Inequality offensive

March 15, 2012 by Peter Dizikes

Inequality offensiveDavid Autor, professor of economics and associate head of MIT’s Department of Economics, left, with Institute Professor Peter Diamond at Tuesday’s forum. Photo: Peter DizikesEconomists have measured America’s growing wealth gap in great detail: by income, educational attainment, and in terms of the country’s declining social mobility, among other metrics. At an MIT forum on Tuesday night, however, economists suggested the issue matters for an overarching reason that’s slightly harder to quantify: Inequality, they said, constitutes a threat to America’s values and political system.

“If there’s any national religion that we have, it’s the religion of meritocracy, the belief that people get where they end up in life because of hard work and playing by the rules,” said moderator David Autor, professor of economics and associate head of MIT’s Department of Economics. “That’s a very powerful belief system to have … it makes people say, fundamentally, ‘I can accept the outcome I get, because it’s not arbitrary, it reflects some kind of justice.’”

By contrast, Autor noted, a decline in opportunities for advancement threatens to undermine that confidence. “If rising  makes our society more dynastic, less determined by what you do and more determined by choosing the right parents, that’s harmful … the system is not rewarding [those] values and virtues.”

Inequality can also distort the ways political decisions are made, noted Peter Diamond, Institute Professor and professor emeritus of economics at MIT.

“Given the way we organize Congress and the presidency, [corporations and individuals] with a lot of money … have a lot more of an impact on policies,” Diamond said at the event, “Minding the Gap: A Conversation about Economic Inequality,” hosted by MIT’s Technology and Culture Forum. In this sense, he added, inequality is not just a symptom of larger economic or social problems, but a problem in itself.

College as a dividing line

To be sure, the basic numbers on economic inequality in the United States are striking, as detailed at the event. In 1980, the top 1 percent of U.S. households earned about 10 percent of the nation’s income; today that top percentile receives about 25 percent of income. The top 10 percent of households accounted for a bit more than 30 percent of income from World War II until about 1980, but now receives 50 percent of all income.

And among the top 1 percent of households, 70 percent of income stems from returns on capital — the assets they already own — whereas for all households, only 20 percent of income comes from capital, noted Arjun Jayadev, an economist at the University of Massachusetts at Boston.

This income inequality often manifests itself in educational inequality, which in turn helps perpetuate the divisions in society; 82 percent of children in the wealthiest quartile of households obtain a college degree, compared to just 8 percent of children in the bottom quarter.

“College really begins to be a dividing line in terms of things like family formation,” said Frank Levy, the Daniel Rose Professor of Urban Economics in MIT’s Department of Urban Studies and Planning, noting that wealthier people are more likely to marry and have children.

With this in mind, Levy added, Republican presidential candidate Rick Santorum’s recent remarks on the subject — he called President Barack Obama a “snob” for promoting the idea that all Americans should attend college — “speak to a real and deep resentment.”

Mixture of solutions

To be sure, identifying the inequality problem is easier than resolving it. But the panelists all suggested that certain policy initiatives, if implemented, would help address the issue.

Diamond’s own policy wish list features items designed to help an economy that, in his view, remains in an “incredibly awful” position. He called for more infrastructure investment — which he noted would be a relative bargain at the moment, given the country’s very low borrowing rates — and further investment in education.

The latter, Diamond emphasized, does not require a search for elusive “shovel-ready” spending projects, but could be accomplished by the federal government providing aid to school districts so they could re-employ some of the thousands of teachers laid off during the recent downturn.

“While we also know that merely throwing money at the [education] problem won’t solve it, taking money away from the problem is unlikely to solve it, yet that is exactly what has been happening in state after state as they deal with the fallout from the financial crisis,” Diamond said. “We need the federal government to pump more money through the states and local governments into education.”

Diamond also pointed to some of his own recent research, with economist Emmanuel Saez of the University of California at Berkeley, which found that the optimal marginal income tax rate on the highest earners — those making $400,000 or more per year — is well above the current 36 percent, or even the 39 percent level that existed during the 1990s.

“The Washington debate right now is between the Bush and Clinton tax rates on the top,” Diamond said. But his work with Saez shows that a more efficient rate for raising revenue — without significantly deterring the wealthy from trying to earn more — is “somewhere between the tax rate at the top in Reagan’s first administration, which was 50 percent, and the tax rate at the top from the Johnson years up to the Reagan change, which was 70 percent.”

A few of the panelists also emphasized the need for improved education at the community college level, and for providing job-training opportunities for high school graduates affected by the movement of manufacturing and technical jobs overseas. All of them emphasized educational improvements, at every level of school, as a way of helping to restore a society with a reasonable equality of opportunity, though not necessarily of outcomes.

“The playing field is tilted right from the beginning, and it’s very hard to avoid that,” Levy said. “That’s not going to stop.” Through education, he added, “You have to do things to try to even up [opportunities] for kids who don’t have access to as much.”

Provided by Massachusetts Institute of Technology (news : web)

This story is republished courtesy of MIT News (, a popular site that covers news about MIT research, innovation and teaching.

Waffle House Executive Pushes Georgia Anti-Picketing Law That Would Put Founding Fathers in Jail

by: Zaid Jilani, Republic Report | Report
To many in the South, Waffle House is a family-friendly restaurant that serves up some of the best grits and hashbrowns around. But behind that iconic sunny yellow sign is a corporate agenda aimed at stripping Americans of their rights.

State Senator Don Balfour of Snellville, Georgia — a Waffle House vice president who serves on the board of the Georgia Chamber of Commerce — is pushing a bill in his state’s legislature that would effectively outlaw picketing outside of private homes. Although the bill is aimed at suppressing union protests at the “private residences” of business executives, its scope is actually much further reaching.

The bill is written to make it illegal for picketers to take part in actions that would be “interfering with the resident’s right to quiet enjoyment.” But historically, one group of activists took part in protests aimed at private residences intended exactly to disrupt the peace to make their point: the Founding Fathers.

Prior to the Revolutionary War, Sam Adams and other Founding Fathers formed a group called the Sons of Liberty to protest the Stamp Act and similar oppressive legislation. The Sons of Liberty regularly protested outside of the homes of British colonial officials, including the homes of tax collectors. If Balfour and Georgia’s Big Business titans have their way, these protests would be illegal, and Adams and many of the other Founding Fathers would’ve been arrested.

Think about that next time you dig into those delicious Waffle House waffles.

Billionaire’s Bogus Legal Tactics Against Bloggers Threaten Free Speech


Recently, Salon’s Glenn Greenwald reported that Idaho billionaire and CEO of Melaleuca, Inc., Frank VanderSloot, has been engaged in a systematic campaign to silence journalists and bloggers from publishing stories about his political views and business practices. VanderSloot and Melaleuca have targeted national news organizations and small town bloggers alike by issuing bogus legal threats alleging defamation and copyright infringement in an attempt to keep legitimate newsworthy information from being released to the public.

This aggressive tactic not only chills otherwise protected free speech, but in many states, also risks triggering liability under “anti-SLAPP” statutes. Anti-SLAPP laws prevent strategic defamation lawsuits—frequently filed by plaintiffs with deep pockets—that have little to no chance of winning, yet are aimed at pressuring the target into settling for fear of expensive litigation.

Last month, after VanderSloot became a finance co-chair on leading Republican presidential candidate Mitt Romney’s election campaign, Melaleuca’s attorneys sent threatening letters to Mother Jones and Forbes, forcing them to temporarily take down articles exploring VanderSloot’s public position on gay rights and Melaleuca’s business practices. It turns out that this practice is nothing new for Vandersloot: he targeted local political blogs in Idaho with similar tactics for years on a local level.

At the beginning of February, a blogger for the The Idaho Agenda was forced to take down a post after receiving a defamation suit threat from Melaleuca’s in house counsel. The author indicated that he took it down because he feared the expensive litigation battle but insisted that “the facts included in the post are a matter of public record found elsewhere, including the internet, periodicals and newspapers.”

Back in 2007, Melaleuca pressured the politics blog 43rdStateBlues to take down a critical post written by a pseudonymous blogger “TomPaine.” Another blogger on 43rdStateBlues, “d2”, posted the lawyer’s letter explaining to readers why the original was taken down. Incredibly, Melaleuca’s lawyers then obtained a retroactive copyright certificate on the threat letter and demanded the hosting provider take down the post as well. Even after they complied with the letter, Melaleuca sued TomPaine for copyright infringement then subpoenaed TomPaine’s and d2’s identity.

You can read more of the details of these cases and Glenn Greenwald’s analysis of how all of these posts were perfectly protected speech here.

New Romney Plan Lowers Taxes Further On Rich, Raises On Poor (CHART)

Mitt Romney




When Mitt Romney unveiled his revised tax and debt plan last week, his camp sold it as a bid to preserve fairness to the middle class.

He proposed an across the board 20 percent cut to everybody’s current rates, and to make up the lost revenue by limiting deductions, credits and other tax benefits for wealthy Americans. But he declined to specify exactly how he’d broaden the tax base. And a new analysis by the Tax Policy Center shows that without those details, his proposed cuts would actually be more regressive than his first plan.

Compared to the original proposal, the new one — or at least the pieces of it Romney’s specified — would actually lower taxes further on the wealthy, while slightly raising them on the poor. If Romney does ultimately specify which popular tax benefits he plans to eliminate, it’ll have to be a long list. According to TPC, “in the absence of such base broadening…the Romney plan would lower federal tax liability by about $900 billion in calendar year 2015 compared with current law, roughly a 24 percent cut in total projected revenue. Relative to a current policy baseline, the reduction in liability would be about $480 billion in calendar year 2015.”

Here it is in chart form:

US income distribution winners and losers

People all over the world have spent almost six months in front of universities, public parks, banks, and even Wall Street to publicly protest their dissatisfaction with economic inequality. But how much disparity really exists between the rich and poor in the United States? According to a new study, it might be more than you would think.

A recent study published in the Review of Radical Political Economics(published by SAGE), analyzed surveys of US households from the late 1990’s and early 2000’s. The author looked at differences among quintiles (or fifths of the U.S. population according to gross income) and found that when the U.S.  prospers, there is an uphill flow of income to households in the upper quintiles while the majority of households in middle and lower income quintiles do not see an increase in income at all. This of course affects US households when the economy slows down.

According to the author, the data suggests that “those in the bottom…appear to be stuck there, and in some cases even sliding further into the depths of poverty, further negating the optimistic outcomes postulated by conventional economic thinking.”

The author analyzed data from surveys of over 60,000 U.S. households that were taken periodically from 1996 to 2003. He notes that throughout these years, U.S. households had to adjust to some substantial changes in the economy from times of surplus and low unemployment rates to times when the economy slowed down substantially. Interestingly, when the economy of the U.S. prospered in the 1990s, only the incomes of richer households appeared to reflect this growth.

“It can be argued that households in the upper portion of the income distribution are better positioned, or even favored, to reap the benefits from growth, further widening the income gap between rich and poor,” wrote the author.

Conversely, the author wrote that even in times of economic prosperity, poorer classes have limited access to resources that would improve their position. For example, while technological advances spur economic growth, they do not benefit all households equally.

“The data imply that the U.S. economy is not one of mobility and opportunity,” wrote the author. “Richer households are getting richer, the poorer households are staying poor, and those middle-income  continue to move about chasing the elusive American dream.”

More information: The article entitled “Who are the Winners and the Losers? Transitions in the U.S. Household Income Distribution” from theReview of Radical Political Economics is available free for a limited time at:http://rrp.sagepub … ull.pdf+html

Study finds Upper class people more likely to cheat

People from wealthy, upper classes are more likely than poorer folks to break laws while driving, take candy from children and lie for financial gain, said a US study on Monday.

The seven-part study by  at the University of California Berkeley and the University of Toronto analyzed people’s behavior through a series of experiments.

For instance, drivers of expensive vehicles were observed to be more likely to break the rules at four-way intersections, and were more likely to cut off pedestrians trying to cross the street than drivers of cheaper cars.

In another test using a game of dice, given the opportunity to win a prize, people who self-reported high socio-economic status were more likely than the rest to lie and say that they had rolled higher numbers than they actually had.

People with higher status were also less likely to tell the truth in a hypothetical job negotiation in which they were the employer trying to hire someone for a job they knew was soon to be eliminated.

And when given a jar of candy that they were told was for children in a nearby lab — though they could take some if they wanted — the richer people took more candy than anyone else.

“The pursuit of self-interest is a more fundamental motive among society’s elite, and the increased want associated with greater wealth and status can promote ,” said the study in the .

A series of factors “may give rise to a set of culturally shared norms among upper class individuals that facilitates ,” added the researchers.

For instance, richer people are more independent from others and are therefore less concerned with what others think of their actions than poorer people, the authors suggested.

Wealthy people also appear to be more goal-focused, look more positively on greed, and have greater feelings of self-entitlement, which “may shape… to the consequences of one’s actions on others,” said the study.

More information: “High social class predicts increased unethical behavior,” by Paul K. Piff, Daniel M. Stancato, Stéphane Côté, Rodolfo Mendoza-Denton, and Dacher Keltner, PNAS (2012).

Harris Wants Fannie Mae, Freddie Mac to ‘Pause’ Foreclosures

The two companies own more than 60 percent of California mortgages

By  on February 27, 2012

Attorney General Kamala Harris wants Fannie Mae and Freddie Mac to place “a good faith pause on foreclosure sales in California” until the federal government completes “a thorough, transparent analysis” of the possibility of writing down the debt of borrowers who owe more on their homes than they are worth.

Harris made the request in a letter sent Friday to Edward DeMarco, the acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.

“As ground zero for this mortgage and foreclosure crisis, California’s underwater homeowners deserve a straight-forward analysis from FHFA of whether a program of principal reduction by Fannie Mae will provide significant assistance to struggling homeowners as well as save taxpayer dollars,” Harris wrote in her letter.

In the letter, Harris said that a legal settlement reached earlier this month with the nation’s five largest mortgage servicers provides “an historic opportunity for you to work with us.”

As part of the settlement, Bank of America, Wells Fargo, JP Morgan Chase, Citibank and Ally Financial agreed to collectively put more than $12 billion toward reducing the principal on loans or offering short sales to approximately 250,000 California homeowners who owe more on their homes than they are worth and are behind on their mortgage payments.

Fannie Mae and Freddie Mac, which together own more than 60 percent of California home loans, have so far balked at reducing the amount that amount underwater borrowers owe.

Source: The Bay Citizen (

I Was a Warehouse Wage Slave

By Mac McClelland | March/April 2012 Issue

Illustration by Mark MatchoIllustration by Mark Matcho

“DON’T TAKE ANYTHING that happens to you there personally,” the woman at the local chamber of commerce says when I tell her that tomorrow I start working at Amalgamated Product Giant Shipping Worldwide Inc. She winks at me. I stare at her for a second.

What?” I ask. “Why, is somebody going to be mean to me or something?”

She smiles. “Oh, yeah.” This town somewhere west of the Mississippi is not big; everyone knows someone or is someone who’s worked for Amalgamated. “But look at it from their perspective. They need you to work as fast as possible to push out as much as they can as fast as they can. So they’re gonna give you goals, and then you know what? If you make those goals, they’re gonna increase the goals. But they’ll be yelling at you all the time. It’s like the military. They have to break you down so they can turn you into what they want you to be. So they’re going to tell you, ‘You’re not good enough, you’re not good enough, you’re not good enough,’ to make you work harder. Don’t say, ‘This is the best I can do.’ Say, ‘I’ll try,’ even if you know you can’t do it. Because if you say, ‘This is the best I can do,’ they’ll let you go. They hire and fire constantly, every day. You’ll see people dropping all around you. But don’t take it personally and break down or start crying when they yell at you.”

Several months prior, I’d reported on an Ohio warehouse where workers shipped products for online retailers under conditions that were surprisingly demoralizing and dehumanizing, even to someone who’s spent a lot of time working in warehouses, which I have. And then my editors sat me down. “We want you to go work for Amalgamated Product Giant Shipping Worldwide Inc.,” they said. I’d have to give my real name and job history when I applied, and I couldn’t lie if asked for any specifics. (I wasn’t.) But I’d smudge identifying details of people and the company itself. Anyway, to do otherwise might give people the impression that these conditions apply only to one warehouse or one company.Which they don’t.

[read more]



Michigan Tea Partiers Share Rick Santorum’s Fears Over Obama’s College Push

Michigan Tea Partiers Share Rick Santorum’s Fears Over Obama’s College PushEVAN MCMORRIS-SANTORO 

TROY, MICHIGAN — Rick Santorum’s contention here Saturday that President Obama’s plan to make college more accesible is really a scheme to brainwash people into becoming liberals may have struck some outside observers as a little odd.

But for the tea party crowd gathered here as part of an Americans For Prosperity rally, Santorum’s words about higher education were right on point.

“President Obama wants everybody in America to go to college,” Santorum said. “What a snob!”

Santorum started by saying some people don’t need to go to college: “Not all folks are gifted the same way. Some people have incredible gifts with their hands.” He then suggested there was an sinister motive behind Obama’s push to get more Americans in college classrooms.

“There are good, decent men and women who work hard every day and put their skills to the test that aren’t taught by some liberal college professor… That’s why he wants you to go to college. He wants to remake you in his image,” Santorum said. “I want to create jobs so people can remake their children into their image, not his.”

Red meat, yes. But still not something you hear a lot on the campaign (though Santorum’s used the line before). So I set out into the crowded ballroom to find out just what the people the AFP crowd thought of Santorum’s attack line.

Turns out they quite liked it.

“I thought that was brilliant,” said Angie Clement of Commerce, Mich. “Not everybody has to go to college. We need garbagemen, we need welders, carpenters.”

“Everybody can’t be equal,” agreed Paul Murrow of Milford, MI seated nearby. “Somebody needs to do the manual labor.”

Clement’s husband, Stephen, said Santorum was right on the mark when he said that Obama wants to send kids to get college degrees so as to produce more liberals.

“It starts down at the elementary school level with all this bullshit about diversity, pardon my French,” he said. “Diversity and sensitivity and all that crap. That’s the stuff that needs to be taught at home not by my teachers. My teachers need to be academic: Math, science, history, social studies, that sort of thing and keep political opinions out of it, bottom line.”

Like most of the crowd in Troy, Stephen and Angie are middle-aged. Stephen said his two step kids are grown and one, his stepson, went to the University of Michigan and got an engineering degree, “but now he’s not using it. And that’s his choice.”

“I think he’s saying, ‘Do you think that that’s the only way you can be a successful person? To go to college?’” said another attendee, Elizabeth, who didn’t want her last name used. “That is snobbery. In this entrepreneurial country that we have, where fortunes are made in a lot of ways — they’re not only made by college-educated people.”

They all agreed that college can help some people — but they also agreed that universities are basically socialism factories.

“They try and disguise it with, you know, ‘equal opportunity’…” Stephen Clement began.

“It’s communism,” Murrow said, cutting him off. “The professors are all teaching the kids…”

“Where does the social engineering stop?” Clement jumped back in, fired up. “Does it stop after we send everybody to college, or does it stop after we set their curriculum and said, ‘these are the things you’re allowed to study?’ Does it become the Soviet Union?”

As Greece Erupts, BBC’s Paul Mason on “The New Global Revolutions” over Austerity, Inequality


Greece is bracing for protests after eurozone finance ministers concluded a deal that will provide a $170 billion bailout in return for another round of deep austerity cuts. The bailout is opposed by several unions and left-wing groups in Greece over new cuts and layoffs imposed on public sector workers. We’re joined by Paul Mason, economics editor at BBC Newsnight and author of the new book, “Why It’s Kicking Off Everywhere: The New Global Revolutions.” He has just returned from Greece. “What makes the headlines are, of course, the riots,” Mason says. “What doesn’t make so many headlines is what is happening to real people… We are living in a time where the world has, in the last couple of years, erupted in a way that many people thought they would never see again since the 1960s… The underpinnings of this new global unrest are that…people are sick of seeing the rich get richer during a crisis.”