It’s the season to show concern for the less fortunate among us. We should also be concerned about the widening gap between the most fortunate and everyone else.
Although it’s still possible to win the lottery (your chance of winning $648 million in the recent Mega Millions sweepstakes was one in 259 million), the biggest lottery of all is what family we’re born into. Our life chances are now determined to an unprecedented degree by the wealth of our parents.
That’s not always been the case. The faith that anyone could move from rags to riches – with enough guts and gumption, hard work and nose to the grindstone – was once at the core of the American Dream.
And equal opportunity was the heart of the American creed. Although imperfectly achieved, that ideal eventually propelled us to overcome legalized segregation by race, and to guarantee civil rights. It fueled efforts to improve all our schools and widen access to higher education. It pushed the nation to help the unemployed, raise the minimum wage, and provide pathways to good jobs. Much of this was financed by taxes on the most fortunate.
But for more than three decades we’ve been going backwards. It’s far more difficult today for a child from a poor family to become a middle-class or wealthy adult. Or even for a middle-class child to become wealthy.
The major reason is widening inequality. The longer the ladder, the harder the climb. America is now more unequal that it’s been for eighty or more years, with the most unequal distribution of income and wealth of all developed nations. Equal opportunity has become a pipe dream.
Rather than respond with policies to reverse the trend and get us back on the road to equal opportunity and widely-shared prosperity, we’ve spent much of the last three decades doing the opposite.
Taxes have been cut on the rich, public schools have deteriorated, higher education has become unaffordable for many, safety nets have been shredded, and the minimum wage has been allowed to drop 30 percent below where it was in 1968, adjusted for inflation.
Congress has just passed a tiny bipartisan budget agreement, and the Federal Reserve has decided to wean the economy off artificially low interest rates. Both decisions reflect Washington’s (and Wall Street’s) assumption that the economy is almost back on track.
But it’s not at all back on the track it was on more than three decades ago.
It’s certainly not on track for the record 4 million Americans now unemployed for more than six months, or for the unprecedented 20 million American children in poverty (we now have the highest rate of child poverty of all developed nations other than Romania), or for the third of all working Americans whose jobs are now part-time or temporary, or for the majority of Americans whose real wages continue to drop.
How can the economy be back on track when 95 percent of the economic gains since the recovery began in 2009 have gone to the richest 1 percent?
The underlying issue is a moral one: What do we owe one another as members of the same society?
Conservatives answer that question by saying it’s a matter of personal choice – of charitable works, philanthropy, and individual acts of kindness joined in “a thousand points of light.”
But that leaves out what we could and should seek to accomplish together as a society. It neglects the organization of our economy, and its social consequences. It minimizes the potential role of democracy in determining the rules of the game, as well as the corruption of democracy by big money. It overlooks our strivings for social justice.
In short, it ducks the meaning of a decent society.
Last month Pope Francis wondered aloud whether “trickle-down theories, which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness…”. Rush Limbaugh accused the Pope of being a Marxist for merely raising the issue.
But the question of how to bring about greater justice and inclusiveness is as American as apple pie. It has animated our efforts for more than a century – during the Progressive Era, the New Deal, the Great Society, and beyond — to make capitalism work for the betterment of all rather merely than the enrichment of a few.
The supply-side, trickle-down, market-fundamentalist views that took root in America in the early 1980s got us fundamentally off track.
To get back to the kind of shared prosperity and upward mobility we once considered normal will require another era of fundamental reform, of both our economy and our democracy.
62 Billionaires Own As Much Wealth As Half of Humanity
"Widening Income Inequality Bad For Economic Growth: IMF Report "
By Eric Levitz January 18, 2016 11:52 a.m.
Photo: Bernat Armangue/AP/Corbis
If the wealthiest 62 billionaires on the planet decided to pool their resources, they could buy up every last thing owned by the 3.6 billion people who make up the poorest half of humanity, according to a new report .. https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bp210-economy-one-percent-tax-havens-180116-en_0.pdf .. from Oxfam. The report, which was released just as some of those billionaires were arriving in Davos for the World Economic Forum, shows that the gap between rich and poor has grown wider in recent years: In 2010, the bottom half owned as much as the richest 338 individuals.
Most concerning, this growing divide isn’t just the product of the rich getting richer: According to Oxfam, the wealth owned by the poorest 50 percent fell by a trillion dollars over the past five years, a 41 percent drop. The net worth of the richest 62 people grew by $542 billion, a 44 percent gain.
[ yeah, the media picks up on a few corrupt union people and all i hear in the pub up the road is guff as unions are no good, corrupt, outdated, no help - bitch, complain, whinge, whine - blah blah blah blah .. and they are guys who should know! .. no wonder some cringe when they muh shadow ]
However, the loss of wealth in the bottom half came despite improving conditions for the poorest people on earth. Between 1990 and 2010, the number of humans living in extreme poverty was cut in half. The rate of progress toward eliminating extreme poverty has slowed in recent years, but the trend has not reversed direction.
Thus, the decline in the wealth of the bottom half appears to be driven in part by the growing indebtedness of individuals in advanced countries — a point emphasized by some of the report’s critics.
“The methodology of adding up assets and subtracting debts and then making a global 'net wealth' distribution implies that many of the poorest in the world are those in advanced countries with high debts,” said Mark Littlewood, director general of the Institute of Economic Affairs, a British think-tank, to the BBC .. http://www.bbc.com/news/business-35339475 .. “Whilst we might have sympathy for the Harvard law graduate's plight, it is unclear that worrying about her should be the focus of a development organization.”
Whether or not an indebted American millennial is poorer than a worker with a positive net worth in Bangladesh, both would stand to benefit from Oxfam’s recommendations for reducing inequality, which include cracking down on tax havens to fund greater investment in public services.
The report notes that the plutocratic class has an estimated $7.6 trillion in offshore accounts. If that income were taxed, an extra $190 billion would be available to governments every year. Such revenue could be used to subsidize the cost of public college in the U.S., or to aid in the eradication of preventable illnesses in the developing world.
As Oxfam notes, growing inequality hurts the world’s poorest even when the cohort's absolute living standards are improving. The charity finds that as much as 30 percent of all African financial wealth is held offshore, costing the continent $14 billion in tax revenues each year. Were that wealth invested in social welfare instead of in the Cayman Islands, 4 million children’s lives could be saved through better health care, and enough teachers could be hired to put every African child into a classroom.
“As an organization that exists to tackle poverty, Oxfam is unequivocal in welcoming the fantastic progress that has helped to halve the number of people living below the extreme poverty line between 1990 and 2010,” the charity writes. “Yet had inequality within countries not grown during that period, an extra 200 million people would have escaped poverty.”
i hear you badmouth anything democratic for the most part, but not much on what you are FOR as an alternative. .. bits .. ...could you tell us how these positions and plans will make our lives better? [...] Strengthen the feudal system by eliminating inheritance tax. The first 15 million dollars could be exempt, but protected dynasties are a clarion call to the .1%. Equal opportunity and the merit system wouldn't even need to be pretended to be supported. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=117831022
"Widening Income Inequality Bad For Economic Growth: IMF Report"
In his new book, a Nobel laureate outlines how the huge disparity arose and the huge course correction needed to address it.
Mike Segar / Reuters
Gillian B. White Nov 2, 2015 Business
If there’s one thing Joseph Stiglitz wants to say about inequality, it’s that it has been a choice, not an unexpected, unfortunate economic outcome. That’s unnerving, but it also means that citizens and politicians have the opportunity to fix the problem before it gets worse.
In his new book, Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity .. http://www.indiebound.org/search/book?searchfor=Rewriting+the+Rules+of+the+American+Economy%3A+ , Stiglitz, a Nobel-prize winning economist, professor at Columbia University, and the chief economist at the Roosevelt Institute, asks the question “Can the rules of America’s economy be rewritten to benefit everyone—not just the wealthy?” The answer, he insists, is yes.
Stiglitz describes the current situation as “a stark picture of a world gone wrong”: He notes that 91 percent of all income growth between 2009 and 2012 was enjoyed by the wealthiest 1 percent of Americans. In the first half of the book, Stiglitz focuses on the practices and policies that have gotten the country to this point. It is a familiar story: The demise of labor unions, the increasing financialization of the economy, and the lack of wealth-building opportunities in minority communities have made the rich richer while leaving everyone else to flounder. He lists off a bevy of other contributors too: weak wages, ineffective regulation and federal oversight, and a focus on short-term versus long-term growth, which embodies a preference for rewarding shareholders over workers and consumers.
Stiglitz also notes that despite advancements in technology, which should—in theory—increase efficiency and lower costs, consumers are paying more in fees for financial services, which enriches big banks and companies while siphoning money out of the middle class. All of these things, he says, have created a society with a gaping hole, not only in its economic makeup, but in its morality.
Stiglitz spends the latter portion of the book laying out how to fix things. Like his primer on how inequality came to be, the solutions cover everything from fiscal policy to corporate boardrooms to retirement savings. His overview doesn’t prioritize pragmatism: A solution that only involves overhauling the few things that everyone agrees need to be overhauled is no solution at all, he argues.
Instead, he swings for the fences, suggesting a massive revision in the way the U.S. economy does business. First up is the attempt to tame what is called rent-seeking—the practice of increasing wealth by taking it from others rather than generating any actual economic activity. Lobbying, for example, allows large companies to spend money influencing laws and regulations in their favor, but lobbying itself isn’t helpful for the economy besides creating a small number of jobs in Washington; it produces nothing but helps an already rich and influential group grow more rich and more influential. Stiglitz suggests that reducing rent-seeking is critical to reining in inequality, especially when it comes to complex issues such as housing prices, patents, and the power that large corporations wield.
To overhaul these behaviors and the policies that support it, Stiglitz says that America should give up what he deems the “incorrect and outdated” belief in supply-side economics, which grows from the premise that regulation and taxes dampen business opportunities and economic growth. Instead, massive changes to tax laws, regulations, and the financial sector are needed, he says, in order to curb rent-seeking. For instance, increasing tax rates, ending preferential treatment for top earners, and refining the tax code would decrease incentives to amass extreme amounts of wealth, since it would be so heavily taxed, and that tax would be difficult to shirk. Stiglitz suggests a 5 percent increase to the tax rate of the top 1 percent of earners—a move that he says would raise as much as $1.5 trillion over 10 years. He also calls for a “fair tax,” which would eliminate preferential tax treatment for money earned from capital gains and dividends—perks enjoyed primarily by people who can afford to own a lot of stock.
To further ensure that corporations, markets, and individuals aren’t pursuing profits at the expense of workers and the public, Stiglitz calls for a more active central bank. He accuses the Fed of being both too narrowly focused on macroeconomic indicators, and too deferential to the businesses and markets it has the ability to regulate. He wants the government to sponsor a homeownership agency that would dole out housing loans in a way that encourages buyers instead of developers and would closely monitor the market for fairness.
Stiglitz’s thoroughness is admirable, but his prescriptions can be overwhelming, given how much it would take to make each change. The agenda also includes emphasizing the goal of full employment rather than focusing on the sometimes reductive unemployment figures; investment in public infrastructure; better access to financial services, childcare, health care, and paid leave; and strengthened opportunities for collective bargaining. Oh, and better wages for workers, and more corporate transparency, too.
Actually implementing all of these changes would require a complete shift in American policy and practice. The world that Stiglitz envisions in his book, one where all citizens can enjoy the promise of education, employment, housing, and a secure retirement seems at once like the realization of the American dream and an unattainable utopia. _____________________
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How much is the CEO of an enormous company really worth?
IMAGE: National G.O.P. Polls Before Iowa Eventual nominee appears in bold. Numbers show average of polls of Republicans in final weeks before Iowa caucus. Source: Real Clear Politics and Polling Report
By contrast, the poll leaders in the final weeks before voting in the last three competitive Republican races — 2012, 2008 and 2000 — were mostly traditional politicians: Mitt Romney and Newt Gingrich in 2012; John McCain and Mike Huckabee in 2008; George W. Bush in 2000.
Yet the biggest cause, in my view, is the mind-set of the Republican electorate. It is angrier and more disenchanted than it has been in years. Pockets of such anger have long existed. Disenchanted conservatives helped Mr. Santorum win the Iowa caucus four years ago, for example, and Pat Buchanan win New Hampshire in 1996. Ultimately, though, a different group of conservative voters — comfortable with the Republican establishment — won out.
IMAGE: Angry at the Government Share of self-identified Republicans who report being angry at the government in Washington. Alternatives were “frustrated” and “basically content.” Source: Pew Research Center
The establishment may yet prevail this year. Mr. Rubio and Chris Christie have been sparring so much lately because both are trying to emerge from Iowa and New Hampshire as the establishment alternative. One of them (or Mr. Bush, if he can somehow turn around his campaign) will still probably have a chance to consolidate the parts of the party turned off by Mr. Cruz and Mr. Trump. If that effort succeeds, 2016 will end up looking less unusual than it now does.
To understand what’s happened, I asked the analysts at the Pew Research Center .. http://www.pewresearch.org/ .. to dig into their long-running surveys on the country’s mood and break out the numbers just for self-identified Republicans. The numbers generally do not show sharp changes in the last few years. They do show an electorate that has become steadily more radicalized over the last decade.
The disenchantment began during the end of George W. Bush’s presidency, accelerated during the financial crisis and reached a new peak during President Obama’s highly active first term. By some measures, the unhappiness has remained at that peak; by other measures, it’s even higher today.
Consider this: When Pew asks people whether they trust the government in Washington to do the right thing, it offers three possible answers: just about always, most of the time, only some of the time. In the most recent survey, 18 percent of Republicans skipped all of those answers and volunteered “never.” That share was up from 8 percent who did so four years earlier.
Similarly, 33 percent of Republicans said they were angry at the federal government (as opposed to frustrated or basically content), up from 27 percent four years earlier. Only 12 percent of Republicans report being satisfied with the country’s direction — roughly unchanged since 2012 and compared with the 18 percent who gave that answer in October 2008, at the depths of the financial crisis. These patterns suggest that a candidate like Mr. Trump or Mr. Cruz could have emerged in the 2012 cycle, but probably not earlier.
One especially telling explanation of the 2016 campaign comes from a Pew question about Republicans’ attitudes toward their own party. In more than two decades of Pew polling on the question, Republicans’ unhappiness with their party during the Obama presidency has exceeded any previous level of self-party dissatisfaction, among either Democrats or Republicans.
IMAGE: Republican Disaffection Share of self-identified Republicans saying they are dissatisfied with the country’s direction. Source: Pew Research Center
About half of Republicans have disapproved of their party’s congressional leaders in most polls since 2013. By comparison, only about 20 percent tended to disapprove during the Bush presidency.
No wonder, then, that candidates who sound so angry are doing so well this year. The actual start of voting — now just two weeks away — still has the potential to return a sense of historical normalcy to the campaign. But the Republican electorate is substantially different from the way it used to be, which means the result could be, too.
Correction: January 19, 2016
An earlier version of a chart with this article incorrectly left off Rudolph Giuliani and Mitt Romney, two of the national polling leaders among Republicans in the weeks before the 2008 Iowa caucuses. Mr. Giuliani led an average of polls, at 20 percent, and Mr. Romney was fourth at 14 percent.
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