Archive for December, 2014

Yo mamma

Posted: 31 December 2014 in Uncategorized


If you’re still looking for a present [ht: ja] for that special someone. . .





Let’s end the year with some important charts assembled by Steven Rattner.

Yes, economic growth picked up and financial markets soared to new record highs. But—and it’s a big but—wages remained stagnant (barely budging in real terms), income inequality got worse (increasing from already grotesque levels), the tiny minority at the top made out like bandits (just as they were doing before 2007), and government programs (even with a Democratic president and Senate) did little to ameliorate the effects of stagnant wages and growing inequality.

That’s what 2014 looked like in the United States. And nothing about 2015 looks to change those trends.





Here’s another chart summarizing data from Ed Wolff’s study, “Household Wealth Trends in the United States, 1962-2013: What Happened over the Great Recession?”

As Wolff explains,

In 2013 the richest one percent of households held about half of all outstanding stock, financial securities, trust equity, and business equity, and a third of non-home real estate. The top 10 percent of families as a group accounted for about 85 to 90 percent of stock shares, bonds, trusts, and business equity, and over three quarters of non-home real estate. Moreover, despite the fact that 46 percent of households owned stock shares either directly or indirectly through mutual funds, trusts, or various pension accounts, the richest 10 percent of households accounted for 81 percent of the total value of these stocks, though less than its 91 percent share of directly owned stocks and mutual funds.

In contrast, owner-occupied housing, deposits, life insurance, and pension accounts were more evenly distributed among households. The bottom 90 percent of households accounted for 59 percent of the value of owner-occupied housing, 33 percent of deposits, 35 percent of life insurance cash value, and 35 percent of the value of pension accounts. Debt was the most evenly distributed component of household wealth, with the bottom 90 percent of households responsible for 74 percent of total indebtedness.

Wolff’s research helps explains why the recovery has been so disappointing to the majority of the population. Housing has regained its ground only slowly while corporate profitability (on both Main Street and Wall Street) has boomed. In other words, we’ve seen slow growth in the major asset of the bottom 90 percent but substantial growth in the assets held by the wealthy elite in society.



In a piece forwarded to me by a former student [ht: jm], the Economist reminds us of John Maynard Keynes’s 1930 prediction [pdf] that, in one hundred years, a new age of abundance and leisure would mean we’d have to do very little work—perhaps three hours a day, just “to satisfy the old Adam in most of us.”

Well, sixteen years shy of Keynes’s century, we’re still working many more hours than we need to. And not because we don’t know what to do with our leisure time. It’s because current economic arrangements are such that, to earn enough income for ourselves and our families, we still have to work (or, according to the information in the chart above from the American Time Use Survey, engage in work-related activities) more than eight hours a day—which leaves, on an average work day (and after sleeping, eating and drinking, taking care of our households, and so on) just 2.5 hours of leisure.


The problem of time lost doing work is particularly acute in the United States, especially when compared to other rich countries (such as France, Germany, and the United Kingdom). Starting in 1970, Americans worked on average fewer hours per year relative to other countries—and, while the total number of hours worked has decreased since then in all four countries, it’s declined the least in the United States (essentially having leveled off since 1982).

fredgraph-2 fredgraph-1

And it’s not just a matter of “yuppie kvetching” as the Economist (and, earlier, Elizabeth Kolbert) argues—as if we were in a world of “time-poor haves” and “time-rich have-nots” (although the readers of the Economist might like to imagine themselves in those terms). As readers can see in the two charts above, the average annual hours worked by production and nonsupervisory employees almost perfectly tracks the annual hours worked by all employed persons in the United States (the difference in 2011 amounted to merely 24 hours per year).

The fact is, those near the top, who do in fact spend a great deal of their time at work, serve the tiny minority above them by making sure everyone else—the vast majority of the population—also spends a large portion of their time working and, in the process, creating much more value than they receive in their wages and salaries. Those hours—the many hours people spend working not for themselves but for the small group who own and control the enterprises where they work—that’s the real lost time we should be worried about.

And that’s what keeps the entire system—of a great deal of work and very little leisure—firmly in place, especially in the United States.

If only Keynes had been right back in 1930:

Of course there will still be many people with intense, unsatisfied purposiveness who will blindly pursue wealth—unless they can find some plausible substitute. But the rest of us will no longer be under any obligation to applaud and encourage them.

The only way to eliminate that obligation is for the people who work to have a say in how many hours they work and in what is done with the value they create while they work.

Otherwise, as long as things stay the way they are, the rest of us will continue our search for lost time.


Special mention

December 20, 2014 Israel's Future