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Yes. However, it lets people make assumptions when they don't see what it is correlated with.
correlated with population growth ...
Yes. However, it lets people make assumptions when they don't see what it is correlated with.
I don't get you. both graphs are in the same paper.
Seriously?
You don't get the significance?
Often, people assume other factors static unless they are shown otherwise.
theres no such thing as the american dream right?
Leading with one graph or another can be leading. I get that. Andrew Sullivan used a graph to emphasize something he wanted to talk about, or wanted his readers to discuss. But he didn't hide the source, indeed it was embedded in the blog. While he clearly wanted to lead the conversation somewhere, I think it overstates the case to say he meant to mislead his readers.
The conversation has to start somewhere. A blog or bulletin board post isn't an essay.
This is a partial view: it ignores the effect of the increasing value of urban/suburban land.
http://www.bloombergview.com/article...coming-by-landThere is growing concern that wealth inequality has skyrocketed, and that capital income accounts for a growing share of the economic pie. This was the theme of Thomas Piketty’s "Capital in the Twenty-First Century." But although we usually think of “capitalists” as they were defined by Karl Marx -- i.e., owners of corporations -- we forget that land also is a form of capital, which means landlords (and homeowners) are capitalists, too. Furthermore, according to Matt Rognlie, an economics Ph.D. student at the Massachusetts Ins ute of Technology, it is land, not corporate capital, that has been responsible for the lion’s share of the increase in capital's share of income.
This increase is happening worldwide. A great report by the Economist showed that the share of residential property value as a percentage of gross domestic product has skyrocketed in European countries since 1950.
This is bad for the economy. To understand why, we have to look at the reasons land has value in the first place. That’s not easy, because for most of human history, the value of land came mainly from the value of its natural productive power -- the fertility of the soil, or the minerals beneath the earth. But in the modern age, land has value for a very different reason, summed up by the real estate mantra: location, location, location.
In a city or suburb, land’s value comes from location. People want to be close to the companies where they work. Companies want to be close to the people they employ. Stores want to be close to the consumers they serve, and consumers want to be close to the stores. Companies in the same industry want to be close to one another, so they can keep an eye on rivals, absorb ideas and poach talent. And people want to be close to other people in general, so they and their children can have friends, enjoy culture and meet their romantic partners.
As our economies become more complex, there are more kinds of stores, more cultural activities and more industries to cluster together. Therefore, the value of location increases, which pushes up the value of land. It doesn’t matter how much empty land is out there -- who wants to live on the Kansas prairie? What matters for the value of modern land is the incentive to locate close to other people. And unless we all start telecommuting and living entirely online, location will become more and more valuable as our economy becomes more complex.
More stores, more industries and more culture are good things. But it’s a very bad thing that location has become so important to us, because location is an inherently scarce commodity. When it becomes more important, it also becomes more scarce, and when it becomes more scarce, it puts a brake on growth, just as if oil became more expensive. The Economist reports that this scarcity may have reduced U.S. GDP by more than 13 percent since the 1960s.
This is exacerbated by the fact that cities themselves are so remarkably productive. When businesses and people cluster densely together, productivity increases for all of them. But ironically, the bigger the productivity bonus that density provides, the bigger the loss from the scarcity of urban locations. In economics jargon, this is an "externality" that means that land ends up getting paid more than the value it produces.
There is a good case to be made that real estate prices will drop as the first world countries work through their demographic bubble. There will be more housing available than people able to buy it at current prices. I agree, though, that location is critical. Quality properties/locations will still command quality prices.
it's more expensive to be poor:
http://www.economist.com/news/united...ensive-be-poor
Financialization of the US economy is both a driver of inequality, and draining of capital from productive Real Economy to the speculative "financial wealth begets financial wealth" casino.
The Age of Finance Capital—and the Irrelevance of Mainstream Economics
A number of salient features distinguish the age of finance capital from earlier stages of capitalism, that is, stages when finance capital grew and/or circulated in tandem with industrial capital.
One such distinctive feature of the age of finance capital is that, freed from regulatory constraints, finance capital at this stage can and often does grow independent of industrial or productive capital. Prior to the rise of big finance and the dismantlement of regulatory constraints, the role of finance was considered to be largely greasing the wheels of the economy. Commercial banks consolidated people’s savings as bank deposits and funneled them as credit to manufacturing and commercial enterprises. Under these cir stances, where regulatory standards stipulated the types and quan ies of investments that commercial banks and other financial intermediaries could undertake, finance capital largely shadowed industrial capital; they grew or expanded more or less apace.
Not so in the age of finance capital where buying and selling of ownership les, instead of producing real values, has become the primary field of investment, and asset price inflation cons utes the main source of profit making and (parasitic) expansion. Not only has this slowed down the traditional flow of national savings (through the banking system) into productive investment in the real sector of the economy, it has, indeed, reversed that flow of funds into productive investment. Today, there is a net outflow of funds from the real into the financial sector.
“The financial sector, properly functioning, primarily recycles idle balances into additional capital formation. Years of financial deregulation fostered the creation of new instruments, ever more reliant on Ponzi-like methods of profit acquisition, by reversing this dynamic and sucking profits out of production to expand the financial sector at the expense of productive investment. . . . The relationship between the financial sector and the nonfinancial sector had effectively morphed from symbiotic to parasitic” [1].
A clear indication of this ominous trend of capital flight from the real to the financial sector is reflected in the glaring divergence between corporate profitability and real investment. Prior to 1980s, the two moved in tandem—both about 9% of GDP. Since then whereas corporate profits have increased to about 12% of GDP, real investment has declined to about 4% of GDP [2].
This obviously means that as larger and larger portions of corporate earnings are funneled out of the real sector into the financial sector (mostly through stock buybacks, dubious mergers and predatory takeovers), real investment has been dwindling accordingly.
A closely related hallmark of the age of finance capital is that the draining mechanism of the real by the financial sector is facilitated by monetary policy, which is crafted by the financial aristocracy’s proxies at the head of central banks and treasury departments. Every sign of a market downturn is met with generous injections of cheap money into the banking and other financial ins utions—ostensibly to stimulate production and employment by extending low-cost credit to real sector businesses/producers. In reality, however, the nearly interest-free funds thus bestowed upon the financial sector hardly leaks out to the real sector. Instead, it is invested in asset price inflation, or creation of market booms and busts. Each bust is “remedied,” once again, by injections of larger doses of public money and, thus, creation of a bigger bubble that, in turn, would entail higher social costs of bailing out the next bust—and so on.
It is therefore no exaggeration to argue that, in the age of finance capital, central banks have evolved as ins utions designed to subsidize the powerful financial interests with public money. Win-win gambling is, of course, an oxymoronic expression. Yet, that’s exactly what Wall Street banks and other financial ins utions are enjoying nowadays: they win as long as the financial bubbles they create continue expanding, but they also win when the bubbles burst; as they are then compensated for their losses with bail-out monies and all kinds of other shady rescue plans.
And who would ultimately pay for the blackmailing moneys thus bestowed upon the too-big-to-fail banks and other financial en ies?
The answer is, of course, the people—through extensive measures of austerity cuts. Under liberal capitalism of the compe ive industrial era, a long cycle of economic contraction would usually wipe out not only jobs and production, but also the debt burdens that were ac ulated during the expansionary cycle that preceded the cycle of contraction. Although such massive debt destructions were often painful, especially to giant financial speculators, they also occasioned much larger salutary effects of unburdening the society/economy of unsustainable debts and, thus, bringing about a fresh start, or a clean slate.
By contrast, in the age of finance capital debt overhead is artificially propped up through its monetization, or socialization. Indeed, due to the influence of powerful financial interests, national debt burden is often exacerbated by governments’ generous bailout plans of the bankrupt financial giants and the transfer or conversion of private to public debt.
It follows that, in the age of finance capital, monetary policy has turned into an instrument of redistribution of income and/or wealth from the bottom up.
It also follows that, in general, financial capitalism is more conducive to inequality than the earlier stages of capitalism, or even the pre-capitalist socioeconomic formations.
In the age of finance capital, however, profit making is largely divorced from real production and employment, as it comes mostly from speculative investment, or through parasitic extraction from the rest of the economy.
Not surprisingly, chronic stagnation and chronically high rates of unemployment signify another hallmark of the age of finance capital. As the financial sector systematically appropriates the major bulk of a society’s economic surplus, it thereby undermines that society’ productive capacity. At the heart of the persistent stagnation, as mentioned earlier, is an acute decline in productive investment. By steadily absorbing a society’s economic surplus and engaging in financial manipulations to augment their own personal wealth at the expense of the public, the financial elites deprive the society of expanding its productive capacity and providing employment and income for its citizens. The result is protracted economic sluggishness, chronically high rates of unemployment, steadily declining standards of living, and growing poverty and inequality.
http://www.counterpunch.org/2015/09/...eam-economics/
The Repugs/VRWC/1% will block all attempts to remedy the above, eg, if a President Bernard Sanders and his Congressional allies proposed remedies, they'd be killed by the Repugs, who have for years don't even attempt to hide that they work for BigCorp/1%/VRWC and absolutely not For The People.
iow, America is ed and un able. Marx was right. Give capitalism enough rope, and it will hang itself.
Robert Reich: America's Immoral Economy
The social contract has become entirely one-sided.
An economy depends fundamentally on public morality; some shared standards about what sorts of activities are impermissible because they so fundamentally violate trust that they threaten to undermine the social fabric.
It is ironic that at a time the Republican presidential candidates and state legislators are furiously focusing on private morality – what people do in their bedrooms, contraception, abortion, gay marriage – we are experiencing a far more significant crisis in public morality.
We’ve witnessed over the last two decades in the United States a steady decline in the willingness of people in leading positions in the private sector – on Wall Street and in large corporations especially – to maintain minimum standards of public morality. They seek the highest profits and highest compensation for themselves regardless of social consequences.
CEOs of large corporations now earn 300 times the wages of average workers. Wall Street moguls take home hundreds of millions, or more. Both groups have rigged the economic game to their benefit while pushing downward the wages of average working people.
By contrast, in the first three decades after World War II – partly because America went through that terrible war and, before that, the Great Depression – there was a sense in the business community and on Wall Street of some degree of accountability to the nation.
It wasn’t talked about as social responsibility, because it was assumed to be a bedrock of how people with great economic power should behave.
CEOs did not earn more than 40 times what the typical worker earned. Profitable firms did not lay off large numbers of workers. Consumers, workers, and the community were all considered stakeholders of almost equal en lement. The marginal income tax on the highest income earners in the 1950s was 91%. Even the effective rate, after all deductions and tax credits, was still well above 50%.
Around about the late 1970s and early 1980s, all of this changed dramatically.
The change began on Wall Street. Wall Street convinced the Reagan administration, and subsequent administrations and congresses, to repeal regulations that were put in place after the crash of 1929 – particularly during the Roosevelt administration – to prevent a repeat of the excesses of the 1920s.
As a result of that move towards deregulation, we saw a steady decline in standards – a race to the bottom – on Wall Street and then in executive suites. In the 1980s we had junk bond scandals combined with insider trading. In the 1990s we had the beginnings of a speculative binge culminating in the dotcom bubble. Sad to say, under the Clinton administration the Glass-Steagall Act – that had been part of the banking act of 1933, separating investment banking from commercial banking – was repealed.
In 2001 and 2002 we had Enron and the corporate looting scandals. Not only did this reveal the dark side of executive behaviour among some of the most admired companies in America – Enron had been listed among the nation’s most respected companies before that time – but also the complicity of Wall Street. Wall Street traders were actively involved in the Enron travesty. And then, of course, we had all of the excesses leading up to the crash of 2008.
Where has the moral center of American capitalism disappeared? Wall Street is back to its same old tricks. Greg Smith, a vice-president of Goldman Sachs, has accused the firm of putting profits before clients. Almost every other Wall Street firm is doing precisely the same thing and they’ve been doing it for years.
The Dodd-Frank bill was an attempt to rein in Wall Street, but Wall Street lobbyists have almost eviscerated that act and have been mercilessly attacking the regulations issued. Republicans have not even appropriated sufficient money to enforce the shards of the act that remain.
The Glass-Steagall Act must be resurrected. There has to be a limit on the size of big banks. The current big banks have to be broken up using anti-trust laws, as we broke up the oil cartels in the early years of the 20th century.
We’ve got to put limits on executive pay and have a much more progressive income tax so that people who are earning tens if not hundreds of millions of dollars a year are paying at a rate that they paid before 1981, which is at least 70% at the highest marginal level.
We also need to get big money out of politics.
These changes can’t come about unless we have campaign finance reform that provides public financing in general elections and a cons utional amendment that reverses the grotesque decision of the Supreme Court at the start of 2010, in a case called “Citizens United versus the Federal Election Commission.”
None of this is possible without an upsurge in the public at large – a movement that rescues our democracy and takes back our economy. One can’t be done without the other. Our economy and democracy are intertwined. Much the same challenge exists in Europe and Japan and elsewhere around the world, where systems profess to combine capitalism and democracy.
Massive inequality is incompatible with robust democracy.
Today, in the United States, the top 1% is taking home more than 20% of total income and owns at least 38% of total wealth. The richest 400 people in America have more wealth than the bottom 150 million Americans put together.
As we’ve already seen in this Republican primary election, a handful of extraordinarily wealthy people can virtually control the election result – not entirely, but have a huge impact. That’s not a democracy. As the great American jurist and Supreme Court associate justice Louis Brandeis once said: “We can have huge wealth in the hands of a relatively few people or we can have a democracy. But we can’t have both.”
http://www.alternet.org/media/robert...mmoral-economy
iow, America is ed and un able.
according to LSE prof Charles Goodhart, a shrinking pool of labor has momentous implications for inequality:
http://www.telegraph.co.uk/finance/c...f-workers.htmlWorkers of the world are about to get their revenge. Owners of capital will have to make do with a shrinking slice of the cake.
The powerful social forces that have flooded the global economy with abundant labour for the past four decades years are reversing suddenly, spelling the end of the deflationary super-cycle and the era of zero interest rates.
"We are at a sharp inflexion point," says Charles Goodhart, a professor at the London School of Economics and a former top official at the Bank of England.
As cheap labour dries up and savings fall, real interest rates will climb from sub-zero levels back to their historic norm of 2.75pc to 3pc, or even higher.
The implications are ominous for long-term US Treasuries, Gilts or Bunds. The whole structure of the global bond market is a based on false anthropology.
Prof Goodhart says the coming era of labour scarcity will shift the balance of power from employers to workers, pushing up wages. It will roll back the corrosive inequality that has built up within countries across the globe.
What in reality happened is that the twin effects of plummeting birth rates and longer life spans from 1970 onwards led to a demographic "sweet spot", a one-off episode that temporarily distorted labour economics.
Prof Goodhart and Manoj Pradhan argue in a paper for Morgan Stanley that this was made even sweeter by the collapse of the Soviet Union and China's spectacular entry into the global trading system.
The working age cohort was 685m in the developed world in 1990. China and eastern Europe added a further 820m, more than doubling the work pool of the globalised market in the blink of an eye.
"It was the biggest 'positive labour shock' the world has ever seen. It is what led to 25 years of wage stagnation," said Prof Goodhart, speaking at a forum held by Lombard Street Research.
We all know what happened. Multinationals seized on the world's reserve army of cheap leader. Those American companies that did not relocate plant to China itself were able play off Chinese wages against US workers at home, exploiting "labour arbitrage". US corporate profits after tax are now 10pc of GDP, twice their historic average and a post-war high.
Professor Goodhart makes large assumptions. He doubts that robots will displace workers fast enough to offset the labour shortage, or that greying nations are culturally able to absorb enough immigrants to plug the jobs gap, or that India and Africa have the infrastructure to repeat the "China effect".
The world has never faced an ageing epidemic before so we are in uncharted waters. What is clear is that the near vertical take-off of the dependency ratio is about to shatter all our economic assumptions.
The last time Europe's serfs suddenly found themselves in huge demand was after the Black Death in the mid-14th century. They say it ended feudalism.
Morgan Stanley and Lombard St Research fail to mention VRWC (ongoing) union busting which destroyed "working class salary leaders" that lifted all salary earners?
No mention of BigCorp's relentless push for destructive globalization, like NAFTA, to pit US workers against Asian sweatshop workers, to allow subsidized US products like corn to destroy subsistence farmers in MX?
Claiming demographics as the culprit of course hides the culpability of the BigCorp's War on Employees.
broad demographic trends, trade policy and private greed exist at the same time. all have explanatory value.
boiling a complex world down to single explanations and ideological soundbites misrepresents reality.
does Goodhart, etc even mention BigCorp's VERY ACTIVE ROLE in screwing employees?
any explanation why US household income has been essentially stagnant for 35+ years?
any explanation why 100s of BigCorps have spent more on stock buybacks (pushing up board's and mgmt's stock holdings) and dividends rather than investments and employee compensation?
if the supply of labor is shrinking, does it become more expensive or not?
which population charts are these guys reading?
the additional 3B+ people in the next 35 years will just sit around, not working, refusing to work?
Somebody has more than I do, it's not fair!
you're so trite.
you might want to catch up with the conversation. too much inequality is bad for economies and can also cause social instability.
I see first hand how companies take advantage of poor people.
Aside from that, here is another cost of being poor:
Sure, concern about poverty is all about jealousy, why didn't the eggheads figure that out?
Some peoples ignorance boggles.
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