Archive for the ‘Inequality’ Category

The global rich and global climate change

July 7, 2021

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The great economic historian Adam Tooze wrote an eye-opening article about how the global rich (the richest 10%) are the chief drivers of climate change.  What he should have noted is that, at least in the immediate future, they will suffer the least from living on a hotter planet.

Tooze noted that their consumption causes nearly half of the world’s carbon emissions, and the global middle class (the next 40%) cause nearly all the rest.  The global poor (the bottom 50%) are responsible for hardly any, yet they will be the hardest hit.

He said we need to think less about which nations are the chief cause of the problem, and more about the different economic classes.  Global warming has been affected even more by the super-rich (the top 1%) in the OPEC nations and in China than the super-rich in North America.

China accounts for half the increase in global emissions from 1990 to 2015.  One-sixth of the total global increase comes from China’s rich and one third from China’s middle class. 

The betterment of material living standards in China during that period is one of the world’s great positive achievements.  But it also, according to Tooze, is a big contributor to what may be the world’s greatest problem.

It is not just that the richest 10 percent consume so much.  They are the ones who make the investment decisions.  This is true not only of private investment decisions, but of government investment, to the extent that it is financed by borrowing.

Add to that the fact that the richest 10 percent are the dominant political class in most countries.

Adam Tooze did not spell out the implications of this, but they are important.

The richest 10 percent, along with the global middle class, will try to meet the challenge of global warming by investing in alternative technologies that will maintain their material standard of living.

The problem is that making windmills, solar panels or electric vehicles is energy-intensive and uses up non-renewable resources.  Probably there is a net benefit at some point; I’m not qualified to say. The point is, you have to burn a lot of fossil fuels to create the alternatives to fossil fuels. 

What the global rich, and the global middle class, are not considering, is austerity for themselves.  Nobody that I know of advocates giving up air travel, for example. 

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Which matters most? Race or class?

March 31, 2021

On almost any level of American society, you’re better off being white than being black.

Even if you’re President of the United States.

Barack Obama could never have gotten away with the sordid personal behavior of Bill Clinton or the manifest ignorance of George W. Bush. (I leave out Donald Trump because he’s in a category all his own.)

Source: Demos.

Clinton, Bush and Obama all were targets of vituperative attacks, but the attacks on Obama were on a different level than the other two.

On a lower level of society, there is a great deal of racial discrimination in the restaurant industry.  Black employees are most commonly found in the kitchen; white employees are the ones who serve the public.

So does that mean Barack Obama and black dishwashers are in one category, and Bill Clinton, George W. Bush and white waiters and waitresses are in another?

Barack Obama is a rich celebrity.  He lives in an $11.75 million house in Martha’s Vineyard.  He has nothing in common with a dishwasher.

The Obamas are good friends with the Bushes, who are good friends of the Clintons, who used to be good friends of the Trumps. 

They all have more in common with each other and with other rich celebrities than any of them does with an hourly worker of any race.

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So which matters most?  The vertical lines that separate Americans of different races or the horizontal lines that separate Americans of different economic classes?

If you look at different jobs, you see that a disproportionate amount of the dirty, low-wage work of American society is done by the descendants of enslaved black people and conquered Mexicans and Puerto Ricans.  It is not a coincidence that the descendants of enslaved and conquered people are at the bottom of the economic ladder.

The lines are diagonal lines.  Race and social class can’t be separated.  You find people of every race on every level of American society—but not equally.

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Racism and prejudice are almost always factors in racial inequality.  Nowadays, they are seldom the only factors.

• The Republican Party in many states has been illegally purging black citizens from voter registration rolls and making it more difficult for them to vote.  But I don’t think that is because they think blacks are an inferior race.  It is because the vast majority of them vote Democratic.

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These same Republicans are perfectly happy with Senator Tim Scott of South Carolina or Supreme Court Justice Clarence Thomas.

• Police killings of black people are proportionately greater than police killings of white people.  One reason is that some police are racist and many are racially prejudiced.  But it’s also a fact that police in general treat poor people worse than they do rich people and middle-class people.

And there are also big differences in police departments across the country based on training and policies.  And the inconvenient fact is that a disproportionate number of violent crimes are committed by black people.

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But I don’t think these other factors explain away racial prejudice.  Like a lot of things, the issue is complex.

Black people were targeted for the sale of subprime mortgages in the run-up to the 2008 recession.  But I don’t think this was because the financial speculators had an implicit against them because of their race.

Rather it was because they were more financially vulnerable than equivalent white people, for historical reasons that are rooted in racism.

If you look at reasons for inequality in the USA, there is very often a racial angle, but there also is almost always a money angle.

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Education and the mirage of equal opportunity

March 22, 2021

It’s common to hear people say that they don’t believe in economic equality, but they do believe in equality of opportunity.

But one of the points of getting a lot of money and a high social position is to give your children advantages over other people’s children.

One of the ways of doing that is to enroll your children in elite private schools. I read an article by Caitlin Flanagan in The Atlantic about how students who attend the top private schools get a head start in life that’s almost impossible, or at least very, very difficult, for anybody else to overtake—even students in highly selective public schools.

In a just society, there wouldn’t be a need for these expensive schools, or for private wealth to subsidize something as fundamental as an education.  We wouldn’t give rich kids and a tiny number of lottery winners an outstanding education while so many poor kids attend failing schools.

In a just society, an education wouldn’t be a luxury item.  We have become a country with vanishingly few paths out of poverty, or even out of the working class.  We’ve allowed the majority of our public schools to founder, while expensive private schools play an outsize role in determining who gets to claim a coveted spot in the winners’ circle.

Many schools for the richest American kids have gates and security guards; the message is you are precious to us.  Many schools for the poorest kids have metal detectors and police officers; the message is you are a threat to us.

Public-school education—the specific force that has helped generations of Americans transcend the circumstances of their birth—is profoundly, perhaps irreparably, broken. In my own state of California, only half of public-school students are at grade level in reading, and even fewer are in math. When a crisis goes on long enough, it no longer seems like a crisis. It is merely a fact.

Source: The Atlantic

The Chronicle of Higher Education meanwhile reported on how colleges are doubling down on efforts to keep black students from failing and dropping out. 

This could be good.  I think many affirmative action programs push young black people into positions where they’re over their heads, then leave them to flounder and blame them for their failure.

More mentoring, and more attention to the individual and less to improving numbers, would help. 

But what may very well happen is that colleges will increase recruitment, retention and graduation numbers for African American students while doing little to improve their actual education, and while also ignoring disadvantaged students who are white or in other non-black racial categories.

In the long run, expecting less of African-American students won’t help them.  It will devalue their degrees and send them into the world not knowing how poorly-prepared they are.

I’m reminded of Goodhart’s Law – “when a measure becomes a target, it ceases to be a good measure” – because people will figure out how to game the system. Or, as W. Edwards Deming put it, “Give a manager a numerical target, and he’ll meet it, even if he has to destroy the company to do so.”

LINKS

Private Schools Are Indefensible by Caitlin Flanagan for The Atlantic.  “Elite schools breed entitlement, entrench inequality—and then pretend to be engines of social change.”

The Antiracist College by Tom Bartlett for the Chronicle of Higher Education.  “This may be a watershed moment in the history of higher education and race.”

How the GOP could become a workers’ party

February 26, 2021

A Modest Proposal for Republicans: Use the Word “Class” by Scott A. Siskind for Astral Codex Ten. “Pivot from mindless populist rage to a thoughtful campaign to fight classism.”

There are some interesting ideas here that are consistent with what Republican leaders say they stand for.  I’m not sure I agree with Siskind about prediction markets being better than credentialed experts, though.

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Winners and losers in the COVID economy

January 25, 2021

A blogger who calls himself Nikolai Vladivostok posted this chart. It shows what people in different segments of the U.S. population say about whether they’re worse off or better off.

People whose income was $100,000 a year were, on average, very happy with their situations. So were those with post-graduate educations.

The unhappiest were people whose income was $50,000 a year or less. Women on average were unhappier than men.

I was a little surprised that city residents were happier than suburbanites. I always thought of U.S. suburbanites as affluent and pleased with themselves. I guess that thinking is out of date.

You might wonder how much of this is due to the SARS-CoV-2 pandemic and how much would be true in any year. Nikolai Vladivostok found some other charts illustrating how hard the pandemic has been on different income groups.  Having a low-income job is a risk factor.

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Meet the new boss, same as the old boss

December 14, 2020

A writer named Edward Curtin had a good article in OffGuardian about the basic similarity of the Democratic and Republican parties.

Both are willing to bail out monopoly businesses. Both are unwilling to do anything meaningful to help the poor, working people or the middle class.

Both are committed to perpetual war. Leaders of neither party are willing to pardon Julian Assange, Chelsea Manning or Edward Snowden for the crime of pointing out how Americans have been deceived by their government.

The truth is that both the Trump voters and the Biden voters have been taken for a ride.  It is a game, a show, a movie, a spectacle.  It hasn’t changed much since 1969; the rich have gotten richer and the poor, working, and middle classes have gotten poorer and more desperate.  Those who have profited have embraced the fraud.

The Institute for Policy Studies has just released a new analysis showing that since the start of the Covid-19 “pandemic” in mid-March and the subsequent transfer upwards of $5 trillion to the wealthy and largest corporations through the Cares Act, approved 96-0 in the US Senate, 650 US billionaires have gained over a trillion dollars in eight months as the American people have suffered an economic catastrophe.

This shift upward of massive wealth under Trump is similar to Obama’s massive 2009 bailout of the banks on the backs of American workers.  Both were justified through feats of legerdemain by both political parties, accomplices in the fleecing of regular people, many of whom continue to support the politicians that screw them while telling them they care.

If the Democrats and the Republicans are at war as is often claimed, it is only over who gets the larger part of the spoils.  [snip]

I am well aware that most people disagree with my analysis. It does seem as if I am wrong and that because the Democrats and their accomplices have spent years attempting to oust Trump through Russia-gate, impeachment, etc. that what seems true is true and Trump is simply a crazy aberration who somehow slipped through the net of establishment control to rule for four years.

To those 146+ million people who voted for Biden and Trump this seems self-evident. But if that is so, why, despite their superficial differences – and Obama’s, Hillary Clinton’s and George W. Bush’s for that matter – have the super-rich gotten richer and richer over the decades and the war on terror continued as the military budget has increased each year and the armament industries and the Wall Street crooks continued to rake in the money at the expense of everyone else?

Source: OffGuardian

It’s a good article, well worth reading in full.  As Curtin points out, the same thing is going on in Britain.  My only quarrel with him is his focus on the “white working class.”  The American wage-earning class is multi-racial, and with a higher percentage of African-Americans, Hispanics, immigrants and women than the general population.

This is important to point out, because so many self-described liberals ignore this reality and set up a false opposition between racial justice and economic justice.

It is not as if black wage-earners are forging ahead and white wage-earners are the only ones falling behind.  Neither Barack Obama nor Bill Clinton did anything special to raise up black working people, either as a special group or part of the overall body politick.  Neither did Donald Trump nor George W. Bush did anything meaningful for working people—white, black or otherwise.

LINK

The Past Lives On: The Elite Strategy to Divide and Conquer by Edward Curtin for OffGuardian.  (Hat tip to Steve from Texas)

A good time to be a billionaire

December 3, 2020

Hat tip to Daniel B.

The case against race reductionism

November 12, 2020

Why is there still such a big gap in income, wealth and status between white and black Americans?T

There are two prevailing schools of thought.  One holds that this is because whites are the way they are.  Another holds that this is because blacks are the way they are.

The first says that nothing will change until whites get rid of their prejudices.  The other holds that nothing will change until blacks get rid of their self-destructive behavior.

Historian Touré F. Reed, in his new book, TOWARD FREEDOM: The Case Against Race Reductionism, said this kind of thinking is guaranteed to keep things the way they are.

He said we Americans as a nation need to look at other reasons black Americans are lagging behind.  They include:

  • De-industrialization, financialization and offshoring of manufacturing jobs.
  • Factory automation.
  • The decline of labor unions.
  • Cutbacks in public service employment.

These things hurt a majority of Americans, but, for historical reasons, they hurt black Americans the most, Reed wrote.

None of this is changed by scolding liberal white people for their alleged racism or unemployed young black men for their alleged laziness, Reed said.

But why would anybody think differently?  That  is the topic of his book.  It is structured around the thinking of notable activists and thinkers, much like my friend Michael Brown’s new book on intellectuals.  It would make a good companion volume to Brown’s Hope & Scorn.  Whatever you think about the status of intellectuals, ideas do have consequences.

A. Phllip Randolph

Reed begins with A. Philip Randolph, the president of the Brotherhood of Sleeping Car Porters, and his protege, Bayard Rustin, a pacifist and civil rights activist affiliated with the Fellowship of Reconciliation.

These two black men are a bridge between the 1930s and the 1960s.  They advocated civil rights for African-Americans and economic justice for the multi-racial working class for many decades.

They were supporters of the New Deal, even though many members of the Roosevelt administration were racists, and black Americans did not receive the full benefits to which they were entitled, especially in housing.                                             .

So did a substantial majority of African-American voters, because large numbers did benefit from the Wagner Act, the Works Progress Administration, the Civilian Conservation Corps, the Social Security Act, the GI Bill and so on.

And the New Deal cleared the way for the civil rights revolution that was yet to come.

Bayard Rustin

The Committee for Industrial Organization – later the Congress of Industrial Organizations – organized low-wage workers, both black and white.  Many of its tactics, such as the sit-down strike and mass demonstrations, were later adopted by the civil rights movement.

Randolph, by the threat of a mass march on Washington, pressured President Roosevelt into adopting a Fair Employment Practices Code for war industry.  Although the federal FEPC was not enforced, many state governments adopted their own versions after the war and carried out its intent.

If there had not been a National Labor Relations Act, which set a precedent for regulating employer-employee relations, an FEPC might have been dismissed as unconstitutional, Reed noted.

Randolph and Rustin lived long enough to become mentors and supporters of the Rev. Martin Luther King Jr.  Like them, Rev. King regarded civil rights and labor rights as inseparable.  He spoke in union halls almost as often as he did in churches.   When Dr. King was imprisoned in the Birmingham jail, the United Auto Workers bailed him out.

The 1963 March on Washington was a march for both “jobs and justice.”  When King was murdered, he was in Memphis, Tenn., to support a strike of sanitation workers.  He was working on another protest demonstration, a Poor People’s Campaign—a “poor people’s,” not “black people’s,” campaign.

Reed thinks Randolph and Rustin got things right, and so do I.

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The passing scene: Links and charts 8/9/2020

September 9, 2020

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Some graphs and comments by Tony Wikrent on Ian Welsh’s blog.

UNITED STATES OF INEQUALITY: 2020 and the Great Divide on Capital and Main (Hat tip to Bill Harvey)

Adolph Reed Jr. on identity politics

July 1, 2020

This Bill Moyers interview with Adolph Reed Jr. was aired in 2014.

Adolph Reed Jr. is a retired professor of political science and a Marxist.  He thinks that what is called identity politics is a way of maintaining structure of inequality.  The purpose of this post is to call attention to his critique of identity politics and provide links to some of this work.

Identity politics is based on an analysis of how dominant groups oppress marginal groups.  Some examples:

  • Whites > Blacks  [racism]
  • Men > Women  [male chauvinism, mysogyny]
  • Native-Born > Immigrants [xenophobia]
  • Anglos > Hispanics [xenophobia]
  • Straights > Gays [homophobia]
  • Cisgendered > Transgendered [transphobia]

These are not made-up problems.  It is a fact that white job applicants or loan applicants get preference over equally-qualified or better-qualified black applicants.  It is a fact that shocking numbers of women are sexually harassed on the job.  No-one should be denied basic rights by reason of race, gender, national origin or LGBTQ identity.

The problem is when disparities between groups are used to distract from the structure of wealth and power in society as a whole.  According to economist Gabriel Zucman, one percent of Americans own 40 percent of the nation’s wealth, up from 28 percent in the 1990s.

Reed says that, within the multicultural framework, this would be okay if the upper one percent were 50 percent women, 15 percent black and the appropriate percentages Hispanic, GLBTQ and so on.

Ideas of equity can be used to promote inequality.  Ideas about oppression of minorities can be used to divert attention from exploitation of the majority by the minority.  The ideology of multiculturalism can be used as a technique to divide and rule.

Honoring diversity doesn’t bring about full employment, living wages, debt relief or an end to America’s forever wars

Honoring multiculturalism can leave members of all the different groups divided among themselves and equally exploited, along with straight white cisgender males, by employers, bankers, landlords and corrupt politicians..

LINKS

Public Thinker: Adolph Reed Jr. on Organizing, Race and Bernie Sanders, an interview for Public Books.

An interview with political scientist Adolph Reed Jr. on the New York Times’ 1619 Project on the World Socialist Web Site.

Nothing Left: the long, slow surrender of American liberals by Adolph Reed Jr. for Harper’s Magazine (2014)

Adolph Reed: Identity Politics Exposing Class Division in Democrats, from an interview on the Benjamin Dixon Show (2016)

The Trouble With Uplift by Adolph Reed Jr. for The Baffler (2018)

What Materialist Black Political History Actually Looks Like by Adolph Reed Jr. for nonsite.org.

The old radicalism and the cultural revolution

June 24, 2020

The old-time left-wing radicalism, which sought economic change, is being replaced by a new radicalism, which seeks cultural change.

The old radicals thought the basic problem is that a tiny elite monopolizes wealth and power.  The new radicals think the basic problem is that dominant groups, such as whites and males, oppress marginalized groups, such as blacks and women.

The George Floyd protests show how the new radicalism has taken hold.  They are bigger and involve more people than anything in my adult lifetime, including the late 1960s and early 1970s.

A real and great evil, the abuse of black people by police, is opposed not only by black people, but by middle-class white people and, nominally at least, by corporate America as well.

Ross Douthat wrote a great column in the New York Times about Bernie Sanders as the last representative of the old-time radicalism and his eclipse by the new radicalism.

Here are some highlights:

[It was argued that a] left that recovered the language of class struggle, that disentangled liberal politics from faculty-lounge elitism and neoliberal economics, could rally a silent majority against plutocracy and win.  The 2016 Sanders primary campaign, which won white, working-class voters who had been drifting from the Democrats, seemed to vindicate this argument.

The 2020 Sanders campaign, however, made it look more dubious, by illustrating the core challenge facing a socialist revolution: Its most passionate supporters — highly educated, economically disappointed urbanites — aren’t natural coalition partners for a Rust Belt populism, and the more they tugged Sanders toward the cultural left, the easier it was for Joe Biden to win blue-collar votes, leaving Sanders leading an ideological faction rather than a broader working-class insurgency.

Now, under these strange coronavirus conditions, we’re watching a different sort of insurgency challenge or change liberalism, one founded on an intersectional vision of left-wing politics that never came naturally to Sanders.  Rather than Medicare for All and taxing plutocrats, the rallying cry is racial justice and defunding the police.  Instead of finding its nemeses in corporate suites, the intersectional revolution finds them on antique pedestals and atop the cultural establishment.

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Thomas Piketty on inequality in education

June 5, 2020

In the present-day USA, young people are told they have no economic future unless they have college educations.  Unless their parents are relatively affluent, the only way they can afford tuition is to go into debt—debt that literally can follow them all their lives.

Many of the top jobs in management, academia and government are only open to graduates of prestigious colleges.  So the educational system reinforces inequality.

Thomas Piketty

Thomas Piketty, in his new book Capital and Ideology, shows that this pattern exists across the Western world, including his native France.

It wasn’t always this way, he noted.  During the decades following the Second World War, the progressive and socialist political parties opened up higher education to working people in a way that hadn’t been done before.

Many of the beneficiaries of these programs became leaders of the moderately progressive and socialist parties.  They became what Piketty called the Brahmin Left, an educational elite, which, according to him, lost touch with the wage earners without college degrees.  He said in an interview:

If you look at education policies, in the 1950s, 1960s and 1970s, there was a relatively egalitarian platform of investing in primary and secondary education for all and bringing everyone to the end of secondary school. Gradually, in the 1980s and 1990s there was the rise of higher education, but this egalitarian platform has been abandoned in some cases.

There is a lot of hypocrisy in terms of access to universities. I show in the book that if you look at a country like the United States, there is data now available on the relationship between parental income and access to education that shows if your parents are poor, you still have a 25% chance to enter higher education, but when your parents are rich, you have a 95% chance.

Actually, this is understating the impact on equality of opportunity because of course the universities that those with rich parents have access to are not the same as the universities that those with poor parents have access to.

If you look at the amount of education investment, you find that even in a supposedly more egalitarian public system like France, the picture is unequal.

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Thomas Piketty on equality through taxation

June 4, 2020

Thomas Piketty’s Capital and Ideology is the most comprehensive study I know about the causes of economic inequality.  He gathered a vast amount of data and made sense of it.  To read my comments on his research, click on this, this, this and this.

In the last chapter, he outlined proposals for a “participatory socialism” to make society less unequal.  He saw three main ways to do this: (1) taxation, (2) reform of corporate governance and (3) educational reform.  This post will be about taxation.  I will take up the other two later.

His plan is based on steeply graduated income taxes, inheritance taxes and new taxes on wealth.  These were to be used to finance a wealth endowment of 60 percent of average wealth to every citizen at age 25 and a guaranteed income of 60 percent of average income.

He does not make absolute equality his goal, but he would allow a much narrower band of inequality than exists today.

I’ve long been indignant at the growing extremes of inequality in my country and the abuses of power of the very rich.  Reading Piketty forces me to think about just how much equality I want and how much I would give up to attain it.

Piketty wrote in earlier chapters of Capital and Ideology about how higher taxes have often been the key to greater national power and wealth.

One of history’s mysteries is how it was that European nations could defeat great Asian empires, such as the Ottoman Empire, the Mughal Empire in India or the Manchu (Qing) Dynasty in China, when, prior to the Industrial Revolution, they were equal in wealth and technology to the European nations.  It was the Chinese, for example, who invented gunpowder.

Piketty’s answer is that the Europeans gained an advantage through a higher level of taxation.  Tax revenue across Europe and Asia prior to the modern era was roughly 1 to 2 percent of national income.  This gave a king or emperor enough revenue to reign, but not to exercise tight control over his realm.

This changed in Europe, during the wars of the 16th and 17th centuries, when military competition forced kings to increase their revenues to 8 to 10 percent of national income.

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The greater revenue enabled kings to become absolute monarchs, exercising almost as much control over their citizens as a 20th century president or prime minister.  It also enabled them to put armies in the field that the Turks, Persians, Indians, Chinese and Japanese could not match.

Western governments’ revenue was bumped up again in the early 20th century, to 30 to 50 percent of national income.  This made possible the total wars of the early 20th century.  But it also gave governments enough money to pay for universal public education, old age pensions, public health and the other services of the welfare state.

This was only tolerable because the Western nations had grown rich enough that their people could give up a big fraction of their incomes to government and still enjoy a high material standard of living.

It would not have been possible in, say, France in the time of Louis XIV.  The taxes he levied to finance his wars reduced the peasantry to misery and, in some cases, starvation (because the nobles enjoyed most of the national income, but paid no taxes).

The same conditions may exist in poor African countries today.  But in rich Western countries, it is technologically and economically feasible to raise taxes revenues to 50 percent of national income, which is necessary for PIketty’s program.

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Piketty’s stats and the problem with class conflict

May 28, 2020

The late Saul Alinsky used to say that politics is a struggle among the haves, the have-nots and the have-a-littles.  He said the outcome usually depends on which side the have-a-littles choose.

Reading Thomas Piketty’s big new book, Capital and Ideology,  reminded me I’d forgotten this important truth.

The USA and much of the rest of the world is governed in the interests of a political and economic elite and not a majority of the public.  I want a politics that represents the interests of the majority of the population.

But there are objective reasons why this is harder than it seems.  If you look at economic class in terms of a top 10 percent in income or wealth, a middle 40 percent and a bottom 50 percent, you see that there is a difference between the middle class (the have-a-littles) and the lower class (the have-nots)

I had come to think that the big problem of American politics is that so much of it is a conflict of the top 0.1 percent of income earners with the next 9.9 percent, leaving the rest of us behind.

The top 0.1 percent, in this interpretation, are the millionaires and billionaires that Bernie Sanders denounces.  The next 9.9 percent, very roughly speaking, are highly paid professionals, the “professional managerial class,” who tend to be more socially liberal, but whose economic interests are different from the majority.

Matthew Stewart wrote a good article about this in The Atlantic a couple of years ago.  The conclusion is that we the American majority have to stop thinking we have to choose between the plutocrats and the PMC and unite in our own interests.

That would make sense if economic inequality were the same as it was in Britain, France or Sweden around the turn of the previous century, as reflected in the chart above (taken from Piketty’s book)

But it’s not.  There is now a big middle class, in between the top 10 percent and the bottom 50 percent, as shown in the chart below (taken from an article co-authored by Piketty).

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In western Europe and the USA, the middle 40 percent aren’t doing too badly.  They’re open to the politics of a Margaret Thatcher or a Ronald Reagan.

Instead of claiming a larger share from the haves, they’re told they need to worry about the claims of the have-nots.  Even in parts of the world where economic inequality is greater than in Europe or the USA, there is a middle class with something to lose.

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Thomas Piketty and the politics of inequality

May 27, 2020

Reasonable people differ on the amount of economic inequality that is tolerable.  But I think almost anyone would set some upper limit.

In today’s USA, a single individual, Bill Gates, is wealthy enough to buy the city of Boston for the assessed value of its property.  The size of Jeff Bezos’ wealth is almost unimaginable.

Meanwhile four in 10 Americans lack enough cash on hand to meet an unexpected $400 expense without going into debt.

Why is this acceptable?  I’ll describe the ideas of the great French economist Thomas Piketty in his new book, Capital and Ideology.  Then I’ll discuss some of the things Piketty left out.

Piketty said the fall of Communism in the Soviet bloc and China discredited egalitarianism and validated the market economy.  Leaders of Western capitalist countries felt they were in a position to tell the working class that there is no alternative.

Even before that, the economic stagnation of the late 1970s discredited the welfare state.  The USA had both high unemployment and high inflation, which was considered theoretically impossible.  One diagnosis was that the welfare state had reached its limit, that it was in a state of deadlock because of the inability to satisfy all claimants.  This had been predicted by Friedrich Hayek in The Road to Serfdom.  He said that only a fascist dictator would be able to break the deadlock.

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Ronald Reagan and Margaret Thatcher presented a different answer.  Dial back to welfare state, cut upper-bracket tax rates and allow rich people and corporations to accumulate wealth.  They will invest that wealth and the workings of the free market will assure that this works for the benefit of all.

As Piketty pointed out, none of this worked out as promised.  Cuts in marginal tax rates did not result in job creation, economic growth or anything else that was promised.

So why do Reaganism and Thatcherism still prevail?

One reason is that the historic left-wing parties abandoned the working class.  The Democrats in the USA, the Labour Party in Britain and the French socialists came to represent an educated elite rather than laborers and wage-earners.

Politics in these countries has come to be a conflict of elites, between what Piketty called the Merchant Right and the Brahmin Left.  It is like the conflict between the nobility and the clergy in the European Middle Ages and the conflict between landowners and business owners in 19th century Britain.

In the USA, many progressives see today’s politics as a conflict between the plutocracy, whose power is based on wealth, and the professional-managerial class, whose power is based on their academic credentials and their positions in organizations.  Wage-earners are not represented.  Piketty showed that the same conflict exists in other countries.

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Piketty on the sacredness of property rights

May 27, 2020

When English settlers first dealt with American Indians, there was a fundamental misunderstanding of the nature of property rights.

The Indians had no idea of buying the exclusive right to use a tract of land, keep everybody else off it and sell the land to someone else.

Thomas Piketty pointed out in his new book, Capital and Ideology, that, in fact, this was a fairly new idea even for the English and other Europeans.

The idea of absolute property rights did not exist in the European middle ages. Someone might have a hereditary right to grow crops on a certain tract of land, a second person the right to 10 percent of all crops grown on the land, a third person the right to grind grain produced on the land for a fixed fee, and so on.

Furthermore the right to land use was not so much bought and sold as inherited.

Medieval France was what Piketty called a “ternary” society—a society in which political power and property ownership were divided between a hereditary noble class who “fought for all” and a priestly class who “prayed for all,” leaving very little for a lower class who “worked for all.”

The “ternary” system existed in the Islamic world, India and many other parts of the world, and it casts its shadow over the present world.  Saudi Arabia and the Gulf states (mostly Sunni) are ruled by hereditary monarchs while Iran (mostly Shiite) is ruled by clerics.  In India, the descendants of Brahmins (priests) and Kshatriyas (warriors) are richer and more influential than the Vaishyas (farmers, craftsmen and traders) and Shudras (laborers).

In Europe, uniquely, priests were celibate.  They could not found dynasties.  This mean that the Roman Catholic institutions had to be corporations.  They had to have a continuing existence that was independent of who was in charge.  It’s not accidental that business corporations originated in Europe.

The French Revolution overthrew hereditary property rights and established what Piketty called “proprietarianism” or “the ownership society”—the idea that property rights were sacred, provided that the property was acquired through legitimate purchase.

The accepted story in France is that the revolutionaries divided up the aristocrats’ estates among the peasants and turned France into a nation of small landowners.  In fact, according to Piketty, the revolutionaries made arbitrary distinctions between land that was owned through hereditary privilege and land acquired through voluntary contract, and, in many areas,  property ownership remained almost as concentrated as before.

Piketty wrote that the revolution was one of history’s “switch points.”  He thinks it could have been more radically egalitarian than it was.

In fact, concentration of wealth in France at the beginning of the 20th century was even greater than at the time of the French Revolution.

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Piketty’s new book on economic inequality

May 26, 2020

The French economist Thomas Piketty made a big splash with Capital in the 21st Century (published 2013, translated into English 2014).  He showed why, all other things being equal, the rich will get richer and the rest of us will get less.

In different countries in different historical periods, the rate of return on income-producing property exceeded the rate of economic growth.  This was true whether the income-producing property was real estate, government bonds, corporate stocks or something else.

What this meant was that, in the absence of revolution, war or something else that wiped out the value of their assets, the rich would get richer and everybody else would be left behind.

Piketty’s new book, CAPITAL AND IDEOLOGY  (published 2019, translated 2020), is more ambitious and complicated.  He thinks it is an even better book that its predecessor and I agree.  It is a great work.

He looked at all the forms that economic inequality has taken in the past few centuries and all the different ways that inequality has been rationalized.  While his earlier book was based mainly on data from France, Great Britain and the United States, the new book tries to be global in scope.

He said it is important to understand not only the forms of economic inequality, but the reasons why people accept them.

His book covers several kinds of “inequality regimes”:

  • “Ternary” societies in which most wealth is controlled by hereditary kings and aristocrats and an established church or religious institution.
  • “Ownership” societies in which property ownership is regarded as a sacred right, superseding everything else.
  • Slave and colonial societies.
  • “Social democratic” societies, which limit the rights of property owners.
  • The hyper-capitalism of today, which is a backlash against social democracy and Communism.

The degree of inequality in any nation or society is not the result of impersonal economic law, he wrote; it is the result of choices that could have been different.  History does not consist of class struggles; it consists of a struggle of ideas and a struggle for justice.

To understand inequality, he wrote, it is necessary to understand the reasons for choices at various “switch points” of history—the French Revolution, the British constitutional crisis of 1911, privatization in Russia after the fall of Communism.

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The new lockdown-induced poverty

April 5, 2020

If you deny people the right to provide for themselves, you have a responsibility to provide for them.

Lockdowns are preventing millions from going out and earning a living.  The fact that their jobs may be deemed nonessential doesn’t lessen their need to pay for food, rent and utilities.  There are more serious problems in the world than boredom.

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The U.S. government will provide some minimal relief—one-time-only checks to be mailed to households, extension of unemployment compensation benefits, etc.

But it doesn’t appear as if it will be enough to offset the coming lockdown-triggered recession.  I think a recession would have happened even without a pandemic, but the lockdown will bring it sooner and make it worse.

Deaths and infections from the coronavirus are doubling every few days.  The lockdown is necessary.  A lot of people are going to die in U.S. states who would have lived if their governors had ordered lockdowns sooner.

At the same time, I can understand why those governors hesitated.  The governors who’ve waited longest are, in general, the governors of the poorest states.

Usually, when huge numbers of people suddenly lose their jobs and are plunged into poverty, they take to the streets to protest and strike.

But under lockdown, it’s illegal to take to the streets.  Repressive governments suppress uprisings by, among other things, ordering curfews.  Because of the pandemic, these curfews are already in place.

If a government orders a lockdown, it has a duty to make it possible for everyone, no matter who, to observe the lockdown without fear of hunger or homelessness.

Leaders of some countries realize this.  Others don’t.  The ones that don’t can expect an explosion of mass defiance sooner or later.

LINKS

Somebody’s Screwing You and It Ain’t China by Caitlin Johnstone.

Location Data Says It All: Staying at Home During Coronavirus Is a Luxury by Jennifer Valention-DeVries, Denise Lu and Gabriel T.X. Dane for the New York Times.

Jobs Aren’t Being Destroyed This Fast Elsewhere – Why Is That? by Emmanuel Saez and Gabriel Zucman for the New York Times.

New Inequalities and People-to-People Social Protection by Nora Lustig and Nancy Birdsall for Vox & CEPR Policy Portal.

Services Sector Falls Off Cliff: First Data Points from the Eurozone Where Lockdowns Started Earlier by Wolf Richter for Wolf Street.

‘I just want to go home’: the desperate millions hit by Modi’s brutal lockdown by Hannah Ellis-Peterson and Shaikh Azizur Rahman for The Guardian.

The fading American dream

February 21, 2020

A team of researchers at Stanford University, led by an economist named Raj Chetty, took advantage of newly accessible data from the Internal Revenue Service and studied the ebb and flow of American wealth and income across the generations.

They concluded that 90 percent of children born in 1940 went on to earn more than their parents, but only 50 percent of children born in the 1980s did so.

That’s not because the U.S. economy stopped growing, although growth did slow, they wrote.   It is because more and more gains were captured by the ultra-rich.

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Piketty on the merchant right and Brahmin left

September 24, 2019

The French economist Thomas PIketty is famous for his best-selling book, Capital in the 21st Century, which explained why inequality constantly increases.

Thomas Piketty

The explanation is the formula r>g.  It means that the rate of return on assets over time exceeds the rate of economic growth.  That means the wealthy get an ever-larger share of the economic pie until and unless something happens to destroy the value of their assets—war, revolution or a financial crash.

Piketty has just published a sequel, Capital and Ideology. in France.  It will be published in English translation next March.  Reviewers say it takes a more global view than the first book and advances more radical ideas for reducing inequality.

The part that’s getting the most attention is Piketty’s notion that politics in the USA, UK and France are polarized between a “Brahmin left,” representing the highly-educated, and a “merchant right,” representing great wealth—two elites who have more in common with each other than with the majority of working people..

Initially, left-wing parties represented poorly educated wage-earners, while right parties represented owners of capital and the professional classes.  Over time, left-wing parties helped children of wage-earners advance into the educated middle class, and their children supposedly became the liberal elites, whom Piketty calls the “Brahmin left.”

The Brahmin left occupy high positions in organizations—government, corporate, educational, “non-profit”— based on their educational credentials.  Their counterparts, the merchant right, have power based on their ownership of businesses and financial assets.

Both believe their power and position is based on merit.  Both embrace global competitiveness, immigration and dismantling of trade protections and the social safety net, which leave working people with lower wages and greater insecurity..

This has produced a nationalist backlash.  Americans elected Donald Trump as President, the British voted to exit the European Common Market and Marine le Pen’s National Rally has a substantial following among French voters.  What they have in common is opposition to globalization and immigration.

The nationalist backlash is not yet a serious threat to the financial elite.  But it has driven immigrants and racial minorities into the left-wing parties in all three countries.  By championing minority rights, the Brahmin left can convince themselves they are still on the side of the underdog.

Piketty thinks the “Brahmin left” and “merchant right” may merge, and true workers’ parties may emerge in opposition to them, as the original British Labor Party emerged in opposition to the Conservative and Liberal parties in the early 1900s.

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Protest and dissent in Putin’s Russia

August 27, 2019

In Russia, the Fight Is Alive by Ilya Matveev for Jacobin.

An elite that dare not call themselves elite

August 12, 2019

Natalia Dashan attended Yale University on a scholarship.  She was one of the 2 percent of Yale undergraduates whose parents are in the bottom fifth of American income earners.

She recently wrote an essay about something that struck her about some of her well-to-do classmates..

They lived and acted as if they in fact were poor.   They looked for reasons to think of themselves as oppressed.  They were in a near-constant state of rebellion.

Yale University Shield

But the rebellions were not over anybody’s material interests.  They were over whether how things were named or what someone said was appropriate—for example, whether “master” was an appropriate job title for the head of a college or whether a faculty member was out-of-line for scoffing at worries about racial stereotyping in Hallowe’en costumes.

Dashing also was struck by how quickly the faculty and administrators caved in to student protests, no matter how foolish their demands might have seemed to someone outside the academic environment and even in the absence of evidence that the protestors represented anybody but themselves.

The historic role of Yale, Harvard and other Ivy League universities has been to educate upper-class Americans to take on the responsibility of leadership—that is, for being a member of a ruling class.

Dashan concluded that the elite—defining the elite as those who grow up with the expectation that they and their children will attend Yale, Harvard or the equivalent—no longer want to assume the responsibility of leading and ruling.

So young people born to wealth and power look for ways to define themselves as oppressed, and older people, who should be their mentors, fear to appear in the role of oppressor.

The problem is that it is largely a performance—what I like to call psychodrama, but which more accurately could be called live-action role-playing.  It is tolerated because it is no threat to anybody, except the unlucky individuals who get caught in the crossfire.

Why this loss of confidence?  Dashan thinks it is fear of responsibility.  I think that is a large part of it.  But I think the more important part is a decline in belief in the values that gave confidence to earlier generations of elite Americans.

When I read Edmund Morris’s The Rise of Theodore Roosevelt, I was struck by how different the Harvard he attended was from the Harvard of today.

The goal of Harvard University in the 1870s was not only to provide an intellectual education, but to shape students’ character based on ideals of patriotism, Protestantism and manliness.

Young men were expected to participate in footfall and other contact sports to toughen them up, but also to teach ideals of sportsmanship—doing your best, but obeying the rules and not whining if you lose.  Attendance at morning prayers at Appleton Chapel was compulsory.

It is true that these ideals excluded a lot of people—Catholics, Jews, freethinkers and women, not to mention un-athletic men.  I would have felt this morality very restrictive if I had lived then.  Evidently many others over the years felt the same.

The unanswered question was:  What do you put in the place of these ideals?  Young people need to believe in something.

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Climate, migration and border militarization

March 13, 2019

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The two agencies of the U.S. government that take climate change most seriously are the Pentagon and the Department of Homeland Security.

They foresee droughts, floods and storms on a scale that will create global political instability and millions of climate refugees, mainly from countries already ravaged by war and poverty.  While other parts of the government dither and deny, they have spent billions since 2003 preparing for the coming emergency.

Their preparation, however, is not aimed at preventing or slowing down climate change, nor is it principally aimed at relieving distress.  Rather it is in protecting the U.S. homeland and American business interests from the desperate masses.

A journalist named Todd Miller did a good job of reporting on this in STORMING THE WALL: Climate Change, Migration and Homeland Security, published in 2017.

He attended a Defense, National Security and Climate Change conference in Washington, D.C., in 2015, attended by top military brass and government and corporate officials.  A NASA representative told how the Space Shuttle and F-35 fighter required chrome, columbium and titanium, which are sourced from South Africa, Congo and Zambia, all threatened with political instability due to climate change.

“If these stressing factor result in increased migration,” he said, “it will just increase the potential for instability and conflict,” which would affect the U.S. ability to obtain elements “critical to the alloys we need to support the system.”

It was at that meeting that Miller for the first time heard the expression, “military-environmental-industrial complex.”  Billions of dollars are being spent to, on the one hand, wean the U.S. military itself from dependence on fossil fuels and, on the other, maintain the political and economic status quo in the face of climate-driven upheaval.

He devoted several chapters of the book to migration from central America and Mexico into the southwest USA.  He showed that the border is not a line on the map separating the United States from Mexico.

The border area extends 100 miles into the interior of the United States, where Immigration and Customs Enforcement (ICE) acts like a military occupying force.  Miller noted that an order by President Obama against racial profiling specifically exempted the Department of Homeland Security.

It also extends down through Mexico into Central America, where there are a series of checkpoints, aided by U.S. military advisers and U.S. military equipment, designed to intercept migrants on their way.  There are fewer arrests nowadays at the international border, but this may not mean that fewer people are trying to cross the border.  It may just mean that more of them are intercepted before they get close.

The U.S. Coast Guard nowadays does more than guard the coasts.  After the 2010 earthquake, the Coast Guard patrolled the coast of Haiti, turning back anyone who tried to flee, and even set up a detention center at Guantanamo Bay.

Migrants leave their home countries for many reasons—commonly poverty, war, tyranny or crime.  But, in the words of a Marine Corps general, climate change is a “threat multiplier.”  Events such as the 2015 drought in Guatemala, Honduras, El Salvador and Nicaragua make all the underlying social problems worse.

The United States is not unique.  The new “smart border” between Turkey and Syria has a new tower every 1,000 feet, a three-language alarm system, and “automated firing zones” supported by hovering zeppelin drones, Miller wrote.

Experts say floods and a rising sea will cause millions to flee Bangladesh.  India has a 2,000-mile ‘iron wall” on its border and soldiers with orders to shoot to kill.  More than 1,000 Bangladeshis were killed between 2001 and 2011 while trying to cross the border.

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Storms, floods and climate apartheid

March 6, 2019

An extreme city, according to Ashley Dawson, is a city in which extremes of rich and poor render it unable to deal with extreme weather events.

In case of storm and flood, the rich people on the high ground almost always get priority over the poor people down by the waterfront—what Dawson calls climate apartheid.

And the people who live in rich places, such as Houston, who are mostly lighter-skinned, get priority over the poorer places, such as Port-au-Prince or San Juan, who are mostly darker-skinned.

Beyond this, Dawson wrote, the incentives of a market economy will almost always favor real estate development over public safety.

The best way to protect cities from high water is to pull back from the shoreline and create or expand wetlands to sponge up the high water.

But property developers, not to mention individual homeowners, want seawalls to protect their investments and enable them to recover their sunk costs.  Our economic system is based on continued growth.  There is no incentive system for pulling back.

Dawson said this is as true of New York City, where he lives, as it is of any city in the world.

This is no small thing.  Nearly half the world’s 7 billion people now live in cities.  Virtually all of them are on ocean coastlines or other bodies of water.  In the Global South, drought is driving increasing numbers of poor people off the land and into urban slums.

Dawson does not view global warming as a doom we can avoid if we try hard enough.  He sees it as an emergency that is already upon us, and that most of us are unprepared for.

He does not view it as merely a scientific and technical problem.  He says it is a social justice issue—a question of who drowns (usually the poor and dark-skinned) and who is saved (usually the rich and light-skinned)

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When Superstorm Sandy was about to hit New York City in 2012, the city government told residents of the potential flood areas to evacuate.  Soon after subway service was shut down, which meant that those without cars were stranded in their neighborhoods.  Soon after high water left thousands without access to electricity and heat, or to essential supplies.

The first responders were volunteers, including veterans of the Occupy Wall Street movement, who reconstituted themselves as Occupy Sandy.  They did whatever it took to provide food and water and rescue stranded elderly and disabled people on upper floors of apartment buildings.

The official disaster relief agencies showed up only a few days date and, according to Dawson, were happy to make use of Occupy Sandy and other volunteers, but reluctant to help or share information.  The reason, he said, is that the official organizations are engaged in a dog-eat-dog competition for funding and don’t want any of their rivals to gain an advantage.

Dawson wrote that when Mayor Michael Bloomberg showed up at the flood-stricken Red Hook neighborhood in Brooklyn, the only people he wanted to talk to were the business owners.  They were the ones who got the funds to rebuild.  The neighborhood and Occupy Sandy leaders were brushed aside.

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The U.S. inequality problem in one graph

February 28, 2019

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This is an updated version of an Economic Policy Institute chart I’ve posted before.  It shows that from 1948 through 1979, the hourly wages of American workers rose almost as fast as worker productivity.  From 1979 on, productivity continued to rise, although at a slower rate, but wages hardly increased at all.

If you include the increased debt, including student debt, that most families have taken on, the average wage-earner’s buying power may be even less than in 1979.

What happened?  The EPI cites three things:

  1. A greater share of national income to holders of financial assets and a smaller share to wages and salaries.
  2. A greater spread between wage-earners and highly paid managers and professionals.
  3. A greater increase in the prices of things wage-earners buy (consumer goods and services) than in the things they product (consumer goods, but also capital goods.

What is the answer?  The EPI says the U.S. needs stronger labor unions and enactment of pro-labor government policies, including a higher minimum wage, higher taxes on top incomes and a jobs program based on repairing the nation’s infrastructure.

LINKS

The Agenda to Raise America’s Pay by the Economic Policy Institute.

First Day Fairness: An agenda to build worker power and ensure job quality by Celine McNicholas, Samantha Sanders and Heidi Shierholz for the Economic Policy Institute.

Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Matters and Why It’s Real by Josh Bivens and Laurence Mishel for the Economic Policy Institute.

The Survival of the Richest by Nomi Prins for TomDispatch.