Bill Gates pens a review on Thomas Piketty’s Capital in the Twenty-First Century (multiple previously). He agrees with the book's central thesis on the problem of high levels of inequality and the need for government role that the market alone cannot solve, and calls upon the imposition of a progressive consumption tax, rather than a tax on capital as Piketty proposes.
The political economy of a universal basic income: "your view of what is feasible should not be backwards looking. The normalization of gay marriage and legalization of marijuana seemed utopian and politically impossible until very recently. Yet in fact those developments are happening, and their expansion is almost inevitable given the demographics of ideology... UBI — defined precisely as periodic transfers of identical fixed dollar amounts to all citizens of the polity — is by far the most probable and politically achievable among policies that might effectively address problems of inequality, socioeconomic fragmentation, and economic stagnation." [more inside]
The Upshot asked: Where are the hardest places to live in the U.S.? (A bit more on the ranking.) Now, given continuing economic divergence (previously): What do the two Americas search for?
It's hardly breaking news, but more and more people are questioning the race to the Ivy League that in some cases begins as early as preschool. And in addition to perpetuating the increasingly-rigid class structure in the US, the Ivy League colleges are inadvertently creating and admitting students who have no idea how to really take advantage of the resources available to them. So writes William Deresiewicz in his article, "Don't Send Your Kid to the Ivy League" from the New Republic:
So extreme are the admission standards now that kids who manage to get into elite colleges have, by definition, never experienced anything but success. The prospect of not being successful terrifies them, disorients them. The cost of falling short, even temporarily, becomes not merely practical, but existential. The result is a violent aversion to risk. You have no margin for error, so you avoid the possibility that you will ever make an error. Once, a student at Pomona told me that she’d love to have a chance to think about the things she’s studying, only she doesn’t have the time. I asked her if she had ever considered not trying to get an A in every class. She looked at me as if I had made an indecent suggestion.See also Deresiewicz's earlier article, "The Disadvantages of an Elite Education" from American Scholar, previously discussed on the blue.
- Welfare economics: an introduction
- The perils of Potential Pareto
- Inequality, production, and technology
- Welfare theorems, distribution priority, and market clearing
- Normative is performative, not positive
Fat-Booty Butch Buys A Suit On A Budget.
I’m a brown dyke living in the Bronx, working 40 hours a week at an non-profit arts center. I’m finally with it enough to pay all my bills on time, if at all. I’ve got a roof over my head and some change in my savings account. I’m not complaining. It’s been worse for me but fuck, just having a job feels like a blessing sometimes. Living in this city makes it feel like I’m scraping by with every penny just to live. My play money is tight and I don’t know how to sew. I wear clothes until they’ve given up on life and I’m not ashamed. I often wonder how regular people buy new clothes all the time. Clothes in the hood and at super-low discount shops never seem to last very long. Fancy clothes cost so much, like why isn’t everyone just running around in cloth diapers? What is someone like me supposed to do when they need to look good in real life?[more inside]
In the LA Review of Books, Stephen Marche reflects upon the Literature of the Second Gilded Age. In his recently published book, Capital in the Twenty-First Century, economist Thomas Piketty argues that when r>g, that is, when an economy's annual rate of return on capital exceeds the economy's annual rate of growth, wealth inequality tends to increase, and that this condition has held both during the 19th century and since around the latter quarter of the 20th century. Unusually for an economics book, Piketty's work makes reference to several pre 20th-century works of fiction. Stephen Marche discusses role of this literature in Piketty's book. He goes on to critique the modern American social-realist novel. Although these books are not discussed by Piketty, according to Piketty's research they too pertain to a time in which r>g. Marche however accuses the more modern literature of being a "restrained, aspirational product" with "most of its sting removed".
"Hi, Marc... You seem to think everyone's worried about robots. But what everyone's worried about is you, Marc. Not just you, but people like you. Robots aren't at the levers of financial and political influence today, but folks like you sure are. People are scared of so much wealth and control being in so few hands... Unless we collectively choose to pay for a safety net, technology alone isn't going to make it happen." [more inside]
This PewResearch animation graphically shows the growing polarization among US voters during the past 15 years. Part of a 121 page pdf. Pew doesn't address why polarization is happening, but the pundits will try: "Voters are becoming angrier because living standards are falling and the middle class is shriveling." Democrats blame corporations, Republicans blame the government and the Dallas Fed blames robots. [more inside]
Student Debt Grows Faster at Universities With Highest-Paid Leaders, Study Finds (SLNYT) 'At the 25 public universities with the highest-paid presidents, both student debt and the use of part-time adjunct faculty grew far faster than at the average state university from 2005 to 2012...The study, “The One Percent at State U: How University Presidents Profit from Rising Student Debt and Low-Wage Faculty Labor,” examined the relationship between executive pay, student debt and low-wage faculty labor at the 25 top-paying public universities.' Report here.
"Britain's richest people are wealthier than ever before, with a combined fortune of almost £520bn, according to the Sunday Times Rich List. The total wealth of the richest 1,000 individuals, couples or families jumped 15% in a year, the survey said. Wealth expert Philip Beresford, who compiled the list, said he had never before seen such a "phenomenal" rise in personal fortune... Mr Beresford said: "The richest people in Britain have had an astonishing year. While some may criticise them, many of these people are at the heart of the economy and their success brings more jobs and more wealth for the country." - The total figure for the Rich List is equivalent to a third of the UK's gross domestic product."
"seeing yourself as physically attractive leads you to believe you belong in a higher social class," according to a recent study by Peter Belmi and Margaret Neale of Stanford Graduate School of Business. Through a series of five studies, they found that "self-perceived attractiveness shaped people's social class perceptions, which in turn, influenced how people responded to inequality and social hierarchies." For example, higher self-perceived attractiveness "reduced donations to a movement advocating for social equality," while lower self-perceived attractiveness led to "greater rejection of inequality and social hierarchies."
The American Middle Class Is No Longer the World’s Richest. The American middle class, long the most affluent in the world, has lost that distinction. Comparing income by country. About the data.
VC for the people - "It's just that people who have options are much more likely to actually find success than people who don't." [more inside]
TechCrunch's Kim-Mai Cutler delivers a 12,000-word deep-dive on San Francisco's Housing Crisis. Touching on: rent control, the Ellis Act, Dianne Feinstein, the mission, the Fillmore, Angelo Sangiacomo, Howard Jarvis, the failure of the Greater San Francisco movement, the perfidy if the Mountain View city council, and the Byzantine machinations behind the Twitter tax. If some of those names are unfamiliar to you, strap in: the story of San Francisco's property law may have found its Gibbon.
Why We’re in a New Gilded Age Paul Krugman reviews Capital in the Twenty-First Century by Thomas Piketty, and discusses the renewal of the importance of capital in preserving inequality across generations.
In 2013, 85% of new houses in London were sold to non-UK buyers. Many stand empty and decaying, held as investments instead of homes. On the other end of the scale, desperate renters turn to leaking barges on the Thames.
For nearly two hundred years America was one of the healthiest and longest-lived countries, but today, over thirty countries have better health by many measures. What happened? "If the culprit of the decline in health is not health care, are individual health-related behaviors, often blamed for the high death rates in some groups, causing our low ranking in health? Apparently not." [more inside]
What's the link between household income during childhood and job choice during adulthood? Stats and pretty graphs ahoy!
Free Money for Everyone - "A wacky-sounding idea with surprisingly conservative roots may be our best hope for escaping endless, grinding economic stagnation." (via) [more inside]
The Two Cultures and the Scientific Revolution - "[Charles Percy Snow] was pleading for a more adequately educated ruling class so that the suffering of the poor might be ameliorated... Snow wanted to believe something like this: political decisions in the modern world often concern how to deploy science and technology, so people well-trained in science and technology will be better prepared to make those decisions. But that's a syllogism without a minor premise." (previously) [more inside]
Inside the Nightmare Launch of HealthCare.Gov - "Unknown to a nation following the fiasco, McDonough's assignment from the President had boiled down to something more dire than how to fix the site. As the chief of staff remembers his mission, it was 'Can it be patched and improved to work, or does it need to be scrapped to start over? He wanted to know if this thing is salvageable.' Yes, on Oct. 17, the President was thinking of scrapping the whole thing and starting over." (previously) [more inside]
A single mom, Nicole just completed a degree in early childhood development at the local community college. She has been patching together part-time work around her studies and Joe’s schedule. Until 2009, Nicole and Joe lived in a poor neighborhood in Baltimore. Now they’re in Columbia, Md., half an hour away by car, but a world away in terms of opportunity. At Joe’s former elementary school in Baltimore, 97 percent of the students are low income, and 97 percent are African-American. His middle school in Columbia is one-third low income, with white, Asian, Hispanic and multiracial students making up just over half the population. In their old Baltimore neighborhood, Nicole says, she saw a man get shot in the leg in front of a corner bar as she held baby Joe in her arms.
Where I live in East Baltimore, everything looks like "The Wire" and nobody cares what a "selfie" is.
Tonight, President Barack Obama will deliver his 2014 State of the Union address. A stream will be available via the White House and from many other outlets. [more inside]
Congress takes a casual look at the peer-to-peer economy - “Finding new ways to monetise used or existing assets has the obvious and immediate effects of raising their value and the wealth of their owners, while simultaneously reducing the value of comparable stuff owned by incumbent companies — for whom monetisation already wasn’t a problem, and who find themselves burdened by the newly competitive environment. The innovations also provide a surplus to those consumers who previously would have paid more to an incumbent. And all without any new stuff actually having to be made.” [more inside]
The 85 richest people around the globe equals the assets held by half of the world's population. Ahead of this year's Davos World Economic Forum (and the premier of Rich Kids of Beverly Hills), Oxfam released a report on inequality. [more inside]
The return of "patrimonial capitalism": review of Thomas Piketty's Capital in the 21st century (pdf) - "Thomas Piketty's 'Capital in the 21st century' may be one of the most important recent economics books. It jointly treats theory of growth, functional distribution of income, and interpersonal income inequality. It envisages a future of relatively slow growth with the rising share of capital incomes, and widening income inequality. This tendency could be checked only by worldwide taxation of capital." [more inside]
The number of homeless New Yorkers in shelters has risen by more than 69 percent since 2002, when Mayor Bloomberg took office. Each night as many as 60,000 people -- including more than 22,000 children, the highest number since the Great Depression, -- experience homelessness in NYC, and during the course of each year, more than 111,000 different homeless New Yorkers, including more than 40,000 children, will sleep in the city's municipal shelter system. Meet Dasani, one of the city's 'invisible children.' [more inside]
Pope Francis' Apostolic Exhortation Evangelii Gaudium has effectively labeled unfettered capitalism a 'tyranny' (previously). [more inside]
"We've somehow been culturally talked into accepting this arrangement, not realizing how businesses are using it to further extract value from us. Businesses are choosing candidates based on their open source contributions, knowing that they are getting more value for less money out of them. These are candidates that will continue to work on things in their free time because it's something they care about and are passionate about. This is akin to not paying someone for overtime." -- Ashe Dryden talks about how unpaid work on open source projects may help sustain inequality and exploitation in the software industry.
Brad DeLong, recently installed at Equitablog, lays out a future (wonkish) where the returns to capital keep increasing relative to labor: "What do we people do to add value? Eight things... [more inside]
The Guardian presents an animated video explaining the distribution of wealth in the UK (and how it's getting worse).
Switzerland to vote on $2,800 monthly 'basic income' for adults (reddit, mr; previously-er) [more inside]
Over the last year and a half, I have been visiting São Paulo and, especially, Rio de Janeiro, observing the process of “pacification,” by which the government attempts to peacefully enter and reestablish state control over the most violent enclaves of the city, those dominated by drug gangs called traficantes, or by syndicates of corrupt police called militias. Until 2008, when the pacification program started, the traficantes controlled roughly half of the favelas, and the militias the other half. Both still hold power in most favelas. The ultimate aim of the state government of Rio’s plan, called the Unidade de Polícia Pacificadora (UPP), or Police Pacification Unit, is to drive both of these groups out and replace them by the state. (SLNYRB)
A survey by a high-end estate agent has revealed that there are more domestic servants in the exclusive London district of Mayfair now than 200 years ago, and indeed, in the élite London neighbourhoods which have been bought up by absentee oligarchs, often only the lights in the servants' quarters are on at night. For those who fancy a life of serving the super-rich, there are courses to prepare them for catering to their masters' exacting whims. But it's not all rosy at the top; the prices of luxury goods (including foie gras, Patek Philippe watches, paintings by artists such as Cézanne and Rothko) in the basket used to calculate the Affluent Luxury Living Index have been rising at a rate exceeding inflation.
"In the past inequality in South Africa was largely defined along race lines. It has become increasingly defined by inequality within population groups as the gap between rich and poor within each group has increased substantially." Is this what's led the BBC to report a growing sense of insecurity among poor (chiefly Afrikaans-speaking) whites? Or are they just blatantly misreading the statistics? [more inside]
People are more likely to kill their fellow citizens as the gap between rich and poor increases. The same is not true of civil war — although you’d think people would be more likely to turn against the state rather than their neighbor as income inequality increased, this isn’t the case.
Inequality and the New York subway. An infographic from the New Yorker: The United States has a problem with income inequality. And it’s particularly bad in New York City—according to recent data from the U.S. Census Bureau, if the borough of Manhattan were a country, the income gap between the richest twenty per cent and the poorest twenty per cent would be on par with countries like Sierra Leone, Namibia, and Lesotho.
Students in Chile held one of their largest marches yet, continuing a campaign for greater public funding of education and in protest of Chile's significant economic inequality, particularly as it affects access to education. (Previously.)
"Ours are aging, consumption-based societies, focused on today. We need to find a way to build for the future. Maybe enfranchising our children is the answer."
A well-executed and terrifying visual representation of exactly how stratified wealth is in America. It's far worse than you could have imagined. [SLYT]
Education is becoming less and less of an equalizer, as it has gradually fortified class barriers. The NYTimes investigation uncovered that culture has increasingly become the best indicator of upward mobility. [more inside]
The US does not have a spending problem, we have a distribution problem "Forty years from now, America will be twice as rich on average as we are today. But most of that wealth will go to the very richest households. We only have a budget crisis if they refuse to pay higher taxes... So the real point isn't that we can't afford Social Security and Medicare. It's that some people don't want to pay the higher taxes necessary to maintain Social Security and Medicare. This is a question of distribution, pure and simple."
In last night's episode of Independent Lens on PBS, filmmaker Alex Gibney presented the case that America's richest citizens have "rigged the game in their favor," and created unprecedented inequality in the United States. "Park Avenue: Money, Power and the American Dream" [video, website]
Trade-offs between inequality, productivity, and employment - "The poor do not employ one another, because the necessities they require are produced and sold so cheaply by the rich. The rich are glad to sell to the poor, as long as the poor can come up with property or debt claims or other forms of insurance to offer as payment..." [more inside]
The comparative experience thus suggests that for inequality reduction, it is the quantity of taxes rather than the progressivity of the tax system that matters most. Affluent countries that achieve substantial inequality reduction do so with tax systems that are large but no more progressive than ours [America's]. [more inside]
Last week, I wrote about how urban trees—or the lack thereof—can reveal income inequality. After writing that article, I was curious, could I actually see income inequality from space? It turned out to be easier than I expected.
Why Teaching Equality Hurts Men: "It hurts them by making them unconsciously perpetrate biases they’ve been actively taught to despise. It hurts them by making them complicit in the distress of others. It hurts them by shoehorning them into a restrictive definition masculinity from which any and all deviation is harshly punished... It hurts them through a process of indoctrination so subtle and pervasive that they never even knew it was happening, and when you’ve been raised to hate inequality, discovering that you’ve actually been its primary beneficiary is horrifying – like learning that the family fortune comes from blood money." (via nooneyouknow)
"I can say with confidence that rich people don't create jobs, nor do businesses, large or small," said über-rich venture capitalist Nick Hanauer in a March 1st TEDx talk, which TED is refusing to put on its website. [more inside]