Look on my works, ye Mighty, and despair!
October 14, 2010 4:11 AM Subscribe
The Problem with Inequality
The biggest problem with runaway inequality, however, is that it undermines the unity of purpose necessary for any firm, or any nation, to thrive. People don't work hard, take risks and make sacrifices if they think the rewards will all flow to others. Conservative Republicans use this argument all the time in trying to justify lower tax rates for wealthy earners and investors, but they chose to ignore it when it comes to the incomes of everyone else.Wealth and an American paradox - Why are Americans mostly opposed to redistribution? Here are a handful of plausible explanations forwarded by scholars:
It's no coincidence that polarization of income distribution in the United States coincides with a polarization of the political process. Just as income inequality has eroded any sense that we are all in this together, it has also eroded the political consensus necessary for effective government.
- "Anti-statism." Americans have been historically suspicious of and hostile to government (although they have accepted many pragmatic programs, like Medicare). Therefore, they may wish that inequality was much less than it is, but they will not empower the government to do something serious about it.
- Opportunity, not outcome. Survey data show that many Americans generally do support government actions that widen opportunities for economic advancement, especially through education. Most Americans may believe, then, that in a society of equal opportunity, unequal outcomes can be reduced or at least tolerated. (Unfortunately, the belief that the U.S. is particularly open to upward mobility is empirically incorrect.)
- Race trumps: In the U.S., issues of economic inequality have been tangled up with issues of race, because blacks have disproportionately been poor and the likeliest recipients of government assistance. Research suggests that this prospect leads whites to resist government action, even action that might benefit themselves.
- Ideology of self-reliance: Americans have been historically committed to emphasizing individual independence and self-reliance; increased government action threatens to create dreaded "dependency." In practice, Americans have comprised that ideology when conditions demanded – in the Great Depression, for example; or in accepting disaster relief. But these values make for deep resistance to any major new initiatives.
- Constricted horizons: Some have argued that political discussions here are so narrowly bounded that Americans may see and resent great inequality but cannot really imagine that things could be (and are elsewhere) different. When, for example, the free-enterprise Obama health plan is seen by so many as an extreme, socialistic program, when our tax rates on the wealthy are described as confiscatory, or when Sweden is depicted as some sort of totalitarian state, it would seem that Americans are operating with blinders on.
Time's running out for job growth - The U.S. does not have the luxury of waiting indefinitely for job growth to resume. Already we're at the absolute limit: any longer, and most of the unemployed will be long-term unemployed and, to a first approximation, unemployable. This country simply can't afford an unemployable underclass of the long-term unemployed — not morally, not economically, and not fiscally, either. [1,2,3,4]
Young, Educated, and Unemployed: A New Generation of Kids Search for Work in their 20s - The Lost Generation: What it's like for 20-somethings to go in search of meaningful work — and not find it. [1,2,3,4]
The Left Right Paradigm is Over: It's You vs. Corporations - The Individual has been supplanted in the political process nearly entirely by corporate money, legislative influence, campaign contributions, even free speech rights... But the battle lines between the two groups have barely been drawn. I expect this fight will define American politics over the next decade. [1,2]
Hegel on Wall Street - Nothing but fierce and smart government regulation can head off another American economic crisis in the future. This is not a matter of "balancing" the interests of free-market inventiveness against the need for stability; nor is it a matter of a clash between the ideology of the free-market versus the ideology of government control. Nor is it, even, a matter of a choice between neo-liberal economic theory and neo-Keynesian theory. Rather, as Hegel would have insisted, regulation is the force of reason needed to undo the concoctions of fantasy. [1,2]
America's Shame - The GOP is stampeding toward an absolutist rejection of climate science that appears unmatched among major political parties around the globe, even conservative ones. [1,2]
The Final End of Bretton Woods 2? - The time may finally be at hand when the imbalances created by Bretton Woods 2 now tear the system asunder. The collapse is coming via an unexpected channel; rather than originating from abroad, the shock that sets it in motion comes from the inside, a blast of stimulus from the US Federal Reserve. And at the moment, the collapse looks likely to turn disorderly quickly. If the Federal Reserve is committed to quantitative easing, there is no way for the rest of the world to stop to flow of dollars that is already emanating from the US. Yet much of the world does not want to accept the inevitable, and there appears to be no agreement on what comes next. Call me pessimistic, but right now I don't see how this situation gets anything but more ugly. [1,2]
From currency warfare to lasting peace - The "international currency war" mentioned by Brazil's finance minister poses massive dangers for the world trade and financial systems. This column by one of the world's most respected international economists argues that there is a better way. The G3 should engage in quantitative easing so they all can export more to each other. For the emerging markets, the danger lies in inflation, asset bubbles, and trade retaliation. To shield their key manufacturing sectors, they should encourage the domestic demand for manufactures. [1,2]
Blaming China Won't Help the Economy - [T]he dominance of free-market thinking in international economic management is over... the United States must adapt to an environment where exchange rates and trade imbalances are managed consciously and have become a legitimate subject for debate in international forums like the Group of 20... Outside America ... a strong conviction now exists that some new version of global capitalism must evolve to replace what the economist John Williamson coined the "Washington consensus." ...governments must deliberately shape market incentives to achieve objectives that are determined by politics and not by the markets themselves, including financial stability, environmental protection, energy independence and poverty relief. [1,2]
Will America come to envy Japan's lost decade? - Whether we like it or not, we are "built to grow" and we use the fruits of that growth to buy off interest groups as we go along. Japan in contrast has greater capacity to stifle these grabs for new redistributions because their politics is more of an insider's game. Imagine a future world history where, fifty years from now, we look back and decide that Japan was the one country that made a semi-success of near-zero growth.
How Facebook is Killing the Economy - We are in the year 2025. Because of advances in production technology, much of the path from extracting the required renewable resources through to the production and distribution of most of the items we demand can be accomplished with automated methods overseen by a small cadre of engineers... I don’t know exactly how this economy works, but I can tell you that it is not working well.
The End of Finance? The monetisation of everything - I know it's wrong, or at least deeply problematic, to adopt a teleological view of history: to say that History has an End, or Purpose, and is inexorably driven by deterministic Iron Laws towards that End, with perhaps an occasional hiccough along the way. But I can't stop myself... Why is it taking so long? The answer of course is that the technology of promising is imperfect... But we learn from crashes in the monetary technology, just as we learn from bridges falling down and rockets exploding. We revert to an older, more familiar technology temporarily. But then History Marches Forward again, and the monetisation of everything progresses further towards its inexorable End. [1,2]
What Does Cutting-Edge Macroeconomics Tell Us About Economic Policy for the Recovery? - That is is what I take to be the guts of Niall Ferguson's read on today's economic problems... Public spending putting people or artificially inducing private employers to put people to work will backfire. I, by contrast, take my stand with John Stuart Mill's 1829 critique of Jean-Baptiste Say (1803). Mill pointed out that people in the aggregate can and do spend less than they earn on currently-produced goods and services... Then you do have a general glut -- an excess supply of pretty much every kind of currently-produced good and service and of currently-employed labor. It happens whenever you have a substantial excess demand for financial assets... in the end, Say bowed... Until we see actual, real signs that expansions of government balance sheets are impairing investor confidence in government promises-to-pay, it seems to me that it would be extremely foolish not to continue to attempt to boost production and employment by expanding government balance sheets. I want to see the money that stimulative policies are impairing confidence--and not just listen to arguments that stimulative policies ought to be impairing confidence. [1,2]
The cost of being unbanked - Candice Choi has a great first-person story about the cost of not having a bank account... check-cashers and payday lenders are likely to be around for a long time yet, acting as yet another tax on poverty.
The solution to the mortgage mess - There are three main ways this can be done. The first is to refinance the current loan, possibly through HAMP. The second is for the banks and the homeowners to negotiate a principal reduction. And the third is to allow a short sale of the house.
How To Cut the Budget Deficit - Kudos to Bill Galston at the Brookings Institution and Maya MacGuineas at the New America Foundation for putting on the table a credible plan to get the federal budget under control. I don't agree with each and every one of their proposals — no one would — but their plan is both specific and sensible. It sets out an achievable goal and has the potential to reach it. And while it gores just about every ox in the budget, it equitably distributes the necessary pain.
Toward a New American Century - Immigration reform, investments in human capital, and a saner housing policy can help restore U.S. economic leadership.
More Preschool, Please - If you're looking for projects that are likely to have really high ratios of benefits to costs, these are your babies. [1,2,3,4]
American People Hire High-Powered Lobbyist To Push Interests In Congress - Citing a desire to gain influence in Washington, the American people confirmed Friday that they have hired high-powered D.C. lobbyist Jack Weldon of the firm Patton Boggs to help advance their agenda in Congress. Known among Beltway insiders for his ability to sway public policy on behalf of massive corporations such as Johnson & Johnson, Monsanto, and AT&T, Weldon, 53, is expected to use his vast network of political connections to give his new client a voice in the legislative process. Weldon is reportedly charging the American people $795 an hour. [1,2]
The Secret Big-Money Takeover of America - Not only is income and wealth in America more concentrated in fewer hands than it's been in 80 years, but those hands are buying our democracy as never before – and they're doing it behind closed doors. [1,2]
Global power: On top of the world - Why the West's present dominance is both recent and temporary. [1,2]
Red Plenty - It's a fictionalised account, or a non-fiction novel, about the project in the early 1960s to use computers to plan the Soviet economy. A key figure is the genius Kantorovich, who invented the mathematical technique of linear programming in 1938. (We follow his mind as the idea dawns on him, on a tram.) He and other real characters such as Kosygin and Khrushchev mingle with fictitious characters – some based on real people, some not, but all convincing. It's a bit like reading a novel by Kim Stanley Robinson, Neal Stephenson, or Ursula Le Guin – or maybe a mashup of all them; full of arguments between passionate and intelligent people, diverting (in both senses) infodumps, and all about something that actually happened – and, more significantly, about something that didn't happen, and why it didn't. [1,2]
TR and the city of history - For Roosevelt, the literary historian's major talent is not for writing but for empathy. She must look at data, at potsherds, at memoirs, at the whole quantity of available evidence and then by an effort of imagination put herself in the place of people whose whole world has long passed... The engineers and the builders could make us a city, Roosevelt says, and it could be a city safe and clean to live in, with modern sanitation and all our material needs met: but would it be a city worth living in? Would we have anything to draw us out of ourselves, and into the lives of our fellows? Roosevelt fears not. He also fears that not only the historical profession, but the whole nation, is heading in this direction, which is where his second metaphor comes in. The historical profession that despises history as literature is America in the Gilded Age, gripped by "the hard materialism of our age." The only hope is something like Rooseveltian progressivism: "the strange capacity for lofty idealism which must be reckoned with by all who would understand the American character... a peaceful people who ... surely possess an emergency-standard far above mere money-getting." [1,2]
that is all; cheers :D
This post was deleted for the following reason: I know you must have spent a bunch of time on this, but a megapost on a complex of fight-starting subjects isn't a great idea for the front page. -- cortex
This thread has been archived and is closed to new comments