Posts Tagged ‘class’
Tags: cartoon, class, Florida, Jim Crow, laws, politics, Rick Scott, Texas, voters, wages
Tags: class, inequality, inflation, interest rates, macroeconomics, neoclassical, working-class
I have often argued that neoclassical macroeconomics is obsessed with class—and biased against the working-class—even when class is not explicitly represented in the models. That’s because, as I explained here,
neoclassical economists blame workers and their downwardly rigid wages for creating and maintaining high levels of unemployment. If the labor market is flexible, a fall in the price of labor is presumed to eliminate involuntary unemployment. If it’s not, then other means are necessary, such as austerity policies that raise unemployment, thus creating pressure to decrease nominal (and, with them, real) wages with the promise of eventually restoring full employment.
As it turns out, Mark Thoma also understands that macroeconomic policy has class implications.
Which mistake is more costly – raising rates too soon versus too late – is not just a technical question about which of the two mistakes is easiest for policymakers to reverse. We also need to ask who will be hurt the most if the Fed makes a policy error on one side or the other. If the Fed raises rates too soon, it is working class households who will be hurt the most by the slower recovery of employment. If it raises rates too late allowing a period of elevated inflation, it is largely those who lend money, i.e. the wealthy, who will feel the impact. Thus, one mistake mostly affects working class households who are very vulnerable to negative shocks, while the other hurts those most able to withstand economic problems. . .
Why do we hear so much about the need to raise interest rates now rather than later, or get the deficit under control immediately despite the risks to households who are most vulnerable to an economic downturn? Those who are most in need – those least able to withstand a spell of unemployment or other negative economic events – have the least power in our political system.
With the decline in unions and other institutions that used to give workers a voice in the political process along with rising inequality that gives even more power to those at the top, the problem is getting worse. No wonder policy has been tilted so much in favor of those at the top. Fiscal policy in particular has been far too responsive to the interests of those with political power rather than those in greatest need.
If we are going to be a fair and just society, a society that protects those among us who are the most vulnerable to economic shocks, this needs to change. The necessary change won’t come easily, the entrenched political and economic interests will be difficult to dislodge.
But the current trend of rising inequality in both the economic and political arenas along with the rising economic risks faced by working class households due to globalization, technological change, and a political system that increasingly neglects their interests is not sustainable. If these trends continue unabated, change will come one way or the other. The only question is how.
And, of course, one of those possible changes is for the working-class to abolish class entirely.
Tags: cartoon, class, Congress, corporations, debt, dollar stores, inequality, John Boe, mergers, privatization, subsidies, taxes, United States
Tags: class, corporations, housing, law, New York City, Only in America, segregation
Just about a year ago, I reported on the plan to build a mixed high-rise apartment building in New York City that would have separate—rich and poor—entrances.
Well, that plan has just been approved by the city.
The building, one of the last Riverside South towers, at 40 Riverside Boulevard, will be 33-stories with 219 luxury condo units and 55 affordable rental units. The affordable housing allowed Extell to increase the overall size of the project under the Inclusionary Housing Program, although a more accurate name, in this case, would probably be something along the lines of the Inclusionary, But Not That Inclusionary Housing Program. While the luxury condos face the water, the affordable units will be segregated into a street-facing “building segment,” with the separate entrance located in the back of the building. “This ‘separate but equal’ arrangement is abominable and has no place in the 21st century, let alone on the Upper West Side,” local Assembly member Linda B. Rosenthal said after the “poor door” plans came to light last August.
In addition, low-income residents will have separate elevators and will not be able to use some of the building’s facilities—such as gyms, storage units, rooftop space—which will be reserved for high-income residents.
According to the Real Deal, that’s just fine for other developers in the city.
“No one ever said that the goal was full integration of these populations,” said David Von Spreckelsen, Senior Vice President at Toll Brothers, told The Real Deal. Toll Brothers’ 1 Northside Piers in Williamsburg, Brooklyn, has separate entrances. “So now you have politicians talking about that, saying how horrible those back doors are. I think it’s unfair to expect very high-income homeowners who paid a fortune to live in their building to have to be in the same boat as low-income renters, who are very fortunate to live in a new building in a great neighborhood.”
Apparently, as corporations acquire legal personhood and new discriminatory rights, class segregation is becoming established as the law of the land.
Tags: 1970s, 1990s, 2010s, capitalism, cartoon, Cheney, class, economy, inequality, Iraq, middle-class, Obama, United States, war
Tags: class, inequality, Marx, Modern Monetary Theory, surplus, taxes
But I’ve mostly treated them as separate issues (except here). Randall Wray [ht: br] has brought those issues together, building on Rick Wolff’s argument against raising taxes as the solution to inequality.
Rick is absolutely correct that when the public begins to see taxes as a payment for services rendered, then they start trying to calculate whether their own payment is “fair”.
That is a primrose path to hell so far as government services are concerned. Since around 1970 that is exactly what has happened to state and local government finances. In the economics literature it is called “devolution”—moving provision of most government services to the state and local government level, and forcing them to pay for it with taxes.
It encouraged the “donut holes” that devastated cities as the more affluent whites ran off to the suburbs.
With new infrastructure and higher income and wealth in the ‘burbs, relatively low tax rates could provide good services. The cities that were left behind had to raise tax rates on an ever-shrinking tax base to try to provide even basic services.
Witness Camden, NJ, which has essentially abandoned large swaths of its jurisdiction to “Escape from New York” dystopia.
This “stakeholder”, “taxes pay for the goodies I get” view has already reduced much of America to third world living standards. No wonder that Regressives pushed the devolution that wiped out cities.
Now the Progressives want to do the same at the Federal level.
The notion that you’ll significantly reduce inequality through taxes on the rich is a pipedream. How high would taxes have to be on the top few tenths of a percent? 50%? 75%? Forget it. They’d still be filthy rich and you’d be poor by comparison.
As I said in the first instalment [sic], we don’t need taxes for revenue. We can justify taxes on the rich not for revenue purposes but as sin taxes. Look at it this way. Let’s raise sin taxes on the rich to reduce the sin of ill-gotten gains.
How high? 100%? Nay, 1000%. Take everything: all their income, all their wealth, the house, the car, the dog. Don’t let crime pay.
Wray and Wolff agree there are far better and more effective ways to solve the problem of inequality in the United States today than to tinker with tax rates.*
*I’m pleased to see a first step toward an alliance between the views of Modern Monetary Theorists and Marxists (which apparently I was accused of back in 2011). But for that theoretical alliance to develop, we’re going to have to convince Marxist economists to give up their view that “taxes pay for government services” and MMTers to consider the significance of the processes whereby the surplus is produced and distributed.
Tags: class, economics, Gramsci, inequality, Joseph Stiglitz, kleptocracy, mainstream, Marx, politics, Soviet Union
After learning that Joseph Stiglitz had been invited to give a lecture on inequality at the University of Oxford, I asked my friend Stephen Whitefield, Professor of Politics, University Lecturer in Politics, and Rhodes Pelczynski Tutorial Fellow in Politics, Pembroke College, to offer his sense of Stiglitz’s lecture. I am pleased to publish his comments here.
It was a huge pleasure for me and my college (Pembroke) and my Department (Politics and International Relations), with the support of the UK Fulbright Commission, to welcome Joseph Stiglitz back to the University of Oxford to deliver the 4th Annual Fulbright Distinguished Lecture. Stiglitz had been Drummond Professor of Political Economy in Oxford in the 1970s. Of course, he won the Nobel Prize for his work that shows, as I understand it, that when markets don’t function with perfect information—that is to say, almost always–then there is also always room for government intervention to improve welfare outcomes. That was a huge turn in the debate, even if many mainstream economists and their political allies/masters have yet to catch up.
Stiglitz was in Oxford to talk about “The Causes and Consequences of Inequality and What Can Be Done About It,” which topic marks another great turn in the debate about what kind of political economy we want, from thinking that inequality is irrelevant, since all boats are rising, to thinking that inequality matters, because it makes just about everything worse, at least when it is at very high levels. Stiglitz was of course also central to shifting the current of academic opinion on this topic. And he demonstrated in a brilliant talk—which everyone can link to here (as a podcast or video)—that he is not averse to turning that scholarship into powerful and persuasive accessible language. I have also to add that Stiglitz is a great person to talk to. As Ngaire Woods, his old friend, said in her introduction to his lecture, Stiglitz listens to people.
So, I know he will not be at all put out if he reads me to say that, while his dissection of the causes and consequences of inequality was outstanding, his discussion of what can be done about them was rather light. I told him that myself at dinner afterwards, as did others. I am sure that a lot of that would have been sorted out if he had had more time to talk. After all, he is not at all short of policy prescriptions, as are others like Thomas Piketty, who advocates a global wealth tax. But the problem is not that there is a lack of policies to put forward. In my view, the main problem is with the lack of a clear vision about how to build the political alliances that are necessary to enact those prescriptions. Maybe Stiglitz is right that things look better in places like Brazil and that we can learn things from its experience. Becoming Swedish, however, even if we thought that an attractive proposition—and I still have Per Wahloo in mind when thinking about Swedish Social-Democracy—is just not an option. So, how do we create a winning coalition against inequality that looks plausible and appropriate to our national conditions?
Well, I don’t know the answer to that right now. But here is a gesture in that direction. First, an irony—that he gave this talk in Oxford where we are of course constantly seeking the support of the 0.01-percenters, including to fund a chair to commemorate Senator Fulbright in my college and department. There were a number of such people in the lecture theatre. But note next something we all know (or strongly believe since Wilkinson and Pickett), that in highly unequal societies even the richest 1 percent appear to have worse health outcomes compared to their counterparts in more equal societies. Stiglitz did not offer a very convincing explanation as to why this is the case. He put it down to stress, which is possible but not very plausible on the face of it. Susan Kelly, who is a medical sociologist at the University of Exeter, puts a more likely hypothesis to my mind: over-treatment. There is apparently a negative correlation at the top end between numbers of physicians and health outcomes. But, who knows? A good question to research. . .
But, to return to my point about the political coalition to implement a reduction in levels of inequality, what we need to know is this: who are the political actors interested in doing this? This was not addressed in any explicit way by Stiglitz, and it seems to me a characteristic of even progressive policies presented by scholars that the questions of who will implement them and in whose political interests they are enacted are seldom on the table. There is talk—just—in analyses of inequality of class but not much about class interests or class actors. Now, there was an implicit answer in Stiglitz’s talk. Perhaps it is the enlightened rich who will use their massive power to reduce inequality, because they will come to see that it is harmful to their interests. Maybe. I have my doubts. Certainly I would not expect inequality to come down to the levels that I would find economically, socially, or politically appropriate if those were the political forces driving it.
But if not the rich, then who? By the admission of all involved in the analysis of inequality, the period from around 1930 to 1980 was one of declining inequality and of course in the post-WWII period of rapid economic growth as well. A time also, not coincidentally, of strong organised trade unions and a mobilised working class. All that is recognised. Less so is the counterpart in international relations, the existence of the Soviet Union and then the Communist bloc and the international communist movement, which presented an alternative to capitalism that many working-class people found attractive and the rich found terrifying enough to make significant concessions. I suspect it takes a stick as well as a carrot to make the rich see their self-interest differently.
Almost all of that historical moment is gone now, and not all for the bad. As a student of the Soviet system, I only lament it when thinking about the appalling kleptocracy that emerged from its womb, to use Marx’s kind of metaphor—a kleptocracy that aspired to be as rich as our own oligarchs. But we should remember that the creation of unions and left movements was the work of generations of intellectuals—I mean that in the broadest Gramscian terms—to create not just policies but first and foremost social and political actors. Perhaps that is what we now need to concentrate on imagining, not to mention doing.