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Posts Tagged ‘inequality

“As long as poverty, injustice and gross inequality persist in our world, none of us can truly rest”*…

 

Last year saw the biggest increase in billionaires in history, one more every two days. This huge increase could have ended global extreme poverty seven times over. 82% of all wealth created in the last year went to the top 1%, and nothing went to the bottom 50%.

Dangerous, poorly paid work for the many is supporting extreme wealth for the few. Women are in the worst work, and almost all the super-rich are men. Governments must create a more equal society by prioritizing ordinary workers and small-scale food producers instead of the rich and powerful…

Late last month, Oxfam released its annual Inequality Report.  As Felix Salmon observes, it’s powerful stuff:

At the end of this crazy bull market, it’s always worth remembering just how enormous the big winners’ gains have been.

Specifically, the world’s billionaires – the richest 2,000 people on the planet – saw their wealth increase by a staggering $762 billion in just one year. That’s an average of $381 million apiece. If those billionaires had simply been content with staying at their 2016 wealth, and had given their one-year gains to the world’s poorest people instead, then extreme poverty would have been eradicated. Hell, they could have eradicated extreme poverty, at least in theory, by giving up just one seventh of their annual gains.

Oxfam is absolutely right, then, to shine a light on the extreme inequality of the world in 2017. Wealth creation is all well and good, but giving new wealth primarily to the world’s billionaires is literally the worst possible way to distribute it. Oxfam’s longstanding proposal for a wealth tax on billionaires makes perfect sense. They don’t need the money; the world’s poorest do. What’s more, as the Oxfam report details, the top 1% too often make their money by exploiting the very poor. Nothing about this is just, especially when a good 35% of billionaire wealth was simply inherited…

You can download the report (pdf) here; it is well worth the read.

* Nelson Mandela

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As we rethink “fair’s fair,” we might recall that it was on this date in 1826 that University College London was founded.  Originally known as London University, it was inspired by the (then) radical ideas of Jeremy Bentham (one of the founders) and created as an alternative to the Anglican universities of Oxford and Cambridge.  UCL was the first secular university in the UK (admitting students regardless of their religion) and the first to admit women.  It is currently the third largest university in the United Kingdom by total enrollment (and largest by postgraduate enrollment), and is consistently ranked among the top universities in the world.

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Written by LW

February 11, 2018 at 1:01 am

“There are people in the world so hungry, that God cannot appear to them except in the form of bread”*…

 

We stand at the precipice if we don’t re-evaluate our understanding of poverty and inequality. The narrative in the neo-liberal west is that if you work hard, things work out. If things don’t work out, we have the tendency to blame the victim, leaving them without any choices. Brexit, Le Pen, and the defeat of Hillary Clinton are examples of the cracks that result from inequality and poverty, symptoms of my childhood experience writ large. The Piketty pitchforks are out, and the march to global disorder can only be arrested by adopting measures that begin to price in the stacked deck that I and anyone else born into deep poverty sees, and resents.

I believe we will see the Italian Five Star Movement submit a referendum to leave the EU this year, and that Marine Le Pen has better than even odds of winning the French election. The EU is in danger of buckling under a globalist defeat and may exist in name only two years from now.

These trends are being accelerated by the blind belief that the poor have failed to seize the opportunities that the market or globalization has created. This myth deserves to be taken off life support—and the emerging, empirical, and carefully observed science of poverty can help us do so if we pay it the attention it deserves…

A powerful plea for a fundamental re-understanding of the economic inequality that vexes our society, and of the myth of meritocracy that has helped sustain it: “Why Poverty Is Like a Disease.”

* Mahatma Gandhi

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As we agree with FDR that “the test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little,” we might recall that this date in 1907 was “Bloody Tuesday.”  The San Francisco streetcar strike, which had begun two days earlier, erupted into violence when armed strikebreakers fired into an angry crowd of strike supporters.  Soon armed strike sympathizers returned fire.  2 died; 20 were injured.

Armed strike breaker, left, shoots into the crowd on Bloody Tuesday, May 7, 1907. The original caption in The San Francisco Examiner said that “Photographer Coleman” took the picture “the moment before the man running beside him was fatally shot.”

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Written by LW

May 7, 2017 at 1:01 am

“The rich get richer and the poor get poorer”*…

 

The richest families in Florence, Italy have had it good for a while—600 years to be precise.

That’s according to a recent study by two Italian economists, Guglielmo Barone and Sauro Mocetti, who after analyzing compared Florentine taxpayers way back in 1427 to those in 2011. Comparing the family wealth to those with the same surname today, they suggest the richest families in Florence 600 years ago remain the same now.

“The top earners among the current taxpayers were found to have already been at the top of the socioeconomic ladder six centuries ago,” Barone and Mocetti note on VoxEU. The study was able to exploit a unique data set—taxpayers data in 1427 was digitized and made available online—to show long-term trends of economic mobility…

More on the research and it’s import at “The richest families in Florence in 1427 are still the richest families in Florence.”  More on the underlying mechanisms of capital accumulation, the persistence of wealth and income, and their polarization here.

* widely-used aphorism, probably dating back to the Bible verse, “For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath” (Matthew 13:12, King James edition); it’s use was reinvigorated by the popular 1921 song “Ain’t We Got Fun.”

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As we dream the American dream, we might spare a rugged thought for Louis Dearborn L’Amour; he died on this date in 1988.  While L’Amour wrote mysteries, science fiction, historical fiction, and non-fiction, he is surely best remembered as the author of westerns (or as he preferred, “frontier stories”) like Hondo and Sackett.  At the time of his death he was one of the world’s most popular writers; dozens of his stories had been made into films, and 105 of his works were in print (89 novels, 14 short-story collections, and two full-length works of nonfiction); as of 2010, over 320 million copies of his work had been sold.

L’Amour was interred in the Forest Lawn Memorial Park Cemetery near Los Angeles.  His grave is marked in a way that acknowledges that death was able to contain him in a way that he successfully resisted throughout his life: while his body is underground, his site is fenced in.

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Written by LW

June 11, 2016 at 1:01 am

“Experience declares that man is the only animal which devours his own kind; for I can apply no milder term… to the general prey of the rich on the poor”*…

 

If all U.S. household income totaled $100, this is how it is divided

Something massive and important has happened in the United States over the past 50 years: Economic wealth has become increasingly concentrated among a small group of ultra-wealthy Americans.

You can read lengthy books on this subject, like economist Thomas Piketty’s recent best-seller, Capital in the Twenty-First Century (the book runs 696 pages and weighs in at 2.5 pounds). You can see references to this in the campaigns of major political candidates this cycle, who talk repeatedly about how something has gone very wrong in America.

 Donald Trump’s motto is to make America great again, while Bernie Sanders’s campaign has focused on reducing income inequality. And there’s a reason this message is resonating with voters:

It’s grounded in 50 years of reality…

Take the tour at “This cartoon explains how the rich got rich and the poor got poor.”

* Thomas Jefferson

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As we take stock of ourselves, we might send yellowish birthday greetings to William Randolph Hearst; he was born on this date in 1863.  Hearst built the nation’s largest newspaper chain, and (in competition with Joesph Pulitzer) pioneered the sensational tabloid style– crime! corruption! sex!– that we’ve come to know as “yellow journalism.”  The possibly apocryphal, but indicative anecdote that became Hearst’s signature dates to the period just before the Spanish-American War: famed illustrator Frederic Remington, sent by Hearst to Cuba to cover the Cuban War of Independence, telegrammed Hearst to tell him all was quiet in Cuba. Supposedly Hearst responded, “Please remain. You furnish the pictures and I’ll furnish the war.”

Hearst parlayed his power as a publisher into a career in politics, serving two terms in Congress, then losing a series of elections (for Mayor of New York City, twice, and for Governor of New York State).  An early supporter of Franklin Roosevelt, Hearst became one of his staunchest– and loudest– opponents.

Hearst’s life was the inspiration for Orson Welles’s classic film Citizen Kane.

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“Poverty is an anomaly to rich people. It is very difficult to make out why people who want dinner do not ring the bell”*…

 

 

It’s easy to be pessimistic about the state of the world; but it does pay to stand back, look at the big picture, and check that pessimism against long term data… which is what our old friend Hans Rosling helps people do. A statistician who specializes in data visualization, here he uses snowballs and toys to explain (to the BBC) the state of income inequality:

Special bonus:  watch Dr. Rosling disabuse WEF-Davos attendees of their misimpressions about sustainable development.

* Walter Bagehot, English economist (1826-1877)

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As we remind ourselves that regression can be a useful thing, we might recall that it was on this date in 1908 that Ernest Shackleton’s Nimrod expedition unloaded the first automobile in Antarctica (an air-cooled Arrol-Johnston two-seater).  Shackleton had hoped that the car would speed his progress to the South Pole; in the event, it didn’t perform in the extreme cold.

The expedition’s engineer, Bernard Day, testing the Arrol-Johnston on the Ross Sea Ice Shelf

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Written by LW

February 1, 2015 at 1:01 am

“Rank does not confer privilege or give power. It imposes responsibility”*…

 

Just about everyone on the planet agrees that CEOs earn too much. Except CEOs. But how much is too much? Let’s put it this way: the average American worker would earn almost $2 million a year if he were paid a fair salary based on the compensation of U.S. CEOs.

That’s just one of the many details to emerge from a fascinating post over at the Harvard Business Review, visualizing the pay-gap ratio between chief executives and average workers internationally…

CEOs are making a lot more than what people deem fair. In the United States, the average American CEO makes a whopping 354 times the salary of the average worker. But ask Americans what a fair salary for a CEO is, and the consensus is just 6.7 times the salary of an average worker.

That means that if the average American were paid the “ideal” fraction of the average CEO’s actual salary, he would rake in $1.8 million a year.

In 1984, legendary management guru Peter Drucker argued that paying any CEO more than 20 times the wages of the average American worker was anathema to the well-being of corporations. Pay your CEO more than that, Drucker argued, and all you did was increase employee resentment, decrease morale, and reward greed over responsibility. If Drucker could see the size of the paychecks of today’s CEOs, he’d be spinning in his grave…

Read more at “The Insanity Of CEO Paychecks, Visualized“; read the HBR piece (and see more charts) here; and then read this short piece at the Financial Times that unpacks the mechanics of greed– and its stifling effect on innovation and growth– here.

* Peter Drucker

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As we fume over fatted cats, we might take a moment to celebrate Ask a Stupid Question Day, celebrated by teachers and students on this date (or sometimes, the last school day of September).

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Written by LW

September 28, 2014 at 1:01 am

“A rich man is nothing but a poor man with money”*…

Intrigued by the mechanisms that generate a world like ours, in which over 33% of the wealth in the U.S. is held by 1% of the population, economist Ricardo Fernholz and mathematician/statistician Robert Fernholz developed a model that might explain the high degree of income and wealth inequality we see in advanced economies.

As James Kwak notes in Baseline Scenario,

The model assumes that all households are identical with respect to patience (consumption decisions) and skill (earnings ability). Household outcomes differ solely because they have idiosyncratic investment opportunities—that is, they can’t invest in the market, only in things like privately-held businesses or unique pieces of real estate. Yet when you simulate the model, you see an increasing share of wealth finding its way into fewer and fewer hands [as illustrated in the chart above].

As the authors emphasize, “it is luck alone – in the form of high realised random investment returns – that generates this extreme divergence.”  In the absence of redistribution, either explicit or implicit, this is the kind of society you end up with…

Clearly, the world is not quite so simple; there are some redistributive mechanisms (taxes and the like), and (given, e.g., educational differences) not all peoples’ earning abilities are equal.  Still, as Kwak observes,

…this is a useful antidote to the widespread belief that outcomes are solely due to skill, hard work, or some other “virtuous” attribute. Even if everyone starts off equal, you’re going to have a few big, big winners and a lot of losers. Because we want to find order and meaning in the universe, we like to think that success is deserved, but it almost always comes with a healthy serving of luck. Bear that in mind the next time you hear some gazillionaire hedge fund manager or corporate CEO insisting that he knows how the country ought to be run.

Read a summary of the Fernholzs’ paper here; download the (rather mathematically-intense) original here.

* “A rich man is nothing but a poor man with money”  – W.C. Fields

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As we ponder polarization, we might send balanced birthday greetings to Elmer Ambrose Sperry; he was born on this date in 1860.  An early exemplar of equipoise, Sperry was the engineer and inventor who devised the gyrocompass (a huge advance on traditional magnetic compasses, first tested on the U.S.S. Delaware in 1911).  His compasses and stabilizers have helped navigate and “balance level” first ships, then aircraft ever since.

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Written by LW

October 12, 2012 at 1:01 am

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