Between 1989 and 2010, the top 1 percent of the population went from holding 30.1 percent of the wealth to 34.5 percent, while the bottom 50 percent went from having 3 percent of the wealth to having just 1.1 percent. That’s right: In 2010, 50 percent of Americans had 1.1 percent of the total net worth (PDF), according to the Congressional Research Service. The share of wealth held by the next 40 percent of people, up to the 90th percentile, had also dropped, from 29.9 percent to 24.3 percent. Put another way (and it’s stunning however you look at it), 10 percent of people have 74.5 percent of the wealth.
The median and mean household net worth dropped considerably between 2007 and 2010, but even as both dropped, inequality increased, with the median—the amount of wealth that half of people have more than and half of people have less than—dropping by 38.8 percent, while the mean—the amount you get when you add up all the wealth and divide it by the number of people—lost just 14.4 percent. That means that the amount everyone would have if wealth were distributed equally went from being 4.6 times the amount the person actually in the middle has to being 6.5 times that number.So: Prior to the financial crisis and the recession, there was massive inequality in America. Following the financial crisis and the recession, there is a Grand Canyon of inequality in America. For good reason, we talk a lot about how much of the wealth the top 1 percent have. We talk less about how little the bottom 50 percent have, but think about what it means that 50 percent of people have just over 1 percent of the money. Forget all the definitions you’ve heard of who is in the underclass. We’re on track to have “underclass” and “majority” be synonyms. And the Republicans have got a guy running for president who wants to speed the process.
No question that the Republican candidate wants to speed the process. The same thing applies to the Democratic candidate though.
There’s no evidence that a low capital gains tax rate boosts the stock market, investment, or the economy [New]
There is no sound evidence that cutting capital gains taxes to levels far below ordinary income tax rates contributes to economic growth at all — let alone enough to outweigh the significant economic cost of doing so.
- - Federal Reserve economists concluded in 2005 that the 2003 capital gains and dividend tax cut had little effect on the stock market: European and U.S. stocks performed similarly both after the announcement of the tax cut and after the tax cut itself, as this chart shows. As the Wall Street Journal stated, the study “concludes that the tax cut … was a dud when it came to boosting the stock market.”
- - “[T]here is no evidence that links aggregate economic performance to capital gains tax rates,” according to University of Michigan tax economist Joel Slemrod.
- - There is no statistically significant correlation between the top capital gains rate and economic growth (see chart).
- - As Len Burman, Syracuse University tax professor and former director of the Urban-Brookings Tax Policy Center (TPC), has explained of this chart, “Many other things have changed at the same time as [capital] gains rates and many other factors affect economic growth. But the graph should dispel the silver bullet theory of capital gains taxes. Cutting capital gains taxes will not turbocharge the economy and raising them would not usher in a depression.”
- - There is also no statistically significant correlation between the capital gains rate and the amount of real business investment.
Check out the other 9 things you need to know too.
Do you see ‘Tax Cuts’ there? No? Me neither. How about ‘Tax Code Loopholes’? No? No. Apparently spending less on ‘Tax Cuts’ or closing tax code loopholes is not an option. Conservative hegemony at work as Paul would say.
What an excellent film! I wonder how did I miss it all this time. Missing describes the story of the disappearance of U.S. citizen Charles Horman in the violent aftermath of the the 1973 military coup in Chile. Horman was in Chile at the time along with his wife, Beth Horman, and his friend, Terry Simon. His father, Ed Horman, flew to Chile to join Beth in trying to find Charles. Ed was under the impression the U.S. embassy in Chile would help him.
Here’s the description on the Wikipedia article:
Missing is a 1982 American drama film directed by Costa Gavras, and starring Jack Lemmon, Sissy Spacek, Melanie Mayron, John Shea, Charles Cioffi and Janice Rule. It is based on the true story of American journalist Charles Horman, who disappeared in the bloody aftermath of the US-backed Chilean coup of 1973 that deposed leftist President Salvador Allende.
The film was banned in Chile during Pinochet‘s dictatorship, even though neither Chile nor Pinochet are specifically mentioned by name in the film (although the Chilean cities of Viña del Mar and Santiago are).
Both the film and Thomas Hauser‘s book The Execution of Charles Horman were removed from the United States market following a lawsuit filed against Costa-Gavras and Universal Pictures‘s parent company MCA by former Ambassador Nathaniel Davis and two others for defamation of character. A lawsuit against Hauser himself was dismissed because the statute of limitations had expired. Davis and his compatriots lost their lawsuit, after which the film was re-released by Universal in 2006.
There is a fascinating interview with Peter Kornbluth, director of the National Security Archive’s Chile Documentation Project at George Washington University, in the 2nd disc. As you can imagine the State Department took issue with the film at the time. When Bill Clinton declassified some relevant documents things changed. Can you imagine Barack Obama doing such a thing? Me neither.
Krugman wipes the floor with the two pro-austerity guests:
And the segment where Krugman detailed his view of the current situation to the BBC host:
UPDATE: There was another segment with Paul Krugman and an ex finance minister of Greece. It’s at the 6 minute mark:
And here’s the entire BBC program:
A Long Beach hospital charged Jo Ann Snyder $6,707 for a CT scan of her abdomen and pelvis after colon surgery. But because she had health insurance with Blue Shield of California, her share was much less: $2,336. Then Snyder tripped across one of the little-known secrets of healthcare: If she hadn’t used her insurance, her bill would have been even lower, just $1,054. “I couldn’t believe it,” said Snyder, a 57-year-old hair salon manager. “I was really upset that I got charged so much and Blue Shield allowed that. You expect them to work harder for you and negotiate a better deal.”
Unknown to most consumers, many hospitals and physicians offer steep discounts for cash-paying patients regardless of income. But there’s a catch: Typically you can get the lowest price only if you don’t use your health insurance. That disparity in pricing is coming under fire from people like Snyder, who say it’s unfair for patients who pay hefty insurance premiums and deductibles to be penalized with higher rates for treatment. The difference in price can be stunning. Los Alamitos Medical Center, for instance, lists a CT scan of the abdomen on a state website for $4,423. Blue Shield says its negotiated rate at the hospital is about $2,400. When The Times called for a cash price, the hospital said it was $250.
“It frustrates people because there’s no correlation between what things cost and what is charged,” said Paul Keckley, executive director of the Deloitte Center for Health Solutions, a research arm of the accounting firm. “It changes the game when healthcare’s secrets aren’t so secret.” Snyder’s experience is hardly unique. In addition to Los Alamitos, The Times contacted seven other hospitals across Southern California, and nearly all had similar disparities between what a patient would pay through an insurer and the cash price offered for a common CT, or computed tomography, scan, which provides a more detailed image than an X-ray.
I rolled my eyes when I read Mrs. Snyder’s comments. Not that I disagreed with her expectations about health-care costs. But Blue Shield and the rest in the AHIP cartel don’t care about the price American’s pay. They care how to make the most money they can and if that means screwing the public that’s what will happen.
Transcript at the link:
BILL BLACK: Well, there were a series of articles in The New York Times covering the recent elections in Europe, particularly in France and Greece, but also mentioning Germany and England. And the common denominator in each of these elections was that the people rose up against the parties imposing Berlin’s austerity program, which has forced Europe back into recession and forced the periphery of Europe back into depression. And they rejected this soundly in these votes.
But the amazing thing was that The New York Times reporters were treating this like, well, these people must be financially illiterate, because everybody knows austerity is the only thing that can be done, and austerity must be done, and it’s good and such. So the more they destroy the economy, the more the New York Times reporters seem to think that destroying the economy is the objective.
And Paul Krugman has been very good. He is, after all, Nobel laureate in economics. He writes a regular column for The New York Times, and for months he’s been explaining how insane the austerity program is. But apparently the New York Times reporters don’t read their own Nobel prize winning economists.
PS. There is an update to the previous post as well.
From Huffington Post:
WASHINGTON — Facing political pressurefrom Republicans and farming groups, the White House has decided to scrap rules proposed last year that would have prevented minors from performing certain agricultural work deemed too dangerous for children.
The Labor Department announced the decision late Thursday, saying it was withdrawing the rules due to concern from the public over how they could affect family farms. “The Obama administration is firmly committed to promoting family farmers and respecting the rural way of life, especially the role that parents and other family members play in passing those traditions down through the generations,” the department said in a statement.
Just a few paragraphs below this remarkable quote, this very same story points out that actual family farms were exempt from these rules. It follows that parents passing along traditions have a rational self-interest in not seeing their kids’ legs cut off under a combine. Corporations, unfortunately, have no such interest… which is why these rules were sought in the first place.
I’m guessing this piece was hastily put together, since a little further down, Sarah Palin is quoted thusly: “If I Want America To Fail, I’d Ban Kids From Farm Work.”
It would seem then, that the Obama Administration and Sarah Palin see roughly eye-to-eye on the matter of exploiting child labor on factory farms. How can one call this “pressure” from the GOP when the two parties clearly agree on something?
Now perhaps I’m wrong about this, but the thought occurs that most parents (or even people who simply appreciate their own non-exploitive childhoods), would be aghast at what’s happening on factory farms. This could be a good issue to attack a party that wants to roll back all of our child labor laws and state so every chance they get.
This is just the latest example of why this election cycle is full of petty, personal attacks that amount to nothing… while real issues of import are almost completely ignored.
There is a transcript at the link
In 2010, as the nation slowly ground its way from Great Recession to recovery, 93 percent of national income gains went to the richest 1 percent of Americans. As Reuters’s David Cay Johnston pointed out today, this makes the 2010 recovery quite different from the recovery that followed the Great Depression, as then, income gains were widely shared by the population, not concentrated at the very top:
The 1934 economic rebound was widely shared, with strong income gains for the vast majority, the bottom 90 percent.
In 2010, we saw the opposite as the vast majority lost ground.
National income gained overall in 2010, but all of the gains were among the top 10 percent. Even within those 15.6 million households, the gains were extraordinarily concentrated among the super-rich, the top one percent of the top one percent.
Just 15,600 super-rich households pocketed an astonishing 37 percent of the entire national gain.
During the recovery, corporate profits have also roared back, already hitting their pre-recession heights. Wages, however, have not done the same.
Not only was the recovery of the bottom 90% nowhere near the recovery of the top 0.1%, but the bottom 90% went backward.
A while ago David recommended Bernand Harcourt’s ‘T
he Illusion of Free Markets: Punishment and the Myth of Natural Order.’ I started reading it a while ago. The ‘Chicago School’ chapter was interesting. Luckily I found a PDF copy of a draft of that chapter. Here’s an excerpt where Harcourt talks about how ‘efficiency’ is defined by laissez-faire economists (from page 24 of the pdf, page 168 of the draft, emphasis is mine):
The Efficiency of the Competitive Market
Ultimately, in the law-and-economics tradition, the Physiocratic belief in natural order metamorphoses into a faith in the efficiency of the competitive market. The earlier, more nebulous concept of an economic system is refined into the “competitive” market. To unpack this claim, a few observations are necessary. First, it is crucial to properly understand how the contemporary use of the term “efficiency” gets refined and improved—and in the process becomes so much more persuasive. As a result of the work of economists such as Vilfredo Pareto, Nicholas Kaldor, and John Hicks, the field of welfare analysis developed a far more workable definition of efficiency. At an earlier time, the concept of welfare maximization aggregated individual welfare without always paying attention to particular individuals whose welfare might decline. This was true, to a certain extent, of Bentham himself. In his Introduction to the Principles of Morals and Legislation, where he clearly defined all his terms, Bentham wrote that “An action then may be said to be conformable to the principle of utility, or, for shortness sake, to utility, meaning with respect to the community at large) when the tendency it has to augment the happiness of the community is greater than any it has to diminish it.”658 The interest of the community, on this formulation, represents the sum of the interests of the individuals, but increasing the total utility of the community does not preclude the fact that some individuals may end up worse off. The utility principle, which Bentham would alternatively discuss under the rubric of “the greatest happiness of the greatest number,” might still allow for decreased utility of some individuals, even perhaps as few as one.659
This collective notion of welfare would give way, in the twentieth century, to more refined definitions of “efficiency.” The first, associated with Pareto, provides that an improvement in collective welfare requires that absolutely no one be make worse off individually. In other words, a Pareto improvement is possible if some people are made better off, but none worse off. This gives rise to the notion of a Pareto efficient (or Pareto optimal) outcome, which is one in which no further Pareto improvements can be made. It also gives rise to another definition of efficiency, the Kaldor-Hicks efficient outcome, where persons who would be made better off by a Pareto improvement could hypothetically compensate those who are made worse off, so that a Pareto efficient result would have obtained at least in theory. These crisper definitions of efficiency now substitute for the looser notion of welfare maximization.660
Once the Pareto and Kaldor-Hicks refinements are in place, it becomes far easier to argue that “efficient” outcomes are in fact neutral, objective, or non-normative, since no one should be opposed to a Pareto improvement in the distribution of resources (unless, of course, equity matters). Some view these Pareto and Kaldor-Hicks refinements as “a much weaker form of utilitarianism,” since they narrow the category of welfare improvements and eviscerate the possibility of collective welfare debates.661 Some argue that they render the entire economic analysis trivial and marginal, something everyone could agree about and that therefore functions only at the margins.662 I think otherwise. Making the term “efficiency” so much less controversial has in fact empowered the welfarist argument, at least in the legal domain. This is especially true since, as Coase admitted, it is generally impossible to imagine assembling the empirical data to support any of these complex welfare calculations. Being able to claim that a legal rule or allocation of resources is Pareto efficient is far more persuasive than to say that it maximizes collective welfare. It facilitates a myth of neutrality. It allows the law-and-economists to argue, as Posner does, that efficiency “offers a neutral standpoint on politically controversial legal topics.”663 In most legal controversies, we are told, lawyers tend to favor either the propertied or the propertyless. “The economist favors neither side, only efficiency.”664 Clearly, the term “efficient” now has a more crisp definition and does a lot more work. …
With a definition of ‘efficiency’ an income growth pattern like this:
would be characterized as efficient! So, be careful when the word ‘efficiency’ is thrown around.
And a second excerpt from the ‘Chicago School’ chapter where Harcourt talks about how criminal sanction is seen by laissez-faire economists (page 32 of the pdf, page 176 of the draft, emphasis is mine):
The Birth of Neoliberal Penality
The function of the criminal sanction in a capitalist market economy, then, is to prevent individuals from bypassing the inherently efficient competitive market because market bypassing—non-voluntary, non-compensated forms of social interaction—are by their very nature inefficient and reduce social welfare. Criminal activity is best understood as an end-run around the market, and the criminal law is therefore best understood as what prevents this kind of market evasion. The central premise of this argument, naturally, is the efficiency of markets: “When transaction costs are low,” Posner emphasizes, “the market is, virtually by definition, the most efficient method of allocating resources.”680 This maps on perfectly, as well, to Richard Epstein’s conception of the penal sphere. The role of the penal sanction, on Epstein’s view, is to prevent fraud and coercion, in order to facilitate the proper functioning of the free market. Notice the underlying notion of orderliness and the strong parallel to Quesnay’s ordre naturel.
This view of the penal sanction has a number of important features that are worth emphasizing. First, …
Fourth, there is a clear wealth dimension to these distinctions. The criminal sanction—rather than tort law—is necessary in the case of murder, violent crime, theft, property crimes, and generally street crime because the value at which the deterrence would have to be placed is too high and the defendants are most often judgment proof (Epstein and Posner agree on this). Both for reasons of insolvency and because of the high costs that would be necessary to deter street crime, the tort system is inadequate and the government must intervene. Posner explains: “In cases where tort remedies, including punitive damages, are an adequate deterrent because they do not strain the potential defendant’s ability to pay, there is no need to invoke criminal penalties—penalties which … are costlier than civil penalties even when just a fine is imposed. In such cases, the misconduct probably will be deterred…. This means that the criminal law is designed primarily for the nonaffluent; the affluent are kept in line, for the most part, by tort law.”682
“This means that the criminal law is designed primarily for the nonaffluent.” Isn’t this how the law is applied towards the thieves at Wall Street?
There was a brief debate focused on the following question: would the gains of the economy continue to accrue to the top 1% once the recovery started, or would the top 1% have a weak post-recession showing in terms of raw income growth as well as income share of the economy? The top 1% had a rough Great Recession. They absorbed 50% of the income losses, and their share of income dropped from 23.5% to 18.1% percent. Is this a new state of affairs, or would the 1% bounce back in 2010?
Well we finally have the estimated data for 2010 by income percentile, and it turns out that the top 1% had a fantastic year. The data is in the World Top Income Database, as well as Emmanuel Saez’s updated Striking it Richer: The Evolution of Top Incomes in the United States (as well as the excel spreadsheet on his webpage). Timothy Noah has a first set of responses here. The takeaway quote from Saez should be: “The top 1% captured 93% of the income gains in the first year of recovery.”
… As you can image, this has increased the percentage of the economic pie that the top 1% takes home. As Saez notes, “excluding realized capital gains, the top decile share in 2010 is equal to 46.3%, higher than in 2007.”
… It’s also worth mentioning that, pre-Recession, inequality hadn’t been that high since the Great Depression, and we are looking to rapidly return to that state. It’s important to remember that a series of choices were made during the New Deal to react to runaway inequality, including changes to progressive taxation, financial regulation, monetary policy, labor unionization, and the provisioning of public goods and guaranteed social insurance. A battle will be fought over the next decade – it’s been fought for the past three years – on all these fronts. The subsequent resolution will determine how broadly-shared prosperity is going forward and whether or economy will continue to be as unstable as it has been.
The low taxing of capital gains plays a huge part in this. The special treatment it is given should’ve stopped. But, as Meteor Blades says, the 1% thinks taking the 93% of the recovery is the way things should be.
See Sue Run (or deficit polling and taxing workers to fund programs for people who could get by without help) [New]
The National Journal polled Americans on questions surrounding the federal budget deficit (linked from Jon Walker). Did Americans blame the safety-net programs for the deficit in the federal budget?
As important, the survey found Americans unconvinced that safety-net programs represent a major source of the deficit problem. When asked to identify the biggest reason the federal government faces large deficits for the coming years, just 3 percent of those surveyed said it was because of “too much government spending on programs for the elderly”; only 14 percent said the principal reason was “too much government spending on programs for poor people.” Those explanations were dwarfed by the 24 percent who attributed the deficits primarily to excessive defense spending, and the 46 percent plurality who said their principal cause was that “wealthy Americans don’t pay enough in taxes.” While minorities were more likely than whites to pin the blame on the wealthy avoiding taxes, even 43 percent of whites agreed.
Given that diagnosis, it is perhaps not surprising that relatively few respondents said they would support major reductions in safety-net programs to reduce the deficit. Fully three-fourths of those polled said Social Security should be cut “not at all” to reduce the deficit, and exactly four-fifths said the same about Medicare. Nearly two-thirds even agreed that Medicaid should be entirely spared from cuts; just 5 percent said it should be cut a lot. There was more receptivity to retrenching food stamps and housing vouchers for the poor (only 51 percent said they should be entirely spared), but even so, just 9 percent said they should be cut “a lot.” Twice as many said defense should face big cuts.
And the accompanying graphic:
The 53% who think “the government taxes workers too much to fund programs for people who could get by without help” left me wondering who exactly are those “people who could get by without help.” Because Wall Street, Big Oil, Big Banks and so on certainly don’t need any government help. Another portion will define “people who could get by without help” as those that receive help from safety net programs. Probably many of those exclude themselves from those who get government help that they don’t need. B. Deutsch at ‘Alas! a Blog’ (linked by Meteor Blades), used data from Suzanne Mettler’s “Reconstituting the Submerged State: The Challenge of Social Policy Reform in the Obama Era” that was published in Perspectives on Politics on September 2010 (pdf) and built a revealing table showing how little many people know about the government programs that they receive a boost from:
Percentage of Program Beneficiaries Who Report They “Have Not Used a Government Social Program” Program “No, Have Not Used a Government Social Program” 529 or Coverdell 64.3 Home Mortgage Interest Deduction 60.0 Hope or Lifetime Learning Tax Credit 59.6 Student Loans 53.3 Child and Dependent Care Tax Credit 51.7 Earned Income Tax Credit 47.1 Social Security—Retirement & Survivors 44.1 Pell Grants 43.1 Unemployment Insurance 43.0 Veterans Benefits (other than G.I. Bill) 41.7 G.I. Bill 40.3 Medicare 39.8 Head Start 37.2 Social Security Disability 28.7 Supplemental Security Income 28.2 Medicaid 27.8 Welfare/Public Assistance 27.4 Government Subsidized Housing 27.4 Food Stamps 25.4
Deutch based a cartoon on the data he gathered: