Rising Angst Among Defenders of Overpaid CEOs

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‘Deaths of Despair’ Rising for White Working Class

man walks along beach in destination town

(Image: Garry Knight / Flickr)

White people in the United States are dying at alarmingly early ages. After decades of lengthening life expectancies, white lifespans are now going the other way. An increasingly unequal economy — alongside steadily declining opportunities for workers without a college degree — may be the cause, two rock-star Princeton economists conclude in their just-released latest research.

The two economists, Anne Case and Angus Deaton, a year ago revealed that whites without a college degree are reporting worse health and are dying younger than they did 15 years ago. In their new follow-up study, published by the Brookings Institution, Case and Deaton take a deep look at what’s driving this trend.

Economic insecurity, the husband-and-wife team note, certainly plays a major role. Lower wages have a major impact on health and happiness. But economic insecurity alone, they conclude, provides an insufficient explanation, since black and Latino households with similar household incomes are living longer, not shorter lives.

So what can help us understand the rising white death rate? Case and Deaton point to the rise of “deaths of despair” — drug overdoses, suicides, and alcohol-related deaths. These deaths, they believe, reflect a “long-standing process of cumulative disadvantage for those with less than a college degree.”

You don’t need to be a Nobel-prize winning economist to understand this “cumulative disadvantage” thesis, but Deaton (who is one) and Case make the explanation plain. Many working class whites who didn’t go to college have lost hope. Their children cannot — for the first time — expect to do better than their parents economically, a direct reproach to the American Dream.

This dynamic is, in effect, trauma, deeply felt by millions of families.

Like many economic and social trends, the deeper trends at play are often viewed as individual rather than structural problems. Anyone whose family has struggled with addiction, with financial insecurity, with mental health problems can attest to the trauma these cause. The cumulative impact of these dynamics are tough to see without studies like this one.

While inequality has always existed in this country, and has always existed along racial lines, deteriorating social and economic status for many working class white families is new. Many authors have reported on this dynamic, Arlie Hochschild’s Stranger in the Own Land and J.D. Vance’s Hillbilly Elegy are just a couple in this growing genre.

Why aren’t Black and Latino families, who are also struggling in the unequal economy, seeing similar health declines? Case and Deaton deviate from economic analysis and point to historian Carol Anderson who succinctly points out that for whites, “If you’ve always been privileged, equality begins to look like oppression.”

Solutions to the problem will not come quickly. Policies that raise wages for those at the bottom will take years to have an impact and even longer to change health outcomes. Worse yet, the policies of the current administration are going in the wrong direction. Case and Deaton suggest reforms in the regulation of opioids would help in the near-term.

The collective decline of the working class has been in motion for decades with middle class wages peaking in the 1970s. Reversing this trend will require a similar timeline. While many feel the problem in their pocketbooks, it is in their doctor’s office where the collective trauma is increasingly being felt.

Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies.

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Rising Inequality Hit us Twice: Once During Recession and Again in Recovery

recession-recovery-inequality

Inequality doesn’t cause every problem in our world today. Inequality just makes every problem worse.

Big problems especially. Like recessions.

We’ve known for some time that recessions—and depressions—become much more likely when wealth starts excessively concentrating in the pockets of the already rich.

Now we have important new research that adds to this story. The same inequality that gets us into economic messes, it turns out, significantly slows the clean-up.

The research comes from an international team of economists who’ve just examined how Americans at different levels of wealth behaved economically before and during the Great Recession. What did American households spend, the investigators asked, and what did they save?

The researchers—the University of Pennsylvania’s Dirk Krueger, the University of Stockholm’s Kurt Mitman, and Federal Reserve Bank of Minneapolis analyst Fabrizio Perri—essentially found what they expected for the period right before the Great Recession. The lower a household’s net worth in 2006,  the higher that household’s consumption rate.

On this front, there was no surprise. Poorer households typically spend a higher share of their incomes than richer families. The goods and services their families need just to get by on a daily basis grab almost all of their incomes.

Richer households, on the other hand, spend far more total dollars on goods and services than poorer families. But they also make far more. With their pockets overflowing, they can afford to save a substantial share of their incomes.

This dynamic becomes more pronounced in any economy growing more unequal. The wealthier the rich become, the more they save. That’s all to the good, the pals of plutocrats insist. Savings by the rich, they assure us, create prosperity as the rich invest in businesses that create jobs. Everybody wins.

In real life, rising inequality limits most all winning to the wealthy. Those savings that rich people have to invest don’t go to businesses that create good jobs because average people—in an economy that’s concentrating rewards at the top—can’t afford to be good customers.

With job-creating businesses struggling, the rich take their savings elsewhere. They speculate. Enter our bubble economy.

The huge downside to all this: All bubbles eventually pop. The great housing bubble of the early 21st century would pop into 2008’s Great Recession.

So what happened with the consumption and savings patterns of America’s households? Here’s where the new research from economists Krueger, Mitman, and Perri gets particularly interesting. The trio found a striking “change in consumption expenditures at different points in the wealth distribution” after the Great Recession hit.

Between 2006 and 2010 saving rates increased most strongly “at the bottom of the wealth distribution.” How could less affluent households suddenly afford to save more? During the Great Recession, they cut their consumption at twice the rate of more affluent households.

And that behavior made eminent sense. These less affluent households—essentially the poorest 40 percent of Americans—held less than one percent of the nation’s wealth going into the Great Recession. In 2008, with people losing jobs left and right, these households cut back their spending markedly and started “to save massively” to protect themselves from the shock of job loss.

But what makes sense for particular households, the researchers make plain, didn’t make sense for the economy as a whole. With the nation’s less affluent spending less, businesses cut back more, and the nation’s economic mess just became messier. The recovery sputtered.

In an ideal world, unemployment insurance would prevent this sort of downward spiral. Unemployment benefits give families at the economic edge a modicum of security. Households that can count on these benefits to cushion the shock of job loss will continue to consume. Their consumption, in turn, helps a troubled economy recover.

Unemployment insurance in our contemporary United States, unfortunately, remains too spotty to offer any appreciable real security. In the Great Recession, less affluent households felt—rightly—on their own

If poorer Americans had unemployment benefit security during the depth of the Great Recession—and, more importantly, if poorer Americans had had a larger share of the nation’s wealth—the nation would have consumed more after the Great Recession hit. The recovery would have been more robust.

Without wealth inequality, as economist Dirk Krueger told one interviewer earlier this month, we still would have had a drop-off in overall consumption during the Great Recession. But that drop “would not have been as large”—and America’s worst economic downturn since the Great Depression would not have lasted as long and been as hard.

Still another good reason, as if we need one more, to make America more equal.

The post Rising Inequality Hit us Twice: Once During Recession and Again in Recovery appeared first on Institute for Policy Studies.

Sam Pizzigati is an associate fellow at the Institute for Policy Studies.

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Meet Samantha Sexton, one of the “30 Under 30” rising stars of Florida politics – Florida Politics (blog)


Florida Politics (blog)
Meet Samantha Sexton, one of the “30 Under 30” rising stars of Florida politics
Florida Politics (blog)
These are the things that happen when your dad is a local labor union president and your mom worked for Florida Today. One principle I … Dave Mica, who helped to shape me as a student leader and young professional; Jack Levine, who challenges me to

and more »

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Greek problems mask the rising risks in Italy and France – Financial Times


Financial Times
Greek problems mask the rising risks in Italy and France
Financial Times
Italy and France face mounting problems of high debt, slow growth, unemployment, poor public finances, lack of competitiveness and an inability to undertake necessary adjustments. Reductions in energy prices combined with low borrowing costs and a …

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Addressing the Top and Bottom of the Rising Wealth Gap

 

Homeless man holding sign 'Very Hungry Please'

(Photo: EyeTunes / Flickr)

Why do you believe the income gap by race has increased tremendously in the past decade? 

The racial wealth gap in America is not new. There is a longer history that is crucial to understanding recent economic trends. However, it is true that the wealth gap by race has worsened since 2008. Though just about everyone saw their net worth plummet during the last recession, the wealth of whites has recovered more quickly than that of racial minorities. One reason is that whites own more financial assets such as stocks and bonds, which have recovered since 2009. For racial minorities, one of their biggest assets is their homes, which have not recovered as quickly in value. 

The larger point is that when we talk about the racial wealth gap, we should try to understand it in historical context. Economists and others sometimes imply that the racial wealth gap has resulted from natural market forces. The truth is that historical circumstances in this country have deeply shaped the way that wealth can be accumulated in the first place. In fact, the entire story of African Americans in this country could be told as one in which wealth accumulation has been made difficult or impossible through a variety of official and unofficial means. We need to acknowledge this history when trying to understand the causes of the growing wealth gap in the United States and its racial dimensions. 

Can entrepreneurship programs for minorities help alleviate the wealth gap? 

Yes, but it isn’t the only answer. There has been a decline in entrepreneurship since the recession. That means many people—minority communities especially—are increasingly dependent on the low-wage, temporary job market for their security. And racial minorities are much less likely to have the start-up capital needed to start their own businesses. Programs that make it possible for them to start their own businesses could help to alleviate this gap. 

However, I don’t think programs that encourage or enable entrepreneurship can stand alone as a solution. These programs would need to be alongside other policies that bring down the concentration of wealth at the top and level the playing field of opportunity by investing in public education, making preschool and child care affordable and accessible, paying workers a living wage, and closing tax loopholes that are siphoning money away from public investments. 

Should public policy focus more on racial income inequality or opportunity inequality (regardless of racial mix)? 

We really need both in our policy agenda—a focus on reducing inequality and increasing opportunity. Equality of opportunity has to be linked to bringing down wealth concentration at the top. Far too many policy discussions ignore wealth concentration while emphasizing education or job training. We have to look at how extreme wealth concentration decreases opportunity for just about everyone else. For example, we need to link tax loopholes for the super wealthy to missing revenues that could be channeled into public investments like education and infrastructure. These are the types of investments that have the power to level the playing field of opportunity. 

What types of programs and initiatives should public policy officials focus on to curb inequality? 

We need a range of initiatives that address both the top and bottom of the rising wealth gap in America. To begin with, all working people deserve to make a living wage. That so many Americans working full-time are living in poverty at the current minimum wage is totally unacceptable. It’s also important to note that 66 percent of low-wage employers are large, wealthy corporations in the service industry with soaring profits and executives who are paid extravagantly. These companies spend millions lobbying against wage increases for their workers. Thus the minimum wage issue is deeply connected to the problem of concentrated wealth. 

Another area that should be a priority is curbing excessive CEO pay. For instance, we need to close the so-called “performance pay” loophole. Under current law, companies are allowed to deduct unlimited amounts of executive pay from their income taxes as long as this pay is based on “performance.” In the way of loopholes, we also need to close the “billionaire loophole” that has essentially rendered the estate tax voluntary at the federal level and in most states. 

As the rich have gotten richer, they have gained more political influence enabling them to block progressive legislation on everything from taxes to labor. Corporate lobbying is at an all-time high, and the Supreme Court is handing down decisions like Citizens United that enshrine the political clout of the wealthy. So in any policy discussions about inequality, we have to focus on protecting our democracy from corporate takeover. Public officials concerned about inequality, for instance, should support amending the Constitution to establish that money is not speech, and that corporations are not people.

The post Addressing the Top and Bottom of the Rising Wealth Gap appeared first on Institute for Policy Studies.

Dr. Marjorie E. Wood is managing editor of Inequality.org and a senior staff member of the Global Economy Project at the Institute for Policy Studies. 

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Rising Inequality in the Global South: Practice and Solutions Symposium

Indian slum with city in background

Rising Inequality in the Global South: Practice and Solutions Symposium

Oxfam and Oxford University organize together a symposium to examine the causes and consequences of rising inequality in the south, and to assess policy solutions.

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Rising Inequality in the Global South: Practice and Solutions

Rising Inequality in the Global South: Practice and Solutions

Inequality is spiralling out of control, but consensus on how to address it is gathering pace. Following on from the success of last year’s symposium about Africa’s extractives industry and illicit financial flows, Oxfam and the University of Oxford are coming together again to examine the causes and consequences of uneven economic growth and rising inequality in the global South, while assessing policy solutions and charting a way forward for equity, democracy and social stability.

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G20 must turn the tide on rising inequality and tackle tax dodging

G20 must turn the tide on rising inequality and tackle tax dodging

G20 Leaders meeting in Brisbane, Australia this weekend (15 and 16 November) are being urged to tackle rising inequality head-on or risk leaving millions of people trapped in poverty, as new figures reveal the wealth disparity in a number of G20 countries.

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Medical staff in Gaza struggle to cope with rising casualties

With the crisis in Gaza mounting, hospitals are struggling to cope with the growing influx of casualties. Three quarters of the dead and wounded are civilians, including many women and children. In the past few days, as the Israeli ground offensive escalates, on average one child an hour is being killed in Gaza.

“I never imagined that I’d witness what I am seeing now,” says Moeen Abu Al Eish, a paramedic and ambulance driver at one of Gaza’s biggest hospitals.

With the crisis in Gaza mounting, hospitals are struggling to cope with the growing influx of casualties. Three quarters of the dead and wounded are civilians, including many women and children. In the past few days, as the Israeli ground offensive escalates, on average one child an hour is being killed in Gaza.

“I fear for my own family,” says Moeen. As he drives his ambulance to the scene of airstrikes and shelling he sees the dead bodies of women and children in the streets, many with horrific wounds. “I have to fight off thoughts that these children could be my own,” he says.

Medical teams are working around the clock to save lives and treat injuries. Oxfam is delivering safe water to Al Shifa hospital, which has been overwhelmed with casualties. Many hospitals and healthcare facilities have also come under attack. At least 18 medical facilities have been hit by Israeli airstrikes and shelling – including hospitals, ambulances and health clinics. 26 health workers from the Palestinian Red Crescent have been injured while trying to respond.

“So far three of our ambulances were attacked and several of my colleagues were severely injured,” says Moeen. “But this doesn’t stop us or slow us down. No amount of danger or threat to our lives can deter us from doing our job.”

Dr. Kamal Khattal works at another hospital that was hit by shelling. “In a second, the situation inside the hospital became so chaotic -  injured people and medical staff were terrified, everyone started to run to find a place to shelter. We had to evacuate all the hospital except the emergency department. Some vital units stopped operating… but we had no option but to continue to working in the emergency unit to treat the dead and injured. We had 15 medical staff among the injuries. This was the last thing I expected.”

Oxfam condemns all violence against civilians by all sides, including ongoing rockets fired from Gaza into Israel and Israeli military actions in Gaza. We call on all sides to respect international humanitarian law.

Oxfam also provides fuel and medicine to Al Awda hospital, the only one in north Gaza with a specialist unit for pregnant women. Many hospitals face severe shortages of medical supplies and fuel. Damage to electricity lines means people in Gaza are suffering from power cuts of 20 hours a day, making it extremely difficult to keep water pumping and life-saving operations going. Over a quarter of essential medical drugs are currently out of stock.

Moeen says the situation is getting worse by the day. “I put all my energy and efforts to try and save civilians, but there is little I can do when I arrive at a bombed site and motionless bodies are all over the place and on the streets. I try to transport the injured to hospital as quickly as possible, knowing that at any moment the site could very possibly be attacked again.

“I thank God every moment that I am still alive. I’ve experienced several wars in my lifetime but nothing could have prepared me for this.”

Please support Oxfam’s humanitarian work in the Gaza crisis.

Read a powerful and passionate blog from Arwa Mhanna, Oxfam’s Communications Officer in Gaza: Living through the Gaza airstrikes

I put all my energy and efforts to try and save civilians.

Other programmes

Moeen Abu Al Eish

Paramedic and ambulance driver in Gaza

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