Economic And Political Apocalypse Is Baked Into Biden-Harris’s Senate-Gated Path Of Business As Usual

 

-by Emorej

Declining Economy And Public Health

Unless there is a massive federal rescue of local governments, and populations dependent on them, quickly after Biden and Harris are sworn in, there will be a perfect storm of rapid economic decline driven mainly by the following:

· More homelessness will hit renters, alongside former homeowners who have been foreclosed upon, and former small business owners who have shut down-- while ownership of real estate (and future rents) will shift even further into a small number of super-rich hands (who are skilled at resisting local government tax increases).
· The increase in homelessness, unemployment and poverty will increase the need for local government services (including those of police and fire departments).
· Most state and local governments, and their employees, will quickly go bankrupt-- as pandemic-deepened revenue decreases, and expense increases, collide with legally and economically constrained borrowing ability.
· Investors who acquire infrastructure from bankrupt local governments (and from bankrupt small businesses) will have no economic incentives to invest in expanding, maintaining or even properly operating that infrastructure for the benefit of people who cannot pay for the services of that infrastructure.
· The healthcare “market,” and especially its “consumers,” which already suffered from the above trends before the pandemic, will continue suffering even more severely until near-universal availability and adoption of vaccine-type solutions (unlikely for at least another year or two), and this suffering will spill over into other markets as people continue to avoid contact with potentially infectious strangers.
· All of the above will, even more than before, (i) increase unemployment, (ii) decrease revenues and profits of most private business, (iii) decrease the tax revenues of all governments, (iv) increase the needs of the populace and the previously mandated obligations of governments, and (v) feed into self-reinforcing feedback loops.

Politics And Procedures

Ensuring occurrence, of the above collapse in the economy and public health, will be Mitch McConnell’s top priority in deploying his Senate veto powers. The only way for Biden-Harris to avoid this blame will be to implement, without the Senate’s consent, major Executive Branch actions including the following:

A. Stop covering up the facts that:

· massive money creation, for the benefit of the investor class, has become routine (and indeed has barely ever been interrupted) over the past 12 years-- as Trump’s Federal Reserve tripled down on the “quantitative easing” (bank and investor bailouts) ramped up by Obama’s Federal Reserve, and
· most of this money has not “trickled down” to 90% of our population because the 90%’s purchasing power has been persistently too low to incentivize investors to invest in employing this 90% to produce more goods or services for this 90% to purchase.

B. Connect the above trillion-dollar dots to admit and explain to voters the facts that:

· taxes don’t “pay for” money creation or for spending by the Federal Reserve or by other arms of the federal government, and
· inflation is caused not by money creation itself, but only by a narrower causation chain: in which, in some economic circumstances, (i) increase in money being spent, (ii) causes increase in demand for particular goods or services, (iii) at times when supply of those same goods or services cannot be quickly increased at similar cost-- by the market or by the government.

C. Increase the purchasing power of the entire population (without most of the “means testing” that becomes largely unnecessary once inflation is demystified) by:

· redirecting the now-routine massive flow of money newly created by the Federal Reserve, and
· exploiting the Treasury Department’s constitutionally-specified power to mint “commemorative” coins, while simultaneously
· increasing the supply of any under-supplied goods and services, (i) primarily, through incentives for private market participants (subject to regulation of unfair competition), and (ii) secondarily, through direct government investment or provision of services (by the federal government or by local governments enabled by flow of the above newly created money).

D. Tattoo the words “market failure” on the forehead of every post-Keynesian economist and, if any of them don’t have pension accounts over-stuffed with bribes from rich ideologues, encourage them to supplement their social security payouts by working as comedians telling jokes with punchlines like:

· “Assume a can-opener,” and
· “That can’t be a $20 bill on the sidewalk because, if it was, then somebody would have already picked it up.”

The joke has been on the 90%, while the investor class has been picking up ever-more dollars from public sidewalks during the last decade-plus, making ever-more obvious the hollowness of the still-ruling ideology of “hard money” (“for little people”).

If Biden-Harris spend even a few months pretending, to still not ‘get’ that this ideology has become a joke, then, without Trump’s personality and pandemic to run against, the Democrats will suffer from the 2024 Presidential election becoming the mother of all anti-incumbent waves.

Poor People Are Most Likely To Be Infected And Most Likely To Die In The Pandemic. Who's To Blame?

Even if you're not as well-off as David Geffin and sailing your yacht around the Grenadines, wealthy Americans-- particularly wealthy white Americans-- seem less likely to be infected by COVID-19 and less likely to die of it if they are. Before we get to Eric Levitz' New York Magazine on why Americans don't vote their class, below, let's look at how that has impacted Americans during the pandemic. Multimillionaire Virginia Congressman Don Beyer (New Dem) is not letting the pandemic get in the way of his quest for party leadership. He's been using his position as the previously unheard of vice-chair of the Joint Economic Committee, to gain national name recognition. Last week, he announced the release of a compelling new report reporting why lower income workers and racial minorities are disproportionately impacted by the coronavirus.

With conservatives in both parties, standing firmly against Medicare-for-All, the report shows that Black, Latino and low-income Americans are more likely to have pre-existing conditions such as hypertension, chronic lung disease, diabetes and heart disease, conditions found in nine of 10 Americans hospitalized for coronavirus. In addition, they are more likely to do person-to-person work in the service industry-- often without benefits like paid sick leave, health insurance and the flexibility to work from home. Black, Latino and low-income Americans are also more likely to suffer economic impacts from the recession caused by coronavirus because they historically experience higher unemployment rates, lower income and much less wealth.

Beyer: "As a result of a corrosive cocktail of systemic inequalities, tens of thousands of people across the country are more likely to die from the coronavirus because of who they are, what they do and where they live. Not everyone has a job that will allow them to work from home and those that do not are disproportionately low-income and people of color. Public-sector jobs that have been pathways to the middle class for so many black families-- essential jobs to keep society running-- are now risky. I keep thinking about the black bus driver in Detroit who, like so many of those in the service industry, was torn between a paycheck and protecting his health-- a few weeks after complaining about the lack of health protections on his bus he died of coronavirus. As Congress thinks through how to help the nation respond and recover from the coronavirus, it is important that we remember that race neutral programs and policies do not always have race neutral impacts. We saw this play out with some of the small business programs that were included in previous legislative responses to the coronavirus-- even though they are eligible, small-business owners of color are having a harder time accessing federal loans through their local banks. I am pleased that in the bill passed yesterday we improved access by ensuring more funds are available to minority-owned businesses."

And best of luck to him. The report-- which makes it clear that "COVID-19 has focused attention on the high human cost of structural inequalities in American society" is very much worth reading. "Economic inequality in the United States strongly determines who will be most likely to be hospitalized or die from COVID-19 and who will be most harmed by its economic impact. As a result, the virus likely will increase inequality, disproportionately hurting the poor, working poor and communities of color. If these underlying conditions are not addressed, the next pandemic could have even more painful results."

Now, to Levitz' essay. "In the mid-20th century," he wrote, "a voter’s socioeconomic position strongly predicted his or her partisan allegiance: In Britain, France, and the United States, voters with low incomes and only a high-school education tended to support left-of-center parties, while high-income, highly educated voters aligned with those of the right. In all three nations, this is no longer the case. All else equal, lower-income voters are still more likely to “vote blue” in the U.S. But that tendency is much weaker than in the past. Meanwhile, the relationship between educational attainment and partisan preference has flipped: Now, college-educated voters are more likely to support putative workers’ parties, while non-college-educated ones tend to favor conservatives."

The decline of class-based voting has long troubled the American left. And for good reason. Voters without four-year degrees are more numerous than those who have them, and America’s political institutions give the former disproportionate influence over election outcomes. For this reason, among others, the Republican Party has fared much better in the era of class depolarization than it did in the preceding one.

What’s more, the declining salience of class identity has exacerbated the challenge of enacting progressive reform, even when Democrats do manage to secure power. Corporate America and the typical worker do not meet each other on an even political playing field. Effective civic engagement requires resources. It takes money to finance campaigns, time to monitor legislative and regulatory developments, and organization to bend those developments in one’s favor. The Chamber of Commerce can shoulder these costs much more easily than isolated working people. Traditionally, the left’s formula for overcoming this fundamental disadvantage has been to (1) help workers collectivize the costs of political engagement by organizing into trade unions, and (2) exploit the working class’s numerical supremacy to overwhelm capitalist opposition. Or, as socialist sloganeers have summarized it: They’ve got money, but we’ve got people; we are many, they are few.

But once workers stop organizing into unions, and stop voting on the basis of class identity, they cease to be “many” in the operative sense. Both major parties become intra-class coalitions in which working people’s interests as workers are either balanced against those of corporate coalition partners (as in the Democratic Party) or ignored (as in the GOP). Meanwhile, absent the concentration of working people into one dominant partisan coalition, America’s veto-point-laden legislative institutions-- and the tendency of staggered presidential and midterm elections to produce divided government-- render large-scale reform of any kind a Herculean task.

Put all these considerations together, and it seems less than coincidental that the decline of class-based voting in the U.S. (and Britain and France) has corresponded with an upsurge in income and wealth inequality.

...The fact that Sanders boasts more support among suburban college graduates than whites with low levels of education shouldn’t be surprising. His agenda may have more to offer the latter in material terms. But in the contemporary U.S., college-educated whites tend to evince more progressive policy preferences than non-college-educated ones even on matters of redistribution. In a national survey fielded earlier this month, the progressive think tank Data for Progress asked voters, “Do you think it is the responsibility of the federal government to see to it that everyone has health-care coverage?” College-educated white voters said “yes” by a margin of 50 to 39 percent; among non-college-educated white voters, that margin was 43 to 39 percent.

The results of Maine’s 2017 referendum on Medicaid expansion lend credence to this finding. Given the opportunity to expand the availability of socialized health insurance, the most highly educated parts of the Pine Tree State voted in favor, while the least well-educated regions voted against. Material interests weren’t entirely irrelevant to voting patterns: Researchers found that, if one held education constant, then areas with higher incomes were more likely to oppose Medicaid expansion. But an area’s median income was still a less reliable predictor of its support for the policy than its average level of educational attainment; college trumped class.

This same dynamic is reflected in the ideological tendencies of the Democratic Party’s congressional caucus. Democratic House members who represent districts with above-median levels of college-educated white voters are more likely to belong to the Progressive Caucus-- and to co-sponsor Medicare for All-- than those who represent districts with above-median levels of non-college-educated white voters.

Democratic senator Joe Manchin represents a state whose median income is $45,000 a year. He is among the most conservative Democrats on Capitol Hill, and said in 2019 that he would not vote for Bernie Sanders in a race against Donald Trump. Manchin’s House colleague, Ro Khana, represents a constituency whose median income is $141,000. Khana is among the most left-wing members of Nancy Pelosi’s caucus and co-chaired Bernie Sanders’s campaign. This is difficult to explain if one posits a tight correspondence between an area’s class composition and its appetite for social democracy. But it’s much less mysterious if one presumes a correlation between high levels of education and support for progressive politics: 60 percent of the adults in Khana’s House district are college graduates, while just 20 percent of those in Manchin’s West Virginia boast bachelor’s degrees.

...The left has good reason to lament the decline of class politics. Class-based political organizations were the muscle behind virtually every major progressive reform in U.S. history. And a radicalized working class is a much more plausible agent for democratizing capital ownership than are affluent liberals (however comfortable the latter may be with western European–style social democracy). More mundanely, unless the Democratic Party staunches its bleeding with non-college-educated voters, it will struggle to assemble Senate majorities.

But in the absence of a strong trade-union movement or laborite media, class position exerts a much weaker influence on voting behavior and policy preferences than some socialists have assumed-- while higher education exerts a much stronger one. Some of America’s most ardent dialectical materialists are themselves affluent college graduates whose politics grew more radical during their time at university. If academic socialization could teach such children of the upper-middle class to prioritize Marxist convictions above their 401(k)s, why couldn’t it also teach millions of “normie” college-educated Democrats to prize progressive principles above their marginal tax rates?

None of this is to say that leftists shouldn’t be fighting for the hearts and minds of white high-school graduates. Class position does not mechanically determine ideology. But neither does race or education. Tens of millions of white, non-college-educated voters cast their ballots for Democrats every election year, and the party could not survive without their support. There is no inherent reason why a larger percentage of this demographic group can’t be won over to progressive politics. But there’s little evidence that mere advocacy for social democratic reform will overwhelm the contingent reasons for the prevalence of white working-class conservatism and/or nonvoting. Only left-wing institutions with a footprint in non-college-educated voters’ workplaces and communities can plausibly overwhelm the hegemony that right-wing media exercises over the median white American’s political imagination. Whatever flaws the left’s account of class depolarization may have, its critique of the Democratic Party’s malign indifference to organized labor’s fate is unimpeachable. The failure of every unified Democratic government since the Second World War to prioritize labor-law reform doubtlessly exacerbated the rightward drift of the white working class.

Nevertheless, for the purposes of near-term electoral strategy, the left must presume that the class composition of the Democratic coalition cannot be drastically changed in the course of a single campaign-- and that college-educated Democrats are as “natural” a constituency for the party’s progressive wing as any other.

Today's Democrats can only win when "luck" defeats Republicans

Bernie's Tax Excessive CEO Pay Act

I got my first job-- when I was still in high school-- working in a print shop. I started out as a minimum wage worker, making $1.15 an hour. The first time I realized I was, as the president of a division of TimeWarner, making $1,000,000 a year, I was astounded and even confused. I managed to justify making that much money to myself but I was never comfortable about it and it made me eager to retire, not stick around and make even more. I've been very sympathetic with Bernie's campaign plank about eliminating those kinds of salaries for CEOs by taxing the companies that hand them out and yesterday I was happy to see that he had teamed up with Barbara Lee and Rashida Tlaib to introduce the Tax Excessive CEO Pay Act in both House of Congress. This is right from Bernie's platform:

In America today, corporate greed and corruption is destroying the social and economic fabric of our society, where a small group of ultra-wealthy CEOs are making the decisions that increasingly determine our economic, environmental and political future. For too long, these greedy corporate CEOs have rigged the tax code, killed market competition, and crushed the lives and power of workers and communities across America. Year after year we’ve seen wages slashed and thousands of workers laid off, all while the richest corporate CEOs pay themselves huge bonuses. They got away with it through a broken campaign finance system, where a few large campaign donations can get you the ear of any politician.

Now Donald Trump, the most corrupt president in history, has brought this corporate corruption straight into the Oval Office.

Enough is enough. With Bernie’s Corporate Accountability and Democracy Plan, we will give workers an ownership stake in the companies they work for, break up corrupt corporate mergers and monopolies, and finally make corporations pay their fair share. When Bernie is president, we’re going to put an end to the corporate greed ruining our country once and for all.

In America today, corporate greed is destroying the social and economic fabric of our society and rapidly moving our nation into an oligarchy, in which a small handful of multi-billionaires increasingly determine our economic, environmental, and political future.

Today, the richest 10 percent of Americans own an estimated 97 percent of all capital income-- including capital gains, corporate dividends, and interest payments. Since the 2008 Wall Street crash, 49 percent of all new income generated in America has gone to the top 1 percent. The three wealthiest people in our country now own more wealth than the bottom 160 million Americans. And the richest family in America-- the Walton family, which inherited about half of Walmart’s stock-- is worth $200 billion and owns more wealth than the bottom 42 percent of the American people.

While the corporate profits that presently go to a small number of ultra-wealthy families are at or near an all-time high, wages as a percentage of our economy are near an all-time low.

Instead of using their massive profits to benefit workers and our society as a whole, corporate America has pumped over $1 trillion into stock buybacks to reward already-wealthy shareholders and executives since the Trump tax plan was signed into law. Meanwhile, as the very rich become ever richer, the average hourly wage of the American worker has gone up by just 1 percent from where it was 46 years ago, after adjusting for inflation. Since 1982, the Walton family has experienced a more than 10,000 percent increase in its wealth, while the median family in America has less wealth today than it did 37 years ago.

The reality is that today the executives and biggest shareholders of most large, profitable corporations could not give a damn about the working class or the communities in which our corporations operate. Those who control these behemoth corporations have only one allegiance: to the short-term bottom line. What happens to their employees, what happens to the environment, and what happens to the community in which their firms function matters very little. These are not really American companies-- they are companies currently located in America at most, and increasingly aren’t even incorporated here but instead merely selling here. Tomorrow, if the economics made sense to them, they could be located in China-- and already they are incorporating in offshore tax havens like Bermuda and the Cayman Islands to avoid paying U.S. taxes.

This type of greed is not an economic model we should be embracing. We can do better; we must do better.

The establishment tells us there is no alternative to unfettered capitalism, that this is how the system and globalization work and there’s no turning back. They are dead wrong.

The truth is that we can and we must develop new economic models to create jobs and increase wages and productivity across America. Instead of giving huge tax breaks to large corporations that ship our jobs to China and other low-wage countries, we need to give workers an ownership stake in the companies they work for, a say in the decision-making process that impacts their lives, and a fair share of the profits that their work makes possible in the first place.

If workers had ownership stakes in their companies and an equal say on corporate boards:

• Corporations would be far less likely to shut down profitable factories in the United States and move abroad;
• CEOs would not be making over 300 times as much as their average workers; and
• Companies would be far less likely to pollute the communities in which workers live.

The time has come to substantially expand employee ownership in America. Study after study has shown that employee ownership increases employment, increases productivity, increases sales, and increases wages in the United States. This is in large part because employee-owned businesses boost employee morale, dedication, creativity and productivity, because workers share in profits and have more control over their own work lives.

Employees in worker-owned companies are not simply cogs in a machine owned by someone else. They play a central role in determining what the company does and how it is run.

By giving workers seats on corporate boards and a stake in their companies, we can create an economy that works for all of us, not just the 1 percent. Not only are we going to make it much easier to join a union and much harder to misclassify workers through the Workplace Democracy Act and increase the minimum wage to $15 an hour. With this proposal we are going to fundamentally shift the wealth of the economy back into the hands of those who create it.

The bill that Bernie, Rashida Tlaib and Barbara Lee introduced yesterday-- the Tax Excessive CEO Pay Act-- would impose tax penalties on large companies that overpay their top executives at the expense of their employees, in other words, companies that pay their CEO more than 50 times as much as their average employee. It would impose tax penalties that will add 0.5% to the federal corporate income tax rate on companies with gaps of 50 to 1, and increase gradually, topping out at 5% on companies that pay their CEO more than 500 times median worker pay.

The bill will include something like 80% of the S&P 500 companies, who pay their CEOs more than 100 times what their average work gets. They can continue doing it; they'll just be taxed for doing it-- over $17 billion more among those S&P 500 companies, annually. Billionaires called the proposal "extremely unfair."

Mark Gamba is the progressive mayor of Milwaukie, Oregon, the candidate for the sprawling 5th congressional district of that state. Last night he told us that "If I were in Congress already, I would be the next to co-sponsor this important bill. For all the reasons given, extreme inequity is destructive and I would add that the trend of continuing to pay executives exorbitant wages, benefits and bonuses while the working class gets poorer, is also destructive to capitalism. America's economy is powerful BECAUSE of the middle class not in spite of it. If the current trends continue, we will completely hollow out the middle class, thereby eliminating the purchasing power of the vast majority of the population. The rich can only buy so many i-phones. With any luck, this bill will have the desired effect of reducing this inequity, if not, the funds raised can be used to begin to solve some of the many problems that these overpaid CEOs cause with their short term thinking. Housing and day care affordability could be addressed, improved transit could be made free. These are typically three of the largest expenses any family faces, and for many, they eat up their entire paycheck. It is time to reign in runaway capitalism before it destroys our economy and our planet."

Some of the groups that have already endorsed the bill include the AFL-CIO, the Communications Workers of America, the Americans for Democratic Action (ADA), the National Council of Churches, the Campaign for America’s Future,Public Citizen, the SEIU, the Center for Popular Democracy, the International Brotherhood of Teamsters, the Working Families Party, Take On Wall Street, Our Revolution and Social Security Works. This is the letter they sent to Congress, urging other members to sign on:


We write to strongly endorse the “Tax Excessive CEO Pay Act” to be introduced by Senators Bernie Sanders, Congresswoman Barbara Lee, and Congresswoman Rashida Tlaib. We encourage you to become an original co-sponsor of this important legislation, which will be introduced on Wednesday, November 13.

As you well know, while worker wages have largely stagnated, CEO pay has skyrocketed over the past several decades. In the 1950s, CEOs made 20 times more than their median employees. Last year, the average S&P 500 CEO made 287 times their median worker pay.

The more corporations channel into executives’ pockets, the less they have for wages and other investments. By putting a tax penalty on corporations with extreme pay gaps, the bill would give corporations an incentive to narrow their divides by lifting up the bottom and bringing down the top of their pay scale.

The tax would also discourage the outrageous levels of compensation that give executives an incentive to take excessive risks. Wall Street’s reckless “bonus culture” proved a key factor in the 2008 financial crisis. Current executive compensation practices also contribute to short-term decision making that leaves payrolls, employee training, and R&D budgets slashed. Academic research indicates that extreme pay gaps also undermine business effectiveness by lowering employee morale, which in turn, reduces productivity and increases turnover.

Under this bill, the wider a company’s gap between CEO and median worker pay, the higher their federal corporate tax rate. The tax penalties would begin at 0.5 percentage points for companies that pay their top executives between 50 and 100 times more than their typical workers. Companies that pay top executives over 500 times worker pay would face the highest increase in their tax rate, at 5 percentage points.

The bill would raise an estimated $150 billion over 10 years that could be used to reduce inequality. The Institute for Policy Studies looked at the 80 percent of S&P 500 companies with pay ratios of 100 to 1 and higher in 2018. If the bill’s proposed tax penalties had been in place, these firms would’ve owed as much as $17.2 billion more in federal taxes.

Americans across the political spectrum are outraged about today’s extreme pay gaps. A Stanford survey found that 52 percent of Republicans want to see a fixed cap on CEO pay relative to worker pay-- a more radical approach than a tax penalty on large disparities. A new Gallup analysis concludes that a CEO-worker pay gap tax “fits well with existing public opinion” and likely enjoys “majority support.” This bill would encourage corporations to narrow their gaps, reducing poverty and inequality all across the United States, while holding companies with outrageous CEO pay ratios accountable.

We thank Senators Bernie Sanders, Congresswoman Barbara Lee and Congresswoman Rashida Tlaib for introducing the Tax Excessive CEO Pay Act legislation and look forward to working with you to make it law.

First co-sponsor in the Senate: Bernie's dear friend and, hopefully, 2020 running-mate, Elizabeth Warren.

Judging by his excessively and extreme Wall Street-friendly posture and record in Congress, I don't think New Dem Bill Foster is going to rush to sign on as a co-sponsor to this legislation in the House. Rachel Ventura, his progressive challenger, is another matter. She old us today that "If I was in Congress now, or if I am sworn in in 2021, I would support the Excessive CEO PAY CUT ACT. I think we should rename it the 'Excessive CEO Pay Cut Act' act so people know that we've had enough of CEO's making millions of dollars per week while working families scrape by. Members of the United Autoworkers Union stood on the strike line for more than a month while the CEO of that company made $22 million a year. The UAW members that I talked to, some of them were also single mothers, were all making between $17 and $25 an hour while the CEO was making $10,500 per hour. I mean, that's not even close! That means that the CEO is making 420X what the top line worker is making. Teachers in Joliet are getting ready to go out on strike. A first year teacher makes in the neighborhood of $43,000/year and the Superintendent makes close to $250,000 per year in compensation and benefits. What you get is a much closer ratio where the person in charge is making six times more what the lower wage teacher makes. So in addition to the argument that we need to get rid of excessive CEO salaries let me also make the argument that the public sector is so much less extreme in wage gap than the private sector. We need to think about bringing our energy sector into the public sphere instead of the private, saving taxpayers millions!"

This proposal right up Arizona progressive Eva Putzova's alley. It's what she's all about and has a lot to do with exactly why she's running for Congress against "former" Republican, Blue Dog Tom O'Halleran. "My day job," she told us this morning, "is to increase workers' wages and improve working conditions in the restaurant industry. When it comes to pay gap, large restaurant chains are among the worst offenders: McDonalds' CEO makes 2,124 times more than the median McDonalds' worker. This gap is 7.4 times higher than the S&P 500 CEO/worker ratio. We have to start taxing companies that continue to exacerbate inequality and hold them accountable. I will be happy to support Reps. Lee and Tlaib's Tax Excessive CEO Pay Act when elected to Congress."

Another economic royalist, as FDR used to put it, Jim Costa (Blue Dog-CA), is not exactly a booster for Bernie's new bill, despite representing a Central Valley district whose residents would benefit from it in a major way. Costa finally has a progressive opponent, Kim Williams, who noted earlier today, "As Axios reported, more than 53 million people-- 44% of all workers aged 18-64-- are low-wage earners. Rural areas, like mine, are particularly hard hit as medium-sized businesses and worker-protected jobs are in short supply. Many people are forced to work multiple low paying jobs for the corporate giants we all know well. These same corporations write checks every two years to millionaire incumbents like Jim Costa, and they’ve made a healthy return on their investment. We need more representatives to support Sanders, Lee, Tlaib, and the thousands of working class families who have played by the rules and still can’t make it." Please consider tapping on the thermometer above and supporting Williams, Ventura, Putzova and Gamba.

Chicago Zip Codes Shouldn't Determine Which Side Of The City's 30 Year Life Expectancy Divergence You're On

This map of Chicago from The Economist shocked me as the magazine makes the point that if you take a ride along Chicago's red line-- a rail service running north-south for 23 miles-- life expectancy varies by 30 years from one end to the other! Thirty years! In a developed country! In the richest country in the world! And it's not all caused by the epidemic of opioid addiction and the NRA-GOP worship of fire arms.

In the last decade, Chicagoland stopped sending Republicans to Congress. But there are still worthless conservatives representing the area. And if Dan Lipinski is the worst and best known, he isn't the only one. Blue America has 4 strong progressive candidates running in primaries against 4 Democratic incumbents who are not part of the solution-- Marie Newman, Kina Collins, Robert Emmons and Rachel Ventura. I asked all four to look at the map and help me understand it. Marie-- who is running for the seat occupied by Lipinski-- was the first to respond. "Environmental, economic and racial injustices are clear and stark in the Chicago area. This affects my district, IL-03-- the southwest side of the city and suburbs-- dramatically and everyday. My platform was built on addressing the environmental crises in my district as well as the income divide and addressing hate head on. We need to create equality and we need to do it now."

That probably has something to do with presidential candidates Bernie, Elizabeth Warren and Cory Booker endorsing her-- not to mention congressional superstars AOC and Ro Khanna, despite warnings from the DCCC not to.

Kina Collins may not be as well known yet, but we've got to change that. In fact, even before The Economist published the map, she was the first to talk with me about the huge disparity in life expectancy and told me it went into her decision to run for Congress. "In IL-07 we have the largest life expectancy gap in the country from Streeterville with an average age of 90 years just 10 miles south to Englewood with an average life expectancy of 60 years. I am running on a healthcare reform platform to address this health inequity not only in Chicago, but across the country. Your ZIP code should not determine whether you get quality healthcare or not, and we must address the institutional racism and inequity that is built into the healthcare system. Before I announced my candidacy for Congress, I worked as the National Organizer for Physicians for a National Health Program, a national non profit of 20,000 doctors and medical students fighting to secure a single payer medicare for all system. Healthcare is everything, from the water we drink to the air we breathe. That's why when elected I will work to close the healthcare equity gap by supporting Medicare-For-All and a Green New Deal."

While canvassing in New Lenox yesterday, Rachel Ventura told me that "One's life expectancy, chances of getting into college, or median household income should not be determined by the zip code you live in. This map underscores the need for a single-payer, improved Medicare for All system that provides high quality healthcare for every resident of the United States. Additionally, one might consider that life expectancy is negatively impacted in poor areas because of increased levels of pollution. While there are no multiple shades of red to parse out life expectancy in the 11th Congressional District, I am certain that residents who live near the Will County refineries (Citgo and Exxon Mobile) or coal ash pits have lower life expectancy rates. I'm sure that those who live in the more affluent parts of the 11th district retire earlier, earn more money, have access to higher levels of education and better healthcare. We need to close the wealth gap, pass the green new deal and win Medicare for All. This won't happen with a multi-millionaire representing the district who opposes these substantial changes."

Robert Emmons is the last of our Chicagoland candidates but he's running in the first district. Tragically, he lost his best-friend to gun violence in 2015. Robert told me "his death was (statistically speaking) predictable. It was predictable because he was living in a society that failed him-- and our community-- at every turn. Our economic system failed him, our education system failed him, our racist criminal justice failed him. Let’s be clear, his murder was 100% preventable. It was preventable with a living wage, universal pre-k, Medicare-for-All, and a Green New Deal. We must approach the epidemic that is gun violence as a public health crisis, and then eradicate the disease once and for ALL. Zip code should not define whether or not you live or die. When we elect progressives to Congress, we send that message loud and clear."

Sheldon Adelson vs Bernie... Plutocracy vs Democracy

A nexus of pure, unadulterated evil-- Trump and the Adelsons

Sheldon Adelson bought the biggest newspaper in Las Vegas for 140 million dollars. His net worth is something like 32 billion dollars and he represents the interests of the far right Likud Party among Republicans in the U.S. His bribes to Trump are over $25 million. He gives immense sums to Republicans in Congress. Bernie specifically named him in his wealth tax proposal, since he would owe $2.6 billion more in taxes when Bernie's proposal becomes law. The day after Bernie's proposal was made public, Adelson had one of his flunkies write an editorial for his newspaper: Bernie Sanders wants to eliminate rich people. Chock full of lies, it does make one of Bernie's points very well: the over-indulged super-rich are destroying democracy with their immense, untaxed wealth. Adelson:

One of Bernie Sanders’ charms, according to his followers, is that he’s an unapologetic advocate for his beliefs. Never mind that most of the 20th century stands as a monument to the catastrophic dangers of his collectivist philosophy, Bernie’s no phony!

True to form, comrade Sanders this week unveiled how he plans to pay for the gargantuan expansion of the federal government that will be necessary to provide his extensive handouts: He plans to harness the power of the state to fatten the Beltway bureaucracy with a new trillion-dollar pipeline carrying other people’s money.

Sen. Sanders would impose a “wealth” tax of up to 8 percent on rich Americans-- those making more than $16 million annually. His advisers project the new levy would raise $4.35 trillion over a decade, allowing a Sanders administration to pay for free health care, free day care, free college, free housing, free electric vehicles, free electricity and whatever else it can dream up to give away. Members of the Sanders camp also tout the proposal as a way to eliminate billionaires and to attack income inequality.

As for the latter, they have a point. Simply outlawing the accumulation of wealth and raiding the assets of high-earning Americans might indeed reduce income disparities-- by making everyone poorer. Is it any surprise that Bernie can barely bring himself to condemn the quasi-Marxists who have run Venezuela into the ground?

All this will no doubt appeal politically to certain voters who are unconcerned about the practical or moral intricacies of tax policy as long as they’re not the ones paying. But Sen. Sanders is notably silent on the economic ramifications of his confiscatory approach-- and how they might hurt the “little people” he supposedly wants to help.

“A wealth tax would have unknown effects on economic growth,” The Wall Street Journal reported. “The founders of successful companies would have a harder time holding on to controlling stakes as they grow.”

Meanwhile, Tyler Cowen of the Mercatus Center at George Mason University notes that a wealth tax would almost certainly lower “investments in human capital and the creation of new businesses.” That, in turn, means fewer jobs, lower wages and economic stagnation, hardly a recipe for uplifting lower-income Americans.

In real terms-- as opposed to the fantasyland of Sen. Sanders’ campaign rhetoric-- a wealth tax would be constitutionally dubious, destructive for Americans of all income levels, impossible to get through Congress and a nightmare to enforce and administer. But give straight-shooter Bernie credit: He’s upfront about his plans to destroy the U.S. economy.

It's hardly news that greedy billionaires don't want to pay taxes or that Bernie intends to change the fundamental way the economic abundance of this country is distributed. "Follow the money," said Brianna Wu, the progressive candidate taking on Boston New Dem Stephen Lynch. "Housing affordability is a crisis in Massachusetts, and who’s funding Lynch’s campaign? Real estate conglomerates. Health care costs are out of control, and the same people profiting from that price gouging are funding Stephen Lynch. As long as politicians are taking cash from billionaires, billionaires will continue getting the better end of the deal."

Shan Chowdhury, is running against the most corrupt New Dem in New York, Gregory Meeks, a Wall Street owned-and-operated hack who sits on the House Financial Services Committee, carrying water for the banksters. "The fact Adelson uses the term 'human capital' is gross and solidifies the rich and powerful only wanting to keep their wealth, and have no interest in reducing harm imposed by the current market," Chowdhury told us this morning. "It does not make sense to impose heftier taxes on people who do not have money, while the rich reap the benefits from tax cuts. We know it did not work with Reaganomics. It destroyed households and made people poorer. We can tax the richest people in the world up to 8% and they would still have more wealth than a lot of everyday people. By closing the wealth gap, we can retrieve funding for resources such as Medicare for All, Free Public College Tuition, and Guaranteed Homes. Having basic necessities will motivate consumers to participate in the economy. What’s even better about Sen. Bernie Sanders’ proposal is that it will cut away at big money influencers in our democracy. Let’s wipe out billionaires who pay elected officials to their bidding and make politicians accountable to the people. NO Finance, NO Insurance, NO Real Estate-- just the Working Class of America."

Rebecca Parson is the newest primary candidate Blue America has endorsed. This is an amazing woman, unlike anyone I've listened to talk about going to Congress since the first time I spoke with AOC. Rebecca is running for the Washington seat held by the head of the Wall Street-owned New Dems. What an amazing replacement she will be for him-- just as AOC has been for a former head of the New Dems! "Let's give credit where credit is due," she said this morning on reading the piece from Las Vegas. "Adelson is correct that a wealth tax would be impossible to get through Congress-- that's why we need a new Congress. One that isn't beholden to billionaires and their insatiable greed. Only then will we be able to get policies through that benefit the working class instead of the coddled-yet-ruthless billionaire class."

In Washington's 6th Congressional District, democratic socialist Rebecca Parson is fighting for just such a change. By rejecting corporate PAC and lobbyist money, she is free to pursue policies that nurture the working class and poor: national rent control, more social housing, Medicare for All, a federal jobs guarantee, and the Green New Deal. Her opponent Derek Kilmer, by contrast, takes millions in corporate cash every cycle and repays their generosity handsomely: by refusing to support Medicare for All or the Green New Deal. By voting to fast track the TPP against the express wishes of every labor union in his district. By voting to cut food stamps for 1.7 million people.

As Rebecca said herself, "It's time for a Congress that answers to the people, not its billionaire captors." Rachel Ventura is also running for a seat-- this one in Illinois-- occupied by a New Dem. Please consider contributing to all four of these extraordinary candidates by clicking on the Blue America primary thermometer over. Rachel told us that "The problem with having a millionaire as a representative, is that they are out of touch with the majority of the constituents in my district. In February of this year I approached Congressman Foster about signing on to the Medicare for All bill. I had just gone two years without insurance and was forced to pay the mandatory ACA penalty because it was cheaper than paying for coverage. It occurred to me that maybe he just doesn’t get it because he has probably never had to live without insurance." She continued:

When considering my finances as a single mom working two jobs, I had to make hard decisions like choosing to purchase life insurance (a cost of $300 per year) over health insurance ($13,000 per year). I made this choice because I feared what it meant to not have coverage in America. If the worst should have happened at least my children would have the death benefit. This is never a decision a parent should have to make. I remember choosing to not climb a tree with my daughters because an injury might also cause us to lose the house, or my ability to work. Millionaires don’t have to make these choices and they cannot relate to the fears that the rest of us have. They are out of touch with realities that most American’s face when it comes to every day decisions. Since most legislators tend to vote with their experiences and perceptions of their constituents, it means Foster is not able to see my district nor understand the needs of the people who live and work here. More than that, I have witnessed Foster looking down on those who have less. Judging a human being based on their financial state happens too much in this country and it is wrong.

Furthermore, running against an opponent who accepts millions in campaign contribution from only a few donors means he is more likely to represent the wealthy donors than my friends and neighbors in the 11th congressional district. These people, my people, would be better represented by someone who has suffered, made hard choices and “gets it” from real world experience. Wealthy donors means that candidate has the resources to reach voters easier through direct mail and endless TV commercials. In a district like mine where the median income is only $66,000 it means that we will have to stretch our small contributions and reach those voters through door-to-door volunteer efforts.

When looking at how Foster votes, he’s put businesses over American’s with Disabilities when he joined Republicans to gut the Americans with Disabilities Act (ADA). When he voted against net neutrality, he effectively said that those who can afford the highest speed internet should be able to buy it. He believes in a tiered healthcare system where poor people have something that “isn’t great,” but the rich can still afford the best. This is someone who clearly does not have me and my family in mind.

To make matters worse, he doesn’t even own property in my district. Initially in 2008 he was the representative of the 14th district and lost the seat. In 2012 he invested enough money to buy the IL 11th congressional seat, but chose to rent an apartment in Naperville.

But consider this, Foster is the 48th richest person in Congress at a net worth of $9.4 million. I know it is hard to imagine a male Caucasian multi-millionaire basically buying a congressional seat. Or is it?

And, if he is the 48th richest member of Congress, what kind of representation are the voters getting in those 47 other districts? Voters in Illinois’ 11th district have a chance to change this lopsided representation for the wealthy on March 17th 2020.

Bernie Is Right: There Shouldn't Be Any Billionaires

Yesterday, as soon as Bernie announced his wealth tax proposal-- something he's been working on long before he ran for president in 2016-- Thomas Kaplan was working to undermine its authenticity for NY Times readers by insinuating he was just trying to one-up Elizabeth Warren. "With the proposal," wrote Kaplan in his second paragraph, "Mr. Sanders is embracing an idea that has been a centerpiece of the campaign of his top progressive rival, Senator Elizabeth Warren. But while Ms. Warren came first, Mr. Sanders is going bigger. His wealth tax would apply to a larger number of households, impose a higher top rate and raise more money."

I spoke with Stephanie Kelton about the plan since I knew she had been working on it as a top economic advisor to Bernie, first in the Senate when he was the ranking member of the Budget Committee and then during the 2016 campaign. She told me that Bernie had her and Steve Wamhoff, his tax expert on the Senate Budget Committee, working "on a wealth tax back in 2015. We did a lot of work on it, had meetings at the Joint Committee on Taxation), made recommendations, etc. It takes a long time to do this kind of thing carefully. The numbers came together with input from two of the country’s leading experts on inequality, Emanuel Saez and Gabriel Zucman. It’s clear that the Sanders proposal is about addressing the kinds of extreme concentrations in wealth that are corrupting our democracy." The folks at Patriotic Millionaires agree. In their celebratory e-mail yesterday, they said they "need each and every one of the 2020 presidential candidates to enunciate the problem clearly and put forth real, substantive solutions to wealth inequality in this country." Morris Pearl, former managing director at Blackrock, Inc., and Chair of the Patriotic Millionaires, wrote that "The wealthiest people in this country haven't been paying their fair share for a long time, and part of that problem is because our tax code only taxes the wealthy based on how much income they choose to take each year. The very rich get money not from earning it each year, but from spending wealth that they have already made. If our tax laws only target one without touching the other, then rich folks like me will continue to find ways to game the system and our inequality crisis will continue to get worse. There are many ways to address wealth inequality, and Senator Sanders's wealth tax proposal this morning is a welcome addition to our national tax debate... We are thrilled to see this proposal and look forward to more dialogue on this critical issue moving forward in the debates."

In a note to his supporters yesterday, Bernie wrote that "Our tax on extreme wealth would only apply to the wealthiest households in America and would cut the wealth of billionaires in half over 15 years-- which would substantially break up the concentration of wealth and power of this small, privileged class."

This is how much more in taxes some of the richest people in America would owe this year:

• The Walton family - $14.8 billion
• Jeff Bezos - $8.9 billion
• Charles Koch - $3.2 billion
• Sheldon Adelson - $2.6 billion
• Rupert Murdoch - $1.28 billion

Our plan would raise more than $4 trillion over the next decade and anyone with a net worth of less than $32 million would not see their taxes go up under this plan.

Now, I have never understood how someone could have tens and hundreds of billions of dollars and feel the desperate need for even more. I would think that with the amount of money the 0.1 percent of this country has, they might just be able to get by.

But the truth is, for the past several decades there has been a massive transfer of wealth from those who have too little to those who have too much.

And for the sake of our democracy and for working families all over America who are struggling economically, that has got to change.

In my view, a nation cannot survive morally or economically when so few have so much and so many have so little. Millions of people across this country struggle to put bread on the table and are one paycheck away from economic devastation, while the wealthiest people in this country have never had it so good.

It has got to stop.

And when we are in the White House, it will.

Bernie's proposal taxes accumulated wealth, not just income and Kaplan wrote that it "is particularly aggressive in how it would erode the fortunes of billionaires. His tax would cut in half the wealth of the typical billionaire after 15 years, according to two economists who worked with the Sanders campaign on the plan. Mr. Sanders would use the money generated by his wealth tax to fund the housing plan he released last week and a forthcoming plan for universal child care, as well as to help pay for Medicare for all. He quotes Bernie: "Let me be very clear: As president of the United States, I will reduce the outrageous and grotesque and immoral level of income and wealth inequality. What we are trying to do is demand and implement a policy which significantly reduces income and wealth inequality in America by telling the wealthiest families in this country they cannot have so much wealth."

Asked if he thought billionaires should exist in the United States, Mr. Sanders said, “I hope the day comes when they don’t.” He added, “It’s not going to be tomorrow.”

“I don’t think that billionaires should exist,” he said, adding that there would always be rich people and others with less money. “This proposal does not eliminate billionaires, but it eliminates a lot of the wealth that billionaires have, and I think that’s exactly what we should be doing.”

...Mr. Sanders, of Vermont, would create an annual tax that would apply to households with a net worth above $32 million-- about 180,000 households in total, or about the top 0.1 percent, according to the economists who worked on the plan.

He would create a 1 percent tax on net worth above $32 million, with increasing marginal rates topping out at 8 percent on net worth over $10 billion. For single filers, the brackets would be halved, meaning the tax would kick in at $16 million.

By contrast, the wealth tax proposed by Ms. Warren, of Massachusetts, would apply to households with a net worth above $50 million-- an estimated 70,000 households in total.

The structure of her plan is simpler: She would apply a 2 percent tax on net worth from $50 million to $1 billion, and a 3 percent tax on net worth above $1 billion. Unlike the Sanders plan, the tax brackets would be the same for married and single filers.

• $32 million to $50 million net worth: 1 percent marginal tax rate
• $50 million to $250 million: 2 percent
• $250 million to $500 million: 3 percent
• $500 million to $1 billion: 4 percent
• $1 billion to $2.5 billion: 5 percent
• $2.5 billion to $5 billion: 6 percent
• $5 billion to $10 billion: 7 percent
• Over $10 billion: 8 percent

Elizabeth Warren’s wealth tax proposal

• $50 million to $1 billion: 2 percent
• Over $1 billion: 3 percent

Note: The brackets shown for the Sanders proposal are for married filers; the brackets would be halved for single filers. The Warren proposal uses the same brackets for married and single filers.

Mr. Sanders’s tax is projected to raise $4.35 trillion over a decade, while Ms. Warren’s is projected to raise $2.6 trillion over the same time period. Those estimates were produced by Emmanuel Saez and Gabriel Zucman, two economists at the University of California, Berkeley, with whom both the Sanders and Warren campaigns consulted as they developed their proposals. (The projection for Ms. Warren’s plan differs slightly from their original estimate of $2.75 trillion earlier this year.)

“The Sanders plan is really pitched at the idea that we don’t want billionaires and decabillionaires to be billionaires and decabillionaires for as long as they currently are,” Mr. Saez said. “It’s going to erode their fortunes much faster than the Warren wealth tax.”

Mr. Sanders included several steps in his plan to enforce the tax, including creating a “national wealth registry,” increasing funding for the Internal Revenue Service and requiring audits of many taxpayers who are subject to the wealth tax, including all billionaires.

Mr. Saez and Mr. Zucman calculated how the Warren and Sanders wealth taxes would have affected the fortunes of the richest Americans had each been in effect since 1982. The fortune of Jeff Bezos, the Amazon founder who Forbes said was worth $160 billion last year, would have been $87 billion under the Warren plan and $43 billion under the Sanders plan.

Over all, the economists found, the cumulative wealth of the top 15 richest Americans in 2018-- amounting to $943 billion-- would have been $434 billion under the Warren plan and $196 billion under the Sanders plan.

Mr. Sanders is hardly a newcomer to the idea of a wealth tax. In a 1997 book, he wrote that it was “time, high time, to establish a tax on wealth similar to those that exist in most European countries.” In 2017, he included a wealth tax on a list of financing options for Medicare for all.

Ask yourself, do you want the 2020 election to be about the pros and cons of runaway economic inequality and how to fix it-- or about whose family is more corrupt, Trump's or Biden's, who lies more, Trump or Biden, who is further alone the path to complete senility, Trump or Biden-- and who is the lesser evil, Trump or Biden? Let's have a real debate about real and fundamental issues.

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.