Weekend Crap

The Natural Chaos of Markets here: [The Naturak Chaos of Markets] and here
The natural chaos of markets - macrobusiness.com.au | macrobusiness.com.au

The documentaries here: [All Watched over by Machines of Loving Grace]

Television dominates this country. [A Nation of Vidiots - Jeffrey D. Sachs - Project Syndicate]

"Still, statistics indicate that the growing disparity is genuinely overwhelming. In fact, the 400 wealthiest Americans now own more than the "lower" 150 million Americans put together." from [The Second Gilded Age: Has America Become an Oligarchy? - SPIEGEL ONLINE]

[Apple and the Centrally Planned Economy « Modeled Behavior]

tnb

Wealth, Income, and Inequality

Three posts on the growing income and wealth inequality in the US.

[A Taxing Matter: Inequality and its corrosive effects on democracy] and [Surprise! Census Data Contains Good News... For The Rich] and from [Money.CNN]

Middle-class wealth falls: For middle-class families, income fell in 2010. The median household income was $49,445, down slightly from $49,777 the year before.
Median income has changed very little over the last 30 years. Adjusted for inflation, the middle-income family only earned 11% more in 2010 than they did in 1980, while the richest 5% in America saw their incomes surge 42%.
"Over that period of time, it's not that the American economy has necessarily performed badly," Osterman said. "As a country we're richer over that period, but there's been this real shift in where the income has gone, and it's to the top."
Amplifying that trend, the bottom 60% of households saw their income fall last year, while households making $100,000 or more enjoyed a rise in income. [Money.CNN]

Tax and Spend

Two good posts on taxes and spending.

First, The Baseline Scenario discusses what that "Washington" thing is that eats our tax dollars.

[The Baseline Scenario - What is this Washington]

Next, Conservative Bruce Bartlett looks at the 50% who don't pay any Federal income taxes.

[Who doesn't pay Federal Income Tax?]

of note is this

There are 78,000 tax filers with incomes of $211,000 to $533,000 who will pay no federal income taxes this year. Even more amazingly, there are 24,000 households with incomes of $533,000 to $2.2 million with zero income tax liability, and 3,000 tax filers with incomes above $2.2 million with the same federal income tax liability as most of those with incomes barely above the poverty level.

and this

Perhaps the right and left can at least agree that it is unseemly for those in the top 1 percent of income distribution, with incomes at least 10 times the median income, to pay no federal income taxes. It’s not socialism to ask them to pay something.

Tax rates on the super rich need to be raised.

tnb

Income Inequality

A very good post on Inequality in the US.

[ECHIDNE of the Snakes]

tnb

Wealth and Income Inequality #2

Another good post on wealth and income inequality: [Barry Ritholtz - Worlds wealthiest richer than before the credit crunch]

I think we should cut social security and medicare.

tnb

Wealth and Income Inequality in the US

Here are several good charts showing that the super rich are taking more and more of US wealth and income. [Business Insider]

This charts shows that from the 40s to about 1980 income inequality was relatively stable. Then in the 80's we fell in love with cutting taxes to spur the economy and the money started piling up in the super-wealthy's hands. Now the super wealthy have the biggest slice of the American Wealth pie and the economy sucks for the rest of us.

So, go look through these 16 charts and then explain to me again why we should attack our current debt problem by cutting Social Security and Medicare and not raising the tax rate on the rich.

tnb

The Top 1% - US vs the world

http://www.ritholtz.com/blog/2011/06/the-world-top-incomes-database/

The rich certainly have done well since 1985. What changed?

tnb

Income Inequality

Income Inequality - We have more of it and are doing less to fight it than most other developed countries.

OffTheChartsBlog

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Inequality in The US - Class War

Joseph E. Stiglitz on Inequality in the US. A couple of cuts.....

The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.

The top 1 percent rarely serve in the military—the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters, and patriotism goes only so far.

A very good article. A little depressing but very good.

We need a class war.

tnb

The Rich get Richer.

Executive Pay Soars in 2010 - NYTimes.com

How's your paycheck doing?

tnb

Income Inequality, Big Cities and the Tea Party

Creative Class » Blog Archive » Cities, Inequality and Wages - Creative Class

"All of this leads to an intriguing conclusion about the connection between cities and wages. On the one hand, city-size has become a factor in increasing inequality, magnifying the underlying bifurcation of the labor market. On the other hand, bigger cities appear to pay better average wages. Cities make us richer, more productive and increase our wages, even as they reflect and compound the growing social and economic divides of today’s increasingly spiky world."

The big city adds to income inequality. This could help explain the rise of the mostly rural tea-party. The older, rural class sits at home watching their world change. Their successful children move to the big cities, leaving them to watch their now poorer and older neighborhoods, grow poorer and older.

This seems similar to the Oakies of the great depression. The changing world has passed them by, destroyed the life they had known. However, instead of being forced to move-out, take, or go with the family to California in search of a better life, they stay where they are, safe at home, comforted by their social security and medicare, watching fox news for hours on end. Blaming it all on Obama and those damned liberals.

tnb

Income Inequality

Is Income Redistribution the Key to Economic Growth? | Contrarian Musings

This is an interesting article on the causes of income inequality in the US. The argument is that the ending of the Bretton Woods era, when the US came off the gold standard and allowed the Fed to manage the money supply, is the primary cause of the increased wealth and income inequality over the last thirty years. The view is interesting and may very well be true or at least partially true though I'll leave that argument to those better qualified.

However, this leaves me suspicious of the argument, or at least the motives behind the argument.

(Quoting from a Mark Thoma article)

From the end of World War II until the 1970s, the growing prosperity in the US was widely shared across income groups. However since the 1970s, households at the lower end of the income distribution have experienced income stagnation – “real average hourly earnings (excluding fringe benefits) now stand roughly at 1974 levels” – while those at the top of the distribution have continued to do quite well. (emphasis added)

How can so many smart economists, from Paul Krugman to Mark Thoma, write that sentence or one very similar and not ask the obvious question? What changed? Was there a change in some major macro economic policy in the 1970s that could have affected equality of income and wealth in such a dramatic fashion? Why did inequality start rising so rapidly even before the election of Ronald Reagan? Why did it start rising before the top tax rates were reduced and before the adoption of freer trade (globalization)?

Average hourly earnings may have been stagnant since 1974 and the ending of Bretton Woods system may be responsible for that, but this chart of the US (and other) Gini coefficients makes it pretty clear that the rise in income inequality did not start in 1974 but in 1982-83. Look at the chart, the Gini coeffecient was pretty flat or slightly decreasing from the 1950's to 1982 then it jumps in 1982-83 and has increased steadily ever since. The inequality started changing 10-11 years later, it seems a stretch to assign Bretton Woods the responsibilty for this.

I think the question "What changed?" is a valid question, it's just that the time period is wrong. They should be looking at the 1982-83 period. What happend at that time that could be responsible? Well, how about the Reagan Tax cuts for the wealthy, reduced Government regulation? Maybe?

tnb

A Hedge Fund Republic? - NYTimes.com

A Hedge Fund Republic? - NYTimes.com

Here's just one highlite from a good rant on income/wealth inequality in the US.

But there is also a larger question: What kind of a country do we aspire to be? Would we really want to be the kind of plutocracy where the richest 1 percent possesses more net worth than the bottom 90 percent?

Oops! That’s already us. The top 1 percent of Americans owns 34 percent of America’s private net worth, according to figures compiled by the Economic Policy Institute in Washington. The bottom 90 percent owns just 29 percent.

That also means that the top 10 percent controls more than 70 percent of Americans’ total net worth.