Can we cure inequality, and how?

[umbertino]

by: John Case

February 7 2013

Joseph Stiglitz, a Nobel prize winner in economics, views growing inequality (a Marxist might say "the growing class divide") as a threat that may block economic recovery from our "Lesser Depression." In other words, it's possible that the "Lesser Depression" might yet become the "Greater Depression." The news that our country's GDP (gross domestic product) has declined again makes this threat more than just speculation.

Stiglitz writes, "Politicians typically talk about rising inequality and the sluggish recovery as separate phenomena, when they are in fact intertwined. Inequality stifles, restrains, and holds back our growth. When even the free-market-oriented magazine The Economist argues - as it did in a special feature in October - that the magnitude and nature of the country's inequality represent a serious threat to America, we should know that something has gone horribly wrong. And yet, after four decades of widening inequality and the greatest economic downturn since the Depression, we haven't done anything about it."

Stiglitz cites four principal causes of the growing class divide.

First, the working class, broadly defined, is too weak economically to support the consumer spending that has historically driven economic growth.

Second, the hollowing out of the "middle class" since the 1970s means that working people are unable to invest in their future by educating themselves and their children.

Third, stagnating working class incomes are holding back tax revenues. The recent modest agreement to restore tax rates for incomes over $400,000 did very little to change this, considering the multitude of tax breaks for corporations and the rich that remain. Further, investment income from Wall Street speculation is still taxed at a far lower rate than wages. Regressive taxes mean that vital investments in infrastructure, education, research and health that are crucial for restoring long-term economic strength go wanting.

Fourth, inequality is strongly associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile, vulnerable, and likely to generate political instability.

Economist Paul Krugman is a bit more cautious about the direct impact of inequality on the recovery. He notes that economics "is not a morality play" and that a market economy could reach "equilibrium," and you could have virtually full employment based on purchases of yachts, luxury cars, and the services of personal trainers and celebrity chefs. The returns from rising productivity can go, and indeed have been going, ever more to the rich - not to those who do the producing! A democratic society with a political interest in fairness might not like such an economy, but there is little economic evidence that this would not be possible.

But there are "equilibriums" and then there are sustainable equilibriums. The scenario Krugman describes is clearly unsustainable.

Solutions

Beyond this theoretical debate, what are real solutions? I can only think of three ways - plus the obvious fourth - to redistribute wealth on the scale that fairness requires.

1) More progressive taxation to pay for investment in health care, education, security, a clean environment, roads, bridges, green energy and transport. These are public goods. They constitute a substantial portion of social wealth. In addition, most intellectual property - for example, biomedical and technology innovations - are also inherently quasi-public goods - because they exist in people's heads or in a form that can be easily and cheaply copied. Public goods will be the principal sources of wealth in the society that successfully emerges from this depression with democracy intact.

2) Provide for national collective bargaining. For example: Mandate collective bargaining for everyone over two things: the employer's minimum wage, and employee safety. Skip the entire embattled union certification/election process. A workplace organization, or any section of it, can affiliate with a labor federation, or not. End of the "right-to-work" debate, since there is no longer any threat of "decertification." This is analogous to the approach Brazil's former president Lula took to reviving labor law in that country after the military dictatorship. It united organized and unorganized workers in a demand that did not rely on any trickle-down theory to promise gains to multitudes of workers in real time.

3) Enact new laws protecting and expanding the value of "human capital." Human capital represents the education, accumulated know-how, training and other "tools" that an employee brings to an enterprise. The good-paying jobs of the future will be jobs where the "human capital" investment is large. Hourly wage- or salary-based compensation cannot generally retrieve the full value of "human capital" inputs. In the high tech boom, employees with stock or other capital options were one of the few income pluses in the 1990s, offsetting the longstanding stagnation of U.S. working class income. Yet this kind of income is not regulated, and many workers were literally robbed and fleeced of promised wealth in spite of their Herculean efforts for their employers.

And the obvious fourth option:

4) Nationalize the "too big to fail" companies - then we won't have to worry about taxing them fairly.

Any one of these four is the equivalent to a social revolution. Time to think anew.

http://www.peoplesworld.org/can-we-cure-inequality-and-how/

[dog53]

Its socialisim Umbert . We dont want socialisim . It doesnt work. We want and will DIE for FREEDOM.

My dad was in italy said it was beauitful. He was there fightin for your freedom umbert. He won

Shame yall decided to give it away.

Have a great day.

[SgtFuryUSCZ]

****////

Okay, our little commie pal,

Here's the deal....

We are not going to tolerate your jamming our boards any longer when

something of substance to rebuke your ilk is posted.

Pouring on the music postings to drive away important posts which go against your grain

is cowardly, dirty pool, untoward and despicable.

Until you read:

OBAMA's CYBER WARRIORS by DIVEMASTER in OFF TOPICS,

and respond with a comprehensive contribution, we are done with you.

You will be invisible to us!

MODS: We are formally requesting that his music posts go directly to that forum

and not push news & imporatnt articles off the front page.

If people log in here for music they can go directly there and by-pass current events, news and more important recently/newly posted stuff! MUSIC IS NEITHER!

[dontlop]

we can cure inequality by taxing the poor by 60% .. and eliminating taxes on the rich .

[Thaiexpat]

Did you ever stop to think that maybe someone is "pushing your buttons"? I used to do that in the Marines. I enjoyed saying crap just to get a reponse from someone I knew would react a particular way. Sick? Maybe, but sure got a hellava laugh outta it. I dunno, just saying.......maybe a NO RESPONSE might work a bit better, but I am no Mod-expert.

[Luigi1]

No. Income re-distribution or taking from the haves & giving to the have nots has failed over & over.

The only way to cure inequality is for everyone to be forced to contribute something towards society for themselves. That will never happen because it's not PC.

It's only a matter of time before the USA implodes. We can't go on forever with half the people working & paying taxes & the other half sponging off of them.

With equal representation & equal rights come equal responsibility. Only then will the unequality issue be solved.

[Farwould]

****////

Okay, our little commie pal,

Here's the deal....

We are not going to tolerate your jamming our boards any longer when

something of substance to rebuke your ilk is posted.

Pouring on the music postings to drive away important posts which go against your grain

is cowardly, dirty pool, untoward and despicable.

Until you read:

OBAMA's CYBER WARRIORS by DIVEMASTER in OFF TOPICS,

and respond with a comprehensive contribution, we are done with you.

You will be invisible to us!

MODS: We are formally requesting that his music posts go directly to that forum

and not push news & imporatnt articles off the front page.

If people log in here for music they can go directly there and by-pass current events, news and more important recently/newly posted stuff! MUSIC IS NEITHER!

Crawls out from under his SLIMY rock

Umbertino didnt write this post and I like the music post he does.

When you can give a descent question and respect the other sides response

You dont deserve to hear my answer.

Only a coward calls someone a coward so step in front of my wheelchair

and call this LT. a coward.

I just dont see why you have to pick on umbertino he only brings what YOU

dont want to see.I dont mind reading his articles because it is whats going on in this world.

report to sickbay and get you some glasses I didnt see any music on this post.

I like to wave the flag too but I dont walk over others doing it sgt.

obama's cyber warriors typical post not much differant from this post.

All those leaks and leakers I need to take a leak!

Have a Great Day!

[Jaxinjersey]

Inequality = false-premise in the USA, leading to the false-narrative. We all have equal-opportunity... that's the real premise. Some choose to use it to rise to personal heights... some choose contentment at lower levels... and some choose to let circumstances choose that level for them. Frankly, in the course of my life... I've made those choices in each category at one time or another... all in the pursuit of happiness within individual personal thresholds. BTW... currently, my choice, is in the pursuit of new personal heights again! What's your choice???

[Cloud 9]

Inequality = false-premise in the USA, leading to the false-narrative. We all have equal-opportunity... that's the real premise. Some choose to use it to rise to personal heights... some choose contentment at lower levels... and some choose to let circumstances choose that level for them. Frankly, in the course of my life... I've made those choices in each category at one time or another... all in the pursuit of happiness within individual personal thresholds. BTW... currently, my choice, is in the pursuit of new personal heights again! What's your choice??? :)/>

Inequality? I would argue that here in America, we all have the same vitally important right - the right to SUCCEED or FAIL.

Well said, Jax. It IS a choice ;)

[Jaxinjersey]

Inequality? I would argue that here in America, we all have the same vitally important right - the right to SUCCEED or FAIL.

Well said, Jax. It IS a choice ;)/> ;)/>

Thank you Cloud 9... and welcome! Well said too... SUCCEED or FAIL... or ANYTHING INBETWEEN!!! Jax

[msmortgagewiz]

by: John Case

February 7 2013

Joseph Stiglitz, a Nobel prize winner in economics, views growing inequality (a Marxist might say "the growing class divide") as a threat that may block economic recovery from our "Lesser Depression." In other words, it's possible that the "Lesser Depression" might yet become the "Greater Depression." The news that our country's GDP (gross domestic product) has declined again makes this threat more than just speculation.

Stiglitz writes, "Politicians typically talk about rising inequality and the sluggish recovery as separate phenomena, when they are in fact intertwined. Inequality stifles, restrains, and holds back our growth. When even the free-market-oriented magazine The Economist argues - as it did in a special feature in October - that the magnitude and nature of the country's inequality represent a serious threat to America, we should know that something has gone horribly wrong. And yet, after four decades of widening inequality and the greatest economic downturn since the Depression, we haven't done anything about it."

Stiglitz cites four principal causes of the growing class divide.

First, the working class, broadly defined, is too weak economically to support the consumer spending that has historically driven economic growth.

Second, the hollowing out of the "middle class" since the 1970s means that working people are unable to invest in their future by educating themselves and their children.

Third, stagnating working class incomes are holding back tax revenues. The recent modest agreement to restore tax rates for incomes over $400,000 did very little to change this, considering the multitude of tax breaks for corporations and the rich that remain. Further, investment income from Wall Street speculation is still taxed at a far lower rate than wages. Regressive taxes mean that vital investments in infrastructure, education, research and health that are crucial for restoring long-term economic strength go wanting.

Fourth, inequality is strongly associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile, vulnerable, and likely to generate political instability.

Economist Paul Krugman is a bit more cautious about the direct impact of inequality on the recovery. He notes that economics "is not a morality play" and that a market economy could reach "equilibrium," and you could have virtually full employment based on purchases of yachts, luxury cars, and the services of personal trainers and celebrity chefs. The returns from rising productivity can go, and indeed have been going, ever more to the rich - not to those who do the producing! A democratic society with a political interest in fairness might not like such an economy, but there is little economic evidence that this would not be possible.

But there are "equilibriums" and then there are sustainable equilibriums. The scenario Krugman describes is clearly unsustainable.

Solutions

Beyond this theoretical debate, what are real solutions? I can only think of three ways - plus the obvious fourth - to redistribute wealth on the scale that fairness requires.

1) More progressive taxation to pay for investment in health care, education, security, a clean environment, roads, bridges, green energy and transport. These are public goods. They constitute a substantial portion of social wealth. In addition, most intellectual property - for example, biomedical and technology innovations - are also inherently quasi-public goods - because they exist in people's heads or in a form that can be easily and cheaply copied. Public goods will be the principal sources of wealth in the society that successfully emerges from this depression with democracy intact.

2) Provide for national collective bargaining. For example: Mandate collective bargaining for everyone over two things: the employer's minimum wage, and employee safety. Skip the entire embattled union certification/election process. A workplace organization, or any section of it, can affiliate with a labor federation, or not. End of the "right-to-work" debate, since there is no longer any threat of "decertification." This is analogous to the approach Brazil's former president Lula took to reviving labor law in that country after the military dictatorship. It united organized and unorganized workers in a demand that did not rely on any trickle-down theory to promise gains to multitudes of workers in real time.

3) Enact new laws protecting and expanding the value of "human capital." Human capital represents the education, accumulated know-how, training and other "tools" that an employee brings to an enterprise. The good-paying jobs of the future will be jobs where the "human capital" investment is large. Hourly wage- or salary-based compensation cannot generally retrieve the full value of "human capital" inputs. In the high tech boom, employees with stock or other capital options were one of the few income pluses in the 1990s, offsetting the longstanding stagnation of U.S. working class income. Yet this kind of income is not regulated, and many workers were literally robbed and fleeced of promised wealth in spite of their Herculean efforts for their employers.

And the obvious fourth option:

4) Nationalize the "too big to fail" companies - then we won't have to worry about taxing them fairly.

Any one of these four is the equivalent to a social revolution. Time to think anew.

http://www.peoplesworld.org/can-we-cure-inequality-and-how/

Inequality and Unemployment in Europe: The American Cure

James K. Galbraith

University of Texas at Austin - Lyndon B. Johnson School of Public Affairs; Levy Economics Institute of Bard College

Pedro Conceicao

affiliation not provided to SSRN

Pedro Ferreira

Instituto Superior Técnico (IST)

May 1999

UTIP Working Paper No. 11

Abstract:

In this paper we show that inequality and unemployment are related positively across the European continent, within countries, between countries and through time. This contradicts the often-repeated view that unemployment in Europe is attributable to rigid wage structures, high minimum wages and generous social welfare systems. In fact, countries that possess the low inequality such systems produce experience less unemployment than those that do not. Moreover, large inter-country inequalities across Europe aggravate the continental unemployment problem. There is no paradox in low American unemployment. It stems in part from that country's continent-wide programs of redistribution, including the Social Security System, the Earned Income Tax Credit, the federal minimum wage, and a uniform regime of monetary policy geared toward full employment, all of which reduce inter-regional inequality and all of which we recommend for adoption by the European Union.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=228689

[Captjohn]

Don't think for a minute that the fact that the USSR, Cuba, Venezuela, North Korea and all other socialist experiments have been utter failures will deter Obama and his socialist/marxist agenda. He wants a "fairness" (socailist code word for redistribution of income) outcome regardless of the devestating effect it will have on the U.S. He should be viewed and worked with accordingly.

[R2D2]

Its socialisim Umbert . We dont want socialisim . It doesnt work. We want and will DIE for FREEDOM.

My dad was in italy said it was beauitful. He was there fightin for your freedom umbert. He won

Shame yall decided to give it away.

Have a great day.

Dude he is just trying to make a living. You see he is on the SOROS payroll. He is paid to keep it stured up. Just ignore the little communist. He will fagde away and we will never miss his sorry little commie butt.

[gymrat76541]

You would have better luck curing cancer!

Everyone will NEVER be equal in everyones eyes.

You are either too tall, short, ugly, beautiful, wrong color hair, too large, too small, etc...........................

Lets not talk about the wrong race or the wrong sex.

There is no answer or fix to make everyone equal. Stop trying and wasting your money and my tax dollars!

[yota691]

This is on the bottom of this page in small print Communist Party USA Young Communist League if your'e who you say you are and Proud of It, why isn't it on the Top of the page and in big letters like this Communist Party USA Young Communist League and I thought yellow was a Great representation...IMO

[Polecat85]

Can we cure lazy? Until then you will always have people with their hands out instead of finding a way, education or not.