The Rise Of Wealth Inequality In Our Country Certainly Didn't Start With Trump-- And Not Even Bernie Is Going To Be Able To Reverse It Entirely

Over the weekend, the New Yorker, published an essay by Liaquat Ahamed which asks the question The rich can't get richer forever, can they? You might want to read it in the context of yesterday's post Being A Member Of The Elite May Be A Drag-- But Being A Slave Is Much Worse. When Alexis de Tocqueville visited the U.S. in 1831 he noted that the relatively new country "was the world’s most egalitarian society. Wages in the young nation were higher than in Europe, and land in the West was abundant and cheap. There were rich people, but they weren’t super-rich, like European aristocrats." That's changed-- drastically.

According to Unequal Gains: American Growth and Inequality Since 1700, by the economic historians Peter H. Lindert and Jeffrey G. Williamson, the share of national income going to the richest one per cent of the population was more than twenty per cent in Britain but below ten per cent in America. The prevailing ideology of the country favored equality (though, to be sure, only for whites); Americans were proud that there was a relatively small gap between rich and poor. “Can any condition of society be more desirable than this?” Thomas Jefferson bragged to a friend.





Today, the top one per cent in this country gets about twenty per cent of the income, similar to the distribution found across the Atlantic in Tocqueville’s day. How did the United States go from being the most egalitarian country in the West to being one of the most unequal? The course from there to here, it turns out, isn’t a straight line. During the past two centuries, inequality in America has been on something of a roller-coaster ride.

An early systematic attempt to chart the evolution of inequality in this country was undertaken by Simon Kuznets, at that time a professor at Johns Hopkins, who, in 1955, published what turned out to be a seminal paper, “Economic Growth and Income Inequality.” Drawing on years of assiduously collected data—for which he later won a Nobel Prize-- he reached a surprising conclusion. Like most economists, he had assumed that the general trend, in a capitalist economy governed by private property, would be for the rich to get richer-- for inequality to increase steadily over time. That had been true in the initial stages of industrialization, he found, but since then the United States, England, and Germany had experienced a narrowing of economic disparity. And, as more data about more countries became available, Kuznets found that in most advanced economies the poor were catching up with the rich. It was, he said, “a puzzle.”

The explanation appeared to involve two factors. First, there was the rise of mass education. Once countries had reached a certain level of industrialization, skills-- human capital-- became as important as physical capital in determining productivity, and a greater economic share accrued to those with more education, not just to those with money to invest. Second, politics took over from economics. The poor, with the weight of numbers on their side, realized that they could vote in favor of taxing the rich more heavily, redistributing the money to themselves in various ways.

...Kuznets’s article came out at the height of the Cold War. The U.S. economy was booming. More and more people were going to college. White-collar work was taking over from blue-collar work, and, during the Great Depression, the government had introduced programs such as Social Security and unemployment insurance. Americans took comfort in the fact that their version of capitalism was not only the most dynamic and productive economic system in the world but one that was steadily becoming more equitable and fair. It seemed as if they had the problem of inequality licked; it was the era of what came to be called the Great Compression. By the seventies, America was as equal as any of the Scandinavian countries are today.

And then, starting sometime in the early eighties, inequality started to rise. The shape of the curve went from an inverted U to something more like an N: up, down, and up. Nor was this shift a temporary aberration. It has continued for nearly four decades. The jump in inequality has been most dramatic in the United States, where the share of income going to the top one per cent has soared from eight per cent in the early eighties to almost twenty per cent today. But inequality has also increased in Britain, Australia, Canada, large parts of Europe, and even Japan, suggesting that there is something systemic at work across the world. (At the same time, there have been some affluent countries-- notably France and the Netherlands-- where inequality has barely budged.)

Economists are still arguing about the reasons for this reversal. One important factor, they mainly agree, was the opening up of China, Eastern Europe, and other less advanced regions to world trade; another was the liberalization of capital markets. Rising import competition hurt employment in domestic manufacturing and held down wages. Most economists also agree that changes in technology have put unskilled workers at a stark disadvantage.

What they disagree about is the role of government policy. Rising inequality coincided with a profound shift in economic policy throughout much of the advanced world. In the nineteen-seventies, productivity growth in advanced economies stalled, unemployment rates jumped, and inflation rose and remained obstinately high. And so, in one country after another, political parties got elected by promising to cut tax rates, free up markets, and reduce government intervention in the economy. The change was most pronounced in Great Britain and the United States, after Margaret Thatcher and Ronald Reagan took office. But it also occurred to varying degrees in Continental Europe, Canada, Australia, and Japan.





The story of this transformation is the subject of Binyamin Appelbaum’s The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society. It is a tale that has been told before, but Appelbaum adds flesh to the narrative by recounting it through the lives and careers of a small group of economists associated with the University of Chicago-- including the Nobel Prize winners Milton Friedman, George Stigler, Gary Becker, and Robert Mundell-- who were behind the shift.

...The Economists' Hour is a reminder of the power of ideas to shape the course of history, a heartening thought for those of us in the ideas business. But why did the free-market policies promoted by Appelbaum’s principals spread across the world? One reason was that they led to improved economic growth for a while. Yet international competitive pressures played a role, too. As the world economy opened up in the nineteen-eighties, newly mobile capital tended to flow to places that offered the highest return, and very often these were countries with the lowest taxes and the least onerous regulation. To hold on to capital, countries found themselves forced to match the free-market policies of their trading partners.

There is ample evidence that this shift, in turn, led to more uneven income distributions. Countries with larger tax cuts experienced bigger increases in inequality. Appelbaum’s book—focussing on the who, rather than the how—does not delve deeply into these consequences. But they are richly detailed in Capitalism, Alone: The Future of the System That Rules the World by Branko Milanovic.





Even though inequality began to rise after 1980, it took economists a couple of decades to really notice. Among those who turned their attention to the fallout was Milanovic, who grew up in Communist Yugoslavia, spent a couple of decades in the research department of the World Bank, and now teaches economics at the City University of New York. Milanovic originally built his reputation in the late nineties, when, using a giant World Bank database of household incomes, he was able to demonstrate how the benefits of globalization had been distributed among different classes across various groups of countries. The big winners were the “global plutocrats,” whose returns on capital shot up, and the new mass middle class of the emerging world, mainly in East Asia and India, who benefitted from the spectacular growth of their regions. The big losers were Western middle-class workers whose incomes stagnated as the industries they worked in were hollowed out by foreign competition. Hence the visceral appeal of Donald Trump’s protectionist measures against China.

Milanovic isn’t just a whiz at number crunching; he has a whimsical, wide-ranging appreciation for history and culture. He has written about income distribution in the early Roman Empire (inequality during the Augustan age was roughly comparable to that of the United States today), the effects on European soccer when limits on the number of foreign players allowed in club teams were lifted (the richest clubs became even more dominant in their leagues), and the financial implications of Elizabeth Bennet’s decisions in Pride and Prejudice (marrying Mr. Darcy would put her in the top tenth of one per cent, while, as a spinster, she would have fallen from the top percentile to about the fiftieth percentile). Capitalism, Alone builds on Milanovic’s previous book, Global Inequality, which came out in 2016. Indeed, so many of the themes and ideas in the new book were prefigured in the last one that ideally the two should be read together.

In Global Inequality, Milanovic traced the fluctuations of inequality back to the Middle Ages in Holland, Spain, and Italy, and showed that inequality has been going up and down in long and unpredictable waves ever since, responding to various contending forces. In the fourteenth century, for instance, the Black Death led to shortages of labor, which drove up wages in Italy; in the twentieth century, two world wars and the Great Depression destroyed a generation’s worth of capital, causing the incomes of the rich to plunge. Surveying all the data, Milanovic concludes that there seems to have been some sort of cap on inequality-- a limit to the economic divisions a country can ultimately cope with. The rise of inequality in the United States during the nineteenth century, its subsequent fall during the middle decades of the twentieth century, and its resurgence in the past four decades provide an example of the wave at work. Kuznets had come up with his inverted-U-shaped curve only because he had focussed on too small a slice of history.

In Capitalism, Alone, Milanovic turns from the past to the future. With the rise of the emerging economies of Asia, he says, we now have two alternative forms of capitalism operating side by side. One is the “liberal meritocratic” version found in the West, and championed by the United States. The other is “political capitalism,” the less democratic and more authoritarian variant, which has taken shape, most notably, in China. Like all schematics, this one elides a lot of details, but it provides a useful conceptual frame.

In the “liberal meritocratic” world, inequality arises from the way capital is accumulated. The rich are able to save more than the poor, and thus come to own a disproportionate share of the capital and the wealth in the economy. Since the return on capital, a major source of income for the rich, tends to be higher than the growth of wages, the rich become richer. Almost as potent is the way the benefits of education are distributed: rich people tend to be more highly trained, and can earn higher salaries; they are also able to earn higher returns on their capital, since their wealth gives them greater tolerance for illiquidity and risk. In addition, they tend to marry other rich, educated people and are able to pass on more capital to their children, thereby perpetuating inequalities from one generation to the next.

The “political capitalism” of China has its own inequality-generating dynamics. Although China has become capitalist to the core-- almost eighty per cent of the country’s industrial output is produced in the private sector-- the commercial classes are under the thumb of a highly disciplined, autocratic bureaucracy. The rule of law is attenuated, decision-making can be arbitrary, property rights are not fully secure, and corruption is endemic. China is essentially going through a hugely accelerated version of the industrial revolution and the Gilded Age rolled into one. Add in the insidious impact of cronyism, and a very unequal society results. Income distribution in China, it turns out, is even more skewed than in the United States, approaching the sort of levels one finds in the plutocratic republics of Latin America.

What does all this mean for the future of global capitalism? Milanovic finds little on the horizon within either system that would curb the trend toward greater inequality, let alone reverse it. Despite the subtitle of his new book, though, Milanovic wisely trains his attention on the past and the present, steering clear of grand predictions.

...The cohort of European economists, including Milanovic and the French brigade, are following in the footsteps of Tocqueville. They have been able to hold up a mirror so that we Americans can better see ourselves. They’ve also succeeded in focussing public attention on the issue of inequality. They consciously moved away from quantifying inequality with opaque statistics such as the Gini coefficient, and instead popularized more readily understandable measures, like the share of income going to the very, very rich. The phrases “the top one per cent” and its obverse, “the ninety-nine per cent,” became potent political rallying cries during the Occupy Wall Street movement in 2011, and concern for the problem hasn’t dissipated. Inequality is a major political issue in the lead-up to the 2020 Presidential election; Democratic candidates are airing proposals for wealth taxes, steeper income taxes, more biting inheritance taxes, and a better social safety net. That’s another heartening reminder of the power of ideas to shape the course of history.

Thoughts on Warren and Sanders: How Much Change Is Needed in 2021?

The best of all possible worlds?

by Thomas Neuburger

I've written before comparing Elizabeth Warren and Bernie Sanders as presidential candidates, but only preliminarily. (See "The Difference Between Sanders and Warren, or Can Regulated Capitalism Save the Country?") But there's much more to say — foreign policy, for example, is barely touched on there — and also much is evolving in their positions, especially Warren's.

That earlier piece focused on the differences between these two candidates based on their economic ideologies. As I wrote then, "Though both would make the next administration, if either were elected, a progressive one by many definitions, the nature of the progressivism under each would be quite different."

In particular, I asked:

Can the current capitalist system be reformed and retained, or must it be partly nationalized — taken over by government — and reduced in size and capacity, for the country to be saved from its current economic enslavement to the "billionaire class"? In addition to questions of personal preference, Democratic primary voters will be asked to decide this question as well.

And the question applies quite broadly. The billionaire class also controls our response to climate change. Is it possible for a "free" market system — a system in which billionaires and their corporations have control — to transform the energy economy enough to mitigate the coming disaster, or must government wrest control of the energy economy in order to have even a hope of reducing the certain damage?

But there are other contrasts between these two as well, other differences, as Zaid Jilani, writing in Jacobin, points out. He begins where we began, with the ideological and philosophical differences:

Why the Differences Between Sanders and Warren Matter

Both are critics of the Democratic establishment. Both are foes of Wall Street. And both are substantive, policy-focused politicians. But that doesn’t mean Bernie Sanders and Elizabeth Warren share the same worldview.

Sanders tends to focus on “post-distribution” remedies, meaning he prefers to use the government’s power to tax and spend to directly meet Americans’ needs — or replace the market altogether. His social-democratic ideas, like free college and single-payer health care, are now policies most Democrats have to tip their hat to at least for electoral reasons. Warren wants to empower regulators and rejigger markets to shape “pre-distribution” income, before taxes. Less likely to push for big-ticket programs, she wants to re-regulate Wall Street and make life easier for consumers.

So far this is familiar ground.

Different Theories of Change

But as Jilani points out, there are differences in style and "theory of change" as well. ("Theory of change" usually encompasses how a given policy change is to be accomplished, as opposed to what that change should be.) Jilani again:

The two senators also have distinct theories of change. Sanders has long believed in bottom-up, movement-based politics. Since his days as mayor of Burlington, Vermont, he has tried to energize citizens to take part in government. He generally distrusts elites and decision-making that does not include the public. Warren, on the other hand, generally accepts political reality and works to push elite decision-makers towards her point of view.

When I worked at PCCC ["the most influential outside PAC supporting Warren" says Jilani], I was once told that Warren decided to run for the Senate after witnessing the amount of power she had as an oversight chair for the bank bailouts. She believed that “being in the room” with decision-makers in the Obama administration was essential to creating change.

About this he concludes: "While Warren wants to be at the table with elites, arguing for progressive policies, Sanders wants to open the doors and let the public make the policy."

"Elizabeth is all about leverage"

These are significant differences, and his observation goes a long way to explaining this item from a long piece published in Politico Magazine in 2016, an article otherwise about Barack Obama and Hillary Clinton. Discussing why Warren refused to endorse Sanders, Glenn Thrush wrote:

Luckily for Clinton, Warren resisted Sanders’ entreaties, for months telling the senator and his staff she hadn’t made up her mind about which candidate she would support. For all her credibility on the left, Warren is more interested in influencing the granular Washington decisions of policymaking and presidential personnel—and in power politics. Warren’s favored modus operandi: leveraging her outsider popularity to gain influence on the issues she cares about, namely income inequality and financial services reform.

“Elizabeth is all about leverage, and she used it,” a top Warren ally told me. “The main thing, you know, is that she always thought Hillary was going to be the nominee, so that was where the leverage was.”

Warren, several people in her orbit say, never really came close to endorsing the man many progressives consider to be her ideological soulmate.

For many grassroots supporters of Sanders, who were also strong Warren supporters prior to his entry into the race, these revelations — "all about the leverage" and "never came close to endorsing" — took the bloom off the Warren rose. For whatever reason, that bloom appears not to have returned, at least not completely.

Jilani's observation in no way diminishes Warren's credibility or core desirability as a candidate. If you care about achieving your goals through "leverage," joining the Sanders campaign, which may have looked to you like a kind of Children's Crusade, would seem foreign to your way of operating.

The Bottom Line — Not Just Method, But Scope

While Jilani notes that many of Warren's past positions, for example, on charter schools and Medicare for All, have grown more progressive, she still doesn't seem to prioritize Medicare for All as strongly as Sanders does.

In 2012, Warren was explicitly opposed to Medicare for All (called "single payer" at the time). "Five years later — after decades of advocacy by Sanders had helped popularize Medicare for All — Warren [finally] decided to endorse the policy," writes Jilani. "But unlike consumer protections or financial regulation, establishing a single-payer health care system doesn’t seem to be a top priority for Warren." He adds, "It’s hardly a surprise that Warren didn’t raise single-payer during her first two campaign events in Iowa and when asked about it by a Washington Post reporter, [she] suggested she didn’t bring it up because no one else at the events raised it."

As noted above, if either were president, the odds that America will change for the better would vastly improve. But each would do that job in a different way. Each has a different philosophy of how government should work, and approach the process of change from different directions — though I have to give Warren credit for picking public fights with fellow Democrats when others are much more timid.

But to these two differences — philosophy and approach — let me add a third, a difference in sweep. The scope of change envisioned and attempted by a Sanders presidency would likely be far greater than that attempted by Warren.

In these times, with a massive climate tsunami fast approaching and a Depression-style rebellion in full view, can America, in this Franklin Roosevelt moment, afford just a better manager of the current system, a better rearranger, and survive?

There's not much question that Warren would better fix the status quo, and be a better choice as president, than 95% of the other candidates on offer. But would a Warren presidency be enough to bring us through this crisis as safely as Washington, Lincoln and FDR once did?

For many true progressives, I think that's the question she'll be asked to answer, and she has about a year, or less, to answer it.
  

The Difference Between Sanders and Warren, or Can Regulated Capitalism Save the Country?

Gallup Poll from earlier this year

by Gaius Publius

I'm writing this as a heads up, since the issue will come up forcefully in not too many months. Elizabeth Warren and Bernie Sanders are not equivalents for each other, and it's not even close. Though both would make the next administration, if either were elected, a progressive one by many definitions, the nature of the progressivism under each would be quite different.

(I suspect they'll also have different foreign policies, and other, major policy differences will likely emerge as well. But let's deal only with what's already on the table, already known and before us.)

David Dayen, writing at the New Republic, made the point quite well, so I'm going to quote him at a little length. But first, let's bottom line this:

Bernie Sanders is a socialist. Elizabeth Warren is a capitalist. Both want the economy to work on behalf of the people, but their methods of getting there, on quite a few issues, could not be more different.

In addition to the cage match that may or may not develop between two strong-minded politicians — a match in which personalities, and voters' preference about personalities, could play a huge part — there will also emerge a fundamental conflict of ideas as well.

Can the current capitalist system be reformed and retained, or must it be partly nationalized — taken over by government — and reduced in size and capacity, for the country to be saved from its current economic enslavement to the "billionaire class"? In addition to questions of personal preference, Democratic primary voters will be asked to decide this question as well.

And the question applies quite broadly. The billionaire class also controls our response to climate change. Is it possible for a "free" market system — a system in which billionaires and their corporations have control — to transform the energy economy enough to mitigate the coming disaster, or must government wrest control of the energy economy in order to have even a hope of reducing the certain damage?

Heavy questions, and consequential for generations to come. Here's how Dayen frames it:

The Essential Difference Between Bernie Sanders and Elizabeth Warren
The potential 2020 candidates are often portrayed as identical progressives. A closer look proves otherwise.

Senator Bernie Sanders wants to be president—he made that much clear with his energized campaign in 2016. Senator Elizabeth Warren does, too, as several recent moves show. They both have widespread name recognition and share similar political philosophies. Is there room enough in a Democratic primary for the two of them? ...

Warren and Sanders recognize that they share the same lane in a presidential race: They’re both populists dedicated to fighting economic inequality. Splitting the vote and missing the opportunity to elevate that signature issue in presidential politics would be a worse fate than any extinguished personal ambition.

But Warren and Sanders are hardly identical progressives. They have markedly different approaches to empowering the working class. In the simplest possible terms, Warren wants to organize markets to benefit workers and consumers, while Sanders wants to overhaul those markets, taking the private sector out of it. This divide—and where Warren or Sanders’s putative rivals position themselves on it—will determine the future of the Democratic Party for the next decade or more. [emphasis added]

I think the last statement is accurate, with one proviso. If the Democratic Party's current corrupt leadership keeps control through 2020, all bets are off. The future of the Democratic Party will then be its past, a past of charismatic Obamas and Clintons, and the real resistance — the fight against rule by the rich — will seek in vain again from faithless Republicans what it can only conclude will never ever be available from Democrats.

But that proviso aside, let's look at the policy detail that marks this Warren/Sanders divide. First, about Warren, who wants to change the rules of the big money poker game so that smaller players (us) are not so disadvantaged:

Warren’s suite of policies, rolled out in recent months, all try to reform rules that empower the wealthy at the expense of regular Americans. Her Accountable Capitalism Act would ensure worker representation on corporate boards, and require large corporations to consider all its stakeholders—not just investors but workers, consumers, and communities of interest—in any decision-making. Her climate bill would force public companies to disclose climate-related risks, giving investors more information to use their money toward sustainable goals.

Her housing bill would transfer money for affordable housing to communities that adopt zoning policies to make it easier to build. Her 21st Century Glass-Steagall Act seeks structural separation of commercial and investment banks to keep companies making the riskiest trades away from taxpayer-funded bailouts. And the Anti-Corruption and Public Integrity Act would buttress these gains by reducing the role of special interest lobbying in federal policymaking.

Sanders, on the other hand, doesn't want to write new rules for the poker game; he wants to break it up:

Sanders, while concerned with making markets fairer, would rather just rip them up, either through limiting how much companies can grow or instituting publicly funded options alongside them. He would put a hard cap on the size of financial institutions to make them more manageable. He would make public colleges and universities tuition-free, rather than expanding access for certain needy students. He would create a federal jobs guarantee through 2,500 American Job Centers nationwide, and he estimates that his $1 trillion infrastructure investment would support 13 million publicly funded jobs as well. And in health care, he would simply nationalize the insurance sector, putting everyone on a Medicare-style plan.

Take just his Job Guarantee program. Under the Stephanie Kelton / Levy Institute proposal (pdf), which the Sanders Institute endorses, the federal government wouldn't just offer a job to anyone who wants one. It would deliberately compete with the private sector in order to put a floor under wages and working conditions.

Here's how Kelton explained the proposal to me in 2014:

If [FDR-style jobs programs] were created the right way, and you said, “Anybody who’s ready, willing and able to work, or unable to find a job in the private sector — or if you just don’t like that job — you can come and take this [government] job. We’re going to create one for you at a living wage with these benefits …”

You create a package for the worker that then becomes the minimum, [which] everyone else has to provide … or they’re not going to get workers. That becomes the de facto minimum. … We’re not going to let you starve in America.

"We're not going to let you starve in America" — unlike Walmart and Amazon, I hasten to add. That's a nice carrot. But notice that the stick, the implementation, is deliberately anti-neoliberal. Here's how I said her proposal back to her in the same conversation, just to make sure I heard it right (6:55 in the clip):

I don’t want this to go by without people getting what was said. … You’re saying that you don’t really need to define a minimum wage, because the government sets a floor. … [Then] anybody who wants a better job than the junk job they’ve got can work for the government. That forces the private employers to compete with the government for workers, and that’s a good thing for workers. Is that what you're saying?

Her answer: "It is what I'm saying."

Of course, there's quite a bit of overlap between Sanders' proposals and Warren's, which Dayen also explains, and also much fuzziness around the simplified labels "capitalist solution" and "socialist solution." Still, the areas of non-overlap are quite clearly marked.

Will voters respond to Warren's charisma on the stump and ultimately decide that market tweaks are a more, well, American solution than Sanders' market-busting proposals? The 2020 election, if each or either emerges as a frontrunner, will provide the answer. And if either is elected, the four years that follow will show if the chosen answer actually works.

GP
 

Elizabeth Warren-- Saving Capitalism From... Itself, Of Course

Recently a guy who's writing a book about the years when Mo Ostin ran Warner Bros Records-- the glory years-- interviewed me and asked me why everyone respects and admires Mo so much and how it differed from other executives who ran other record companies. I had some experience at SONY (then CBS Records) and with post-Mo Warners chieftains. My perspective was fairly simple. Mo instilled in his vice presidents a sense of obligation to stakeholders-- our artists, our customers, our employees, our shareholders, the art itself that we were releasing, our society-- that had to be foremost in our minds. It was so much like what my grandfather, a small businessman, had taught me decades earlier that I was floored. Both also implied that by fulfilling obligations to and responsibility for this stakeholders, my own situation would be satisfactory to my own ambitions.

I never felt anything at CBS remotely like that. It was a dog-eat-dog world based on greed and selfishness. it was ugly and i couldn't wait to get out. After AOL "bought" Warner Bros, the first meet with senior staff with Steve Case, our new leader, was catastrophic. As we were walking out I told my boss that I had decided while he was speaking to leave the company. (He had too.) Case told us that all this bowing and scraping to the artists and the employees and the customers, etc was O.V.E.R. and that going forward it was all about US. We're all going to be RICH, he shouted, like some kind of cheap motivational counsellor. But everyone was rich and every was rich because we built a better company.

Let me give you an example, the same one I gave the writer who interviewed me. No one ever wanted to leave Warner Bros, unlike the constant movement between the other music companies. One of the reasons was our posture towards insurance. If the insurance industry came up with something new that would benefit our employees, we would also jump right on it-- like parental leave, for example. Case sneered at the idea. If the law called on the company spending $10 towards health insurance, we would spend $10, not $11, let alone $25. I was a dark, mean little world on the horizon. Today Warners has around a quarter of the employees, few hits and is, basically, a money laundering operation for a Russian oligarch, Leonid Blavatnik, who reports to Putin and has been a funnel for funds to Trump. Warner Bros... once the single biggest source of contributions to the Democratic Party and to socially progressive initiatives!

On Wednesday, Elizabeth Warren introduced legislation, the Accountable Capitalism Act, that seems to be trying to codify-- at least in part-- Mo's ideas about how to run a company. She described it as an effort "to help eliminate skewed market incentives and return to the era when American corporations and American workers did well together. The legislation aims to reverse the harmful trends over the last thirty years that have led to record corporate profits and rising worker productivity but stagnant wages." Take that, CBS!

For most of our country's history, American corporations balanced their responsibilities to all of their stakeholders - employees, shareholders, communities-- in corporate decisions. It worked: profits went up, productivity went up, wages went up, and America built a thriving middle class.

But in the 1980s a new idea quickly took hold: American corporations should focus only on maximizing returns to their shareholders. That had a seismic impact on the American economy. In the early 1980s, America's biggest companies dedicated less than half of their profits to shareholders and reinvested the rest in the company. But over the last decade, big American companies have dedicated 93% of earnings to shareholders-- redirecting trillions of dollars that could have gone to workers or long-term investments. The result is that booming corporate profits and rising worker productivity have not led to rising wages.

Additionally, because the wealthiest top 10% of American households own 84% of all American-- held shares-while more than 50% of American households own no stock at all-- the dedication to "maximizing shareholder value" means that the multi-trillion dollar American corporate system is focused explicitly on making the richest Americans even richer.

"There's a fundamental problem with our economy. For decades, American workers have helped create record corporate profits but have seen their wages hardly budge. To fix this problem we need to end the harmful corporate obsession with maximizing shareholder returns at all costs, which has sucked trillions of dollars away from workers and necessary long-term investments," said Senator Warren. "My bill will help the American economy return to the era when American companies and American workers did well together."

Since the passage of the Republican tax bill, American companies have already announced more than half a trillion dollars in stock buybacks this year while real wages remain flat. There is an urgent need to end the grip of shareholder value maximization and return to the era when American corporations produced broad-based growth that helped workers and shareholders alike. The Accountable Capitalism Act:

• Requires very large American corporations to obtain a federal charter as a "United States corporation," which obligates company directors to consider the interests of all corporate stakeholders: American corporations with more than $1 billion in annual revenue must obtain a federal charter from a newly formed Office of United States Corporations at the Department of Commerce. The new federal charter obligates company directors to consider the interests of all corporate stakeholders-- including employees, customers, shareholders, and the communities in which the company operates. This approach is derived from the thriving benefit corporation model that 33 states and the District of Columbia have adopted and that companies like Patagonia, Danone North America, and Kickstarter have embraced with strong results.

• Empowers workers at United States corporations to elect at least 40% of Board members: Borrowing from the successful approach in Germany and other developed economies, a United States corporation must ensure that no fewer than 40% of its directors are selected by the corporation's employees.

• Restricts the sales of company shares by the directors and officers of United States corporations: Top corporate executives are now compensated mostly in company equity, which gives them huge financial incentives to focus exclusively on shareholder returns. To ensure that they are focused on the long-term interests of all corporate stakeholders, the bill prohibits directors and officers of United States corporations from selling company shares within five years of receiving them or within three years of a company stock buyback.

• Prohibits United States corporations from making any political expenditures without the approval of 75% of its directors and shareholders: Drawing on a proposal from John Bogle, the founder of the investment company Vanguard, United States corporations must receive the approval of at least 75% of their shareholders and 75% of their directors before engaging in political expenditures. This ensures any political expenditures benefit all corporate stakeholders.

• Permits the federal government to revoke the charter of a United States corporation if the company has engaged in repeated and egregious illegal conduct: State Attorneys General are authorized to submit petitions to the Office of United States Corporations to revoke a United States corporation's charter. If the Director of the Office finds that the corporation has a history of egregious and repeated illegal conduct and has failed to take meaningful steps to address its problems, she may grant the petition. The company's charter would then be revoked a year later-- giving the company time before its charter is revoked to make the case to Congress that it should retain its charter in the same or in a modified form.

Did I mention that during the Mo years, Warner Bros was the most successful and profitable music company in history?

Hey, Rich Criminals, The Guillotine Won't Have To Be Reinvented

You can only push people so far before they react

The big news out of the U.K. this morning was that the country's biggest corporate bosses have gotten big pay raises over the last year and now make an average of $7.2 million, a tidy 140 times more than their employees' average earnings. Theresa May, the U.K.'s new Conservative Prime Minister, whose party's policies have made this possible, said "There is an irrational, unhealthy and growing gap between what these companies pay their workers and what they pay their bosses." I suppose the two previous posts had to lead directly to this one about how hedge fund managers are preparing for the armageddon-- or revolution-- they are helping create with their unfettered greed and control of (the coercive powers of) government. Alec Hogg, reporting last year from Davos-- yes, I'll be honest: I would vote for a Trumpanzee if he'd promise to use a nuke (a small one ONLY) on one of these Davos summits-- wrote that the predatory super rich were "preparing getaways by buying airstrips and farms in remote areas."

With growing inequality and the civil unrest from Ferguson and the Occupy protests fresh in people’s mind, the world’s super rich are already preparing for the consequences. At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were already planning their escapes. “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway,” he said.

Johnson, who heads the Institute of New Economic Thinking and was previously managing director at Soros, said societies can tolerate income inequality if the income floor is high enough. But with an existing system encouraging chief executives to take decisions solely on their profitability, even in the richest countries inequality is increasing.

Johnson added: “People need to know there are possibilities for their children-- that they will have the same opportunity as anyone else. There is a wicked feedback loop. Politicians who get more money tend to use it to get more even money.”

Global warming and social media are among the trends the 600 super-smart World Economic Forum staffers told its members to watch out for long before they became ubiquitous. This year, income inequality is fast moving up the Davos agenda-- a sure sign of it is poised to burst into the public consciousness.

Jim Wallis, founder of Sojourners and a Davos star attraction after giving the closing address in 2014, said he had spent a lot of time learning from the leaders behind recent social unrest in Ferguson. He believes that will prove “a catalytic event” which has already changed the conversation in the US, bringing a message from those who previously “didn’t matter.”

But as former New Zealand prime minister and now UN development head Helen Clark explained, rather than being a game changer, recent examples suggest the Ferguson movement may soon be forgotten. “We saw Occupy flare up and then fade like many others like it,” Clark said. “The problem movements like these have is stickability. The challenge is for them to build structures that are ongoing; to sustain these new voices.”

So what is the solution to having the new voices being sufficiently recognised to actually change the status quo into one where those with power realise they do matter?

Clark said: “Solutions are there. What’s been lacking is political will. Politicians do not respond to those who don’t have a voice In the end this is all about redistributing income and power.”

She added: “Seventy five percent of people in developing countries live in places that are less equal than they were in 1990.”

Republicans aren't the only politicians who sell out-- Schumer and Murphy

The panellists were scathing about politicians, Wallis describing them as people who held up wet fingers “to see which way the money is blowing in from.”

Author, philosopher and former academic Rebecca Newberger-Goldstein saw the glass half full, drawing on history to prove society does eventually change for the better. She said Martin Luther King was correct in his view that the arch of history might be long, but it bends towards justice.

In ancient Greece, she noted, even the greatest moralists like Plato and Aristotle never criticised slavery. Newberger-Goldstein said: “We’ve come a long way as a species. The truth is now dawning that everybody matters because the concept of mattering is at the core of every human being.” Knowing you matter, she added, is often as simple as having others “acknowledge the pathos and reality of your stories. To listen.”

Mexican micro-lending entrepreneur Carlos Danel expanded on the theme. His business, Gentera, has thrived by working out that “those excluded are not the problem but realising there’s an opportunity to serve them.”

He added: “Technology provides advantages that can lower costs and enable us to provide products and services that matter to the people who don’t seem to matter to society. And that’s beyond financial services-- into education and elsewhere.”

Which, Danel believes, is why business was created in the first place – to serve. A message that seemed to get lost somewhere in the worship of profit.

Two days later, Hogg was still reporting from Davos about how our elites have engendered a feeling of worldwide pessimism and geopolitical tensions by not doing enough to reduce runaway inequality. The Davos elites, who gave us Austerity for monkey politicians like Paul Ryan and David Cameron to espouse, were worried that "the next big revolution will be in regulation rather than innovation."

Laura Tyson, professor of business administration and economics at UC, Berkeley says she's worried that accelerating economic inequality will lead to clashes all over the world, although she focused particularly on the Middle East. "We have not done nearly enough about inclusive growth. We’re now having economic growth with increasing inequality."

Thomas Piketty's former professor, Christopher Pissarides, a 2010 Nobel winner at the London School of Economics, said governments need to use tax revenues to create jobs but saying what you might expect someone with a "Sir" in from of his name warned that punishing the rich is not the way to go. "I don’t think taxing high incomes and simply taking the money and passing it on as transfers to lower incomes can work in today’s open globalised world," he said. Parroting the standard age-old, right-wing world view, he insists that redistribution takes away the incentive for lower-skilled people to acquire skills and go into the labour market and creates disincentives for higher earners to stay in the country, work hard and look for new ventures to make money." Yes, he could be Paul Ryan if he wanted to give up half his IQ. But where he parts ways with garden variety conservatives like Ryan is that he calls on governments to use more imaginative ways of rebalancing incomes by creating more and better jobs at the lower end and investing in better education.

One example of such innovation, Pissarides said, is in Sweden. Tax rates can be as high as 60% but tax revenues are used to provide services that would not otherwise be created by the free market at a reasonable price. He said the best example is subsidised childcare, which allows both parents to work, and creates jobs for carers.

This, he said, “is boosting the income of the family, as well as the childcare worker because their salary is subsidised, and it reduces inequality.” Couples on lower incomes, who would not be able to afford expensive childcare, can stay in the workforce while raising a family, not just people on high incomes.

One reason this model is so successful in Sweden, he argued, is that people have faith in the state: “You have to have trust in the public sector. There should be no corruption. [In Sweden], because people have trust in the public sector to make use of the money, they pay it and tax evasion is very low.”

The American right-- long before Trump came around-- figured this out and set about-- with a great deal of success-- to undermine that faith and in fact, preach hatred of government and persuade their partisans that "government is the problem, not the solution."

One last bit about how the Davos elites think, a report from Jo Confino, on whether or not the criminal billionaire class thinks it's profitable to just let the world go to hell. He points out, for example, that most CEOs care not a whit about Climate Change.

How depressed would you be if you had spent more than 40 years warning of an impending global catastrophe, only to be continually ignored even as you watch the disaster unfolding?

So spare a thought for Jørgen Randers, who back in 1972 co-authored the seminal work Limits to Growth, which highlighted the devastating impacts of exponential economic and population growth on a planet with finite resources.

As politicians and business leaders gather in Davos to look at ways to breathe new life into the global battle to address climate change, they would do well to listen to Randers’ sobering perspective.

The professor of climate strategy at the Norwegian Business School has been pretty close to giving up his struggle to wake us up to our unsustainable ways, and in 2004 published a pessimistic update of his 1972 report showing the predictions made at the time are turning out to be largely accurate.

What he cannot bear is how politicians of all persuasions have failed to act even as the scientific evidence of climate change mounts up, and as a result he has largely lost faith in the democratic process to handle complex issues.

In a newly published paper in the Swedish magazine Extrakt he writes:

It is cost-effective to postpone global climate action. It is profitable to let the world go to hell.

I believe that the tyranny of the short term will prevail over the decades to come. As a result, a number of long-term problems will not be solved, even if they could have been, and even as they cause gradually increasing difficulties for all voters.

Randers says the reason for inaction is that there will be little observable benefit during the first 20 years of any fiscal sacrifice, even though tougher regulations and taxes will guarantee a better climate for our children and grandchildren.

Trump's standard Republican economic agenda, delivered in Detroit today was geared right towards wealthy donors, not towards workers. For example, he boasted about abolishing the inheritance tax, babbling about how "workers have paid enough," but perhaps not aware that "workers" don't pay a dime of inheritance taxes. In fact no one does except a fraction of the top 1% of earners. It kicks in at around $11 million and that tends-- in real life-- to be unrealized capital gains which hasn't been previously taxed, negating one of the primary right-wing talking points about estate taxes. The whole plan sounded like it could have been written by one of Paul Ryan's interns aimed to increase rather than decrease economic inequality. Just as Señor Trumpanzee was speaking, a new Monmouth poll was released showing Hillary clobbering him 46-34% among registered voters, with Gary Johnson at 7% and Jill Stein at 2%.Among likely voters, it's Hill-dog at 50% and Mr. T at 37%. Independents prefer Trump by 2 points, 32 to 30%, a rapidly eroding advantage.