economy Markets

Something’s Gotta Give (Big-Picture Trends For The New Era)

As should be abundantly clear to anyone who took time over the weekend to read "Quarantinis", something's gotta give, so to speak. My own view on inequality in America is informed less by normative concerns about what's "right" or "just" or "moral", and more by practical questions about what is (or, in this case, isn't) sustainable. It is not, I have repeatedly argued, sustainable for five people to control so much wealth that their combined fortunes dwarf entire sectors of advanced economies. Again, it isn't a matter of morality and it's not a question of whether someone "deserves" the benefits that accrue from founding (and then building out) a company like Amazon or Google. It is simply a matter of feasibility. Read more: Quarantinis (And A Glimpse Into Our Not-So-Distant Future) Forget for a moment whether the poor and the middle-class will "rise up" -- never mind, for our purposes here, whether the proletariat is on the verge of a revolt. Rather, the point is that no social stratum will tolerate a scenario like that which will be our reality within a decade if something doesn't alter the current trajectory. There is no chance that the "traditional" business class (e.g., "r
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19 comments on “Something’s Gotta Give (Big-Picture Trends For The New Era)

  1. George says:

    H…….you speak social conscience here that I heard from my parents for 60 years at a time when the situation you describe was nowhere near as exaggerated as it has become currently…. They were displaced immigrants during WW2 from Social Aristocracy in an Eastern European Country..I was 5….and remember all too well…..
    As I see it the changes that contributed to these excesses are part sociological attitudes that have been altered by events in our lifetime as well as a Political system that manipulates all to the ever concentrated ranks of the super-advantaged.. The underclasses have done their share to fuel these inequalities by buying into the narrative that has been ever so skillfully presented to alter their perceptions and corrupt their leaders. It is not a conspiracy it is just smart people maneuvering unceasingly to their own advantage … IT IS THE WAY OF THE SPECIES….
    ‘The answer lies within ourselves not in our stars ‘ This is a great post by the way…….

  2. John Banjo says:

    “Rather, the point is that no social stratum will tolerate a scenario like that which will be our reality within a decade if something doesn’t alter the current trajectory.”

    the degree that the masses vote and potentially vote against their own interests is and will likely remain astounding. …see 2016

    “There is no chance that the “traditional” business class (e.g., “regular” CEOs, America’s ultra-rich “super-managers”, hedge fund titans, etc.) will tolerate a situation where they are rendered wholly irrelevant by a handful of people whose personal fortunes wax and wane by tens of billions of dollars every hour the stock market is open.” … you’re getting warmer…

    my prediction is the employment “recovery” will flatten if not reverse, and the market eventually breaches and blows through the 3/23/20 low, … then change will be mobilized.

    Great expose. Appreciated your comment, George, as well.

    • DoubleB says:

      “the degree that the masses vote and potentially vote against their own interests is and will likely remain astounding”

      Do they? Some people’s interest is just hating other people due to the color of their skin. I think that number is larger than most of us care to admit.

      The other possibility is that working class white people voting for Trump is actually very much in their economic interest. If you have limited skills, one way to maximize them is to mitigate the competition for jobs needing those skills. Eliminating illegal immigration and marginalizing people of color with similar skills sets is one way to do that. It’s not like the white working class flourished under the Clinton and Obama presidencies.

      • cdameworth says:

        To understand the decisioning to embrace leaders who clearly are not advocating the best interests of the society as a whole requires rejecting logic and understanding about what is driving thought and behavior patterns. The commodization of “news” has enabled people in the US to find their preffered echo chambers and develop an inherent trust in the talking head presenting the information they desire to hear. This loyalty to one or more TV personalities disables logic and enables subjugation for millions of viewers daily.

        The end result? Corprocrats are largely the chosen candidates, not by accident, but by design. When Sanders and Warren propose society changing policies to invoke wealth redistribution and medicare/education for all, the echo chambers call them too expensive and then ignore/suppress coverage of those candidates. The masses blindly believing their loyal daily talking head would never mislead them, follow that lead at the polls.

        This despite several multi-Trillion dollar bailout packages for the very corporations where the wealth concentration is occurring. When the fallout of this nation is over, I’d love to read a psycho-analysis of the mental exploitation of the richest society in US history, I’m sure it’ll be quite fascinating.

  3. Jeff Klein says:

    Knowing of my background on Wall Street, I have, for months now, been hit with questions by friends as to the “disconnect” between the financial pain they are feeling versus the “stellar” returns on Wall Street. These are not poor people. Many are quite wealthy (although they consider themselves middle class) . They are not “angry”, not yet. But they are vocal. And unhappy. If this class of Americans are upset, then what of the masses of Americans not quite as financially secure? And what would happen if the Fed moves to directly support the equities market? I doubt it would go over well in middle America…

  4. kilo says:

    Aristotle, in his work Politics, argued for a general welfare system as necessary for any functioning society. From what I recall, his argument wasn’t one of morality either. Instead, he proposed it to maintain social order so that the masses wouldn’t revolt and kill the landowners.

    Along the same line of thought, Mark Blythe, in his characteristically sarcastic manner, issued a direct warning to the elites of America: “The Hamptons are not a defensible position.”

  5. DoubleB says:

    I do agree with H that some change will come when extremely wealthy people find themselves completely marginalized by the money of the Big Tech CEOs. One of these guys will overreach and find himself in a heap of trouble with regulators, Congress and the American people.

    I don’t buy that there’s going to be some revolution of the American “peasantry.” I’m happy to be wrong on this, but the working class in the this country rarely go after the wealthy–not when more convenient scapegoats are available like immigrants and African-Americans. In response to an earlier comment I don’t see a bunch of folks from Queens rolling out to the Hamptons with guns ablazing.

    • kilo says:

      You may not be familiar with Blythe, and if that’s the case I can see how it would be tough to understand that his statement wasn’t to be read literally. It was a figure of speech. Blythe was making the point that the rich would be better off giving up a little wealth now rather than a lot of wealth later.

      Blythe’s simply indicating that the greater this wealth gap grows, the more likely it is we see more drastic policies to close these gaps, which will significantly reduce the wealth of the elites.

      His remark about the Hamptons is typical of his Scottish sense of humor, something I find refreshing in a Brown University economics professor.

      Good to hear your perspective, one that I more or less agree with.

  6. Ria says:

    Before going to UBI, the US needs to try Universal Health Care not linked to employment, and a higher minimum wage- supplemented by government credits. In the next decade the minimum wage in the US should be $20 per hour with some sort of government subsidiy in addition. If you increased public educational funding – including increased subsidy for post-secondary education and more public spending on public health and infrastructure that would go a long way to leveling the playing field for the bottom 50%. I would also suggest some sort of subsidy for social security so that wage taxes could be reduced. That requires higher income tax rates (should eliminate income taxes on incomes below a low threshold), higher corporate tax rates and probably a mildly progressive VAT.
    After doing that- which I consider a low hanging fruit and you want to go to UBI, well ok. But a UBI is not going to fix many of the problems out there which are caused by underinvestment in public goods- the right to a good robustly funded education, the right to health care access and a society with robust physical infrastructure and public health.

    • payshunt says:

      A person aged 20 or 30 may not agree. Why confiscate income and spend it on universal Healthcare?

      The last time universal healthcare was attempted most large corporations were able to dodge their obligation to current and retiring employees. Employees ended up spending far more for healthcare and corporations reaped a windfall.

    • mfn says:

      I think you’ve offered a bunch of sensible reforms and supported them with pretty sound logic. 1+

  7. Canuck says:

    Wow, good comments. Thanks all.

  8. Thank you for pointing correctly that the income started with Reagan. That is correct, I saw a special in the 80’s with Tip ONiel in it, he admitted that the Democrats created the middle class with the progressive tax brackets. Once Reagan flattened the tax structure the disparity started and will continue getting worse.
    In our capitalist system there should be winners and losers, but you are correct there is no utility in someone being worth 100 billion or more. I know no one is talking about tax reform, Maybe we will talk about it if Bezo’s becomes a trillionaire.
    I know some billionaires say if we enacted a billionaire tax they would move out of the country, so if this was going to happen it would have to be done by the G7 at the same time, so Billionaires would have nowhere else to go,
    Or we could do what Saudia Arabia does and put the rich under house arrest until they agree to some type of payment for the masses.

    • mfn says:

      If we’re gonna be honest about the predicament in which we find ourselves, we should start by holding the people who brought us here accountable — i.e., Barry Goldwater and Ronald Reagan, the original pitchmen for Make America White Again; Howard Jarvis, of Prop 13 infamy, and Grover (“drown it in a bathtub”) Norquist; aided and abetted by the morally and ethically bankrupt Gingrich, DeLay, and McConnell; and amplified, at every step, by Rupert Murdoch and Roger Ailes’ Faux News propaganda machine, with a big assist from Limbaugh. Bill Clinton and third way triangulation didn’t help any.

    • A Pi says:

      They always have Monaco….

    • Mr. Lucky says:

      Tip was also famous for his remark that” All politics is local.” Look at what is happening to the COVID mess, local fragmentation, squabbling over masks, etc. People are dying from local politics. That’s part of the revolution. It’s also going to make solutions difficult and make “divide and conquer” the new politics. Tip was right.

  9. I’m relatively well off, but I’ve had just about enough of this. Tax the bejesus out of wealth of all kinds and
    Do whatever it takes to level the incomes of this country.
    We are about to see millions of formerly working people losing homes, health care and any hope of educating their
    Children……in what formerly was the wealthiest country in world history.
    There is simply no excuse for homelessness and lack of health care.
    I live in Seattle and see these disparities daily…..we are ground zero for this…….and our billionaires feel guilty enough about their wealth, that they beg for higher taxes and give most of it away.

  10. runamok says:

    H, very good post. Keep these in the rotation once in a while.

  11. Vlad is Mad says:

    Two things are striking–a post on inequality triggers 10x reader comment/responses. Secondly, why does this not end in violent insurrection. Too Soviet of me?

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