Tag Archives: inequality

what would reparations for slavery actually look like?

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This New York Times article attempts to answer the question, but left me a little confused. It seems that many serious studies go back to the idea of “40 acres and a mule” promised to freed slaves by Abraham Lincoln. That promise was never honored. There are several estimates of what that could mean today. But see if you can make sense of this statement: ” He used the current average price of agricultural land and figured that 40 acres of farmland and buildings would amount to roughly $123,000. If all of the four million slaves counted in the 1860 census had been able to take advantage of that offer, it would have totaled more than $486 billion today — or about $16,200 for each descendant of slaves.” There are also ideas for “longer-term investments in education, housing and businesses that build up wealth”.

Here are a few facts the article points out. First, the net worth of the average black household is only about a tenth the net worth of the average white household. I knew there was a gap, but the size of the gap is shocking to me. Second, the United States has paid reparations to descendants of citizens held in Japanese-American internment camps.

Personally, I support reparations in principle, although I think native Americans and anyone born into poverty through no fault of their own suffers just as much as an African American in a similar economic circumstance. One idea would be to pilot social programs like universal health care, child care, and free college initial for African Americans and Native Americans, and then expand them to the general population as they are fine tuned and shown to be successful.

Joseph Stiglitz’s Economic Platform

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Joseph Stiglitz has a new book on what he thinks an evidence-based progressive economic platform should look like. I admit, I haven’t read the book, but I have read this Axios summary of the book. And here is my summary of that summary:

  • “the government should spend as much money as it takes to bring the economy to full employment.” Nicely put.
  • strong antitrust action, including against social media companies
  • a federal job guarantee, but no universal basic income or explicitly race-based reparations
  • the ability to opt in the Medicare
  • (optional) mortgages provided by the government (well, don’t we have something close to this already? I guess it’s just that private banks get their cut before they hand it over to an “implicitly” government-backed lender. I guess you could cut out the middleman.
  • Higher education funded by a progressive tax on post-graduation earnings: “Graduates earning more than $30,000 might pay 1% of their income toward repaying their student loans; those on seven-figure salaries might pay 4%. After 25 years, the loans are forgiven.” He doesn’t specify this has to be public schools only, although it seems to me this would blur the distinction. And if this federal program existed, is it possible states would reduce or end their funding for state schools and blur the distinction even more?

This all sounds good to me. Add some serious research spending and it just might work. The jobs guarantee might work, but would have to be coupled with a stronger disability, mental health and substance addiction safety net than we have now.

Robert Skidelski

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Robert Skidelski reminds us that, if a critical mass of people is ever going to enjoy the good life, at least two things have to happen. First, the wealth we are creating has to be shared and not just horded by an elite few. And second, we have to learn to distinguish what we need from what we want, and put some limits on the latter rather than let advertisers and other brainwashers always convince us that we want more and more.

There is little echo in this narrative of the older view that machines offer emancipation from work, opening up a vista of active leisure – a theme going back to the ancient Greeks. Aristotle envisaged a future in which “mechanical slaves” did the work of actual slaves, leaving citizens free for higher pursuits. John Stuart Mill, Karl Marx, and John Maynard Keynes comforted their readers with the thought that capitalism, by generating the income and wealth needed to abolish poverty, would abolish itself, freeing mankind, as Keynes put it, to live “wisely and agreeably and well.”

Likewise, in his essay “The Soul of Man Under Socialism,” Oscar Wilde claimed that with machinery doing all the “ugly, horrible, uninteresting work,” humans will have “delightful leisure in which to devise wonderful and marvelous things for their own joy and the joy of everyone else.” And Bertrand Russell extolled the benefitsof extending leisure from an aristocracy to the whole population…

But the concept of growing abundance, articulated by Keynes and others, has been over-ridden by economists’ commitment to inherent scarcity. People’s wants, they say, are insatiable, so they will never have enough. Supply will always lag behind demand, mandating continuous improvements in efficiency and technology. This will be true even if there is enough to feed, clothe, and house the whole world. Poised between the profusion of their wants and the paucity of their means, humans have no option but to continue to “work for hire” in whatever jobs the market provides. So the day of abundance, when they can choose between work and leisure, will never arrive. They must “race with the machines” forever and ever.

February 2019 in Review

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Most frightening and/or depressing story:

Most hopeful story:

  • Here is the boringly simple western European formula for social and economic success: “public health care, nearly free university education, stronger progressive taxation, higher minimum wages, and inclusion of trade unions in corporate decision-making.” There’s even a glimmer of hope that U.S. politicians could manage to put some of these ideas into action. Seriously, I’m trying hard not to be cynical.

Most interesting story, that was not particularly frightening or hopeful, or perhaps was a mixture of both:

  • We could theoretically create a race of humans with Einstein-level intelligence using in-vitro fertilization techniques available today. They might use their intelligence to create even smarter artificial intelligence which would quickly render them (not to mention, any ordinary average intelligence humans) obsolete.



where academic economics is headed

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Writing in Boston Review, Harvard Professor Dani Rodrik and others talk about how public opinion has turned against the economics profession to some extent over the last decade or so, and how academic economists are trying to engage with the issues of the day, including inequality, technological change and climate change.

  • economic history
  • behavioral economics
  • the study of culture (hmm, not sure if economists first thought of this one…)
  • wealth concentration
  • costs of climate change, and setting an appropriate carbon price
  • “concentration of important markets” (maybe this means concentration of a few firms within a given market?)
  • working class income stagnation
  • social mobility
  • empirical data analysis to test and confirm theory
  • analysis and study of institutions
  • appropriate allocation of property rights, including “intellectual property”
  • innovation, technological change, and their effects on growth and labor markets
  • money, power, and politics

They list a few “economic universals” which they think will never change: “market-based incentives, clear property rights, contract enforcement, macroeconomic stability, and prudential regulation”. Traditional topics that will probably always be studied include labor, credit, and insurance markets; tax, fiscal and monetary policy; international trade; recessions and financial crises; public goods and social insurance programs. I had to look up prudential regulation, which is basically capital requirements and limits on risk in the banking sector.

socialism, capitalism, and inequality

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This article on History News Network sums it up pretty well. Socialism doesn’t work well when it means an authoritarian government controlling all aspects of the economy in the name of “the people” (e.g., the Soviet Union). Capitalism works well for an elite few but does not work well for the majority when it allows private wealth to hijack the political process (e.g., the United States, especially in recent decades).

There is a formula that works pretty well. It’s almost boringly simple and yet seems depressingly out of reach for the U.S. as long as wealthy individuals and industries are able to buy elections and write the nation’s laws to continue stacking the deck in their favor, while using our free speech protections to wage an effective propaganda war so that the public actually supports this.

It’s a common mistake of both left and right to talk about capitalism and socialism as if there were only two choices. One-party socialist systems in less developed countries have not worked well over the past century. Capitalism as practiced in the United States and many other nations has mainly benefitted those who already are wealthy. The nations in which all citizens gain from economic growth have combined elements of market economies, private ownership, and political policies that mitigate inequality. In western Europe, public health care, nearly free university education, stronger progressive taxation, higher minimum wages, and inclusion of trade unions in corporate decision-making result in much lower inequality and much happier populations.

fair vs. unfair inequality

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This interesting article in Vox talks about academic ideas on how to distinguish and measure a difference between fair and unfair inequality. The premise is that there is no moral justification for leaving anyone below the poverty line, even if they are there due to bad choices of their own making. But once out of poverty, there is a need for incentives for people to make effort, make good choices and take the kind of good risks that sometimes pay off for society. There is also a difference between people who are less well off because of bad luck (often the luck of who their parents are) and people who are less well off because they have made less effort or bad choices. Of course, people who are better off because of luck or breeding will tend to rationalize their success relative to others as being due to superior effort and good choices, when in fact they may not be the case. So having an objective way to measure this is an interesting idea. It suggests you could have policies that kick in automatically when some measure of “unfair inequality” gets to a certain level. I don’t quite understand the measure itself, but this is a blog post referring to an academic paper, and I didn’t dig into the academic paper itself.

Giants: The Global Power Elite

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This is a new book from Project Censored (or at least that’s where I became aware of it). I’m not sure whether I agree with the politics 100%, but numbers are numbers and these are a bit shocking.

As the number of men with as much wealth as half the world fell from sixty-two to just eight between January 2016 and January 2017, according to Oxfam International, fewer than 200 super-connected asset managers at only 17 asset management firms—each with well over a trillion dollars in assets under management–now represent the financial core of the world’s transnational capitalist class. Members of the global power elite are the management–the facilitors–of world capitalism, the firewall protecting the capital investment, growth, and debt collection that keeps the status quo from changing. Each chapter in Giants identifies by name the members of this international club of multi-millionaires, their 17 global financial companies—and including NGOs such as the Group of Thirty and the Trilateral Commission—and their transnational military protectors, so the reader, for the first time anywhere, can identify who consitutes this network of influence, where the wealth is concentrated, how it suppresses social movements, and how it can be redistributed for maximum systemic change.

“delusions of merit”

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This long article describes how people who have made it tend to have have “delusions of merit“. In other words, they believe they have earned their place in society through effort or self-discipline, that those less fortunate have not made the effort or do not have the self-discipline, and therefore they feel no moral obligation to help those beneath them. The problem is, we are not talking about a vast middle class refusing to help a small underclass here. We are talking about a small minority failing to feel compassion for the vast majority of fellow people.