Category Archives: Inequality

DOJ’s Zero Tolerance Of Zero Tolerance

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A Justice Department report critical of the Baltimore police missed the point. So did those who praised and faulted it. [Credit: NY Post]

A Jus­tice Depart­ment report crit­i­cal of the Bal­ti­more police missed the point. So did those who praised and fault­ed it. [Cred­it: NY Post]

The Depart­ment of Jus­tice report on Bal­ti­more police prac­tices has prompt­ed pre­dictable reac­tions from Left and Right.

The report con­firmed sus­pi­cions on the Left that police uncon­sti­tu­tion­al­ly harassed African-Amer­i­can males. From the Right came reflex­ive defens­es of the police.

Both have a point.  And both miss the point.  As does the report itself. Con­tin­ue read­ing →

Debt And The New American Exceptionalism

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Federal Reserve Chairman Janet Yellen plans to increase interest rates. Can government and households survive the shock? [Credit: Huffington Post]

Fed­er­al Reserve Chair­man Janet Yellen plans to increase inter­est rates. Can gov­ern­ment and house­holds sur­vive the shock? [Cred­it: Huff­in­g­ton Post]

The Amer­i­can econ­o­my is back.  After years of tepid growth and a first quar­ter con­trac­tion, GDP grew by a robust 4.6 per­cent in the third quar­ter of last year.  The unem­ploy­ment rate remained at 5.8 per­cent in Novem­ber, and ana­lysts expect the Labor Depart­ment to announce tomor­row that the econ­o­my added sub­stan­tial­ly more than 200,000 jobs in Decem­ber.  Infla­tion is low, the dol­lar is strong, oil prices have tum­bled, and fed­er­al deficits are low­er.  Near­ly six years after the reces­sion end­ed, the long-await­ed recov­ery appears at last to have arrived.

That recov­ery has in part been dri­ven by a force that could be its undo­ing: debt.  Near­ly $46 tril­lion of it, or more than 2–1/2 times our annu­al eco­nom­ic out­put. Con­tin­ue read­ing →

Inequality: Has The Income Gap Narrowed?

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Two icons of the Left -- economist Thomas Piketty and Senator Elizabeth Warren (D-MA) -- talking about rising inequality last June. But by some measures, inequality is shrinking. [Credit: National Review]

Two icons of the Left — econ­o­mist Thomas Piket­ty and Sen­a­tor Eliz­a­beth War­ren (D‑MA) — dis­cussing ris­ing inequal­i­ty dur­ing an event last June. But by some mea­sures, inequal­i­ty is shrink­ing, not ris­ing. [Cred­it: Nation­al Review]

“The game right now in Amer­i­ca is rigged. It is rigged so that those at the top keep doing bet­ter and bet­ter, and every­one else is under increas­ing pres­sure, is under increas­ing eco­nom­ic strain…And that is the pro­found dan­ger that we see from great inequal­i­ty.” Eliz­a­beth War­ren (D‑MA)

Democ­rats are still sting­ing from last month’s epic defeat at the polls.  Some of them attribute that unhap­py out­come to ide­o­log­i­cal tem­per­ance.  The par­ty would do bet­ter, some argue, if their can­di­dates took a more stri­dent tone, denounc­ing the rich, preach­ing that Wash­ing­ton gov­erns in the ser­vice of Wall Street, and call­ing for more aggres­sive redis­tri­b­u­tion of income and wealth to damp­en ris­ing inequality.

But a new study pub­lished in the South­ern Eco­nom­ic Jour­nal pulls at a crit­i­cal thread of that nar­ra­tive.  It found that, at least accord­ing to one mea­sure of income, the gap between rich and poor actu­al­ly nar­rowed between 1989 and 2007. Con­tin­ue read­ing →

Inequality: What We Earn vs. What We Consume

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Is inequality better measured by what we earn or what we spend? The difference is surprising. [Credit: Politic.org]

Is inequal­i­ty bet­ter mea­sured by what we earn or what we spend? The dif­fer­ence is sur­pris­ing. [Cred­it: Politic.org]

Is your stan­dard of liv­ing bet­ter mea­sured by what you earn or by what you buy?

The ques­tion may seem an odd one, but it is crit­i­cal to under­stand­ing the prob­lem of ris­ing inequal­i­ty. Con­tin­ue read­ing →

Paul Krugman and the Inequality Deniers

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Recent criticism of Thomas Piketty's Capital in the 21st Centruy has drawn the ire of the splenetic Paul Krugman. [Credit: National Review]

Recent crit­i­cism of Thomas Piket­ty’s Cap­i­tal in the 21st Cen­tu­ry has drawn the ire of the sple­net­ic Paul Krug­man. [Cred­it: Nation­al Review]

There is grow­ing con­cern among peo­ple on the Right and Left about income inequal­i­ty. But you wouldn’t know that from read­ing Paul Krugman’s lat­est screed.

What stirred Krugman’s bile this week was crit­i­cism of econ­o­mist Thomas Piketty’s book, Cap­i­tal in the 21st Cen­tu­ry, a work that has attained canon­i­cal sta­tus among the Left on both sides of the Atlantic. Con­tin­ue read­ing →

Elizabeth Warren’s Anti-Progressivism

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Elizabeth Warren (D-MA) preaches progressivism but is her student loan proposal anti-progressive? [Credit: NPR]

Eliz­a­beth War­ren (D‑MA) preach­es pro­gres­sivism but is her stu­dent loan pro­pos­al anti-pro­gres­sive? [Cred­it: NPR]

“This coun­try should not be run for the biggest cor­po­ra­tions and largest finan­cial insti­tu­tions.” Sen­a­tor Eliz­a­beth War­ren (D‑MA)

To judge from Warren’s record so far, she would be pre­fer that the coun­try be run for the ben­e­fit of its biggest uni­ver­si­ties. Con­tin­ue read­ing →

Vince Young And Economic Mobility

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Vince Young in happier times. His rapid rise and sudden fall constitute a cautionary tale. But behind it all there is good news about economic opportunity and upward mobility. [Credit: Dallas Morning News]

Vince Young in hap­pi­er times. His rapid rise and sud­den fall tell a cau­tion­ary tale. But a new study pro­vides wel­come news about eco­nom­ic oppor­tu­ni­ty and upward mobil­i­ty. [Cred­it: Dal­las Morn­ing News]

Vince Young is bank­rupt.  The sto­ry of a star col­lege quar­ter­back who rose from hum­ble cir­cum­stances to impos­si­ble wealth only to plunge into insol­ven­cy in the course of eight years is one marked by extrav­a­gant spend­ing, fool­ish invest­ments and, he has argued in court doc­u­ments, exploita­tion by agents, busi­ness asso­ciates, fam­i­ly and friends.  His is an extreme exam­ple of eco­nom­ic mobility.

Reports of Young’s bank­rupt­cy fil­ing coin­cid­ed with the release this week of a new study by a group of Har­vard and Berke­ley econ­o­mists that reached an unex­pect­ed con­clu­sion: upward eco­nom­ic mobil­i­ty is not the exclu­sive province of entre­pre­neurs, enter­tain­ers and star ath­letes like Young. The Nation­al Bureau of Eco­nom­ic Research [NBER] report con­clud­ed that “chil­dren enter­ing the labor mar­ket today have the same chances of mov­ing up in the income dis­tri­b­u­tion (rel­a­tive to their par­ents) as chil­dren born in the 1970s.” Con­tin­ue read­ing →

Frenemies of the Poor

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The 50th anniversary of the President Johnson's declaration of a War on Poverty has provoked strong views on whether it has succeeded or failed. The truth lies somewhere between. [Credit: Huffington Post]

The 50th anniver­sary of the Pres­i­dent John­son’s dec­la­ra­tion of a War on Pover­ty has pro­voked strong views on whether it has suc­ceed­ed or failed. The truth lies some­where between. [Cred­it: Huff­in­g­ton Post]

It’s not much of an exag­ger­a­tion to say that right now Repub­li­cans are doing all they can to hurt the poor, and they would have inflict­ed vast­ly more harm if they had won the 2012 elec­tion. More­over, GOP harsh­ness toward the less for­tu­nate isn’t just a mat­ter of spite (although that’s part of it); it’s deeply root­ed in the party’s ide­ol­o­gy.  Paul Krug­man, “Ene­mies of the Poor,” Jan­u­ary 12, 2014

The 50th anniver­sary of Pres­i­dent Johnson’s War on Pover­ty has occa­sioned a good deal of moral exhi­bi­tion­ism. Lib­er­als heap praise on the pro­grams and flat­ter them­selves for sup­port­ing the trans­fer of an esti­mat­ed $20.7 tril­lion (in 2011 dol­lars) in cash and non-cash ben­e­fits from those who earned it to those who did not. And they are rel­ish­ing the oppor­tu­ni­ty to denounce con­ser­v­a­tives as ene­mies of the poor, moti­vat­ed by ide­ol­o­gy and spite.

Some con­ser­v­a­tives, like the Her­itage Foundation’s Robert Rec­tor, are using the anniver­sary to declare the War on Pover­ty lost. Rec­tor recent­ly was quot­ed as say­ing that “the War on Pover­ty has been a com­plete cat­a­stro­phe.” Con­tin­ue read­ing →

The Fed and the Consequences of Bad Predictions

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South Africa's government in recent years voted to jail people who make unauthorized and inaccurate forecasts. Good thing for the Federal Reserve that their bad predictions don't carry consequences. [Credit: University of MN]

South Africa’s gov­ern­ment in recent years vot­ed to jail peo­ple for mak­ing unau­tho­rized and inac­cu­rate weath­er fore­casts. Good thing for the Fed­er­al Reserve that their bad pre­dic­tions don’t car­ry con­se­quences. [Cred­it: Uni­ver­si­ty of MN]

The South African gov­ern­ment in recent years con­sid­ered a bill to jail peo­ple who pub­lished inac­cu­rate and unau­tho­rized fore­casts of severe weather.

Hold­ing peo­ple account­able for their pre­dic­tions seems a bit harsh in this sea­son of pre­dic­tions. But the South Africans do have a point: pre­dic­tions have con­se­quences. That’s as true of pre­dic­tions about the econ­o­my as about the weath­er, some­thing that the Fed­er­al Reserve might do well to pon­der. Con­tin­ue read­ing →

Maximum Wage: Solution to Inequality?

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The Swiss campaign to limit executive pay fell short, but are there good solutions to the problem of income inequality?

The Swiss cam­paign to lim­it exec­u­tive pay fell short, but are there good solu­tions to the prob­lem of income inequality?

We know that people’s frus­tra­tions run deep­er than these most recent polit­i­cal bat­tles. … They expe­ri­ence in a very per­son­al way the relent­less, decades-long trend. … And that is a dan­ger­ous and grow­ing inequal­i­ty and lack of upward mobil­i­ty that has jeop­ar­dized mid­dle-class America’s basic bar­gain — that if you work hard, you have a chance to get ahead. .I believe this is the defin­ing chal­lenge of our time: mak­ing sure our econ­o­my works for every work­ing Amer­i­can. It’s why I ran for Pres­i­dent. It was at the cen­ter of last year’s cam­paign. It dri­ves every­thing I do in this office. — Pres­i­dent Obama

Eco­nom­ic inequal­i­ty is a polit­i­cal­ly potent issue.  Van­der­bilt Uni­ver­si­ty pro­fes­sor Lar­ry Bar­tels believes that it was a crit­i­cal one in the 2012 Pres­i­den­tial race, adding 2 to 3 per­cent­age points to Pres­i­dent Oba­ma’s share of the vote and 1 per­cent in bat­tle­ground states.  The Pres­i­den­t’s advan­tage on this issue, Bar­tels says, was large­ly sym­bol­ic, hav­ing more to do with the per­cep­tion that his oppo­nen­t’s great wealth had detached him from the con­cerns of ordi­nary vot­ers. Peo­ple moti­vat­ed to vote for the Pres­i­dent because of this issue did so more because of who they believed Mitt Rom­ney was than because of what the Pres­i­dent pro­posed to do. Con­tin­ue read­ing →