Tag Archives: inequality

ask not what Bernie Sanders could have done for you…

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Warning: political post follows! I’m still thinking about why the continuing Black Lives Matter demonstrations are bothering me a little bit. This Ross Douthat post (the New York Times token conservative op-ed guy) has helped me crystallize it a little bit. Police violence is an important but narrow issue. Renaming streets and tearing down statues is justified in some cases but doesn’t do much to address systemic problems. Maybe the movement will expand to encompass larger issues like violence of all types, mass incarceration, discrimination and inequality afflicting black people. All good, but only a slice of the much larger problems affecting our country and planet.

Many of the people demonstrating in the streets voted overwhelmingly against the candidate who would have done the most on these issues. The article is called “The Second Defeat of Bernie Sanders”. The way I look at it, Bernie Sanders didn’t fail, we all failed to support the candidate who could have brought about real change for all the hard working people of this country, black people included. The “socialism” Bernie stood for was to take just a little of our country’s enormous wealth and use it to provide the benefits that would make ordinary people’s lives better, and that most other wealthy and even functional-but-not-so-wealthy countries in the world are providing. Health care, education, child care, and retirement for a start. If we ever decide to pay reparations for slavery, it is likely to look…something like this. Bernie would have fought to provide these benefits to the descendants of enslaved African people, and to everyone else who needs them. Big business and wealthy individuals would have fought back, tooth and nail. And Bernie would have maybe led a Congress that would have fought back by enshrining meaningful anti-corruption provisions in our nation’s Constitution. He would have led us in doing our nation’s fair share (at least) to address the climate crisis and accelerating ecological collapse. Maybe. Most likely, he would have made real progress on one or two of these issues in our messy real world political system, then tried to lay the ground work for others to continue the fight. But that is more than the next Joe B. Democrat in line is likely to do. Prove me wrong Joe!

June 2020 in Review

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In current events, the coronavirus crisis in the U.S. is spinning out of control as I write this in early July. I made a list of trackers and simulation tools that I have looked at. Asian countries, even developing countries, pretty much have it under control, Europe is getting it under control, and the U.S. and a few other countries are melting down. Some voices are very pessimistic on the U.S. economy’s chances to come back. So of course I’m thinking about that, but I don’t have all that many novel or brilliant ideas on it so I’m choosing to write about other things below. Most frightening and/or depressing story:
  • The UN just seems to be declining into irrelevancy. I have a few ideas: (1) Add Japan, Germany, India, Brazil, and Indonesia to the Security Council, (2) transform part of the UN into something like a corporate risk management board, but focused on the issues that cause the most suffering and existential risk globally, and (3) have the General Assembly focus on writing model legislation that can be debated and adopted by national legislatures around the world.
Most hopeful story:
  • Like many people, I was terrified that the massive street demonstrations that broke out in June would repeat the tragedy of the 1918 Philadelphia war bond parade, which accelerated the spread of the flu pandemic that year. Not only does it appear that was not the case, it is now a source of great hope that Covid-19 just does not spread that easily outdoors. I hope the protests lead to some meaningful progress for our country. Meaningful progress to me would mean an end to the “war on drugs”, which I believe is the immediate root cause of much of the violence at issue in these protests, and working on the “long-term project of providing cradle-to-grave (at least cradle-to-retirement) childcare, education, and job training to people so they have the ability to earn a living, and providing generous unemployment and disability benefits to all citizens if they can’t earn a living through no fault of their own.”
Most interesting story, that was not particularly frightening or hopeful, or perhaps was a mixture of both:
  • Here’s a recipe for planting soil using reclaimed urban construction waste: 20% “excavated deep horizons” (in layman’s terms, I think this is just dirt from construction sites), 70% crushed concrete, and 10% compost

socialism by the numbers

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We can argue about the ideology of “socialism” vs. “capitalism”, often without even clearly defining these terms. It’s harder to argue with an avalanche of clearly presented evidence. This article from Current Affairs lays out the numbers showing the United States gradually slipping behind it’s developed country peer group in all areas. Consistently, the Scandinavian and Northern European countries that combine high productivity with policies to redistribute some of the wealth do the best. Our Anglo-American cousins the UK, Canada and Australia tend to do a little better than the U.S. but have still fallen behind the leaders of the pack.

The U.S. does well on measures of average income and wealth, but very poorly on measures of median income and wealth. We do poorly on measures of free time, infant and maternal mortality, life satisfaction, and innovation. I’m sure you can argue about how some of these indicators are defined and measured, but the overall trend is clear – we are creating financial wealth, but not sharing it and not creating satisfying or healthy lives for the majority, and we are continuing to slip behind our peers.

more on fully automated luxury communism

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Here is the Amazon review of the actual book:

In the twenty-first century, new technologies should liberate us from work. Automation, rather than undermining an economy built on full employment, is instead the path to a world of liberty, luxury and happiness—for everyone. Technological advance will reduce the value of commodities—food, healthcare and housing—towards zero.

Improvements in renewable energies will make fossil fuels a thing of the past. Asteroids will be mined for essential minerals. Genetic editing and synthetic biology will prolong life, virtually eliminate disease and provide meat without animals. New horizons beckon.

In Fully Automated Luxury Communism, Aaron Bastani conjures a vision of extraordinary hope, showing how we move to energy abundance, feed a world of 9 billion, overcome work, transcend the limits of biology, and establish meaningful freedom for everyone. Rather than a final destination, such a society merely heralds the real beginning of history.

Amazon

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.