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Special mention

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Americans die younger [ht: ja] than people in other high-income countries—by more than 2 years!

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According to a study by Andrew Fenelon, Li-Hui Chen, Susan P. Baker just published in the Journal of the American Medical Association (unfortunately gated), American men and women can only look forward to a life expectancy of 76.4 and 81.2 years, respectively, compared with the 78.6 and 83.4 years of their peers abroad.

The question is, why? The authors of the study focus on injuries, which are the leading cause of death for Americans between 1 and 44 years of age. Among injuries, those responsible for the greatest number of deaths are drug poisonings, firearm-related injuries, and motor vehicle crashes.

The injury causes of death accounted for 48% (1.02 years) of the life expectancy gap among men. Firearm-related injuries accounted for 21% of the gap, drug poisonings 14%, and MVT crashes 13%. Among women, these causes accounted for 19% (0.42 years) of the gap, with 4% from firearm-related injuries, 9% from drug poisonings, and 6% from MVT crashes. The 3 injury causes accounted for 6% of deaths among US men and 3% among US women.

Perhaps even more important, the authors of the study found systematic variation in injury deaths across countries, with relatively high rates in the United States. Therefore, they conclude,

Although injury prevention represents an important means to improve life expectancy, the existence of predictable international patterns of injury mortality may suggest that these causes of death reflect broad factors that go beyond individual policies.

In other words, there’s something seriously wrong in the United States, which is causing Americans to die young.

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Special mention

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growth

There is no doubt that, eight years after the crash of 2008, the world economy continues to stagnate. The problem of slow growth is confirmed by Joseph Stiglitz [ht: ja], who bases his argument on the latest report from the United Nations, World Economic Situation and Prospects 2016 (pdf). Thus, for example, the growth rate of developed economies, which averaged only 0.8 percent over the 2007-2014 period, was projected for 2015 to be 24 percent less than before the crash (and forecast to still be less than in 2007 for at least the next two years). For other groups of countries, the decline is even worse: 54 percent for developing countries and 132 percent for economies in transition.

A few days ago, I argued that slow growth was a fundamental problem for capitalism. The question is, why?

To be clear, there’s a reasonable argument to be made that we would all be better off with less or no growth. That’s certainly true for our natural environment, in terms of issues such as global warming, pollution, and so on. Fewer resources would be extracted; less energy would be needed, thus lowering the level of greenhouse gasses; and, in general, less environmental damage might be caused by our economic activities.

My argument, however, is about the predominant economic system in the world today. It is capitalism that has a slow-growth problem. And that’s because growth is both a premise and promise of a particularly capitalisy way of organizing our economic activities.

It is a premise in the sense that capitalists—the capitalist class as a whole, not necessarily individual capitalists—can collect and utilize for their own purposes more surplus-value when capitalism is growing—when productivity is high, when more commodities are being produced, when the economy as a whole is growing. There’s more surplus available, even if workers’ wages are rising, and individual capitalists can all get their aliquot share of that growing surplus.

Of course, capitalists can get more surplus even when the economy is not growing, or growing only slowly. But that requires additional measures, such as keeping wages low. If, for whatever reason, they’re able to keep workers’ wages from growing, then the difference between the value those workers produce and what they receive in income can still grow.

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And, as it turns out, capitalism has a way of keeping workers’ wages from rising: unemployment. According to the United Nations, just in the OECD countries, 44 million workers were unemployed in 2015, about 12 million more than in 2007. And one third of unemployed individuals were out of work for 12 months or more in the last quarter of 2014—a 77.2 percent increase in the number of long-term unemployed since the financial crisis hit.

One of the key premises of capitalism is that it provide sufficient jobs to employ everyone who wants to (and, of course, needs to) work. Clearly it hasn’t been able to do that in the years since the crash—and slow growth in the foreseeable future will maintain or even increase the existing “employment gap.”

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source

But, of course, the existence of a large number of unemployed workers has had the desired effect: real wages declined from 2008 onward and, even as they began to increase in 2015, they’re still far below what they were before the crash.

And while the decline in real wages certainly serve to increase profitability in the short run, it has also undermined the ability of workers to buy back the commodities they produce. That undercut the consumption contribution to growth. In turn, capitalists ahve been hesitant to continue to invest, which is lowering the investment component of growth.

That means we can expect little economic growth now and in the years to come. And, as I have shown, slow growth undermines both the premise and promise of capitalism.

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Special mention

175072_600 February 9, 2016

Protest of the day

Posted: 9 February 2016 in Uncategorized
Tags: , , ,

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British football (i.e., soccer) fans are plotting a mass stadium walkout in protest over rising ticket prices.

The decision by around 10,000 fans to stage a 77th-minute walkout of the Liverpool-Sunderland game was the clearest indication yet that vast numbers of supporters have been driven to breaking point over the failure of teams to share some of their new £8.3 billion television contract, a windfall set to widen the gulf between those within the game and those who pay to follow it.

The protest on Saturday forced Liverpool’s owners to revisit their pricing policy for next season and came in the same week as an online backlash forced Arsenal to scrap a season-ticket surcharge, both of which emboldened campaigners against the rising cost of attending matches to crank up the pressure on other clubs.

A meeting of supporters groups was planned last night for the end of this week or the beginning of next week at which a number of options will be discussed, one being the viability of a mass walkout.

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One of the consequences of Bernie Sanders’s campaign for president is that economists and economic ideas that are often overlooked or marginalized are making the news.

Consider, for example, Gerald Friedman [ht: ja], a University of Massachusetts Amherst economics professor.* He’s front-page news on CNN, and that’s because he has provided “the first comprehensive look at the impact of all of Sanders’ spending and tax proposals”—including spending on infrastructure and youth employment, increasing Social Security benefits, making college free, expanding health care and family leave, raising the minimum wage, and shifting income from the rich to the working-class through tax hikes on the wealthy and corporations.

“Like the New Deal of the 1930s, Senator Sanders’ program is designed to do more than merely increase economic activity,” Friedman writes. It will “promote a more just prosperity, broadly-based with a narrowing of economy inequality.”

Emmanuel Saez, Professor of Economics at the University of California, Berkeley, is also in the news, because of his research on tax rates. In a 2011 paper he wrote with Peter Diamond, Saez argued that, in order to achieve a fair distribution of the tax burden in the midst of rising inequality, very high earners should be subject to high and rising marginal tax rates on earnings. While the top income marginal tax rate on earnings today is about 42.5 percent, they estimate the optimal top tax rate (which would maximize tax revenue from top-bracket taxpayers) to be 73 percent, even higher than Sanders is currently proposing.

“My feel is that the reasoning behind Sanders’s tax plan is not so much tax revenue generation from top earners but rather make top tax rates so high so as to discourage ‘greed,’ defined broadly as extracting income at the expense of the rest of the economy as opposed to real productive behavior,” Mr. Saez wrote in an email. “I think pretax top incomes would finally start to decline.”

Friedman and Saez are economists who are never cited in the mainstream media, and whose ideas are receiving a public airing precisely because of Sanders’s extraordinary success in the current campaign.

 

*Here’s the appropriate disclaimer: I did my doctoral work at the University of Massachusetts Amherst, although Friedman was not there at the time.