Tag Archives: class

An Idiot’s Guide to Inequality

An Idiot’s Guide to Inequality

JULY 23, 2014

Nicholas Kristof

“We may now have a new “most unread best seller of all time.”

Data from Amazon Kindles suggests that that honor may go to Thomas Piketty’s “Capital in the Twenty-First Century,” which reached No. 1 on the best-seller list this year. Jordan Ellenberg, a professor of mathematics at the University of Wisconsin, Madison, wrote in The Wall Street Journal that Piketty’s book seems to eclipse its rivals in losing readers: All five of the passages that readers on Kindle have highlighted most are in the first 26 pages of a tome that runs 685 pages.

The rush to purchase Piketty’s book suggested that Americans must have wanted to understand inequality. The apparent rush to put it down suggests that, well, we’re human.

So let me satisfy this demand with my own “Idiot’s Guide to Inequality.” Here are five points:

First, economic inequality has worsened significantly in the United States and some other countries. The richest 1 percent in the United States now own more wealth than the bottom 90 percent. Oxfam estimates that the richest 85 people in the world own half of all wealth.

The situation might be tolerable if a rising tide were lifting all boats. But it’s lifting mostly the yachts. In 2010, 93 percent of the additional income created in America went to the top 1 percent.

Second, inequality in America is destabilizing. Some inequality is essential to create incentives, but we seem to have reached the point where inequality actually becomes an impediment to economic growth.

Certainly, the nation grew more quickly in periods when we were more equal, including in the golden decades after World War II when growth was strong and inequality actually diminished. Likewise, a major research paperfrom the International Monetary Fund in April found that more equitable societies tend to enjoy more rapid economic growth.

Indeed, even Lloyd Blankfein, the chief executive of Goldman Sachs, warns that “too much … has gone to too few” and that inequality in America is now “very destabilizing.”

Inequality causes problems by creating fissures in societies, leaving those at the bottom feeling marginalized or disenfranchised. That has been a classic problem in “banana republic” countries in Latin America, and the United States now has a Gini coefficient (a standard measure of inequality) approaching some traditionally poor and dysfunctional Latin countries.

Third, disparities reflect not just the invisible hand of the market but also manipulation of markets. Joseph Stiglitz, the Nobel Prize-winning economist, wrote a terrific book two years ago, “The Price of Inequality,” which is a shorter and easier read than Piketty’s book. In it, he notes: “Much of America’s inequality is the result of market distortions, with incentives directed not at creating new wealth but at taking it from others.”

For example, financiers are wealthy partly because they’re highly educated and hardworking — and also because they’ve successfully lobbied for the carried interest tax loophole that lets their pay be taxed at much lower rates than other people’s.

Likewise, if you’re a pharmaceutical executive, one way to create profits is to generate new products. Another is to lobby Congress to bar the government’s Medicare program from bargaining for drug prices. That amounts to a $50 billion annual gift to pharmaceutical companies.

Fourth, inequality doesn’t necessarily even benefit the rich as much as we think. At some point, extra incomes don’t go to sate desires but to attempt to buy status through “positional goods” — like the hottest car on the block.

The problem is that there can only be one hottest car on the block. So the lawyer who buys a Porsche is foiled by the C.E.O. who buys a Ferrari, who in turn is foiled by the hedge fund manager who buys a Lamborghini. This arms race leaves these desires unsated; there’s still only one at the top of the heap.

Fifth, progressives probably talk too much about “inequality” and not enough about “opportunity.” Some voters are turned off by tirades about inequality because they say it connotes envy of the rich; there is more consensus on bringing everyone to the same starting line.

Unfortunately, equal opportunity is now a mirage. Indeed, researchers find that there is less economic mobility in America than in class-conscious Europe.

We know some of the tools, including job incentives and better schools, that can reduce this opportunity gap. But the United States is one of the few advanced countries that spends less educating the average poor child than the average rich one. As an escalator of mobility, the American education system is broken.

There’s still a great deal we don’t understand about inequality. But whether or not you read Piketty, there’s one overwhelming lesson you should be aware of: Inequality and lack of opportunity today constitute a national infirmity and vulnerability — and there are policy tools that can make a difference.”

1 Comment

Filed under Spotlights

So, hypothetica…

So, hypothetically… if I could take a bunch of MOOCs (Massive Open Online Courses) and read books at Barnes and Noble all day… and then be able to display my knowledge and understanding of the subject on an equal, if not higher, level than a college student… then, hypothetically… why is everyone paying for college again? (Answer: Because a college degree isn’t about education, it’s a class marker. If we cared about everyone being educated, we would accredit free online courses and allow people to achieve intellectual growth and success without going into debt. But that’s not what college is for. I mean, yeah in college you can travel and learn from amazing professors and start your own anything and have access to facilities and resources and money, yeah, college is all that. And I’m not discrediting anyone who loves college but… college, at the end of the day is a business. College is just one more big way to perpetuate the system. But I say f**k the system, man.) #FreeEducationForAll #LearnRadically

– Vanessa Newman (Washington, DC) – haikuology.tumblr.com

theblackcollegian.tumblr.com

(via theblackcollegian)

 

So true it hurts.

Leave a comment

June 26, 2014 · 12:08 am

Creativity Will Drive the U.S. Economy

Creativity can be found in all industries, and we need it to boost the economy

August 9, 2012

“Ten years ago, Richard Florida published his first book about how creativity was emerging as a common element shaping America’s economy, geography, communities, and jobs. Now, in The Rise of the Creative Class: Revisited, Florida reveals updated statistics and discusses how the United States has reached a Creative Age that will be the driving force behind its economic recovery. Florida,director of the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management and founder of the Creative Class Group, recently spoke with U.S. News about how creativity has pervaded every aspect of Americans’ lives, but has also caused a new kind of class divide. Excerpts:

Why is creativity a valuable resource?

When I began to look at this in some detail a little more than a decade ago, I became convinced that it is the key to economic growth. And over the past decade, what has really surprised me is how creativity has started to infuse everything. I noticed all these younger researchers looking at not only arts and culture, and science and engineering, and the traditional knowledge-based jobs, but they’re looking at the transformation of, like, barbershops or butcher shops or distilleries or microbreweries in places all across the country.

Who is the creative class?

Now we have 10 years of research to document it, but what I looked at were occupations, jobs, and the United States Bureau of Labor Statistics. So I began to choose jobs based on which of those jobs use a lot of creativity in work. And it’s interesting, now we’ve had new data which actually enables us to look at the underlying skills in the past 10 years, and the researchers who have looked at that say that there are two key skills that underlay creative work. The first are cognitive or analytical skills—our brain power, our ability to process information to acquire knowledge. But the other one is social skills, and not just the ability to be popular, be a nice person, but the ability to manage teams or manage other people or form a business or manage an entrepreneurial enterprise. And those two skill sets, the cognitive and social skills, are really the ones that distinguish the creative class. About 40 million Americans are members of the creative class.

How has the meaning of the word “creative” expanded or shifted over time?

It was really funny, actually I say this in the preface, when I looked at the term that professionals on LinkedIn most use to define themselves in the past couple years, it was “creative.” I think they would have thought of “creative” in the past as an arts person or maybe a marketing person or a musician or maybe a designer, but you find increasingly people are defining themselves as creative in their work. They also did a survey of CEOs and they said, what is the skill you most value in your people, and they said their creativity, their ability to solve problems, come up with new solutions, use their brainpower to figure things out.

What is the Creative Age?

We had three great ages in recent history. The first was the modern Agricultural Age, and we made progress in agriculture. Then we shifted from the Agricultural Age to the Industrial Age, and that created the great economic revolution and propelled the United States to dominance. But now over the past three or four decades, we have shifted to the Creative Age. We saw that beginning to happen in 1980. In about 1980 you could see more than 20 million new members of our workforce joined the creative class.

Is American society closer to a full Creative Age than it was when you wrote the first book?

Yes, but it’s more divided. The United States has built a stronger creative economy, more of our people work in the creative economy. Unfortunately, our working class has shrunk as manufacturing jobs were eliminated in the crisis. That’s really the challenge of our future: How do we now expand the creative class, which has, say, 35 percent of our workforce and in some cities and metros nearly half, how do we expand that class to include more people and get past this divide? There are the creative class areas and the places that are falling further behind. Even though they offer lower housing prices and many times attractive living, it seems as though the economic benefits—the concentration of these creative class jobs, the ability to pursue it in your career, all the other things that people want—those are in certain areas more than others, so we have this society that’s dividing by class and by community. That’s really what worries me. I talk in the last chapter of the book about the need to build a new creative compact, a social compact of our time that can extend the Creative Age and creative economy to more Americans, can upgrade those service jobs, can make manufacturing stronger, make sure people have opportunity, make sure that cities are strengthened, but that’s hard.”

1 Comment

January 3, 2013 · 5:27 pm