(Roughly) Daily

Posts Tagged ‘wealth

“Inequality is as dear to the American heart as liberty itself”*…

And indeed, what was true a century ago seem still to hold. Everyone seems to hate/fear inflation, but it has radically different impacts on different groups within our society…

Inflation is widening America’s wealth gap.

• Prices have risen across the nation, and so have wages across all income levels.

• The lowest-earning households gained an average of $500 in earnings last year. But their expenses grew by almost $2,000.

• Meanwhile, the upper half of earners pulled further ahead as their incomes outgrew expenses significantly.

Whom does inflation hurt the most?” from Scott Galloway (@profgalloway)

William Dean Howells

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As we ferret out unfairness, we might cautious birthday greetings to James Mill; he was born (James Milne) on this date in 1773. A historian, economist, political theorist, and philosopher (a close ally of Utilitarian thinker Jeremy Bentham), he is counted among the founders of the Ricardian school of economics (and so, among other things, a father of monetarism, the theory that excess currency leads to inflation).

His son, John Stuart Mill, studied with both Bentham and his father, then became one of most influential thinkers in the history of classical liberalism (perhaps especially his definition of liberty as justifying the freedom of the individual in opposition to unlimited state and social control). JSM also followed his father in justifying colonialism on Utilitarian lines, and served as a colonial administrator at the East India Company.

James Mill

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“Where wealth accumulates, men decay”*

One long, brutal game of musical chairs…

It’s easy to place the blame for America’s economic woes on the 0.1 percent. They hoard a disproportionate amount of wealth and are taking an increasingly and unacceptably large part of the country’s economic growth. To quote Bernie Sanders, the “billionaire class” is thriving while many more people are struggling. Or to channel Elizabeth Warren, the top 0.1 percent holds a similar amount of wealth as the bottom 90 percent — a staggering figure.

There’s a space between that 0.1 percent and the 90 percent that’s often overlooked: the 9.9 percent that resides between them. They’re the group in focus in a new book by philosopher Matthew Stewart, The 9.9 percent: The New Aristocracy That Is Entrenching Inequality and Warping Our Culture.

There are some defining characteristics of today’s American upper-middle class, per Stewart’s telling. They are hyper-focused on getting their kids into great schools and themselves into great jobs, at which they’re willing to work super-long hours. They want to live in great neighborhoods, even if that means keeping others out, and will pay what it takes to ensure their families’ fitness and health. They believe in meritocracy, that they’ve gained their positions in society by talent and hard work. They believe in markets. They’re rich, but they don’t feel like it — they’re always looking at someone else who’s richer.

They’re also terrified. While this 9.9 percent drives inequality — they want to lock in their positions for themselves and their families — they’re also driven by inequality. They recognize that American society is increasingly one of have-nots, and they’re determined not to be one of them…

America’s upper-middle class works more, optimizes their kids, and is miserable: “The problem with America’s semi-rich“– Emily Stewart (@EmilyStewartM) talks with Matthew Stewart.

* Oliver Goldsmith

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As we rethink requisites, we might recall that it was on this date in 1851 that Richard Bentley, a London publisher, released The Whale, by Herman Melville in a printing of 500 copies. About a month later it was published (in a slighted different version) in the U.S. under its better-known title, Moby Dick.

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“A fair day’s-wage for a fair day’s work: it is as just a demand as governed men ever made of governing.”*…

As low-wage employers struggle to find workers, it seems as that labor– which has been left behind over the last several decades, as the economic benefits of growth have flowed to executives and owners– may be about to have its day. But will it? And what might that mean?

In her first statement as Treasury Secretary, Janet Yellen said that the United States faced “an economic crisis that has been building for fifty years.” The formulation is intriguing but enigmatic. The last half century is piled so high with economic wreckage that it is not obvious how to name the long crisis, much less how to pull the fragments together into a narrative. One place to start is with the distribution of national income between labor and capital (or, looked at another way, between the wage share and the profit share of national income). About fifty years ago, the share of income going to labor began to decline, forming a statistical record of the epochal collapse of working class power. Episodes of high employment in the 1990s and the late 2010s did not reverse the long-term pattern. Even today, with a combination of easy money and fiscal stimulus unprecedented since World War II, it is unclear what it would take to reverse the trend in distribution.

Few would seriously dispute that hawkish Federal Reserve policies have played a direct role in the decline of the labor share since the 1970s. This is the starting point for thinking about monetary policy and the income distribution, but many questions remain. Today’s expansionary program extends beyond monetary policy to include fiscal stimulus and even industrial policy, but the first sign of an elite rethinking was the Fed’s dovish turn around 2016. (The Fed chair then was Yellen, whose current tenure as Treasury Secretary has been marked by close coordination with her successor, Jerome Powell.) In a fundamental sense, the entire Biden program hangs on the Fed: low interest rates made possible a reevaluation of the cost of massive government debt, which has in turn opened new horizons for a would-be activist government. 

If the age of inequality was the product of a hawkish Fed, could a dovish central bank reverse the damage? Today, there is more reason to speak of a “pro-labor turn” than perhaps at any time over the last half century. But history is not so easily reversed. The new policy regime is not a simple course correction to decades of misguided neoliberalism. There is evidence that the current experiment was made possible by a recognition that workers had suffered a secular defeat—specifically, that they had lost the ability to increase or even defend their share of the national income. What would happen if labor became stronger?…

Tim Barker (@_TimBarker) explores: “Preferred Shares,” in Phenomenal World (@WorldPhenomenal).

On a related note: “The economics of dollar stores.”

[Image above: source]

* Thomas Carlyle

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As we re-slice the pie, we might send acquisitive birthday greetings to Claude-Frédéric Bastiat; he was born on this date in 1801 (though some sources give tomorrow as his birthday). An economist and writer, he was a prominent member of the French Liberal School. As an advocate of classical economics and the views of Adam Smith, his advocacy for free markets influenced the Austrian School; indeed, Joseph Schumpeter called him “the most brilliant economic journalist who ever lived”… which is to say that Bastiat was a father of the neo-liberal economic movement that’s been central to creating the situation we’re in.

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“Justice is not the work of the law: on the contrary, the law is only the declaration and application of what is just in all circumstances where men have relations with one another”*…

This essay proposes a new model of personal and public wealth-building that can address the current crisis of inequality in the United States. We place contemporary American wealth inequality into its historical context by tracing how federal government policies have worked to support personal and public wealth building across three periods: the First Industrial Revolution of the mid-19th century, the Second Industrial Revolution of the early 20th century, and the Information and Communication Technology revolution of the late-20th century. We then suggest a series of potential governmental policies that can help to ensure a more equitable wealth distribution in the future. Our proposed “mutualist” model of political economy would allow for the large-scale diffusion of productivity gains that may follow the installation of deployment of the next wave of general-purpose technologies. This new social contract will move beyond the welfare state’s focus on insurance toward a more radical notion of shared ownership of returns on capital via universal individual capital endowments and new public investment channels that control shares in firms and intellectual property…

Addressing inequality in the U.S.: “The Mutualist Economy: A New Deal for Ownership“– Nils Gilman (@nils_gilman) and Yakov Feygin (@BuddyYakov) offer a powerfully-provocative proposal.

They join a growing chorus. See also, e.g., Louis Hyman (toward the end of this essay) and Lynn Forester de Rothschild (in this interview).

[Image above: source]

Pierre-Joseph Proudhon, describing an ideal state

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As we rethink what isn’t working, we might send gilded birthday greetings to Johns Hopkins; he was born on this date in 1795. A businessman who is largely remembered as a philanthropist, he operated wholesale and retail businesses in the Baltimore area; he built his fortune by judiciously investing his proceeds in myriad other ventures, most notably, the Baltimore and Ohio (B & O) Railroad. In 1996, Johns Hopkins ranked 69th in “The Wealthy 100: From Benjamin Franklin to Bill Gates – A Ranking of the Richest Americans, Past and Present

His bequests founded a number institutions bearing his name, the best-known of which are, of course, Johns Hopkins Hospital and Johns Hopkins University.

Although Hopkins is widely-noted as an abolitionist, recent research indicates that Johns Hopkins was a slave owner for at least part of his life.

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Written by (Roughly) Daily

May 19, 2021 at 1:01 am

“To be wealthy and honored in an unjust society is a disgrace”*…

 

wealth

 

Scroll a bit, and you come to…

million

Then scroll… and scroll… and scroll… and scroll… and scroll… and scroll… for a visualization of relative levels of wealth in the U.S., with provocative facts and comparisons along the way: “Wealth shown to scale.”

[TotH to EWW]

* Confucius, The Analects

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As we wonder if enough is ever enough, we might spare a thought for one of the architects of the economic reality in which we live, Gary Becker; he died on this date in 2014.  A Nobel laureate economist with an interest in the social sciences, Becker updated the concept of “human capital” (which dated, of course, back to the days of Adam Smith and slavery), arguing that labor economics is part of capital theory.  He mused that “economists and plan-makers have fully agreed with the concept of investing on human beings.”  In this and other assertions, he was a defining proponent of the Chicago school of economics.

220px-GaryBecker-May24-2008 source

 

Written by (Roughly) Daily

May 3, 2020 at 1:01 am

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