Tag: Inequality

Must-read: Jefferson Cowie and Nick Salvatore: “The Long Exception: Rethinking the Place of the New Deal in American History”

Posted on by Brad DeLong

Must-Read: From “The Defining Moment” to “The Long Exception”…

Jefferson Cowie and Nick Salvatore (2008): The Long Exception: Rethinking the Place of the New Deal in American History: “The period from Franklin Roosevelt to the end of the twentieth century… [shows] that the New Deal…

…was more of an historical aberration–a byproduct of the massive crisis of the Great Depression—than the linear triumph of the welfare state. The depth of the Depression undoubtedly forced the realignment of American politics and class relations for decades, but… there is more continuity in American politics between the periods before the New-Deal order and those after its decline than there is between the postwar era and the rest of American history…. While liberals of the seventies and eighties waited for a return to what they regarded as the normality of the New Deal order, they were actually living in the final days of what Paul Krugman later called the “interregnum between Gilded Ages”… [with respect to] race, religion, class, and individualism.

The melting away of North Atlantic social democracy

Posted on by Brad DeLong

Over at Talking Points Memo: The Melting Away of North Atlantic Social Democracy: Hotshot French economist Thomas Piketty, of the Paris School of Economics, looked at the major democracies with North Atlantic coastlines over the past couple of centuries. He saw five striking facts:

  • First, ownership of private wealth—with its power to command resources, dictate where and how people would work, and shape politics—was always highly concentrated.
  • Second, 150 years—six generations—ago, the ratio of a country’s total private wealth to its total annual income was about six.
  • Third, 50 years—two generations—ago, that capital-income ratio was about three.
  • Fourth, over the past two generations that capital-income ratio has been rising rapidly.
  • Fifth, the flow of income to the owner of the dollar capital did not rise when capital was relatively scarce, but plodded along at a typical net rate of profit of about 5% per year generation after generation.

He wondered what these facts predicted for the shape of the major North Atlantic economies in the 21st century. And so he wrote a big book, Capital in the Twenty-First Century **READ MOAR at Talking Points Memo

Version with annotations, references, and deleted scenes: https://fold.cm/read/delong/the-melting-away-of-north-atlantic-social-democracy-Fdf2BEBZ

Photo of Thomas Piketty in Sweden, June 30, 2014. (AP Photo/Janerik Henriksson)

Must-Read: Steven Greenhouse: A Safety Net for On-Demand Workers?

Posted on by Brad DeLong

Must-Read: Steve Greenhouse: A Safety Net for On-Demand Workers?: “For many Americans who care about how workers are treated…

…their biggest concern about the much-ballyhooed ‘on-demand’ economy is the way that Uber, Lyft, and other ‘gig economy’ companies have rushed to treat their workers as independent contractors. For employers, the advantages of this strategy are huge…. You don’t have to follow minimum wage, overtime, or employment discrimination laws, you don’t have to make employer contributions to Social Security, Medicare, or unemployment insurance, and your workers can’t unionize…. Alan Krueger… and Seth Harris… propose that Congress update the nation’s labor laws and create a third category of workers: independent workers… [who] should be covered by employment-discrimination laws, they should have the right to unionize and bargain collectively, and their employers should pay Social Security and Medicare taxes. But Krueger and Harris argue that these ‘gig economy’ workers shouldn’t be covered by minimum wage and overtime laws because, in their view, it’s so hard to keep track of exactly when they’re working….

Their paper left me with numerous questions: Krueger and Harris say that on-demand companies shouldn’t be required to provide workers’ compensation… [but] should be able to opt into workers’ comp as they wish…. Krueger and Harris say that without workers’ comp, workers can always sue under tort law, but that wouldn’t be a satisfactory alternative in many cases…. Krueger and Harris say that on-demand employers shouldn’t have to pay into the unemployment insurance system…. [But] many Uber drivers work 30 or more hours a week, and many have driven for that company for more than a year. So why shouldn’t they be covered by unemployment insurance, just like regular workers?… Krueger and Harris write that Lyft and Uber drivers are a ‘canonical example of independent workers.’ But the California and Oregon labor commissioners and many legal experts say that Uber and Lyft exercise such great control over their drivers that the drivers should be considered employees….

A study that Krueger did, done in conjunction with Uber’s chief of research, found that Uber drivers gross $17.50 an hour on average in 20 cities…. But after subtracting the cost of gasoline, insurance, auto payments, and auto maintenance, many drivers say they net just $10, $11, or $12 an hour. With Los Angeles having approved a $15-an-hour minimum wage and with many Uber drivers netting considerably less than that per hour, why exactly shouldn’t drivers be covered—and protected—by minimum wage laws, especially when Uber’s and Lyft’s apps can easily calculate how much time drivers spend carrying passengers and driving to pick up passengers?…

Must-Read: Ananya Roy: The Land Question

Posted on by Brad DeLong

Must-Read: Ananya Roy: The Land Question: “It is precisely land that is a problem…

…disputes over land are central to the politics of urban transformations around the world, from Kolkata to Detroit. Closely entangled with the land question is… ‘urban informality’: complex arrangements of tenure, ownership and shelter that cannot be easily converted into neat and tidy sales. Governing urban informality is thus tricky. On the one hand, such unsettled and unmapped land regimes present tremendous opportunity for powerful state action, notably evictions, dispossessions, and land grabs. On the other hand, such action can set in motion equally powerful social uprisings, or simply be confounded by the sheer inertia of urban informality. Let me return to the case of Kolkata to explain these points.

The land promised by one executive, the Chief Minister of West Bengal, to another, the Prime Minister of Singapore, is to be an industrial site. Billed as both ‘encroachment-free’ and ready ‘right now’ for the location of manufacturing industries, the site marks one of the many inter-Asian transactions through which a new era of modernisation, industrialisation, and urbanisation is being forged. It also marks some of the common problems that haunt such transnational alliances. For example, this particular plot of land, fantasized as empty of encroachers, and indeed of inhabitants, is one that has its share of squatters. Not surprisingly, these are labourers who migrated to the area from nearby villages to work on the various construction projects of the government. And despite the promise of readiness for global investment, there is little adequate infrastructure for industrialisation. To build such infrastructure requires not only substantial subsidies from the state but also the capacity to acquire land through eminent domain.

Thus, while the Chief Minister states ‘I can give the land right now if someone wants it,’ in the lower ranks of the bureaucracy, a district official says this about the widening of the one narrow road that serves the region: ‘We’ll need to acquire hundreds of acres of land as the road passes through many densely populated areas. Given the government’s hands-off land policy, a four-lane road to the Goaltore plot is a distant dream.’ The infrastructure problem, it turns out, is effectively a land problem…

Must-Read: Matt Bruenig: Why Education Does Not Fix Poverty

Posted on by Brad DeLong

Must-Read: Matt Bruenig: Why Education Does Not Fix Poverty: “Brookings and the American Enterprise Institute claim to have hatched a bipartisan consensus plan for reducing poverty…

…The consensus plan will focus on three things: education, marriage, and work…. Since 1991, we have done precisely what the education-focused poverty people said to do. Between 1991 and 2014, we steadily reduced the share of adults in the ‘less than high school’ and ‘high school’ bins and increased the share of adults in every other bin…. [But] the poverty rate for each educational bin went up over this time and overall poverty didn’t decline at all. In fact it went up…. As the adults migrated up the educational bins, they took the poverty into the higher educational bins with them…. There are a number reasons why aggregate education gains do not necessarily translate into aggregate poverty declines. I will discuss three…. First, handing out more high school and college diplomas doesn’t magically create more good-paying jobs…. Second, having more education does not necessarily increase people’s productive capacity…. Third, poverty is really about non-working people…. Old-age, disability, unemployment, having children do not go away just because you have a better degree…. To the extent that education does nothing to provide better income support for those who do find themselves in these vulnerable situations, its effect on overall poverty levels will always be weak, or, as with the US in the last 23 years, totally nonexistent…

Must-Read: Mark Thoma: Why It’s Tricky for Fed Officials to Talk Politically

Posted on by Brad DeLong

Must-Read: I would beg the highly-esteemed Mark Thoma to draw a distinction here between “inappropriate” and unwise. In my view, it is not at all inappropriate for Fed Chair Janet Yellen to express her concern about excessive inequality. Previous Fed Chairs, after all, have expressed their liking for inequality as an essential engine of economic growth over and over again over the past half century–with exactly zero critical snarking from the American Enterprise Institute for trespassing beyond the boundaries of their role.

But that it is not inappropriate for Janet Yellen to do so does not mean that it is wise. Mark’s argument is, I think, that given the current political situation it is unwise for Janet to further incite the ire of the nutboys in the way that even the mildest expression of concern about rising inequality will do.

That may or may not be true. I think it is not.

But I do not think that bears on my point that Michael R. Strain’s arguments that Janet Yellen’s speech on inequality was inappropriate are void, wrong, erroneous, inattentive to precedent, shoddy, expired, expired, gone to meet their maker, bereft of life, resting in peace, pushing up the daisies, kicked the bucket, shuffled off their mortal coil, run down the curtain, and joined the bleeding choir invisible:

Mark Thoma: Why It’s Tricky for Fed Officials to Talk Politically: “I think I disagree with Brad DeLong…

…Should speeches by Federal Reserve officials be limited to topics concerning monetary policy and financial stability, or should they be free to speak on any topic, no matter how politically charged it might be? It’s an important question as the Fed prepares to announce next week what’s looking like a significant change in its eight-year policy of zero-perecent interest rates.
Fed Chair Janet Yellen, for example, was sharply criticized for a speech last year highlighting what economists know about rising inequality and what might be done to overcome it.
This speech, which Yellen gave in October 2014, is still creating controversy. This week, it erupted again when UC Berkeley economist Brad DeLong defended Yellen against the charge that she’s a ‘partisan hack,’ a description in the headline of a Washington Post story by Michael Strain after Yellen’s speech…

Must-Read: Steve Roth: The Pernicious Prison of the Price Theory Paradigm

Posted on by Brad DeLong

Must-Read: Steve Roth (2014): The Pernicious Prison of the Price Theory Paradigm: “Steve Randy Waldman has utterly pre-empted the need for this post…

…cut to the core of the thing, in the opening line of his latest (collect the whole series!):

When economics tried to put itself on a scientific basis by recasting utility in strictly ordinal terms, it threatened to perfect itself to uselessness.

But I’ll try to help a little. What that means: In the mid 20th century, economists decided:

It’s impossible to measure absolute utility. We can’t say what the value to you is of a heart bypass for your mother, or the value of a college education for your kid, or the value of (you or someone else) buying a third or fourth Lamborghini…. Absolute utility — because we can’t measure it — will effectively not exist…. We not only aren’t able to think about absolute utility — actual human value — we are forbidden to do so. Barred.

And with this spectacular piece of rhetorical legerdemain, the discipline disavowed itself of any responsibility for the implications and effects of that rhetorical legerdemain. (It’s hard not to be impressed.)… The (inexorable) implications? Concentration and distribution of wealth and income not only don’t matter… they can’t matter. Steve explains it all far better, with circles and arrows and a paragraph on the back of each one explaining how each one is to be used as evidence against us. But I hope this little summation helps.

Inequality, technocracy, utility, and the Federal Reserve

Posted on by Brad DeLong

Storify: Inequality, Technocracy, Utility, and the Federal Reserve: A Short Twitter Dialogue on Various Matters of Moral Philosophy, or, IT’S OK FOR THE FED CHAIR TO TALK ABOUT INEQUALITY!!!!