“A person who is not a liberal in their youth has no heart, but a person who is not a conservative by middle age has no brain.”
Attributions and variations attributed to many people, including Disraeli, Churchill, and Burke
Sen Bernie Sanders (I-VT) isn’t given much of a chance to become president by anyone, including his supporters. He isn’t photogenic and he isn’t a charismatic orator. But he has an appeal among many voters, particularly those with less than a third his 73 years of life. How did this come about, and why are so many people dissatisfied with the nominee apparent, Sec. Clinton?
The answer appears to come in the definition of what we call “generations” – a concept that actually has more to do with the economic and social climate someone is born into and nothing to do with their parents. This may tell us something about the rate of social change we can expect in the next few years, too, as this depression finally ends and opportunities open up for young people.
Income inequality is certainly the rallying issue for many progressives these days. Paul Krugman goes as far as to call it the one issue, the only important one. “Inequality is, indeed, the defining challenge of our time. Will we do anything to meet that challenge?” he asked last December.
Whether or not that is overstating the issue, the debate over inequality is not going away soon. Solutions are often elusive, largely because the root of income inequality is far from obvious. The free market system in the US has not always had high levels of inequality, after all. It’s a new feature to anyone who lived through the 1950s, for example.
What caused the problem? Perhaps it is the simple law of supply and demand meeting a limit to the paying work available in a developed economy.
Are you ready for retirement? While the idea might have its appeal, especially with the winter weather making for long commutes this year, an awful lot of workers are not on a track to be able to retire. That’s according to a survey from the Employee Benefit Research Institute (EBRI), conducted annually. They found that only 18% are “very confident” that they’ll have enough for retirement and a further 37% are “somewhat confident”. That’s up from the 2013 survey, in which only 13% was “very confident”.
The implications go beyond any one family’s ability to retire, however. The decline in workforce participation has been largely due to retirement since the start of 2011, and retirement opens jobs for young people. The wave of retirement that should accelerate after 2017 is one of the main reasons Barataria has hope for the 2020s. But is retirement nothing more than a dream for many workers today?
In his inaugural speech, New York Mayor Bill de Blasio returned constantly to the theme of “A Tale of Two Cities”. New York is big enough to be both of them at once – one a poor city where people barely get by and another that is wealthy beyond the imagination of most people. But it isn’t just his city that de Blasio wants to fix. “This inequality problem bedevils the entire country,” he intoned. “But it is not just a moral outrage, it is a horrible constraint on economic growth and on giving people the security they need to tackle problems.”
So starts 2014, the year when inequality is certain to be the big social, political, and economic issue. That is a given because after many years of intellectual stagnation the Democrats have a popular issue that they can run with. Where did it come from? A lot of credit has to go to a short video published in November 2012 that still lights up social media. And the reaction to it shows how far we have to go in order to tackle the problems of inequality.
After all, it’s not a matter of policy – inequality is a feature of the system we have.
Around the world, two stories have been consistent since 2008 – the developed world is struggling with a depression while the developing world largely charges ahead. The two worlds have never been so far apart as the careen towards similarity. But in this hemisphere, three stories have come to show where it all comes together – how “wealthy” is what a nation feels more than how it is.
Forget how Japan and Europe are wallowing in desperation for a while – on this side of the big ponds things are happening. It may be slower than anyone wants, but change is happening. The reactions to that change show that my favorite saying is still true – that while people are people, cultures are cultures. Wealth, or at least the feeling of wealth, is a state of mind.
Is wealth and income inequality holding the economy back? A recent study by the Pew Foundation shows that from 2009-2011 the wealthiest 7% of the US saw their net worth climb 24% – to an average of nearly $3.2M – while the other 93% of the population saw their wealth plummet 7%. More than being unfair, it may also be holding back economic growth overall. The rich may be happy with their take, but it may stop coming.
A number of studies have shown the effect over a number of countries, and the effect is undeniable. At what point does income and/or wealth inequality slow growth? Like an excess of debt it’s hard to say, but the two taken together lead to a compelling argument that the search for sustainable, meaningful growth is a strongly bipartisan, left and right issue – and something we should get moving on as a priority.
How bad has wealth inequality become in the US? Thanks to a video that is becoming viral, a new discussion about inequality has fired up – sadly, just after our election cycle. It takes off from work done 6 months ago by Dan Ariely and Mike Norton, first reported humbly in a simple blog. But thanks to new graphics and explanation it’s lighting up the ‘net in a way not seen before.
As discussed previously, income and wealth inequality is the best indicator of a future slowdown in economic growth around the world. More attention to this problem is certainly a good thing. But the context of how this comes to be and what can be done about it remains elusive. Let’s take a long view and see where the problem came from – and what can be done about it as we work to set up the next period of expansion that comes after the Managed Depression we are in now.