Notes on Economic Inequality

Soak the Rich: An Exchange on Capital, Debt and the Future (David Graeber, Thomas Piketty) — The Baffler, No 25, 2014

  • “I am not sure that we are on the eve of a collapse of the system, at least not from a purely economic viewpoint. A lot depends on political reactions and on the ability of the elites to persuade the rest of the population that the present situation is acceptable. If an effective apparatus of persuasion is in place, there is no reason why the system should not continue to exist as it is. I do not believe that strictly economic factors can precipitate its fall.”
  • “The apparatus of persuasion—or of repression, or a combination of the two, depending on what country you are considering—may allow the present situation to persist. A century ago, despite universal suffrage, the elites of the industrialized countries succeeded in preventing any progressive taxes. It took World War I to bring about a progressive income tax.”
  • “When the Occupy Wall Street movement was reproached for failing to frame concrete demands (even though it had in fact done so), I suggested—somewhat provocatively—that debts should be forgiven and the workday reduced to four hours. This would be beneficial from the ecological viewpoint and at the same time respond to our hypertrophied work time.”

 Wealth inequality in America: It’s worse than you think (Chris Matthews) — Fortune, October 31, 2014

  • “The advent of the income tax has made measuring income much easier for economists, but measuring wealth is not as easy. To solve the problem of not having detailed government records of wealth, Saez and Zucman developed a method of capitalizing income records to estimate wealth distribution.”

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The explosion in U.S. wealth inequality has been fuelled by stagnant wages, increasing debt, and a collapse in asset values for the middle classes.

 

  • Emmanuel Saez and Gabriel Zucman find that over the past three decades the share of household wealth owned by the top 0.1 percent has increased from 7 to 22 percent. They write that the growing indebtedness of most Americans through mortgage and credit card obligations, combined with the collapse in the value of their assets during the Great Recession, and stagnant real wages have led to the erosion of the wealth share of the bottom 90 percent of families. They warn that without policies to reduce the concentration of wealth, such as estate taxes, within two decades the gains in wealth democratization which occurred in the New Deal and after World War II may well be lost.

 

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Explosion in wealth inequality needs urgent plan of action, says Oxfam — The Guardian, October 29, 2014

  • With an endorsement from Andy Haldane, chief economist at the Bank of England, the report said a 1.5% billionaire wealth tax would raise $74bn a year – enough to put every child in school and provide health care in the world’s poorest countries.
  • Mark Goldring, Oxfam’s chief executive, said: “Inequality is one of the defining problems of our age. In a world where hundreds of millions of people are living without access to clean drinking water and without enough food to feed their families, a small elite have more money than they could spend in several lifetimes.

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