Posts Tagged ‘inequality’

top400

The total income reported on the top 400 individual tax returns rose 20 percent in 2014, according to Internal Revenue Service (pdf) data released last Thursday.

The figures reveal the concentration of earnings at the summit of the income distribution, in a club that required $126.8 million of adjusted gross income to enter. That tiny group, out of nearly 150 million tax returns in 2014, took home $175.5 million on average (that’s in 1990 dollars) and 1.3 percent of total U.S. adjusted gross income.

President-elect Donald Trump and the Republicans who control Congress have promised to lower the taxes on this group. First, they plan to repeal Obamacare and its taxes, which would bring the long-term capital gains rate down to 20 percent. A potentially even bigger benefit for the top 400 will come from  Trump’s proposal to slash the tax on corporate income from 35 percent to 15 percent. That rate would also apply to at least some of the “passthrough” income from S Corporations and partnerships that is reported directly on individual income tax returns and is now taxed at a top rate of 39.6 percent.

A lower rate for passthrough income would disproportionately benefit the über rich, just as the lower rate on capital gains does. In 2014, the top 400 earners reported 1.3 percent of all adjusted gross income in the U.S., but 2.94 percent of all partnership and S corp net income, and 10 percent of capital gains taxed at a lower rate.

We know the top 400 will benefit enormously from those tax changes. But we won’t be able to measure it, since the IRS also announced it would no longer release data on the top 400, which it has compiled going back to 1992. Instead, future reports will focus on the top 0.001 percent, which included 1,396 households for 2014.

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The extensive media coverage since Fidel Castro died has included many different voices—from those of journalists who interviewed him and wrote about him, especially in the early years, through Cold Warriors and Cuban émigrés who did battle with him to political figures whose comments have been crafted to align with contemporary constituencies and goals.* But the media have left out one important group: ordinary people who, over the years, found themselves inspired by and generally sympathetic with (even when critical of many features of) the Cuban Revolution.

I’m referring to people around the globe—students, workers, peasants, activists, and many others, throughout the Americas and across the world—who have understood the significance of the Revolution for Cuba and, as a historical example of anti-imperialism and human development, for their own attempts to enact radical political and economic change.

What we haven’t learned from recent coverage is that re-revolutionary Cuba was under the thumb of the U.S.-backed dictatorship of Fulgencio Batista, who governed a relatively wealthy but highly unequal country in which the majority of people had no voice and suffered from high unemployment, a low level of literacy, poor health, and inadequate housing. And they were exploited in an economy dominated by large landowners, U.S. corporations, and American organized crime. The 26th of July Movement (a name that originated in the failed attack led by Fidel on the Moncada Barracks in 1953) launched an insurrection in 1956, with the landing of small force that found its way to the Sierra Maestra Mountains, and, with the support of an army of volunteers in the countryside and “Civic Resistance” groups in the cities, succeeded in overthrowing Batista. A small revolutionary organization with widespread popular support managed to confront and ultimately defeat a typical authoritarian Washington-backed Latin American regime just 90 miles off the U.S. coast.

And while a great attention has been paid to the growing tensions from early on between the new Cuban government and the United States, which sponsored a series of clandestine invasions and assassination attempts, mainstream accounts have overlooked the tremendously successful campaigns to do what had seemed impossible in Cuba and elsewhere—to eliminate illiteracy, promote health, and improve living and working conditions, especially in the countryside. In fact, one of the reasons Havana became and remained so shabby (as legions of foreign visitors who rarely venture outside the capital city never fail to describe) was the Cuban government’s focus on transforming conditions in rural areas so that, in contrast to many other countries, impoverished agricultural workers and their families would have no need to move en masse into the city.

That’s what I noticed when I traveled to Cuba in the late-1970s during the administration of Jimmy Carter, when U.S. travel restrictions were allowed to lapse. I didn’t see the urban ghettoes I drove through before boarding my flight in Montreal, and nowhere did I come across the poverty and inequality characteristic of rural areas across all the countries where I’d lived and worked in Latin America.

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Thanks to the Revolution, Cuba has achieved enormous progress—not only in comparison to the rest of Latin America and the Third World but even (at least in terms of indicators like infant mortality) the United States. That radical turnaround, and the ability to maintain it in the face of unrelenting U.S.-government opposition over decades, is the major reason Fidel and the Cuban Revolution have been admired around the world.

By the same token, the Cuban Revolution has not been romanticized or supported uncritically, especially as a model for left-wing movements elsewhere. For the most part, the economy has been organized around state ownership, not worker-run enterprises. And a small number of political leaders, including Fidel himself, and a single political party have managed to hold onto power, with little in the way of democratic decision-making beyond the local level—not to mention public antipathy towards and discrimination against LGBT people, the jailing of journalists and political dissidents, and so on. Economically and politically, Cuba is no paradise.

Still, for all its faults and mis-steps, the Cuban Revolution has long served as an example of the ability of people to struggle against the impossible and to win. Fidel was thus on the right side of history.

 

*Including the anti-socialist drivel offered by John McTernan, a former speech writer for Tony Blair.

Leftists versus Liberals

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Over the course of this past year, I warned on numerous occasions (e.g., here, here, and here) we needed to pay more attention to the ways class politics were playing out in the 2016 presidential election.*

Now, it’s true, there was considerable attention before 8 November on white working-class men. But the other members of the American working-class were largely overlooked.

That’s certainly true of Black and Hispanic workers as well as white working-class women. The presumption was, because of the nature of Donald Trump’s campaign (as well as his past boorish behavior), working-class voters other than white men would flock to Hillary Clinton and ensure her victory.

As it turns out, the majority of women (54 percent) did vote for Clinton. But white women didn’t (by a margin of 10 points). And white women without a college degree even less: only about one-third (34 percent) voted for the Democratic candidate, while the vast majority (62 percent) went for Trump.**

The Clinton campaign was clearly counting on the support of universal “sisterhood.” But it failed—in no small part because it forgot about “economic inequality, or more specifically, economic inequality among women.”

As Kathleen Geier explains,

economic inequality among women is just as large, and has been growing just as fast, as economic inequality among men.This economic divide among women has created one of the most significant fault lines in contemporary feminism. That’s because professional-class women, who have reaped a disproportionate share of feminism’s gains, have dominated the feminist movement, and the social distance between them and their less privileged sisters is wide and growing wider. In the decades since the dawn of the second wave, educated women gained access to status jobs, but working-class women experienced declining wages and (because of the rise of divorce and single parenthood among the working class) shouldered an increasingly heavy burden of care. Yet mainstream feminist groups and pundits have consistently stressed the social and cultural issues that are most important to affluent women, while marginalizing the economic concerns of the female masses. . .

The class divisions between women came to a head in the 2016 election, when Big Feminism failed women, big-time. Mainstream feminists sold women a bill of goods, arguing that the election of a woman president would improve the lot of women as a class. . .

if you’re a woman living paycheck to paycheck and worried sick over the ever-diminishing economic prospects for you and your children, you’re unlikely to be heavily invested in whether some lady centimillionaire will shatter the ultimate glass ceiling.

The upshot is, both the Democratic Party and the feminist movement are badly in need of reform when it comes to class politics.

Again, here’s Geier:

Feminists would be well-advised to ease up on pop culture navel-gazing and corporate pseudo-feminist drivel like Lean In. They need to shift their central focus from the glass ceiling to the sticky floor, which, after all, is the place where most women dwell. A feminism that delivers for working-class women by addressing their material needs could expand feminism’s base and bring about a much-needed feminist revival. A feminism that delivers for working-class women by addressing their material needs could radically expand feminism’s base. And should feminism once again become a vibrant bottom-up mass movement instead of a top-down elite concern, there’s no telling how far it could go.

Most U.S. feminists know this. But they—and, with them, the working-class—were betrayed by the kind of feminism sanctioned by the elite, which was and remains silent on class politics.

 

*Although, as I explained, “American politics has always been about a lot of things (from nativism and racism to foreign entanglements and so-called cultural issues).” Still, while U.S. politics shouldn’t be reduced to class politics, ignoring or marginalizing class issues leads to a fundamental misunderstanding—on the part of politicians, pundits, and pollsters—of what is going on out there.

**According to Clare Malone,

Preliminary exit poll results show that while she won women by 12 points overall (Trump won men by the same margin, a historic gender gap), Clinton lost the votes of white women overall and struggled to win women voters without a college education in states that could have propelled her to victory.

Inequality

Mainstream economists have finally discovered the importance of institutions. But they get it all wrong.

Take Daron Acemoglu (of MIT) and Jim Robinson (of the University of Chicago). In their view (according to Adam Davidson), Donald Trump threatens to disrupt the institutions that serve as the basis of “American Exceptionalism.”

The problem is, the United States does not represent an exception to the rule that “Over most of history, a small élite confiscated wealth from the poor.”

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As I showed the other day, the distribution of wealth in the United States is obscenely unequal (with the top 1 percent owning more than 40 percent of the nation’s wealth), and has been getting more unequal over the course of the past three decades. And it’s the existing set of institutions—economic, political, and cultural—that has made it possible for a small élite to confiscate wealth from the vast majority, including the poor.

Trump is thus a consequence, not a cause, of the institutions that have come to represent the unexceptionally unequal “American way of life.”

Scary numbers

Posted: 31 October 2016 in Uncategorized
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top-wealth

Gabriel Zucman, in his article in the special issue of Pathways, “State of the Union: The Poverty and Inequality Report 2016” (pdf), reveals lots of scary numbers about wealth inequality in the United States.*

The scariest is the percentage of wealth owned by the top 0.1 percent of households, which “has exploded in the U.S. over the past four decades.”

The share of wealth held by the top 0.1 percent of households is now almost as high as in the late 1920s, when The Great Gatsby defined an era that rested on the inherited fortunes of the robber barons of the Gilded Age.

In recent decades, only a tiny fraction of the population saw its wealth share grow. While the wealth share of the top 0.1 percent increased a lot in recent decades, that of the next 0.9 percent (i.e., 99–99.9) did not. And the share of total wealth of the “merely rich”—households who fall in the top 10 percent, but are not wealthy enough to be counted among the top 1 percent—actually decreased slightly over the past four decades. In other words, $20 million fortunes (and higher) grew much faster than smaller fortunes in the single-digit millions.

The flip side of this trend is, of course, the wealth of the bottom 90 percent, which actually grew from 15 percent in the 1920s to 36 percent in the 1980s but dramatically declined thereafter. According to the most recent data, the members of the bottom 90 percent collectively own just 23 percent of total U.S. wealth, about as much as in 1940.

Yes, indeed, these are scary numbers.

 

*There are plenty of other scary numbers in the rest of the report, concerning U.S. poverty, income inequality, and  much else—alone and in comparison to other countries.