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An Idiot's Guide to Inequality was wriiten by Nicholas Kristoff of the NYT in 2014, around the time that Thomas Piketty's book ("Capital") also was a popular hit (that is, a short-lived meteor in the economics firmament) at the time.
Here follows an excerpt of the five guideline entries (one should read the article to understand what Kristof is saying):
First, economic inequality has worsened significantly in the United States and some other countries. The richest 1 percent in the United States now own more wealth than the bottom 90 percent. Oxfam estimates that the richest 85 people in the world own as much wealth as the bottom half of humanity.
The situation might be tolerable if a rising tide were lifting all boats. But it’s lifting mostly the yachts. In 2010, 93 percent of the additional income created in America went to the top 1 percent.
Second, inequality in America is destabilizing. Some inequality is essential to create incentives, but we seem to have reached the point where inequality actually becomes an impediment to economic growth.
Certainly, the nation grew more quickly in periods when we were more equal, including in the golden decades after World War II when growth was strong and inequality actually diminished. Likewise, a major research paper from the International Monetary Fund in April found that more equitable societies tend to enjoy more rapid economic growth.
Inequality causes problems by creating fissures in societies, leaving those at the bottom feeling marginalized or disenfranchised. That has been a classic problem in “banana republic” countries in Latin America, and the United States now has a Gini coefficient (a standard measure of inequality) approaching some traditionally poor and dysfunctional Latin countries.
Third, disparities reflect not just the invisible hand of the market but also manipulation of markets. Joseph Stiglitz, the Nobel Prize-winning economist, wrote a terrific book two years ago, “The Price of Inequality,” which is a shorter and easier read than Piketty’s book. In it, he notes: “Much of America’s inequality is the result of market distortions, with incentives directed not at creating new wealth but at taking it from others.”
For example, financiers are wealthy partly because they’re highly educated and hardworking — and also because they’ve successfully lobbied for the carried interest tax loophole that lets their pay be taxed at much lower rates than other people’s.
Fourth, inequality doesn’t necessarily even benefit the rich as much as we think. At some point, extra incomes don’t go to sate desires but to attempt to buy status through “positional goods” — like the hottest car on the block.
Fifth, progressives probably talk too much about “inequality” and not enough about “opportunity.” Some voters are turned off by tirades about inequality because they say it connotes envy of the rich; there is more consensus on bringing everyone to the same starting line.
Unfortunately, equal opportunity is now a mirage. Indeed, researchers find that there is less economic mobility in America than in class-conscious Europe.
We know some of the tools, including job incentives and better schools, that can reduce this opportunity gap. But the United States is one of the few advanced countries that spends less educating the average poor child than the average rich one. As an escalator of mobility, the American education system is broken."
Frankly, I propose that there are two real and tangible changes to governance in the US that are the most meaningful.
*The American people must somehow breakaway from the continual BoobTube reinforcement of money as the only real reason for one's existence - and the more, the better. That is a patent falsehood, but it "sells" both TV and print coverage of the subject of money.
*Taxation is rigged for the rich. Reagan promised upper-incomes a flat-tax, which is what they have. (See here.) So, whether they work a 40-hour week or an 80-hour week, the Net Income After-tax is about the same. It is astronomic.
*But so what? Why should that important. After all, isn't making money a success?
*The answer to that question depends upon your yardstick. In a rudimentary sense, yes it is an individual succes. But, who becomes a millionaire on a deserted island?
And that's my point: When you live in a collective, which all nations are as market-economies, the rules are different. To get rich, you need a lot of people, called consumers, to help you. And, if so, what is best for "most people" is a priority over what is best for "any one individual" ...
Here follows an excerpt of the five guideline entries (one should read the article to understand what Kristof is saying):
First, economic inequality has worsened significantly in the United States and some other countries. The richest 1 percent in the United States now own more wealth than the bottom 90 percent. Oxfam estimates that the richest 85 people in the world own as much wealth as the bottom half of humanity.
The situation might be tolerable if a rising tide were lifting all boats. But it’s lifting mostly the yachts. In 2010, 93 percent of the additional income created in America went to the top 1 percent.
Second, inequality in America is destabilizing. Some inequality is essential to create incentives, but we seem to have reached the point where inequality actually becomes an impediment to economic growth.
Certainly, the nation grew more quickly in periods when we were more equal, including in the golden decades after World War II when growth was strong and inequality actually diminished. Likewise, a major research paper from the International Monetary Fund in April found that more equitable societies tend to enjoy more rapid economic growth.
Inequality causes problems by creating fissures in societies, leaving those at the bottom feeling marginalized or disenfranchised. That has been a classic problem in “banana republic” countries in Latin America, and the United States now has a Gini coefficient (a standard measure of inequality) approaching some traditionally poor and dysfunctional Latin countries.
Third, disparities reflect not just the invisible hand of the market but also manipulation of markets. Joseph Stiglitz, the Nobel Prize-winning economist, wrote a terrific book two years ago, “The Price of Inequality,” which is a shorter and easier read than Piketty’s book. In it, he notes: “Much of America’s inequality is the result of market distortions, with incentives directed not at creating new wealth but at taking it from others.”
For example, financiers are wealthy partly because they’re highly educated and hardworking — and also because they’ve successfully lobbied for the carried interest tax loophole that lets their pay be taxed at much lower rates than other people’s.
Fourth, inequality doesn’t necessarily even benefit the rich as much as we think. At some point, extra incomes don’t go to sate desires but to attempt to buy status through “positional goods” — like the hottest car on the block.
Fifth, progressives probably talk too much about “inequality” and not enough about “opportunity.” Some voters are turned off by tirades about inequality because they say it connotes envy of the rich; there is more consensus on bringing everyone to the same starting line.
Unfortunately, equal opportunity is now a mirage. Indeed, researchers find that there is less economic mobility in America than in class-conscious Europe.
We know some of the tools, including job incentives and better schools, that can reduce this opportunity gap. But the United States is one of the few advanced countries that spends less educating the average poor child than the average rich one. As an escalator of mobility, the American education system is broken."
Frankly, I propose that there are two real and tangible changes to governance in the US that are the most meaningful.
*The American people must somehow breakaway from the continual BoobTube reinforcement of money as the only real reason for one's existence - and the more, the better. That is a patent falsehood, but it "sells" both TV and print coverage of the subject of money.
*Taxation is rigged for the rich. Reagan promised upper-incomes a flat-tax, which is what they have. (See here.) So, whether they work a 40-hour week or an 80-hour week, the Net Income After-tax is about the same. It is astronomic.
*But so what? Why should that important. After all, isn't making money a success?
*The answer to that question depends upon your yardstick. In a rudimentary sense, yes it is an individual succes. But, who becomes a millionaire on a deserted island?
And that's my point: When you live in a collective, which all nations are as market-economies, the rules are different. To get rich, you need a lot of people, called consumers, to help you. And, if so, what is best for "most people" is a priority over what is best for "any one individual" ...
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