Category Archives: Economics

A Scandal of Enormous Proportions — And It’s Funny, Too

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Along with Paul Krugman, Stephen Colbert and his writers are among the best analysts of current affairs working today. Here, the brilliant Mr. Colbert discusses a recent discovery: the principal academic evidence for cutting government spending during a serious economic downturn is baloney, and not the nourishing kind. The Harvard professors who issued the study didn’t share their data with other economists, ignored data that didn’t fit their hypothesis and made a crucial Excel coding error.

The mind reels. And workers and families worldwide suffer.

(For some reason, I couldn’t get the video to embed, so you’ll probably have to put up with a brief commercial.)

http://www.colbertnation.com/the-colbert-report-videos/425748/april-23-2013/austerity-s-spreadsheet-error?xrs=share_copy

Paul Krugman discusses the same issue with fewer laughs:

http://www.nytimes.com/2013/04/19/opinion/krugman-the-excel-depression.html?_r=0

What the 1% Want from Washington

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I don’t think I’ve ever heard of an opinion poll targeted at the rich. But two political science professors did a survey of people in the Chicago area with an average net worth of $14 million. Their research found that:

“The biggest concern of this top 1% of wealth-holders was curbing budget deficits and government spending. When surveyed, they ranked those things as priorities three times as often as they did unemployment — and far more often than any other issue…. They were also much less likely to favor raising taxes on high-income people, instead advocating that entitlement programs like Social Security and healthcare be cut to balance the budget.“

“The wealthy opposed — while most Americans favor — instituting a system of national health insurance, raising the minimum wage to above poverty levels, increasing the Earned Income Tax Credit and providing a ‘decent standard of living’ for the unemployed. They were also against the federal government helping with or providing jobs for those who cannot find private employment.”

Which explains why so many politicians talk about reducing the budget deficit instead of stimulating the economy and helping the unemployed and underemployed. And why so many politicians want to cut Social Security and never even think about expanding it.

http://www.latimes.com/news/opinion/commentary/la-oe-page-wealth-and-politics-20130322,0,3575694.story

$59 in 45 Years!

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In case there was any doubt about the growth of inequality in America, a new study based on IRS data shows that:

Corrected for inflation, the average annual income of the bottom 90% of workers in 2011 was $30,437. In 1966, the average was $30,378. That’s an increase of $59 in 45 years.

Meanwhile, the average income of the top 10% almost doubled, rising from $138,793 to $254,864, an increase of roughly $116,000, while the average income of the top 1% rose by $628,000. For the top 0.1%, the increase was $18 million!

More recently, since 2009, the top 1 percent received 81% of  the growth in income. The top 0.1% received more than 50% of the growth.

The wealthiest Americans are pulling away from the rest of us because income has shifted from labor to capital, and because of lower taxes on capital gains, dividends, estates, and other income that is especially important to people with a lot of money.

Policies that especially benefit people with high incomes could be changed (in theory). Yet, in the words of economist David Cay Johnston:

“It has become widely understood that we cannot balance our federal budget by raising taxes only on those at the top, because there is not enough income there, even if we taxed away everything the top makes. What is equally true is that we cannot increase tax revenue if the incomes of the vast majority keep falling [or remain stagnant]. That, however, has yet to become part of the debate on how to finance government.”

http://www.taxanalysts.com/www/features.nsf/Articles/C52956572546624F85257B1D004DE3FC?OpenDocument

The Forgotten Millions

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I’ve been intending to write something here about how America has become a low-wage nation compared to other developed countries. In the meantime, here’s a link to the latest column from the fairly indispensable Paul Krugman, in which he points out that unemployment is still a terrible problem and briefly explains what will happen if we start down the “fiscal slope” (it’s not really a cliff, since its effects will be gradual):

“The unemployment crisis goes on and on, even though we have both the knowledge and the means to solve it. It’s a vast tragedy — and it’s also an outrage.”

Throw in the issues of underemployment and low wages and the problem is even worse.

http://www.nytimes.com/2012/12/07/opinion/krugman-the-forgotten-millions.html?hp

Why Obama Now?

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I enthusiastically endorse the message and quality of this video written and directed by Lucas Grey, an animator for The Simpsons.

Except for the misspelling of “insurance” at 1:40:

Also available at http://whyobamanow.org/.