Thursday, March 10, 2016

Gateway to Sources and Information About Income Inequality in the United States

Millions of Americans are working longer hours for lower wages, and yet almost all of the new income and wealth being created is going to the top one percent. While the top one percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. 
  Scholars, from the Nobel-Prize-winning Paul Krugman to the widely respected economist James Surowiecki, have been working to analyze these disparities. Americans are not generally aware of the extent of this income inequality. In most developed countries, there is a direct relationship between income inequality and the public's views about the need to address the issue – but not in America, where income inequality is worse but the concern is lower. The most commonly accepted measurement of income inequality, the Gini Index, ranks the United States sixth-worst among 173 nations. 

Private-equity companies are far more obviously connected to an undue concentration of wealth at the expense of workers and communities than are collateralized-debt obligations, which were at the core of our 2008 Great Recession. Within the one percent, there is a top one percent that consists disproportionately of private-equity and hedge-fund principals.


“His [Donald Trump’s] supporters seem to believe that he can do these things; or, even if they don’t quite believe, they long for someone who can — who can tame OPEC and China and Iran as if world affairs could be made to be like a reality TV show. This is an understandable yearning to some extent, in an age in which the United States’ ability to call the global shots is so much reduced from what it was fifty years ago. But it has a more sinister aspect, this wish for a strong man who can just fix everything. And surely it’s also the case for some Trump supporters that after eight years of [President] Obama, a bullying white man is exactly what is needed to restore things to their natural order. It is these qualities that lend Trumpism its faintly disturbing Face in the Crowd*odor.”

[* A Face in the Crowd was a 1957 Elia Kazan movie about an overnight media sensation.]

Michael Tomasky, “Trump,” in the New York Review, September 24, 2015, pp: 12-16.


“When erecting Trump Tower, according to investigative reporter and Trump biographer Wayne Barrett, he threatened an [Ed] Koch administration official who had denied him a crucial abatement with these words: ‘I don’t know whether it’s still possible for you to change your decision or not. But I want you to know that I am a very rich and powerful person in this town and there is a reason I got that way. I will never forget what you did.”2 The tower, of course, was built; in 1986, the official left the Koch administration to join the Trump Organization.”

Michael Tomasky, “Trump,” in the New York Review, September 24, 2015, pp: 12-16.

 “ . . . Is [Donald] Trump not the logical culmination of where Republican politics have been headed for many years now, going back to the Clinton and Bush presidencies, but especially during the tenure of Barack Obama? Two qualities more than any others have driven conservatism in our time. The first is cultural and racial resentment, felt by the mostly older and very white population the GOP increasingly represents — resentment against a fast-changing, more openly sexual America, as well as against dark-skinned immigrants, and White House occupants, and gay people and political correctness and the ‘moocher class’ and all the rest. The second is what we might call spectacle—the unrelenting push toward a rhetorical style ever more gladiatorial and ever more outraged (and outrageous), driven initially by talk-radio hosts like Rush Limbaugh and now reproduced on websites, podcasts, and Twitter feeds too numerous to mention. There is a strong tendency, perfected over the years by Fox News, to cover and discuss domestic politics as a combination of war, sport, and entertainment all at once.”

Michael Tomasky, “Trump,” in the New York Review, September 24, 2015, pp: 12-16.

“If he’s still around next March [2016], [Donald] Trump could benefit from a change the GOP has made to how delegates are awarded. In primaries and caucuses before March 15, candidates will be awarded delegates proportionately to their vote total; but from March 15 onward, states will have the option of awarding delegates on a winner-take-all basis. This is a change from 2012, and the idea here is to avoid a drawn-out battle of the sort that took place in that year between [Mitt] Romney and Rick Santorum, and to get to a nominee more quickly.
“On paper, this change was intended to benefit a front-runner such as [Jeb] Bush. But what if Trump is still running come March 15 [2016]? He certainly won’t lack for money. What if a still-plausible Trump wins primaries in some large, winner-take-all states?”

Michael Tomasky, “Trump,” in the New York Review, September 24, 2015, pp: 12-16.

[In September 2015, Jeb] “Bush still runs fairly well in national polls — he’s usually second to [Donald] Trump, although a pretty distant second. Many observers continue to believe that he’ll outlast everyone else by dint of money — as of July 31 [2015], Bush had raised $120 million, compared to Hillary Clinton’s $68 million; the closest Republican was Texas Senator Ted Cruz, at $52 million.3 But it’s worth remembering here that the billionaire Trump has virtually unlimited money without having to raise a cent.

Michael Tomasky, “Trump,” in the New York Review, September 24, 2015, pp: 12-16.

ormal>Michael Tomasky, “Trump,” in the New York Review, September 24, 2015, pp: 12-16.


“ . . . [Donald] Trump is one of the defining showmen of our new Gilded Age, whether we like that fact or not. Grandiosity, ostentation, and at least a touch of vulgarity have been his hallmarks from the beginning, the beginning being his 1980 reopening of the old and dowdy Commodore Hotel at Grand Central as a Grand Hyatt, bathed in marble, mirrors, chrome, and glass — ‘classy,’ to be sure, albeit in a Great Neck catering hall kind of way.”

Michael Tomasky, “Trump,” in the New York Review, September 24, 2015, pp: 12-16.

“[Donald Trump, quoted by Michael Tomasky:] ‘I do deals — big deals — all the time. I know and work with all the toughest operators in the world of high-stakes global finance. These are hard-driving, vicious cutthroat financial killers, the kind of people who leave blood all over the boardroom table and fight to the bitter end to gain maximum advantage. And guess what? Those are exactly the kind of negotiators the United States needs, not these cream puff ‘diplomats’ Obama sends around the globe to play patty cake with foreign governments. No, we need smart people with titanium spines and big brains who love America enough to fight fiercely for our interests.’”

Michael Tomasky, “Trump,” in the New York Review, September 24, 2015, pp: 12-16.
“The Donald Trump situation, as anxious Republicans and mystified commentators sometimes call it, only grows more anxiety-producing and mystifying by the week. His performance in the August 6 [2015] debate was not considered world-beating. Then, in the wake of it, he was widely perceived as having made reference in a CNN interview to the menstrual cycle of Fox News host and debate moderator Megyn Kelly, which was supposed to finish him off. It was about the fourth such dose of poison but, Rasputin-like, Trump has survived each one.1 After the debate, he maintained his large lead over the field.

FOOTNOTE: “The first three: his reference to Mexican ‘rapists’; his mockery of John McCain’s war heroism; the revelation that he may have once ‘violated’ his then wife Ivana. All washed off him.”

Michael Tomasky, “Trump,” in the New York Review, September 24, 2015, pp: 12-16.


‘[Joseph] Stiglitz’s emergence as a prominent critic of the current economic order was no surprise. His original Ph.D. thesis was on inequality. And his entire career in academia has been devoted to showing how markets cannot always be counted on to produce ideal results. In a series of enormously important papers, for which he would eventually win the Nobel Prize, Stiglitz showed how imperfections and asymmetries of information regularly lead markets to results that do not maximize welfare. He also argued that this meant, at least in theory, that well-placed government interventions could help correct these market failures. Stiglitz’s work in this field has continued: he has just written (with Bruce Greenwald) Creating a Learning Society, a dense academic work on how government policy can help drive innovation in the age of the knowledge economy.”

James Surowiecki, “Why the Rich Are So Much Richer,” in the New York Review, September 24, 2015, pp: 32-36.


“[Joseph Stiglitz’s proposed] rules would be good things for the economy as a whole, making it more efficient and competitive. More important, the second half of Stiglitz’s agenda redistribution via taxes and transfers — remains a tremendously powerful tool for dealing with inequality. After all, while pretax inequality is a problem in its own right, what’s most destructive is soaring posttax inequality. And it’s posttax inequality that most distinguishes the US from other developed countries. As Stiglitz writes:
“ ‘Some other countries have as much, or almost as much, before-tax and transfer inequality; but those countries that have allowed market forces to play out in this way then trim back the inequality through taxes and transfer and the provision of public services.’”

Surowiecki, “Why the Rich Are So Much Richer,” in the New York Review, September 24, 2015, pp: 32-36.

On the tax front, he [Joseph Stiglitz] wants to raise taxes on the highest earners and on capital gains, institute a carbon tax and a financial transactions tax, and cut corporate subsidies. But dealing with inequality isn’t just about taxation. It’s also about investing. As he puts it, ‘If we spent more on education, health, and infrastructure, we would strengthen our economy, now and in the future.’ So he wants more investment in schools, infrastructure, and basic research.
“If you’re a free-market fundamentalist, this sounds disastrous — a recipe for taking money away from the job creators and giving it to government, which will just waste it on bridges to nowhere. But here is where Stiglitz’s academic work and his political perspective intersect most clearly. The core insight of Stiglitz’s research has been that, left on their own, markets are not perfect, and that smart policy can nudge them in better directions.”

James Surowiecki, “Why the Rich Are So Much Richer,” in the New York Review, September 24, 2015, pp: 32-36.

“ . . .the political challenge in doing any of this [overcoming income inequality] (let alone all of it) is immense, in part because inequality makes it harder to fix inequality. And even for progressives, the very familiarity of the tax-and-transfer agenda may make it seem less appealing. After all, the policies that [Joseph] Stiglitz is calling for are, in their essence, not much different from the policies that shaped the US in the postwar era: high marginal tax rates on the rich and meaningful investment in public infrastructure, education, and technology. Yet there’s a reason people have never stopped pushing for those policies: they worked. And as Stiglitz writes, ‘Just because you’ve heard it before doesn’t mean we shouldn’t try it again.’”

James Surowiecki, “Why the Rich Are So Much Richer,” in the New York Review, September 24, 2015, pp: 32-36.


[ Joseph] Stiglitz’s agenda for policy —  which is sketched in The Great Divide, and laid out in comprehensive detail in Rewriting the Rules — relies on both kinds of strategies [predistribution and redistribution of income], but he has high hopes that better rules, designed to curb rent-seeking, will have a meaningful impact on the pretax distribution of income. Among other things, he wants much tighter regulation of the financial sector. He wants to loosen intellectual property restrictions (which will reduce the value of patents), and have the government aggressively enforce antitrust laws. He wants to reform corporate governance so CEOs have less influence over corporate boards and shareholders have more say over CEO pay. He wants to limit tax breaks that encourage the use of stock options. And he wants asset managers to ‘publicly disclose holdings, returns, and fee structures.’ In addition to bringing down the income of the wealthiest Americans, he advocates measures like a higher minimum wage and laws encouraging stronger unions, to raise the income of ordinary Americans (though this is not the main focus of The Great Divide).

James Surowiecki, “Why the Rich Are So Much Richer,” in the New York Review, September 24, 2015, pp: 32-36.

“Strategies for reducing inequality can be generally put into two categories: those that try to improve the pretax distribution of income (this is sometimes called, clunkily, predistribution) and those that use taxes and transfers to change the post-tax distribution of income (this is what we usually think of as redistribution). Increasing the minimum wage is an example of predistribution. Medicaid is redistribution.”

James Surowiecki, “Why the Rich Are So Much Richer,” in the New York Review, September 24, 2015, pp: 32-36.