Category Archives: Income disparity

Why Liberals Are Lame: McCarthyite Identity Politics as Cover for Bankrupt Policies

The latest desperate strategy of Obama’s spin-meisters highlights the rot at the core of the Democratic party: the heavy handed use of identity politics as a cover for neoliberal policies that betray the very groups the party purports to represent.

As Obama’s poll ratings continue to deteriorate, Melissa Harris-Perry, professor of political science at Tulane, argued that the reason white liberals were abandoning him was racism. (Earth to Obama: trying to make your base feel guilty, particularly when YOU are the one who ought to feel guilty, is not going to do you any good)

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June Carbone: Why David Brooks Misses the Real Source of Moral Decay – Thirty Years of Class Warfare Against the Working Class

By June Carbone, Edward A. Smith/Missouri Chair of the Constitution Law and Society University of Missouri-Kansas City. Cross posted from New Economic Perspectives

The New York Times told two separate stories earlier this week, with no apparent recognition that they might be related. On September 12, David Brooks published a column decrying the moral “relativism and nonjudgmentalism” of the young. On September 13, a front page story announced that “Soaring Poverty Casts Spotlight on ‘Lost Decade,’” explaining how the economic decline of the bottom half of the population over the past decade has grown worse during the financial crisis.

What do the two stories have to do with each other?

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Income Inequality Produces Indebtedness and Global Imbalances

The IMF has a passel of articles up on income inequality. “Unequal = Indebted,” by Michael Kumhof and Romain Rancière, focused on macroeconomic effects.

It stars with the observation that countries showing a significant increase of income inequality (defined as the share going to the top 5%) have deteriorating current accounts (note these are all advanced economies; they discuss the glaring exception of China later in the article).

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New York Times Runs PR for Bank of America’s Headcount-Cutting Profiteers

It might behoove a publication that styles itself as the newspaper of record to do some basic fact checking rather than take dictation from parties with an obvious axe to grind and publish it as news.

I’m going to give the disgraceful New York Times story, “Outsiders’ Ideas Help Bank of America Cut Jobs and Costs” a long form treatment, not only because it may help readers recognize PR masquerading as news, but also because the bits of this story that the Times didn’t bother to probe help illuminate how the retail banking industry became predatory and how some of the mechanisms to transfer wealth to people at the very top are well hidden from the great unwashed public. Thus, this post is a companion piece to our piece today on the rise in poverty and continuing destruction of the middle class in the US.

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Poverty Rate Highest Since 1993; Median Income Reveals Lost Decade and a Half

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.

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The Financial Zoo: An Interview with Satyajit Das – Part II

Satyajit Das is an internationally respected expert on finance with over 30 years working experience in the industry. He is also a best-selling author and a regular contributor to leading finance blogs – including our very own Naked Capitalism. His new book ‘Extreme Money: Masters of the Universe and the Cult of Risk’ is out now and available from Amazon in hardcover and Kindle versions.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.

Part I of the interview can be read here.

Philip Pilkington: In the book you describe ‘money shows’ which are presentations where financiers try to flog their wares to the general public. It really struck me how sleazy these shows are; like something out a carnival sideshow. Salesmen — you know, proper ‘snake oil’ salesmen — stand in front of a crowd and whip them into a frenzy, convincing them that they can all get rich.

I almost found the whole thing quite funny – that is, until I realised that many of these people were just trying to make ends meet. It’s well-known that real wages have stagnated in the last 30 years. And at the same time the financial markets have greatly expanded. These ‘money shows’ seemed to me to be the meeting point of these two toxic phenomena. Perhaps you could talk a little about this?

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Richard Kline: Progressively Losing

By Richard Kline, a Seattle-based polymath and poet

Those anywhere to the liberal side of the Anglo-American political spectrum have been on a long losing streak. As of this summer of 2011, they are wholly in disarray. In my considered view, ‘progressives’ lose because they do not have it as a goal to win. Their principal concern is to criticize the moral failings of others in society, particularly the moral failings of those in power.

At best, progressives seek to convert. In the main, they name and shame—ineffectively. American ‘progressives’ distrust political power, period, are queasy about anyone having it, and suspicious toward anyone who actively seeks it, including other putative progressives. The contest as progressives conceive it is fundamentally a moral one: they believe they are right, and want their opposition to see the light and reform/conform. Thus, they don’t frame what they engage in as a fight but rather as a debate.

There has been another and more radical trend on the left-liberal end of the spectrum previously. That trend derived from radicalized, Continental European, immigrants, it sourced much of labor activism, and is largely extinct in America as of this date. It is the atrophy of this latter muscle in particular which has rendered progressive finger-wagging impotent.

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The Wages of Destroying Labor Bargaining Power: Nearly 30% of Job Losses Due to Management Cutting Pie in Favor of Capital

Yves here. This short piece by Robert Gordon is important because it seeks to quantify the impact of a phenomenon that economists have noticed a bit late in the game: that the benefits of GDP growth, which used to go mainly to labor (via increased hiring and better wages) now benefit capitalists fare more than ordinary workers. The shift towards increases in GDP favoring corporate profits at the expense of labor became pronounced in the weak Bush expansion (we commented on it in a 2005 article) and Gordon’s effort to try to translate that into the impact on unemployment levels is a useful step forward in the debate.

By Robert Gordon, Professor in the Social Sciences and Professor of Economics at Northwestern University. Cross posted from VoxEU

The US is missing millions of jobs. This column argues that the total is 10.4 million. It claims that 3 million of these can be traced to the weakened bargaining position of labour and the growing assertiveness of management in slashing costs to maintain share prices. Moreover, this employment gap is not shrinking because of the ‘double hangover’ effect—an excess housing supply and besieged consumers unwilling to spend.

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Tom Ferguson: The English Riots – Just Meaningless Sound and Fury?

By Tom Ferguson, Professor of Political Science at the University of Massachusetts, Boston and aSenior Fellow at the Roosevelt Institute. Cross posted from New Deal 2.0

Zizek misses the point: Austerity politics is a social and economic disaster.

In a recent essay, Slovenian theorist and literary provocateur Slavoj Zizek attempts to unpack the political meaning of the riots in England. These broke out in response to the shooting of Mark Duggan by the Metropolitan Police and then spread rapidly from London to other cities. Zizek argues that the riots amounted to an exercise in sound and fury signifying nothing — symptoms of an “ideological-political predicament” in which opposition can only be expressed through meaningless bursts of violence.

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Dave Stratman: What Should the Verizon Strikers Do?

Yves here. The tone of this piece is a tad polemical, which may put some readers off, but the underlying point is worth considering. Basic worker protections, such as safety standards, minimum wages, rules against child labor, didn’t come about because business owners offered them but because workers demanded and fought for them.

By Dave Stratman, author of We CAN Change the World: The Real Meaning of Everyday Life who also writes at NewDemocracyWorld

They’ve been out now for two long weeks. Hard weeks. Their savings are running out. Mortgages are a concern. Verizon threatens to cut off health care benefits for strikers’ families on August 31.

Billionaire Warren Buffett said, “There is a class war in this country, and my class is winning.”

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Kucinich on Creating Jobs in America

I normally steer away from political posts, but this two part interview with Dennis Kucinich on Keith Olbermann’s Countdown focuses on economic issues. The interviewer was admittedly throwing softballs, but the critique of Obama was blunt. Is a primary challenge in the offing?

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Dalia Marin on Outsourcing, Income Inequality, CEO Pay

Dalia Marin, who Chair in International Economics at the University of Munich, discusses “new new trade theory” and how it looks at phenomena that don’t fit into older models of trade, particularly outsourcing and offshoring. Her work is empirical and here she discusses wage differentials and the various rationales for why CEO pay has exploded in the US. I think readers will enjoy this interview.

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