The League’s Inequality Symposium Starts Tomorrow
Tomorrow morning we will begin the League’s Inequality Symposium. It will go all day and beyond, until the conversation runs its course. A reminder to those that want to submit a post – it’s not too late. Feel free to email them to Erik, Mark or myself.
I probably won’t post anything, and so I am looking forward to sitting back and reading what the brain trust comes up with. But as a way to get juices flowing for readers, I thought I’d post this graph after the jump.
It will be interesting to see what folks say about inequality in both the symposium essays and commentary, because I find that data shown here deeply troubling in a of time of supposed widespread economic hardship troubling. And over the next few days, people far better qualified than I will either make me feel much better or much worse about such inequality.
As a reader of the League’s contributors and guest posters alike I am psyched to see how people choose to tackle these issues. You should be too. Tomorrow tweet your followers or post your FB friends and invite them to check it out, and then stick around to join the discussion. It should be great.
I’m still working on mine. Is there anything approaching a schedule? Or is it just “get it in before COB tomorrow night”?Report
No,we hope to be posting for days.Report
Whew!Report
Shout out to TVD and his mad proofing skills. Thanks, man.Report
Backatcha, Kelly—Ace choice of photo to kick off the series. Positively ace.Report
As far as I can tell the graph doesn’t correct for inflationReport
Yep, first thing I thought too.
I’d like to see it normalized to things like “average price for one gallon of gasoline” or “average percentage tax rate paid by citizens”, or maybe “percentage of wealth held by top ten percent of citizens”.Report
I’m very much looking forward to this.
Do we know who’s definitely in for a post on this one?Report
Buy-in to post is $50K.Report
Well, apparently lots of people here have $50k to throw away on vanity projects. Who knew the League’s clientele was so wealthy?
I don’t know any definites, but a list of those who’ve expressed interests includes (but is not necessarily limited to);
Roger
Jason Kuznicki
Mike Dwyer
Russell Saunders
Patrick Cahalan
Tim Kowal
James K
Snarky McSnarkSnark
Christopher Carr
Shawn Gude
Simon K
Mike W.
And others (and I beg all those others to please forgive me for not remembering that you expressed interest; I just went with those folks who either expressed interest in the invitation post or sent me an email. I know I bugged a few of you in other threads, and those are harder to dig up.)Report
Mine’s in second draft, already uploaded. Blaise expressed interest in providing editorial services, anybody else who wants to read it and offer suggestions on how to tighten up the monolith, feel free.
I will reciprocate if asked.Report
Second draft? I need to take a look, then. I’m still editing what I thought was the first… sigh.Report
I’m nearly finished with my post, I’ll probably put it up when I get home tomorrow, unless the posting volume has been too high, in which case I’ll hold it for a day or 2.Report
I’m noodling around with something on the dashboard at my site, and will transfer it over when (or, rather more accurately, if) I am happy with it.Report
Subject to time constraints, I’m hoping to weigh in. Emphasis on hoping.Report
We’re all hoping, too, Mark. Not to put too much pressure on you, but, well to put some pressure on you.Report
I hope to have mine finished tonight.
I’m not saying that I outsourced my essay to the Evil Jaybird portion of my brain, but we corresponded while I was putting together an outline.Report
I have an issue with your graph – absolute dollars is a terrible way of measuring profits. Profit is a return on capital, and should therefore be normalised by units of capital i.e. corporate assets. So a graph of return on assets or return on equity would be far more useful.Report
Ditto this. I remember a few years back when there was a big stink about one of the big oil companies (Exxon, I believe) making record profits at a time when gas prices were high. Critics gasped about how the company even boasted about it in it’s annual report. But they failed to distinguish between precise reporting and trying to impress investors. A closer look at the report showed that the record profits were because of record amounts of production, largely a result of having bought another oil company (effectively just adding the profits of two oil companies into one number), and its actual return on assets was quite modest; not bad, but not particularly impressive.Report
I recall some shill defending Carly Fiorina by saying that HP’s revenues doubled during her tenure. Yes,, it turns out that when you buy another company of roughly the same size (Compaq), your revenues will tend to double.Report
As opposed to her opponent Sen. Barbara Boxer, a rich ambulance chaser’s wife? You got nerve bringing Ms. Fiorina down, man. She made her way all on her own, and ended not nearly as shamefully as ex-Gov. Jon Corzine, who should be under investigation if not indictment for “misplacing” literally billions of other people’s money.
Feminist reality check. Carly Fiorina is a righteous babe.Report
Also, she’s never been convicted of murder or rape.Report
“Did she use her powerful connections to dodge a murder rap?”
“If she did, it’s a powerful indictment of the American system of justice, and goes a long way towards explaining why people have lost faith in it.”Report
But there are questions surrounding that topic. I mean, you’re absolutely right that she’s never been convicted. Is it because the case never make it to trial? Was there an out of court settlement we remain ignorant of? Was the California DA pressured into dropping criminal charges? I’ve even heard rumors (from unnamed sources) that the GOP bigwigs in Cali contacted Reagan to divinely intervene on her behalf.
I think it’s an open question whether Fiorina engaged in illegal activity back in the day. Certainly there is no conclusive evidence that she didn’t. And all the speculation points in the direction of a well orchestrated cover up.
Hey, I’m only asking questions here, ya know? {{ /tvd }}Report
Nobody has ever actually proved that she hasn’t been hiring the neighborhood teenagers to have sex while she watches. I mean, I’m not accusing her of anything, I’m just saying that nobody’s proved she hasn’t.Report
So you’re saying that profit margins are unremarkable because it’s corporate assets that have risen almost threefold as personal wealth plummets and personal income at best stagnates. Thanks, I feel so much better.Report
Corporate assets being higher just means some rich people are investing more and consuming less. Hell, the extra funding could even be coming from offshore or from pension funds. The size of corporate assets is not something to be worried about per se.Report
Not only is it not something to be worried about, but it’s something to be happy about. Another term for corporate assets is “capital stock,” and it’s what makes long-run economic growth possible.Report
bubububub riiiiiich peeeepoooooooole
(okay, I promise not to do this anywhere else in the inequality posts. Just this one time.)Report
Since this is a graph from the US Dept. of Commerce, is there any reason to think that the graph isn’t the sum total of all corporate profits? Ie, that we can discount mergers and acquisitions as being irrelevant, since those assets are already included in the mix?Report
I don’t see anything sinister here. If corporations could find ways to employ more people profitably, they would do so.
Here’s a chart showing corporate profits as a percentage of GDP. Some things to note:
1. The current profit level is high but not unprecedented.
2. Corporate profits rose in tandem with the unemployment rate during the ’70s. So that’s not unprecedented, either.
3. It’s common to see profits rising sharply following a recession. This makes sense, as firms cut unprofitable divisions and employees during the recession, making them more efficient and profitable when the recovery begins.
Also, corporate profits aren’t necessarily a great proxy for inequality. Sure, rich people invest in stocks, but they also invest in bonds. Personal interest income, which accounts for the lion’s share of personal investment income, is down in real terms over the last decade. The spike in corporate profits is not reflected in total personal investment income as a share of total personal income, which peaked in the late ’80s and is currently slightly below where it was in 2001 (Source: Table B-29 of the 2012 Economic Report of the President).
Extrapolations from short-term trends are unreliable. Given the magnitude of the disruption to the economy, it’s not surprising that it’s taking a while for things to shake out, but I think it’s premature at best to suppose that this state of affairs will be permanent.Report
By the way, there is one trend in personal income that has been increasing unabated for half a century: Government transfers as a percentage of total personal income, up from 6.3% in 1963 to 17.7% in 2011, increasing nearly monotonically. Corporate profits wax and wane, but welfare is always in season.Report
Well, duh. If people have more, then the government needs to take more, otherwise the inequality just gets worse.Report
That’s complete nonsense, Brandon. In the same time period:
In the 1960s, the top 1% took less than 7% of total US income.
In 2011, the top1% took 18% of total US income.
Corporate profits seem to wax and wax; “trickle down economics” was lies. What we have today is a result of the top 1% doing quite well while the rest, especially the bottom 50%, take all the damage of the recession. Wall Street bankers got bailouts, homeowners making $50k/year got eviction notices and pink slips. Inflation-adjusted wages for most remained stagnant since 1980, inflation-adjusted wages for the top 1% have skyrocketed even during the recession.
When you say “government transfers as a percentage of total personal income”, what you mean is the number of people who have nowhere else to turn. They’re desperately competing for jobs, knowing there’s a 5:1 unemployed:openings ratio in the job market. They’re finding that getting jobs means winding up being inadequately compensated, being shunted into “contract work” positions that pay 20% less than their previous careers and require them to pick up 100% of the tab for healthcare or insurance… if they can even get past all the roadblocks to acquiring insurance (remember, 20% of applicants are denied private insurance outright). If they do find a steady job, most likely it’s an “exempt” position where they’re expected to work 15-20 or more hours of unpaid overtime just to keep it, never use the vacation days they’re entitled to lest they be seen as “not at team player”, and show up to work sick to spread the disease around rather than recuperating at home and sparing everyone else the pain.
They’re “on the government dole” and being called all sorts of insulting names by members of TPoFYIGM. Called “lazy” and “stupid” and “worthless” because even when they put everything into finding work, the work’s just not there because of corporate raiders like Romney. If unemployment were lower, you’d have half the number of people on unemployment benefits and welfare benefits and a far lower percentage of “wealth transfer” as I’m sure you mean the term, but unemployment’s up. It’s called a recession, and the only people insulated this time were the top 1% who got the government bailouts as a form of “wealth transfer” from the taxpaying majority middle class into their greedy, scum-sucking hands.
Inequality getting worse is bad for society. It creates a sense of hopelessness and despair in more and more people. It tells people that their only way to get ahead is to either resort to crime or put all their faith in things like lottery tickets. For every story out there of someone who “pulled themselves up by their bootstraps, worked hard, and made a success of themselves” there are dozens of people who attempted to do so and were shot down by the incredibly tilted system we’re living in today.
And it creates anger. A lot of anger. Especially when the parasite top class, those who add no value to anything while skimming money as the middle men, are protected while everyone else suffers.Report
Image didn’t post for some reason. Here’s the link.Report
Corporate profits seem to wax and wax
I posted a chart showing that this is not the case.
When you say “government transfers as a percentage of total personal income”, what you mean is the number of people who have nowhere else to turn. They’re desperately competing for jobs, knowing there’s a 5:1 unemployed:openings ratio in the job market.
While this number is somewhat correlated with the state of the macroeconomy, there’s been a secular upward trend towards a bigger and bigger share of personal income coming from government social programs, even in good times.
TPoFYIGM
As I’ve pointed out numerous times, this is a baseless smear. The Democrats are proposing tax increases that would only affect a small minority of either party. Opposition to tax increases on those who make more than you isn’t FYIGM, it’s MYOB.
Especially when the parasite Jews, those who add no value to anything while skimming money as the middle men, are protected while everyone else suffers.
Whoops. I might have slightly misquoted you there. Left-wing rhetoric and antisemitic rhetoric look so similar that I get confused sometimes.Report
Especially when the parasite Jews, those who add no value to anything while skimming money as the middle men, are protected while everyone else suffers.
Whoops. I might have slightly misquoted you there.
If you’re not interested in honest discussion, go fish yourself. That just crossed such an ugly line that I shall never respond to your hate-filled, disgusting, worthless bigotry ever again.Report
I was calling you out for your hate-filled, disgusting, worthless bigotry. You’re the one who crossed that ugly line—I just pointed it out.Report
Brandon – That bit was way over the line. The only reason I’m letting it stand is because the rest of the comment was in-bounds. Otherwise, consider yourself warned.Report
Yes, Brandon: There are acceptable ways to scurrilously call people bigots, but that ain’t one of ’em.Report
I stand by that comment, but I’ll respect your request that I not do it again.Report
So there’s no confusion on this point, I was not accusing M.A. of antisemitism, merely pointing out the parallels between antisemitism and anti-rich bigotry.Report
Yes, it was a witticism gone awry but it’s useless to explain that there was a purpose behind it and it wasn’t just a gratuitous slur of the type you were mocking.
Your first mistake was responding atall. Live and learn.Report
Non-apology completely not accepted.
I made a valid point about the fact that Wall Street and a number of large companies got tax-funded bailouts and their CEOs and upper financial officers got taxpayer-funded bonuses out of that.
You responded by accusing me of antisemitism in an incredibly disgusting slur and not just that, you did it by “quoting” me and deliberately editing the quote. I fully believe you meant it as such. That was incredibly beyond the pale.Report
Please use constant dollars and a log scale. The situation is dramatic enough even when depicted correctly.Report
For this series, I will be playing the role of spokesman for the greedy robber barons. Or not. I know next to nothing about the finer points of economics, so I’m looking forward to this series mostly as an opportunity to get my economic knowledge up to next to next to nothing.Report
What if we all take an ethics-based approach, just for kicks?Report
A question for those that don’t see a problem with the above graph that shows record overall profits as wages fall and we look to cut back on human services: is this a purely philosophical stance, or is it a question of degrees?
In other words, is there a point we could get to where the vast majority of people’s wealth and wages decline far enough and the profits for owners/high-end investors grows high enough that your opinion changes? If so, what is that point – when do we know we’re approaching it?
If not, why is this a desirable model? Why should we vote for our own potential serfdom? Report
Why should we vote for our own potential serfdom?
A wiser man than I once said the greatest trick of the Republican Party is convincing a horde of rednecks that they’d better not allow taxes to rise for fear of getting a million dollars less when they hit the lottery jackpot.Report
This makes about as much sense to me as asking how bad the state of heterosexual marriage will have to get before I abandon my support for homosexual marriage. There’s just no causal link. Maybe you could outline your model of what you think is going on here, because I’m not seeing it.
Why should we vote for our own potential serfdom?
This is tinfoil-hat stuff. Serfdom didn’t come about because corporate profits were high—it came about because vassals had legal ownership rights over their serfs.Report
I think you may be bringing more into my question than I am intending. I am not assuming any links at all, causal or otherwise. My question is simply this:
If you believe that inequality is an inherently good thing, is that an absolute belief or do you really mean “inequality is good so long as we’re talking about it being between certain boundaries?”
Real wages have been declining for a while, while profits and wealth are increasing. My question for you isn’t if one causes the other or even if they are related, but rather: can we ever reach a point where those two points on the graph grow so far apart that artificially trying to move them in opposite directions makes sense to you?
Regardless of the causes, you might answer “no, it it is never OK to attempt to artificially manipulate those points” – and if that is indeed your answer, my follow up question is why should most people favor such a system, even to their own potential detriment?
If your answer is “not now, but at some point yes, you’d certainly have to step in,” my question is where does that point exists, and how do we know we’re approaching it?
I’m actually not advocating anything; I’m trying to get a handle on how much of this exists as academic theory in peoples heads that they might steer away from in certain circumstances, and how much of it is fixed dogma that people would not budge from regardless of circumstance.Report
I think that the nature and causes of inequality are more important than the magnitude. Fixation on the Gini index leads to ridiculous claims like:
Income inequality is more severe in the U.S. than it is in nearly all of West Africa, North Africa, Europe, and Asia. We’re on par with some of the world’s most troubled countries, and not far from the perpetual conflict zones of Latin American and Sub-Saharan Africa.
That’s nonsense, of course. Third-world inequality comes from the poor being very poor. American inequality comes from the rich being very rich. Inequality as such isn’t a problem—poverty is—and so it just doesn’t make sense to say that inequality in the US is more severe than it is in West Africa.
Attempts to lower inequality through progressive taxation and other forms of wealth redistribution can have the perverse effect of making poverty worse in the long run. When you take money from people with a high marginal propensity to save (i.e., most rich people) and transfer it to people with a high marginal propensity to consume (i.e., most poor people), you get less savings, which means less capital available to fuel long-run growth, which means more poverty twenty years out.
Again, there’s no reason to believe that what we’ve been seeing for the past few years is the new normal. We saw much worse during the Great Depression, and we recovered from that. The real concern is the drag the ever-expanding welfare state may have on the economy, as that truly is unprecedented.
Also, it’s worth noting that as inequality has gone up within most first-world countries, global inequality has been declining. I suspect that these two phenomena are related. Globalization allows people to get much richer than they have in the past. There’s just more money to be made when your market is the whole world rather than just your own country or region. Meanwhile, first-world unions are no longer able to extract rents on their proximity to holders of capital, so their wages haven’t grown as quickly. At the same time, this has opened up new opportunities to the global poor, causing a decline in global poverty and inequality.Report
I sent mine to Erik.Report