What the heck happened in the UK in the last 50 years? Do the bankers run the whole nation? My god.
Is it simply that they are Europe’s bankers? Now that I think about it I don’t see how that is possible, I thought that both France and Germany had very powerful banking sectors.
There has to be a measurement problem with the UK banks. They can’t be that far out of wack.
I’m sure your pal Bernanke is working tirelessly to prevent his four best buddies from controlling 87% of the assets rather than merely 63%. We’re saved.
That number did not really jump out at me. The top 4 account for about 60% (63?) up from 14% which shows a lot of consolidation. But that does not seem too our of wack with what happened in the UK (and probably in most of the major economies … I suppose I should refrain from saying things like that without data … but it makes sense that it would happen, winner take all and all of that jazz).
What was out of wack was the assets as a percentage of GDP in the UK. Holy cow. 459% vs. 62. What happened in the UK? And what are the numbers in the rest of the major economies?
In other words, rich people need to be able to say that they should be rich because they can afford it,
You can’t just say “In other words” and then proceed to say something that is totally unrelated to the quote.
Also, of two sentences making up the entire originally quoted post, you deleted the second one which made the first quite clear that it was talking about the fact that the money in question was already being taxed.
Once again Dean Baker nails it.
If politics and the media in the United States were not so corrupt, this would have been topic No.1 in the election. Candidates would have been pushing plans to aggressively stimulate the economy and to throw the Wall Street crowd in jail. But a candidate who said such things would not get enough money to run a serious campaign, because you need to court the Wall Street types to pay for a campaign these days. And the media would have ignored and/or ridiculed such a candidate.
So, we have an election based largely on nonsense. People are rightly angry that their lives are being ruined by disastrous economic policy. But they have no idea where to turn. And the latest data tell us that the situation is likely to get much worse in the year ahead.
QFMFT.
Late to the party(more like a funeral reception)! I just finished reading The Great Divergence. Recap:
Today, the richest 1 percent account for 24 percent of the nation’s income.
The Great Compression ended in the 1970s. Wages stagnated, inflation raged, and by the decade’s end, income inequality had started to rise. From 1980 to 2005, more than 80 percent of total increase in Americans’ income went to the top 1 percent.
-according to the Central Intelligence Agency (whose patriotism I hesitate to question), income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador. Income inequality is actually declining in Latin America even as it continues to increase in the United States. Economically speaking, the richest nation on earth is starting to resemble a banana republic. The main difference is that the United States is big enough to maintain geographic distance between the villa-dweller and the beggar.-The trouble is that the kinds of jobs computers tend to eliminate are those that require some thinking but not a lot—precisely the niche previously occupied by moderately skilled middle-class laborers.
But MIT economist David Autor readily concedes that computer-driven job polarization can’t possibly explain the entire trend toward income inequality in the United States, because income inequality is much greater in the United States than it is in Europe.-[T]he narrowly economic focus of most previous studies of inequality has caused them to miss what may be the most important single influence on the changing U.S. income distribution over the past half-century—the contrasting policy choices of Democratic and Republican presidents. Under Republican administrations, real income growth for the lower- and middle-classes has consistently lagged well behind the income growth rate for the rich—and well behind the income growth rate for the lower and middle classes themselves under Democratic administrations.
-But the culprit, they say, is not so much partisan politics (i.e., Republicans) as institutional changes in the way Washington does business (i.e., lobbyists). “Of the billions of dollars now spent every year on politics,” Hacker and Pierson point out in their new book, Winner-Take-All Politics, “only a fairly small fraction is directly connected to electoral contests. The bulk of it goes to lobbying….”
The resultant power shift, they argue, affects Democrats and Republicans alike.-The Great Divergence coincided with a dramatic decline in the power of organized labor. Union members now account for about 12 percent of the workforce, down from about 20 percent in 1983. When you exclude public-employee unions (whose membership has been growing), union membership has dropped to a mere 7.5 percent of the private-sector workforce.
-In their influential 2007 paper, “Inequality and Institutions in 20th Century America,” Levy and Temin regard unions not merely as organizations that struck wage bargains for a specific number of workers but rather as institutions that, prior to the Great Divergence, played a significant role in the workings of government. “If our interpretation is correct,” they wrote, “no rebalancing of the labor force can restore a more equal distribution of productivity gains without government intervention and changes in private sector behavior.”
-To summarize: Taft-Hartley halted labor’s growth and then, over many decades, enabled management to roll back its previous gains.
-It’s no accident that the social democracies, Sweden, France, and Germany, which kept on paying high wages, now have more industry than the U.S. or the UK. … [T]hat’s what the U.S. and the UK did: they smashed the unions, in the belief that they had to compete on cost. The result? They quickly ended up wrecking their industrial base.-But the U.S. tech sector doesn’t, for the most part, employ lower-skilled workers. It employs higher-skilled workers. If trade with China were throwing anybody out of work, Lawrence concluded, “it is likely to be … workers with relatively high wages.” And in fact, Lawrence wrote, during the first decade of the 21st century there was very little measured increase in income inequality “by skill, education, unionization or occupation.”
-Trade does not appear to have contributed much to the Great Divergence through the mid-1990s. Since then, it may have contributed to it more significantly, though we don’t yet have the data to quantify it.-Who are the Stinking Rich? Their average annual income is about $7 million. Most of them likely work in finance, a sector of the U.S. economy that saw its share of corporate profits rise from less than 10 percent in 1979 to more than 40 percent in the aughts.
-An explanation of how finance came to take over the U.S. economy would require its own Slate series, but Saez, Hacker and Pierson argue plausibly that the industry’s deregulation (and the protection it received from a few well-placed Democrats like New York Sen. Chuck Schumer) played a large role.-At a time when the workforce needed to be smarter, Americans got dumber. Or rather: Americans got smarter at a much slower rate than they did during previous periods of technological change (and also at a much slower rate than many other industrialized democracies did).
-Between 1900 and the mid-1970s, U.S. incomes became dramatically more equal while educational attainment climbed. But starting in the mid-1970s and continuing to today, incomes became dramatically less equal while educational attainment stagnated.Summary of causes:
– Race and gender is responsible for none of it, and single parenthood is responsible for virtually none of it.
– Immigration is responsible for 5 percent.
– The imagined uniqueness of computers as a transformative technology is responsible for none of it.
– Tax policy is responsible for 5 percent.
– The decline of labor is responsible for 20 percent.
– Trade is responsible for 10 percent.
– Wall Street and corporate boards’ pampering of the Stinking Rich is responsible for 30 percent.
– Various failures in our education system are responsible for 30 percent.
One important thing he doesn’t talk about(but may be mentioned in this thread) is the shifting of the entire political spectrum. When a party continues to regularly win most elections and hold more offices, the opposition must shift its ideology to suit electors’ voting habits. So if conservatives are in power more of the time and more offices of government, then liberal ideology must shift right to capture more votes.
Anyway, why is income inequality bad? It’s not if you’re a fan of communism. If it wasn’t for income inequality, we would’ve never enjoyed the writings of one Karl Marx and a certain South American doctor would not have dropped his medic bag to pick up an AK-47.
Right wingers are working hard at blaming the unions across the board these days.
In the US they are almost dead, UK too, and what did they get in return??
I’m okay with the AK-47 version if push comes to shove though.
Eh, most of the jobs that are eliminated by computing are stupid pointless jobs. I’m using PHP to eliminate whole swaths of my job that I just don’t want to do because fuck typing.
If those jobs are going the way of the dodo, well, so what. They sucked anyway, and they were a pointless waste of human talent. Just like all the jobs in manufacturing that were eliminated by robots. Or cashiers at CVS. Nobody likes dealing with cashiers, it’s slower than scanning items yourself and handling payment through a machine. Or someone whose job it is to sort forms. Eventually new jobs will pop up to replace em that aren’t so mind numbingly tedious.
And for those folks who lost their stupid tedious job? Well, those folks should get unemployment and a training program.
There are more people than you know who can only do stupid tedious jobs, many of whom love these stupid and tedious jobs because to them they are not stupid and tedious, and these stupid and tedious jobs give them purpose and a feeling of contributing to society. Unless we want them on permanent welfare or out in the streets doing naughty things because they have nothing else to do, we need to create new jobs for them, yes, stupid and tedious new jobs, stupid and tedious though that may be.
Doing what?
Some people aren’t smart and you can’t have a society of all doctors even if everyone was.
I mean the world always needs janitors, but not that many of em. Take away all the manufacturing and office jobs and thats a pretty big gap that can’t really be filled. TGIFridays only needs so many waiters.
4 day workweeks.
“First they came for the cashiers and I didn’t speak out because I wasn’t a cashier…”
The problem, as ShivaX points out, is society only needs so many doctors, programmers, engineers, etc. - i.e., highly educated, specialized workers - so ideally there ought to be enough jobs in the middle between “bum” and “PhD” which pay a living wage to absorb those people. Plus, even if society could absorb that many new highly-paid workers, most of those people have to learn & train for years if not decades for those careers; it’s not practical to, say, ship all those cashiers off to med school boot camp and hope they come out in a few weeks able to perform brain surgery. So what do they do in the meantime?
Wow, he’s completely wrong on gender not being a cause. The empirical evidence is that assorted mating and women’s wage have contributed to inequality (and by a great deal according to some studies I’ve seen).
Basically at first working women helped equalize incomes but then as more women worked, gained experience and became educated they contributed to the growth inequality. He looks merely at women’s wages as % of male wages. But as women’s wages become closer to 100%, the greater the increase inequality is created. He gets the relationship exactly backwards in his conclusion, which makes me not want to read anything else at all in this article.
Basically the role of women and income inequality is as follows: People pair up in their socio-economic sphere (college grads marry college grads and not HS dropouts as a general rule). Women have more education and are working. As their wages approaches males, women are also experiencing the education premium. So in 1950, you had a college grad and a stay at home wife making more than a HS dropout and his wife. In 2010, the college grad and his college grad wife are both working and earning the same wage premium compared to high school grad and his wife. I remember reading some of Tim Smeeding’s work that high-income folks in the US work many more hours than high-income in other (european countries). This was true for women as well as men.
Anyway, the find that households and gender doesn’t matter flies in the face of the empirical works of Sheldon Danzinger, Bob Lehrman, Gary burtless and others on the left who have studied this issue for years. They have all published empirical research on the impact of working women and the rise of single-parent families on child poverty and increase of income equality. Not to say that the rise of the super-rich isnt’ a factor, but these are bigger issues that this guy mentions.
No, the issues of the college/wage premiums and the closing gender gap are taken on separately in different chapters.
I read it. The problem is that he says gender can’t be an issue income inequality b/c he cites the closing gender gap. But empirical studies have found that it’s precisely the closing of the gender gap that has contributed to inequality. He has causation completely reversed in his gender example, which makes me not take him seriously.
I’m having a tough time reading your posts. Are you able to provide some quotes from your sources?
Not sure where this goes, so I’ll put it here:
According to a new report from the CRS, between 2007 and 2010 the bottom 50-percent’s share of the nation’s total wealth dropped from 2.5% to 1.1% while the top 10% grew from 67.2% to 74.5%.
http://www.fas.org/sgp/crs/misc/RL33433.pdf
When does this start becoming cause for alarm?
I’m pretty sure a lot of us already are alarmed about this. On the other hand, a large part of the people in power are wealthy and don’t give a damn, or in some cases are actually quite pleased about this and doing their best to accelerate the process (see for example the Republican Party).