing to be ashamed about, however, and lets be fair, a lot of the rot set in with Reagan in the 80’s.
Whilst it may come as a bit of a surprise, that alleged failed President, Mr. Carter, is quite well liked by many on the Left in the UK, particularly the fact that he’s not tried to become super rich after losing to Reagan in 1980.
Whilst I don’t have a great deal of regard for many of the UK’s Parliamentarians, it would seem DC politicians are nearly to a man and women are addicted to ‘the high life’ and in the pocket of Corporations, a fact made worse by the egregious Supreme Court decision on political donations earlier this year.
What needs to happen if anything is to change is that the State itself funds Federal Elections fully and that candidates for both Congress and the White House be highly limited in the funds they can receive from interest groups, political adverts should be free and only registered political groups/parties be allowed to run political adverts/broadcasts during any campaign.
To say the US political system is corrupt and in the pocket of ‘Big Money’ is an understatement – one only has to refers to Joe Lieberman to see what I mean.
Meaningful change can only occur if most of the present bunch residing in DC are expelled, until that time I’m afraid its business as usual, and that means tolerating poverty levels associated with the Great Depression – a sad indictment indeed on the USA.
Let’s just set aside the moral issues associated with providing for the poor for a moment and consider our own self-interests. And let’s not think about the economy as it stands today, let’s consider the trend of where we seem to be heading. A banana republic?
And for those that currently have a good education, as well as a good job with health benefits and a good salary, good on you. You probably worked hard for it and deserve it.
But think about how you got there. You live in a nation with super highways, high speed metro transportation systems, sophisticated energy and communication grids, top rated world class universities, modern hospitals, at least basic environmental and food standards to protect you and your family, waste management systems, free parks, and numerous other benefits and advantages too numerous to mention. In a sense, these advantages you enjoy were provided by society, or our Country if you will. And yes your contribution is valued and your help is needed to continue build it.
But just what kind of society do you feel built this nation and infrastructure we all take for granted and enabled such affluent lifestyles and opportunities (for you and me and future citizens)? I think I can tell you. I think it was an America built on the sweat and labor of a large middle-class, blue-collar in many cases. We all owe a mountain of gratitude to the working and middle class folks who came before us.
I’ve said enough, but will just say we are all in this together. Tossing 40% of the population under the bus will be like cutting everyone’s throats. Do so at the peril of your own children and grand children. Don’t be so proud you think it can’t happen here.
“. You live in a nation with super highways, high speed metro transportation systems, sophisticated energy and communication grids, top rated world class universities, modern hospitals, at least basic environmental and food standards to protect you and your family, waste management systems, free parks, and numerous other benefits and advantages too numerous to mention. In a sense, these advantages you enjoy were provided by society,” No, they were provided primarily by dirt cheap fossil fuels. Most machines ru
The poverty rate should be subsistence plus medical. My husband and I wondered if this crash were totally synthetic because CO2 needed to be cleared from the atmosphere whether or not it was a man-made problem. And we will suffer a lack of “growth” until the atmosphere is cleared.
What counts as subsistence, Susan? Have you ever tried to live at the current poverty line?
For all those commentators on this blog who are contemplating marching confidently toward the future simply on a platform of class war and redistribution–I have the following questions:
Is it simply capitalism that encourages the production and reproduction of the kind of stunted subjectivity that creates personalities who support our disfunctional society?
Is our individually fractured consciousness (a difficulty relating genuine human needs with satisfaction)solely the result of greedy financial capitalists and their obsessive concern with the bottom line?
Has the process of community disintegration also contributed to the creation of manipulable consumers and citizens?
Does the collapse of community norms tend to also partially generate personality structures incapable of acting in or defining the public interest?
Can community norms be reinstituted without community or functioning communities?
And looking beyond community, could there conceivably be undiscovered constraing elements within the human mind that are sometimes obscured by community norms and perhaps exist independently of community norms?
If all we our now left with is the richness of our individual conscious mental life( without much institutional or community support) is this mental life enough of a foundation to formulate a way out of our financial/economic/policial/cultural crisis?
How might this happen?
What if our brains (whose inner thoughts, feelings and intentions are largely a reflection of now collapsed outer community/societal norms and ideas) are, at least, partially distinct from our individual minds?
What if our minds our not generated by the brain but limited by the brain?
Could this unusual assumption, if supported empircially, gradually challenge the dominant biological naturalism paradigm of the neuroscientific community in much the same way that the work of Steve Keen is now beginning to challenge the neo-classical paradigm in economics?
Could this mean that there is still hope for unifying fractured individual consciousness(as well as an eventual debt jubiles of some sort) through a political/cultural movement independent of the negative socializing influences of Big Capital, Big Government and Big Bank which would have as its primary goal a restructuring of political and economic institutions in conjunction with the possibility of a deeper search for the constraining elements of the human mind which may lie beyond specific community norms but which may be fundamental to recreating individual autonomy, community and a healthy society–an individualism beyond the unconstrained individualism of Big Capital and Big Government?
When I tried to watch the video, it said “sorry, this video is no longer available.”
Otherwise, thanks for the great info.
I found an audio report on P&G at the WSJ, prolly the same thing that Yves posted.
Part of the problem is being fair. Competition is for us only. We want competition only if it doesnt affect us. If we do have competition, we can lobby to eliminate it or make it so ineffective it isnt competition. I have tried to start up a business a time or so, only to find the licensing, permits and rules impossible to follow. Only established firms could follow them.
The US rarely practices what it preaches.
When you can write the rules and enforce them both, like most corporations do today, then there is no fairness.
The ladder to success has a lot of rungs missing these days.
median income in Japan probably rose over that time
households making more than $100,000 a year
This is hardly “affluent”, at least in my part of the country.
In my case, our ‘household’ income is over $100k but it’s hardly a sign of affluence, because it includes two working adult sons who don’t earn enough to live on their own.