One of my favorite inequality stories was the time Deaton's fellow Laureate, Paul Krugman, took a gig at City University of New York teaching one class per week on inequality for a cool $250,000 and for some reason The New Republic, described in the intro to 2020's "Is Zero Hedge a Russian Trojan Horse?":
Interesting on a few levels.
First off, the source, The New Republic (TNR) has for most of its 106
year history been to the left of the American Democrat Party and for
long periods has been to the left of your average Marxist.
For some reason I think of Bolsheviks bad-mouthing Mensheviks.
The second interesting point is this is reminiscent of the PropOrNot
website the Washington Post was promoting in 2016, more on this after
the jump.
The third point of interest is the story itself. From The New Republic, March 9....
TNR felt compelled to jump to Professor Krugman's defense:
FREDRIK PERSSON/AFP/Getty Images New York Times op-ed columnist and Princeton economics professor Paul Krugman will receive $250,000 in his first year teaching at the City University of New York,...
https://newrepublic.com › article › 117399 › krugmans-cuny-salary-doesnt-make-him-hypocrite-inequality
Anyhoo, I thought it was funny. Here's Professor Deaton at Prospect Magazine:
The inequality baked into contemporary US capitalism is warping America’s society and politics, explains Nobel laureate Angus Deaton. Joe Biden’s administration is bursting with inequality experts, but what chance do they really stand of fixing the problem?
In 2013, President Obama called inequality “the defining issue of our time,” and noted that “a few dozen individuals controlled as much wealth as the poorest half of humanity.” The speech was notable because inequality per se had not previously been a particularly salient issue for most Americans, at least since the Gilded Age with its robber barons and gigantic industrial trusts. Until relatively recently, inequality was less discussed in the US than in other countries. The standard measures of income and wealth inequality—the Gini index, the Theil index, the Atkinson index, the Palma index—all bear the names of non-Americans.
American interest, however, has certainly risen since Obama’s speech: Frenchman Thomas Piketty’s Capital in the 21st Century crossed the Atlantic to top the US Amazon charts the year after, and prominent homegrown American economists including Joseph Stiglitz and Paul Krugman have made great waves writing about the issue. The new interest is not restricted to the bookstore—Senator Bernie Sanders, who at one point last year looked like Donald Trump’s most likely Democrat challenger—says he does not believe that billionaires should exist. Dan Riffle, policy advisor to the fast-rising Congresswoman, Alexandria Ocasio-Cortez, claims that “every billionaire is a policy failure.” Now President-elect Biden has announced an economic team, due to take up post later this month, which is collectively steeped in the issue—Treasury Secretary Janet Yellen, and Council of Economic Advisors members, Cecilia Rouse, Jared Bernstein, and Heather Boushey. Inequality will soon have arrived not only as a central issue in American politics, but in American government.
And yet in one sense this development might seem surprising. One can point to the long decline in income and wealth inequality through the first three-quarters of the 20th century and speculate that it was this that then drew the sting from the issue among American politicians and voters. By contrast, the very recent surge in attention is perhaps more tied to the post-Reagan surge in inequality in the eighties and nineties than to the much more modest increases since 2008. At least until the pandemic, the usual measures of wealth and income inequality have not changed much in the US since the financial crisis. Since then, and up until 2020 and Covid-19, despite their spectacular earlier gains, and despite what many would suspect, the world’s super-rich—whose ranks include many Americans—have not in fact done particularly well. So why the new interest just now?
Behind the new interest
To economists, “inequality” is usually taken to refer to income or wealth, a gauge of how far the distribution departs from what it would look like if everyone had the same. And even if inequality in America was relatively flat for the decade before the virus, income and wealth inequalities in the US are among the largest in the world.
But to explain the new interest in inequality we do well to remember that there are also other kinds of inequality that might be as great or greater causes for concern. Racial inequality is perhaps the most obvious in the US. Black Americans do worse than whites on almost all outcomes, including wealth (the median white household has eight times as much wealth as the median black household) and income (almost twice as much), and extends into other aspects of life, such as education (black Americans are 10 percentage points less likely to have a BA degree than whites) and longevity (3.8 years lower), not to mention being grossly overrepresented in America’s prisons (33 per cent of the prison population compared with 12 per cent of the general population.) Covid-19 has taken a heavy and disproportionate toll on African American lives, as well as on Hispanic and Native American lives.
There are other important inequalities across groups, as opposed to individuals. Men and women are far from equal, and while the virus has killed more men, the sorts of service industries worst affected by lockdowns and changing consumer habits has hit female employment harder, even before consideration is given to the extra burden of childcare associated with the disruptions.
Education, particularly the divide between those with and without a college degree, has become more and more salient in the US in the last half century, with expanding gaps in earnings, in morbidity, and in mortality. The “public philosopher” Michael Sandel has noted that “the college degree is a condition of dignified work and of social esteem.” Anne Case and I have argued that those without the degree might as well wear a badge with the scarlet letters BA scored through by a diagonal line. This is another divide the pandemic will deepen. Contrast the difficulties and dangers currently facing millions of less-educated workers in shops, meat processing plants, building sites and the likes, where physical attendance is not an option, with the sorts of professional jobs that are easily carried on over the internet.
For some, all such inequalities may seem inherently unjust, while others disagree. Different people have very different ideas about what is or is not just. A more fruitful approach is to think about “democratic” or “relational” inequality. The philosopher Elizabeth Anderson has argued that we should pay more attention to equality defined as a state of affairs, not where everyone gets the same material wellbeing or at least gets what they deserve, but where “people stand in relations of equality to others.” The important thing is “equal respect and concern for all citizens,” something that need not require equality of wealth or income. This perspective shifts attention to how societies work, whether their rules, procedures and institutions treat everyone fairly, and whether everyone has equal ability to participate in society, to have their views be heard.
Relational inequality can help us think about what is wrong with income and wealth inequality, as well as racial and educational inequalities. Even if I have no objection to your being richer than I am, I can certainly object if you use your wealth to capture political leaders for your own benefit, to avoid paying taxes and to reduce the supply of public goods on which I depend. Louis Brandeis, a US Supreme Court justice between the wars argued that extreme inequality was incompatible with democracy—wealth inequality undermines democratic equality—and this kind of thought is surely behind much of the present concern. Relational equality might be difficult or impossible in the face of extreme inequality in income and wealth.
And this is, inescapably, going to be a political problem. For as the most celebrated early admirer of the American republic, Alexis de Tocqueville, wrote: “Democracy attaches all possible value to each man.” Slowly but ineluctably, unequal respect, unequal esteem, and unequal rewards in American society have come to be felt as a crisis of American democracy.
Tech-charged capitalism
Capital and labour are the two groups that divide up almost all of national income, and the distribution of income between them (and landowners)—the “functional” distribution of income—traditionally dominated discussions of inequality among “classical” political economists. In the first half of the early 20th century, many economists—including John Maynard Keynes—thought that the ratio of the “labour share” and “capital share” would hold steady. Subsequently, the crunching of first tax and then other forms of individual and household-level data saw discussion of profit and wage shares in the economy eclipsed by attention to the distribution across persons.
More recently, though, the functional distribution has returned with a vengeance—because the once-thought-to-be immutable ratio of profits to wages has turned against American workers. And because profits tend to accrue to relatively high-income people, this shift contributed to the widening of the distribution of personal income. During the pandemic, and largely because of it, the US stock market—which values profits, not wages—rose to record levels, a sign that it too expects higher future profits, especially in big tech, even if national income and wages fall. It has been hard to watch the market during the pandemic, when so many working people are suffering job losses, or risking their lives, or queueing at foodbanks. It is as if the market is celebrating their distress, or at the very least is indifferent to it.....
....MUCH MORE
