Exploring economic inequality - Advocating for the bottom 50%
Thanks to the Washington Post for publishing most of our letter:
Really don't think that a particular billionaire (hint: cojones enough to be shot into space) would have objected to being mentioned as in the letter submitted:
July 12, 2021
"Congress could do many relatively inexpensive things to improve working people’s lives. At spending levels near the bottom of what’s being now debated, all workers – including the lowest-paid -- could have additional funds to raise their kids, paid sick days, more job training, and some savings for retirement and emergencies. Millions more could have higher wages and health care coverage. And millions more disabled and elderly people could move above the poverty line. Much of this could be done by modifying existing programs and policies."
Social ‘infrastructure’ improvements for the working class
- Target subsidies for families (child tax credits, daycare, college) to people most in need.
- Raise the minimum wage and index it for inflation. Give states reasonable flexibility to adjust the minimum. All workers get paid sick days.
- Repair and improve SSI.
- Establish a universal retirement savings system.
- Incentivize states to expand Medicaid. Hold Medicare spending increases to general inflation or less.
- Improve Social Security benefits for the bottom 50%. Achieve long-term solvency through higher taxes mostly on the top 20%.
- Improve the unemployment insurance system and job training.
2021 Poverty Projections: Assessing the Impact of Benefits and Stimulus Measures - Laura Wheaton, Linda Giannarelli and Ilham Dehry/Urban
- Using the Supplemental Poverty Measure, the annual poverty rate projection for 2021 of 7.7 percent is well below the rate of 13.9 percent that we estimate for 2018.
- The projected poverty rate for children is 5.6 percent, for adults ages 18 to 64 it is 8.1 percent, and for people age 65 and older it is 9.2 percent.
- The 2021 poverty rate is projected to be higher for Black, non-Hispanic people (9.2 percent), for Hispanic people (11.8 percent), and for non-Hispanic Asian American and Pacific Islanders (10.8 percent) than for white, non-Hispanic people (5.8 percent).
- The federal stimulus checks have a larger antipoverty impact than any of the other programs; if all other programs were in place but the stimulus checks had not been paid, we project 12.4 million more people would be in poverty in 2021. The Supplemental Nutrition Assistance Program alone keeps 7.9 million people out of poverty in 2021, and unemployment insurance benefits lower the number in poverty by 6.7 million (assuming all other programs are in place).
- The combined benefits have the largest impact on children, reducing their projected 2021 poverty rate 81 percent relative to what it would be without any benefits (from 30.1 percent to 5.6 percent).
Findings from the June 2021 American Perspectives Survey
Reaching people where they live and die: How to persuade the unvaccinated – Robert Blendon/Harvard Gazette
"For years, Hou was the only woman who stood a chance against the very best. But she had her own ambitions."
"Low-paid workers will earn an additional $18.80 per week after decision by the Fair Work Commission"
Above is the kind of headline one reads in a country with a functioning federal government.
"We have reviewed several different pieces of empirical evidence that confirm that the relatively stronger minimum wage increases implemented in the last three years have played an important and positive role in arresting the unprecedented deceleration of Australian wage growth that started around 2013, and sparking a partial but fragile recovery. Without the consecutive wage awards implemented since 2017 (of 3.3%, 3.5%, and 3%, respectively), it is clear that overall nominal wage growth in Australia’s economy would still be languishing below 2% – even worse than the all-time record lows recorded in official WPI data for 2016 and early 2017. This confirms the crucial role played by the national wage award in setting a floor to labour market functioning, and stabilising wage norms in the face of unfavourable macroeconomic circumstances."
An increase in the U.S. minimum wage left out of Biden's proposed infrastructure package. Here are some ideas for compromise:
Considerations on Raising the U.S. Minimum Wage To Help
Workers and Families While Minimizing Negative Impacts - CCSE
Still searching for a middle class in Las Vegas...Many of the workers are essential - but is the city? ... Spin the wheel.
The analogy between selling opium (mostly harmful uses, some good) and oil (mostly useful/foundation of modern economies) is stretched a bit. Branko's main point: the wealthy West shouldn’t wag its finger at the developing world about carbon pollution. Richer countries are more able to bear the cost of reducing pollution and should take the lead.
A warmer climate might open up a large part of Siberia for development as well as ports on the Arctic Ocean. Is it in Russia's long-term interest to cut carbon emissions?
"The U.S. government has wasted time and money on its poorly targeted suite of policies to promote homeownership, retirement savings and higher education. Direct, transparent support, focused on those who really need the help, could more efficiently lift millions into the middle class."
The Post editorial goes in the right direction - but not far enough to help many at the bottom. For example, workers with pay too low to allow them to save need more than an increased match to a 401(k). They need a modest contribution even if they can't contribute in a given year.
For more than six years, the Center on Capital & Social Equity has advocated on this web site for shifting tax breaks and subsidies for retirement savings, housing, and education from top earners to people who need help the most.
Half of Americans have no retirement savings — here’s how Congress can look out for them (2018) - Washington Examiner
Including all workers in our retirement savings system requires two things: a universal tax credit and a secure
place to invest it. Congress should be working on both (2018).
Robin Hood Tax Reform: Modest Changes in Health, Retirement Tax Breaks Could Produce Major Gains in US Health Access, Financial Security – at Little or No Added Government Cost (2017)
How the American Retirement Savings System Magnifies Wealth Inequality (2016) - Society of Actuaries
As a prophet once said, better late to a party than never.
Increase in homelessness and need for rental assistance expected with end of CDC eviction moratorium- Boston Herald
Facing roaches, rodents, leaks and balky heat and fire alarm systems, fed-up tenants of PNC Bank’s McKeesport complexes demand change - Pittsburgh PublicSource
US Sick Leave In Global Context: US Eligibility Rules Widen Inequalities Despite Readily Available Solutions - Health Affairs
"As for paid sick days, most higher income workers take them for granted, but millions of low-wage workers don’t get them. Many employers of low-wage workers already offer paid sick leave earned through time on the job. Businesses that don’t are arguably free riding. A few mandatory paid sick days would level the playing field and help employers do the right thing. As the pandemic has shown, paid sick days also can provide a community-wide benefit by slowing the spread of disease."
Increase in homelessness and need for rental assistance expected with end of CDC eviction moratorium- Boston Herald
"An Insider Breaks With Beijing."
Mainline church labels Israel an Apartheid state, and more churches are sure to follow - Steve France/Mondoweiss
" 'We reject Israel’s apartheid system of laws and legal procedures,' the United Church of Christ stated at its general synod, in a resolution approved by 83 percent of members despite an appeal by the American Jewish Committee."
Sunday, July 25, 2021
The symbolism in Revelation is challenging. (Those taking advantage of a new state law legalizing the use of marijuana are advised to sober up before reading.)...Interesting that the ancient writer saw two of the ultimate threats to humans as high prices of food needed by the poor and pestilence. Seems he didn't care for regressive policies and pricing.
5 When he opened the third seal, I heard the third living creature call out, ‘Come!’ I looked, and there was a black horse! Its rider held a pair of scales in his hand,
6 and I heard what seemed to be a voice in the midst of the four living creatures saying, ‘A quart of wheat for a day’s pay, and three quarts of barley for a day’s pay, but do not damage the olive oil and the wine!’
7 When he opened the fourth seal, I heard the voice of the fourth living creature call out, ‘Come!’
8 I looked and there was a pale green horse! Its rider’s name was Death, and Hades followed with him; they were given authority over a fourth of the earth, to kill with sword, famine, and pestilence, and by the wild animals of the earth.
Italy and France requiring COVID-19 vaccination or negative tests to engage in nightlife and recreation - WashExaminer
“Don’t You Work With Old People?”: Many Elder-Care Workers Still Refuse to Get COVID-19 Vaccine - ProPublica
"Amid a 'pandemic of the unvaccinated,' more than 40% of the nation’s nursing home and long-term health care workers have yet to receive vaccinations."
Staggering failure by the long-term care industry and government to get more people vaccinated who work with frail, elderly people. From now on: no vaccination = no job, no pay. No exceptions on religious grounds for members of the Church of the Morons.
US Department of Labor recovers $280K for 36 workers of Medford restaurant that withheld cash, credit card tips; failed to pay overtime
The ACA's fines on employers for not offering coverage impact employers of low-wage workers the most. They are among the least likely to have the resources to offer coverage. Despite lax enforcement, many have shifted workers to part-time schedules or used contractors rather than employees to avoid the potential liability. A flaw in mandating employers to offer coverage and fining those that don't is that low-wage workers can suffer in many ways after employers react.
For years, asked staff at the Treasury and IRS how much had been been collected in employer pay-or-play fines. Never got a straight answer. Am guessing that whatever amount may have been garnered is far less than the revenue estimated in the ACA's scoring....But things may be changing...
"A word to the wise for employers — IRS enforcement of the ACA is very real and it’s increasing in volume and dollar amounts. Reporting for the 2021 tax year may be a ways away, but now is the time to assess your ACA compliance process to ensure you’re not making any errors that could lead to penalty assessments."
"The IRS may be issuing penalties for 2017 and the 2018 tax years, but the agency may go back to even earlier years, as the IRS General Counsel clarified that there is no statute of limitations for Employer Shared Responsibility Payment (ESRP) penalties."
Stateless - PBSideo has closed captioning
"Director Michèle Stephenson’s new documentary follows families of those affected by the 2013 legislation stripping citizenship from Dominicans of Haitian descent, uncovering the complex history and present-day politics of Haiti and the Dominican Republic through the grassroots electoral campaign of a young attorney named Rosa Iris."
Global inequality more than doubled between 1820 and 1910, from less than 20% to about 40%, and stabilized around 40% between 1910 and 2020.
Within-country inequality has dropped between 1910 and 1980 and has risen since 1980.
Between country inequality has increased between 1910 and 1980 and declined since 1980.
The share of global income going to top 10% highest incomes at the world level has fluctuated around 50-60% between 1820 and 2020.
The share of global income going to the bottom 50% lowest incomes has generally been around or below 10%."
Developing countries in times of COVID: Comparing inequality impacts and policy responses - World Inequality Database
National HPA for June averaged 15.6%, up from 15.4% a month ago and 6.5% a year ago.
Low rates are driving high HPA growth across all price tiers but especially the upper tiers.
Historically, HPA in the low price tier has far outpaced HPA in the upper price tiers.
HPA varied significantly among the 40 largest metros in the US. In all metros, HPA was at least 10% or higher from a year ago."
"The Amazon founder revived the theory of surplus value."
c + L = W
Opinion: Here’s the smart way to tax the rich: It’s important to ask the wealthy to pay more. It’s also important to do it the right way. - WaPost
Sisyphus - Medi Belortaja
The Rise of the Bullshit Job: Why do one-third of Americans today feel their job is meaningless? - BetterHumans
US life expectancy decreased by 1.5 years during the pandemic – the largest drop since WWII - USA Today
Effect of the covid-19 pandemic in 2020 on life expectancy across populations in the USA and other high income countries: simulations of provisional mortality data - BMJ
As usual, the decline in U.S. life expectancy is being presented as a racial issue rather than one of economic class. The relationship is linear: for decades higher-income people have increasingly lived longer than lower-income people. If it weren't one racial configuration at the bottom, it would be another. Racism must be fought, but exclusive focus on race deflects from underlying economic issues of class. The resulting divisive politics result in little or no change in policy.
See: "A Widening Gap in Life Expectancy Makes Raising Social Security’s Retirement Age a Particularly Bad Deal for Low-Wage Earners"
"...on an 8-to-5 vote, the council voted to add taxes that could raise about $100 million in revenue in fiscal 2022, and to use that money for housing vouchers, subsidies for day-care workers’ wages and monthly tax credits for low-income families....That would translate to about $375 more in the yearly tax bill of someone earning $300,000, and $6,500 more in the tax bill of someone earning $1 million, according to tables circulated by the three council members."
I’m Fine With Sending Jeff Bezos Into Space, As Long as He Pays His Taxes Here on Earth - The Nation
"Taxing the rich might curtail Bezos’s extraterrestrial activities. But it would make this corner of Planet Earth more habitable."
A tariff on billionaires returning from space? :) ... Not everyone agrees:
"Commercialization of space will benefit everyone. The super-rich are just getting it started."
"Robinhood was the first to pioneer commission-free trading, disrupting the entire brokerage industry and eventually leading to larger rivals like E-Trade, Schwab and TD Ameritrade to all follow suit by slashing fees."
The U.S. bourgeoisie should thank the 'Hood' for driving down broker fees. BTW, that leaves room for a transaction tax of a lesser amount to fund profit sharing with the proles. The stock market somehow managed to be competitive with broker fees. It could bear the burden of transaction levies.
Should team owners -- the taxpayers of Alabama -- get a cut of state university sports profits?
Life on the football plantation: Coach Saban is making $9.3 million. Governor Ivey, $127,833.
Feed sack dresses ... were a common article of clothing in rural US and Canadian communities from the late 19th century through the mid 20th century. They were made at home, usually by women, using the cotton sacks in which flour, sugar, animal feed, seeds, and other commodities were packaged, shipped, and sold. They became an iconic part of rural life from the 1920s through the Great Depression, World War II, and post-World War II years.
Book Review: "Supreme Inequality – The Supreme Court’s Fifty-Year Battle for a More Unjust America" - Steve Emmert/ABA
"Most of Supreme Inequality is an exploration of the Supreme Court’s rightward shift in the ensuing five decades on issues such as the rights of the poor, educational inequality, electoral dynamics, and the rights of the accused."
Excellent treatise by Adam Cohen, its political bias notwithstanding. He provides an anatomy of how the Supreme Court increasingly protects the minority the Founders valued most: people with the most property and power. Since the 1960s, the Supreme Court has steadily suppressed the rights and prospects of low-income Americans in both relative and absolute terms.
"Big law is a corrupting influence on our policymakers. The new FTC is dusting off an old legal tool to fight back."
California businesses hiring homeless workers can get a $30,000 tax credit through new law - Sacramento Bee
The new real estate normal: In the fracturing American economy, any house can inspire a bidding war. - WaPost
Joint Militias: On a Single Day in May, Israeli Settlers and Soldiers Cooperated in Attacks That Left Four Palestinians Dead - Intercept
Echoes of the ethnic cleansing in 1948. Israel's government and its US financiers should put an end to this quickly...Why aren't the houses of Israelis terrorizing Palestinians razed? Different laws and policies for the chosen and "unchosen" = racism. Who gets it next?
UN Human Rights Special Rapporteur on Palestine slams Israeli Squatter-Settlements as ‘War Crime,’ Urges Practical Punishment -
"Lynk asked the nations of the world to classify the Israeli government practice of sponsoring Israeli squatters on Palestinian-owned land on the Occupied Palestinian West Bank as a “a war crime under the Rome Statute of the International Criminal Court.”
"The Special Rapporteur explained, “For Israel, the settlements serve two related purposes. One is to guarantee that the occupied territory will remain under Israeli control in perpetuity. The second purpose is to ensure that there will never be a genuine Palestinian state. These are exactly the reasons why the international community agreed to prohibit the practice of settler implantation when it created the Fourth Geneva Convention in 1949 and the Rome Statute in 1998.” "
"..the current U.S. wealth gap is far larger than needed to reward initiative or to sustain rapid economic growth. To the contrary, over the past three decades, economic growth rates have slowed even as more and more wealth has been concentrated at the top. Much contemporary wealth accumulation seems to be of the least defensible kind: that which results from financial windfalls, speculation — or inherited privilege. Certainly the yawning wealth gap between White people and Black people, the legacy of deliberate racist policies, presents a special moral challenge, deserving of especially urgent policy attention...
"The wealth gap did not develop overnight. It neither can, nor should, be entirely eliminated; but the United States could aim for a more equitable distribution similar to that of our peer nations today — and, indeed, that which prevailed in the country during the era of its greatest international prestige. Policy reforms, starting now, could make it happen."
In describing U.S. inequality, it's good to see the Washington Post focus on the bottom 50% being left behind along with the customary top 1% singled out for increased taxation. The keys to policy changes that would shrink wealth and income gaps probably lie in the economic strata between those groups.
Sunday, July 18, 2021
"...But can peace be counted? Where is it located? When does it happen? Peace lacks this analyzable "thingness": It seems like a non-event, a null set.
"...for me, the close-up is necessary. What is peace, face-to-face, even as war rages all around? You should be able to find it, in how a community solves even its small problems; how it handles inequality and sharing; how it defines and deals with diversities; how it makes a habit of protecting the vulnerable in troubled times; how some behaviors become, in effect, unthinkable within it.
"If you want to study peace, face-to-face, you need to find peaceful faces. And you need to have a plan. And you need to start counting things, maybe, but the right things.
"Above all, you need an example..."
"In Peru’s Andean highlands, voters hope
a new president can improve their lives."
"For the have-nots, the global economy is running in reverse. Unlike the Great Recession of 2008-2009 when the emerging nations at the periphery continued to expand despite the traumas that rocked the center, this time the United States, China and a handful of other nations are on a post-pandemic rocket of growth while many others are stuck at the launching pad, struggling with low vaccination rates, worsening governance and growing debt.
"Kristalina Georgieva, managing director of the International Monetary Fund, spoke this month about a “two-track recovery,” with “accelerating” growth in the United States and a few other major economies, but “suppressed” growth in much of the rest of the world."
"One way to enhance fairness and social mobility is to ensure that people are not disadvantaged simply because they come from poorer families. Our report proposes a unified inheritance and gifts tax that is beneficiary-based and progressive in the cumulative amount received...Another important strategy is to reduce gaps in educational quality and achievement."
Senate Unanimously Passes Legislation Forbidding Products Made with Uyghur Slave Labor into US - Townhall
"Beijing is increasing surveillance and restrictions on the country’s population of 6.3 million Tibetans."
During Covid, some working mothers find a silver lining: more time with their children - Jessica Dickler/CNBC
"Bailys said she hopes to never return to an office full time. 'In my perfect world, I’d love to come in weekly, bi-weekly or monthly.'
"Of course, not all workers have the ability to work from home, even during a pandemic. There’s a clear class divide between workers who can and cannot telework."
"The June 2021 American Perspectives Survey finds that people’s work arrangements and preferences, unemployment experiences, and career aspirations are changing as workers navigate the new post-pandemic labor market.
Despite slow employment growth, a resounding majority (75 percent) of those unemployed for two years or less are currently looking or plan to look for work.
At the same time, the unemployed are more pessimistic about finding quality jobs. Nearly three-quarters of Americans say now is a good time to find a quality job, but only 53 percent of unemployed workers agree.
Eighty-six percent of Americans now say that workplace flexibility is a key factor in choosing a new job. It’s especially important for mothers working full-time."
"...here are a few important regulatory guardrails that these workers badly need:
1) Portable safety net...
2) Vocational training and reskilling...
3) Affordable Internet access and faster speeds...
4) Better training for freelancers and contractors to run a “business.”...
5) Organizing among “distributed” workers."
"State will use $35m to provide monthly cash payments to qualifying pregnant people and young adults leaving foster care."
Wonder how this will work out. Demand for the free money is likely to be much higher than supply. How will officials deciding who gets it deal with issues of fairness and charges of favoritism? ... BTW, do pregnant people leaving foster care get twice as much?
"...All too predictably, the plan is most clear about what it would “prohibit tax increases on”: households earning less than $400,000, “small businesses” and “family farms.” That rules out about 98 percent of the American people, in keeping with one of Mr. Biden’s more imprudent campaign promises. And, of course, even if this package ends up being deficit-neutral, the government’s debt is still growing rapidly as a result of other deficit spending..."
'I can breathe a little bit more.' Millions to receive child tax credit payments - Jonnelle Marte/Reuters
Chantel Springer walks with her son Jasiah in the Brooklyn borough of New York, U.S., July 29, 2020. REUTERS/Brendan McDermid/File Photo
Full-time minimum wage workers can’t afford rent anywhere in the US, according to a new report - Alicia Adamczyk/CNBC
"People working minimum wage jobs full-time cannot afford a two-bedroom apartment in any state in the country, the National Low Income Housing Coalition’s annual “Out of Reach” report finds. In 93% of U.S. counties, the same workers can’t afford a modest one-bedroom."
A Democratic Socialist Agenda Is Possible in Buffalo. It Depends on Labor Unions. - C.M. Lewis and Tyler Walicek/Truthout
Frito-Lay Workers Go on Strike with Some Claiming They Face 84-Hour Work Weeks - Mike Pomranz/Food & Wine
"Everything has gone up," one employee stated. "But our wages have stayed the same."
Unions eye Brookings, Urban Institute as push to organize think tanks grows - Rebecca Rainey/Politico
"The labor movement’s efforts to organize think tanks — major players in influencing and informing the policy debate on Capitol Hill — is the latest white-collar sector to see a burst in collective bargaining."
Herding intellectual cats making six figures feeding on grant money and donations? Maybe. How much will the research assistants get? How do blue-collar staff fit in?
Biden Would Raise Taxes Substantially for High Income Households and Corporations, Cut Taxes for Families with Children - Howard Gleckman/Tax Policy Center
"22% of respondents believe ‘Israel is committing genocide’; 67% say denying Jewish state’s right to exist is antisemitic."
This is what it looks like when a paratrooper crashes through your roof - James Clark/Task & Purpose
"Miraculously, this British paratrooper survived without serious injury."
Victory! ... Live to fly another day.
The child cash benefit could give families security and flexibility they’ve never known - Catherine Rampell/WaPost
Bernie on the National Mall in Washington in June. Photograph: Shawn Thew/EPA
Bernie in Trumpworld: Sanders visits ‘imperative if democracy is to survive’ - Martin Pengelly/Guardian
"Vermont senator tells New York Times $2tn or $3tn will not be enough for new infrastructure package."
Good move by Bernie to take the message outside the political echo chamber. Hope he does some listening as well. (Bigger is not necessarily better.)
"By siding with major food corporations over six Malian former child slaves who were seeking compensation under US tort laws, the US Supreme Court has sent a dangerous message. Apparently, US corporations will not be held to the same standards of decency and human rights abroad as they are at home."
"Bones of enslaved iron furnace workers tell the grim story of their lives."
"When COVID-19 struck, the Federal Reserve stepped in to try to avert economic crisis. As the country’s central bank continues to pump billions of dollars into the financial system daily, who is benefiting and at what cost?"
Airs on July 13, 2021
Biden Launches Sweeping Action on "Big Tech, Big Pharma, and Big Ag." Can It Be Real? - Matt Stoller/Big
"In 1938, Franklin Delano Roosevelt gave a speech to Congress on curbing monopolies... On Friday, Joe Biden reached back to that moment, and gave the most significant speech on monopolies by an American President since then. 'Capitalism without competition isn’t capitalism,' he said. 'It’s exploitation.' "
April 29, 1938
To the Congress:
Unhappy events abroad have retaught us two simple truths about the liberty of a democratic people.
The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.
The second truth is that the liberty of a democracy is not safe if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living.
Both lessons hit home.
Among us today a concentration of private power without equal in history is growing...
Sure - tax luxury consumption and use the proceeds to help citizens most in need pay for necessities. Conspicuous, self-indulgent spending accompanies accumulation of wealth. More market competition and anti-trust enforcement might help re-direct some of this consumption into capital investment.
A major problem posed by wealth accumulation, not addressed in Milanovic's insightful post, is the power it confers to influence government officials and shape policy. Much of that influence is applied unconspicuously, out of public sight. What results is often to the disadvantage of people at the economic bottom.
Sunday, July 11, 2021
"This highlights the distinction between charity and gleaning. In charity, people voluntarily give to others who are in need. This is a good and noble thing to do, but it is not what Leviticus is talking about. Gleaning is a process in which landowners have an obligation to provide poor and marginalized people access to the means of production (in Leviticus, the land) and to work it themselves."
"In many parts of Europe, including England and France, the Biblically derived right to glean the fields was reserved for the poor; a right, enforceable by law, that continued in parts of Europe into modern times."
The lie of “expired” food and the disastrous truth of America’s food waste problem - Alissa Wilkinson/Vox
Your next meal is getting more expensive. Here's what's driving the surge in food prices. - Grace Kay/Business Insider
American Men Suffer a Friendship Recession - /National Review
Biden fires Social Security boss, a Trump appointee who refused to resign - Mike Calia and Emma Newburger/CNBC
Time for Saul to say 'sayonara.' He was one of the guys choking off access to SSI. Not sure if the WH has the authority to keep him out of the building. If not, they could give him a place to sit with no computer hook up or pay.
Biden signs order to tackle corporate abuses across U.S. economy - Nandita Bose, Jarrett Renshaw and Diane Bartz/Reuters
"Tweet President Biden@POTUS
"To keep our country moving, we have to bring fair competition back to this economy. That’s why today, I’m signing an Executive Order promoting competition. It’ll lower prices, increase wages, and take another critical step toward an economy that works for everyone." 1:51 PM · Jul 9, 2021The White House"
Bully for Biden! It's a start.
"Over 2.2 million uninsured adults are in the Medicaid coverage gap — too poor to qualify for Affordable Care Act (ACA) marketplace assistance but ineligible for Medicaid because their state hasn’t adopted the ACA’s Medicaid expansion. Closing the coverage gap would increase health insurance coverage, reduce racial health disparities, and improve health care access, health outcomes, and financial security.
"These state fact sheets provide some basic facts about adults in the coverage gap in each state that hasn’t adopted Medicaid expansion."
Feds rescind health care funding agreement that would have paid for care for uninsured, poor Texans after 2022 - Shannon Najmabadi/Texas Tribune
"The Washington Post, citing two federal health officials, said the decision was a bid to push Texas toward expanding Medicaid."
The Biden Administration continues herding Texas toward Medicaid expansion. But policymakers there prefer giving poor people charity care with federal dollars through a Medicaid waiver rather than with health insurance.
Eleven years after the ACA was passed, 13 states still have not expanded Medicaid to cover the lowest-income people...In 1982, Arizona became the last state to implement the orginial Medicaid program enacted by Congress 17 years earlier.
‘Financially Hobbled for Life’: The Elite Master’s Degrees That Don’t Pay Off - Melissa Korn and Andrea Fuller/WSJ
"Columbia and other top universities push master’s programs that fail to generate enough income for graduates to keep up with six-figure federal loans."
Does the Israeli military demolish the family homes of Jews suspected of committing crimes against Palestinians or destroying their crops? Such a policy would probably be effective in reducing violence against the "unchosen people" in the Holy Land...No more U.S. funding to support racism in Israel. We have enough trouble dealing with our own.
"If Facebook, Twitter and YouTube can censor me, they can censor you—and believe me, they are."
1) Increase federal spending on evidence-based early childhood education for low-income preschoolers.
2) Childcare assistance should target low- and middle-income families and maximize choice.
3) Congress should reprioritize child-related spending on investments in early care and learning.
4) New parents need flexibility to spend more time with their children.
The stimulus helped these Trump voters pay rent and bills. But they blame it for a range of economic ills. - Tim Craig and Lenny Bronner/WaPost
Will the $1.9 trillion stimulus package cause runaway inflation? - Alexander Salter/Washington Examiner
Helpful perspective. The larger the group of spenders being subsidized, the greater the possibility of bidding up prices. For many items, stimulating middle-class spending may push prices up more than targeting help to people at the bottom who need it the most.
A Sea Change for Wages v. Capital?
Addicted to Identity Politics, Progressives May Miss a Historic Chance To Connect with America’s Working Class
Karl Polzer – Center on Capital & Social Equity
New research affirms what has been known for centuries. In the wake of a pandemic, a smaller, more risk-averse work force is often in position to demand higher wages. After the Black Death ripped through Europe, for example, peasants, shop workers and craftsmen realized they had gained bargaining power. Wages rose and the return on capital fell.
Though the impact of the current pandemic probably will be much milder, millions in the American working class suddenly deemed to be “essential” may come to a similar realization. People working with their hands in nursing homes, grocery stores, meat packing plants, or as home health aides, might ask whether they are getting a fair deal. Why, they might ask, are we expected show up to work and risk contagion for wages that barely cover the rent, while millions in the professional, management, and bureaucratic classes can shelter at home and still pull down a good salary? Why don’t we get paid sick days, health insurance, and other basic benefits like they do? Why can’t we spend more time raising our kids to help them get ahead?
In just two months, the Covid virus has upended the American workforce. Incomes have crashed. Unemployment has rocketed. Whatever new normal emerges will be different and probably more unequal. A larger portion of the workface – and the electorate -- may well be unemployed or working for low wages. Jobs that can support a middle-class lifestyle may be harder to find.
This is the perfect time for elected officials to talk to all American workers about how to improve their lives. Unfortunately, many Democrat leaders are deeply rutted in rituals of race and gender politics. The Democratic party may be blowing its chance to regain working class support -- once its bread and butter -- in two important ways. First, its policy agenda largely reflects upper-middle class priorities. Second, the party’s world view and messaging for many years has presumed that low-wage work is exclusive to blacks and Hispanics. To many Democratic leaders, pale-skinned poor people seem to have no standing. It’s almost as if they don’t exist...
Feb. 23, 2020
Dear Sen. Sanders,
Among all candidates for president, we think you are the most committed to making sure that ALL Americans have health insurance and access to comprehensive health care. We commend you for your leadership on this issue.
Unfortunately, it is hard to see how the Medicare-for-all legislation you propose could gain Congressional approval in the foreseeable political future. As a longtime member of the U.S. Senate, you must be able to understand the grounds for this concern.
Please answer this question: If, during your presidency, Congress could agree to pass a universal coverage bill using a different, perhaps more traditional, approach, would you sign it?
Getting ALL Americans affordable coverage as soon as possible is an important part of our policy agenda. We cannot wait until a political moment in the unforeseeable future in which a Medicare-for-all system can gain approval. We also recognize that any universal system put in place will need to enjoy long-lasting acceptance spanning the ebbs and flows of partisan politics.
Our question is of deepest sincerity. Your answer could be key to broadening your base of support and winning the presidency.
Thank you again for your leadership.
Karl Polzer, Center on Capital & Social Equity
A Widening Gap in Life Expectancy Makes Raising Social Security’s Retirement Age a Particularly Bad Deal for Low-Wage Earners
Essay - Karl Polzer
"Social Security’s long-term financial problems result in part from an increase in average life expectancy driven by wealthier people living longer, and, thereby, collecting more benefits. Policymakers should not use funding shortfalls attributable these trends as an excuse to cut monthly benefits alike for those who have gained (high earners) and for those who haven’t (low earners)."
Will Growing Inequality Make Social Security & Long Term Care Financing Fixes Harder?
2020 Society of Actuaries Living to 100 Symposium
Karl Polzer/Center on Capital & Social Equity
This essay explores two basic questions. The first is the extent to which capitalism, which emphasizes the rights of individuals to pursue their interests, and socialism, which focuses on group needs, tend to function in tandem as much as they do in conflict. As many agree that the political pendulum in recent decades has swung in favor of capitalism, the paper also discusses a range of public policies that can be used to reduce its imbalances and risks, with particular emphasis on moderating capitalism's tendency toward systemic inequality. Policy options range from programs to help the poorest, social insurance, higher taxation of income and wealth, and re-channeling to all citizens a portion of profits from private exploitation of public assets and business activities enabled by public laws and infrastructure.
Including all workers in our retirement savings system requires 2 things: a universal tax credit and a secure place to invest it.
Congress should be working on both.
Almost half of Americans have no net assets and little or no retirement savings. Many have no money to save, and if they did, and no retirement account to put it in. Meanwhile, Americans at the top of the economic heap get generous tax breaks for retirement savings – and capital gains from these assets widen the wealth gap.
Establishing a national retirement savings system and reshaping tax policy to provide every American worker a modest tax credit to put in a retirement account could improve economic security, help people prepare for old age, and facilitate saving for emergency expenses. This type of inclusive capitalism would make every American worker an owner of assets generating income. Such a system could be funded via a relatively small sacrifice to high earners without increased federal spending.
Include Everyone in the Retirement Savings System
Related initiatives and proposals:
- 40% of Older Americans Rely Solely on Social Security for Retirement Income - ADVISOR Magazine
- Plan Sponsor Groups Oppose Financial Literacy Proposal
- DOL Exemption Paves Way for Auto Portability
- State-run Auto-IRAs Will Help Close the Coverage Gap
- Half of Americans have no retirement savings — here’s how Congress can look out for them
- Why Not a Minimum Pension?
- Capitalize Workers!
- New York Envisions a State-run Retirement Plan for Private Workers
- If you want more equality, you have to embrace the risk premium
- A preview of the U.S. without pensions - older people work longer
- Why it's so hard for Americans to save
- OregonSaves web site
- Facing employer jitters, ERISA lawsuits, Oregon & other states push toward universal retirement savings systems.
- Treasury ending Obama Administration's myRA savings program.
- Bipartisan Policy Center commission suggests developing a near-universal retirement savings system along with raising Social Security benefits for lower-income and raising Social Security taxes to ensure program solvency.
- Universal system would significantly raise Americans' retirement readiness: EBRI
- Great Britain is ramping up a new universal pension system called National Employment Savings Trust or NEST. Features include automatic enrollment, mandated contributions, and a choice of diversified investment funds, including those based on a person's age.
- Harvard study finds tax subsidies less effective policy option in boosting retirement savings than automatic enrollment or putting money in low-income savers' accounts.
- Appalachian Savings Project helped child-care workers with low and variable earnings save 5.5% of income on average. Program evaluation.
- Urban Institute's "Super Simple" savings proposal. Sharing many features of a system now being implemented in Great Britain, this proposal would establish a universal retirement savings system with contributions from employers, workers, and the government.
- Oklahoma experiment shows power of universal children's savings. Early formal evaluation of the Oklahoma program.
- Great Britain's experience with "Child Trust Funds."
- "Automatic IRAs" available to workers and the self-employed. There is growing support for this type of approach.
- State Retirement Savings Resource Center - AARP
- Illinois to set to build an auto-IRA system for companies with at least 25 employees by 2017. Other states considering similar approaches.
- Click here for a summary of state activity as of July 2016.
- Three ways states are organizing retirement savings programs for private-sector workers.
- Aspen Institute issue brief explores how state retirement savings programs can utilize the federal saver's tax credit.
- Reps. Crowley and Ellison propose legislation to start savings accounts for all U.S. children.
- Research shows value of "hands on" financial education.
If you know of other proposals along these lines or would like to comment, please go the "Contact Us" page on this site and send us an email.
CCSE Proposes Universal Starter IRAs
Australia as a Model?
Australia’s “superannuation” system requires employers to contribute a percentage of employees’ income into diversified retirement funds managed by trustees. By 1999, 97 percent of Australia’s full-time employees and 76 percent of part-time employees were covered by the superannuation system. Over the years, Australia has increased required contributions and continued to refine the system, which has been credited with raising levels of capital accumulation and improving retirement security.
According to a July 2016 report, the Australian superannuation system continues to broaden coverage, but may be contributing to growing wealth inequality in its current form.
CBO report shows growing divergence of wealth between those at the top and bottom
The distribution of wealth among the nation’s families was more unequal in 2013 than it had been in 1989, according a Congressional Budget Office report released August 2016. "For instance, the difference in wealth held by families at the 90th percentile and the wealth of those in the middle widened from $532,000 to $861,000 over the period (in 2013 dollars). The share of wealth held by families in the top 10 percent of the wealth distribution increased from 67 percent to 76 percent, whereas the share of wealth held by families in the bottom half of the distribution declined from 3 percent to 1 percent."
In 2013, CBO reported that families in the top 10 percent of the wealth distribution held 76 percent of all family wealth, families in the 51st to the 90th percentiles held 23 percent, and those in the bottom half of the distribution held 1 percent. Average wealth was about $4 million for families in the top 10 percent of the wealth distribution, $316,000 for families in the 51st to 90th percentiles, and $36,000 for families in the 26th to 50th percentiles. On average, families at or below the 25th percentile were $13,000 in debt.
Over the period from 1989 through 2013, family wealth grew at significantly different rates for different segments of the U.S. population. In 2013, for example: The wealth of families at the 90th percentile of the distribution was 54 percent greater than the wealth at the 90th percentile in 1989, after adjusting for changes in prices. The wealth of those at the median was 4 percent greater than the wealth of their counterparts in 1989. The wealth of families at the 25th percentile was 6 percent less than that of their counterparts in 1989.
While average wealth of the bottom quarter of the distribution dropped steeply over this time period, its amount of indebtedness grew significantly.
Research shows dramatic growth of upper middle class, major shift in economic resources
An Urban Institute report published in June 2016 found that since 1979 the percentage of wealthy and upper-middle-class Americans have grown dramatically while the middle- and lower-middle class has become smaller. The study found that "the proportion of the population in the upper middle class went from under 13 percent in 1979 to over 29 percent in 2014."
The report documents a major shift in the distribution of economic resources. "In 1979, the bottom three income groups controlled 70 percent of all incomes, and the upper middle class and rich controlled 30 percent. By 2014, this distribution shifted to 37 percent for the bottom three groups and 63 percent for the upper middle class and rich groups. The middle class alone saw its share of income decline from 46 percent in 1979 to 26 percent in 2014."
The study divides the population into five classes. The poor and the near-poor had annual incomes from $0 to $29,999; the lower middle class, from $30,000 to $49,999; the middle class, from $50,000 to $99,999; the upper middle class, from $100,000 to $349,999; and the rich, $350,000 and up.
Pew study shows long-term decline in size of middle class, rise in number of poor
After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it, according to a study released in December. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, according to the Pew Research Center analysis of government data. Highlights include the following:
"While the share of U.S. adults living in both upper- and lower-income households rose alongside the declining share in the middle from 1971 to 2015, the share in the upper-income tier grew more.
"Over the same period, however, the nation’s aggregate household income has substantially shifted from middle-income to upper-income households, driven by the growing size of the upper-income tier and more rapid gains in income at the top. Fully 49% of U.S. aggregate income went to upper-income households in 2014, up from 29% in 1970. The share accruing to middle-income households was 43% in 2014, down substantially from 62% in 1970.
"And middle-income Americans have fallen further behind financially in the new century. In 2014, the median income of these households was 4% less than in 2000. Moreover, because of the housing market crisis and the Great Recession of 2007-09, their median wealth (assets minus debts) fell by 28% from 2001 to 2013.
"Meanwhile, the far edges of the income spectrum have shown the most growth. In 2015, 20% of American adults were in the lowest-income tier, up from 16% in 1971. On the opposite side, 9% are in the highest-income tier, more than double the 4% share in 1971. At the same time, the shares of adults in the lower-middle or upper-middle income tiers were nearly unchanged.
"These findings emerge from a new Pew Research Center analysis of data from the U.S. Census Bureau and the Federal Reserve Board of Governors. In this study, which examines the changing size, demographic composition and economic fortunes of the American middle class, ‘middle-income’ Americans are defined as adults whose annual household income is two-thirds to double the national median, about $42,000 to $126,000 annually in 2014 dollars for a household of three. Under this definition, the middle class made up 50% of the U.S. adult population in 2015, down from 61% in 1971."
Impact of Raising the Minimum Wage
Increasing the minimum wage would have two principal effects on low-wage workers, according to an analysis by the Congressional Budget Office. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly.
- Five Facts about the Minimum Wage.
- Living Wage Calculator: The cost of meeting basic needs varies widely depending on where you live. MIT offers an on-line tool to help determine such costs and the living wage in each county and metropolitan area in the U.S. The site also has articles on related issues.
- State Minimum Wage Levels: Federal minimum wage law supersedes a state's minimum wage law if the state level is lower. In those states where the state minimum wage is greater than the federal level, the state minimum wage prevails. Two states have a minimum wage set lower than the federal minimum wage. In 29 states and DC, the state minimum wage is higher than the federal minimum. Fourteen states have a minimum wage that is the same as the federal requirement. The remaining five states have not established a minimum wage.
The Economics of Inequality
Deaton Wins Nobel Prize
"The award comes at a time when there is rising academic and popular interest in the study of inequality. Several economists, including Anthony Atkinson of the London School of Economics (who was among the leading contenders for a Nobel prize this year) and Thomas Piketty of the Paris School of Economics (who is still a bit too young for one), have published widely-read volumes on the subject over the last two years. Mr Deaton published his, The Great Escape: Health, Wealth, and the Origins of Inequality, in 2013. In it, he argued that while most people in the world have gained in terms of health and well-being from GDP growth over the last few decades, there are many groups that have missed out, particularly if on measures beyond those most commonly examined."
-- The Economist
Milanovic Explores Dynamics of Income Inequality in Age of Globalization
In “Global Inequality: A New Approach for the Age of Globalization,” Branko Milanovic identifies five forces pushing up inequality in the United States:
1. The increasing share of national income that accrues to owners of capital.
2. Very high and rising concentration of incomes from capital.
3. People holding high-paying jobs also often have high capital income.
4. The tendency of high-income individuals to marry each other.
5. The rising political power of the rich.
Revisiting the work of American economist Simon Kuznets, Milanovic describes how global income economy waxes and wanes in "waves" driven by economic and political forces.
CBO report analyzes impact of government transfers, taxes on rising U.S. income inequality
"Between 1979 and 2013, all three measures of income examined in this report—market income, before-tax income, and after-tax income—became less equally distributed, based on a standard measure of inequality known as the Gini index. The increase in inequality in both before-tax and after-tax income over the 35-year period stemmed largely from a significant increase in inequality in market income, mostly because of substantial income growth at the top of the market income distribution.
"Because government transfers go predominantly to lower-income households, before-tax income (which is equal to market income plus government transfers) was more evenly distributed in each year than market income. And because higher-income households pay a larger share of federal taxes than lower-income households do, after-tax income was more evenly distributed than before-tax income.
"In each year between 1979 and 2013, government transfers reduced income inequality significantly more than the federal tax system did."
View from the Paris School of Economics
- The return of a patrimonial (or wealth-based) society in the Old World (Europe, Japan).
- Inequality in America: Is the New World developing a new inequality model that is based upon extreme labor income inequality more than upon wealth inequality? Is it more merit-based, or can it become the worst of all worlds?
- In all nations with capitalist economies examined, the poorest half of the population owns virtually no assets or is in debt.
- In general, when the rate of growth of capital exceeds the rate of growth of the overall economy, wealth tends to concentrate. There is no natural market mechanism to counter this tendency; a nation's degree of wealth concentration in large part is a function of public policy.
"The Spirit Level: Why Greater Equality Makes Societies Stronger"
In this book, Richard Wilkinson and Kate Pickett present data making the case that countries with greater income inequality tend to have more health and social problems. Furthermore, there is evidence that the negative effects of inequality impact not just the poor, but people at all social levels. The Equality Trust provides slides of some of the supporting data.
This short Wall Street Journal video describes competing views of the wealth inequality issue and how to address it.
Robert Solow, the Russell Sage Foundation’s Robert K. Merton Scholar and Institute Professor Emeritus at MIT, joined New York Times columnist Paul Krugman and moderator Janet Gornick (Director of the Luxembourg Income Study Center and a former RSF Visiting Scholar) at the Foundation for a conversation on Inequality: What Can Be Done?, a new book by British inequality scholar Anthony B. Atkinson. In the book, Atkinson argues that economic inequality has reached unacceptable levels in many countries and lays out an agenda for reducing inequality. His policy proposals span five areas: technology, employment, the sharing of capital, taxation, and social security.
Columbia's Joseph Stiglitz takes on "The Great Divide"
Click on highlighted words to hear interview.
Hayek Revisited: Is Compromise Possible?
Is Friedrich Hayek's classic defense of individual liberty and economic freedom, rooted in moral tradition, just as relevant today as during World War II? Click here to read a summary of Hayek's "The Road to Serfdom," published by Reader's Digest as that war came to an end and a new international economic order was developed.
Today, how can monopoly power, whether wielded by corporations or government agencies, be checked while expanding economic opportunity and inclusion for all including the young, old, and those with few assets? If Hayek could have foreseen the ability of modern corporations to concentrate wealth and power, what policies would he recommend?
"...Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance -- where, in short, we deal with genuinely insurable risks -- the case for the state's helping to organize a comprehensive system of social insurance is very strong. ...
"(T)here is no incompatibility in principle between the state's providing greater security in this way and the preservation of individual freedom."
-- F. Hayek, The Road to Serfdom, Chapter 9/Security and Freedom
"President Joe Biden’s plan to inject $4 trillion of social and capital infrastructure spending into a $21 trillion economy could help many people take care of their families. But there are also major economic and political downsides. These risks could be reduced, and the proposal’s value increased, by putting Social Security on the table and targeting new social spending to people most in need..."
Where's Social Security?
Karl Polzer, Center on Capital & Social Equity
A government, already paying interest on more than its people produce each year (hint: $22 trillion), now proposes to tax its wealthiest citizens in the vicinity of $3 trillion more to finance a growing list of social and physical infrastructure needs. Like families paying off mortgages, indebted governments should know that each major purchase narrows its ability to raise capital for future needs...
So, what do we need and how can the wealthy be tapped to pay for it? What's missing?...
Thanks to the Washington Examiner for timely publication of this op-ed.
March 1, 2021
"...States could be given flexibility. Congress could set the national minimum at the high end of current proposals, say at $15 or $16, and allow states to adjust it downward by a certain margin, say 20% or 25%, but no lower. A national minimum wage corridor, rather than a line, could help California and New York build up and adjust down from a higher platform. Poorer states could choose lower levels in the corridor, say $12 to $13 an hour.
"Policymakers also should consider how changes to the earned income tax credit and child tax credit can complement wages for working-class families. Members of both parties support higher subsidies to raise children. Such payments should be targeted to help the poorest the most. Yet the current child tax credit provides the most money to higher-income families."
Feb. 17, 2021
Analysis: Ways To Raise the U.S. Minimum Wage To Help Workers, Families, While Minimizing Negative Impacts
A recent Congressional Budget Office (CBO) analysis reinforces the case that raising the national minimum wage is long overdue. But it also provides reasons for caution. Dialing up wages at the bottom up too fast and too much could increase the magnitude of negative side effects including job loss and price increases.
This paper examines potential impacts of raising the federal minimum wage nationally and in selected states and local areas. It ends with suggestions to temper negative side effects resulting from a higher minimum wage and discusses the need to fill income gaps that are too large for a higher minimum wage to address adequately, especially for some types of families. Options include setting a national corridor in which states can choose a minimum wage best fitted to them and supplementing low wages with more support for raising children.
Thanks to the Washington Examiner for running this op-ed and its openness to air a variety of views including our work exploring inequality and advocating for the bottom 50%. The Examiner's audience includes conservative members of Congress whose votes are needed to pass and sustain legislation advancing working class interests.
Biden's stimulus risks sending aid to those who don't need it - Karl Polzer/Washington Examiner op-ed
January 29, 2021
Who exactly will get the enhanced cash aid, and who won't, in the stimulus package the Biden administration will soon negotiate with Congress? This is the first of many distributional challenges awaiting lawmakers on both sides of the aisle. Choices on targeting increasingly scarce public funds will reveal which income groups both parties are committed to represent.
Details of the relief proposal had not been released as of this writing. But it is likely that the administration has been working from the distribution template in legislation Democrats introduced at the end of December. That bill, the Cash Act of 2020, would increase the $600 COVID-19 cash relief authorized last month to a total of $2,000 ($4,000 for couples). It also would send billions of dollars to well-off people that don’t need the money. As with previous COVID-19 cash aid legislation, an argument can be made that the distribution scheme shortchanges millions of people who need money to pay for food and rent.
The Center on Capital & Social Equity explores and promotes ways to include all workers and families in the output of capitalist economies. (See chart above.) All should have the opportunity to own shares of working capital. One way to mitigate the negative effects of monopolies, which antitrust regulation cannot entirely control, is through widespread profit sharing. This can be done by setting up a universal retirement savings system.
Missionary being eaten by a jaguar (Noé León, 1907)
Thanks to the Washington Post for publishing this as leaders in Congress negotiated changes to Covid-19 relief legislation:
Dec. 11, 2020 at 4:31 p.m. EST
Sens. Mark R. Warner (D-Va.) and Susan Collins (R-Maine) said in their Dec. 8 op-ed, “We can’t afford inaction on the covid-19 compromise package,” that their compromise “would help Americans at least get through the next four months.” With due respect to their bipartisan efforts, that was dead wrong.
Very little in the coronavirus relief package would help low-income Americans make it through even one month. What’s needed most is rent relief and money to cover food and utility bills. Yet no direct payments to low-income individuals similar to the checks issued under the Cares Act in the spring are to be found. The bipartisan proposal mainly would benefit interests with access to Congress: businesses (via cheap or free money, plus a liability shield), nonprofits/associations/churches, state governments, and professional classes including doctors, lawyers and accountants.
The D.C. government’s decision to send $1,200 checks to people among the hardest hit sets a good example for states and the federal government. Congressional leaders, many perched in the nation’s wealthiest strata, need to understand that about half of the U.S. workforce earns low wages or is out of a job. Viewed from the bottom up, the United States is becoming a much more impoverished nation.
Karl Polzer, Falls Church
The writer is founder of the Center on Capital & Social Equity.
Interesting evidence on how CARE Act stimulus helped low-income people get through the summer, despite large job losses, and why we need more stimulus now.
Thanks to the Washington Examiner for publishing this op-ed.
- Raise minimum wage with annual COLA (option: give states some leeway to adjust ↓ to reflect cost of living/labor).
- Five PAID sick days annually for ALL workers.
- 100% of Americans with health coverage by 2025 - with strong cost controls (any number of payers will work).
- Universal retirement savings system with minimum $500 annual government contribution (so, all Americans own working capital, have stake in market economy).
- No surprise medical bill >$500.
- Cut cost of college/expand apprenticeship programs.
- Improve Social Security benefits for bottom 50%. Achieve long-term solvency through higher taxes mostly on top 20%.
- Increase refundable child tax credit.
Life expectancy has not increased for the lowest-paid workers - National Academy of Sciences
A Widening Gap in Life Expectancy Makes Raising Social Security’s Retirement Age a Particularly Bad Deal for Low-Wage Earners - Karl Polzer/Society of Actuaries
Thanks to the Society for publishing this article.
2020 Society of Actuaries Living to 100 Symposium
"Although much of it may turn out to be pre-election packaging, legislation unveiled last week by Democrats to help racial minorities is a poorly conceived policy approach that fails to treat the nation’s low-wage workers fairly or equally. Senate leadership is billing the Economic Justice Act as a “major new legislative proposal to make $350 billion in immediate and long-term investments in Black communities and other communities of color.” However, policies that reward or punish citizens based on skin color not only rest of shaky legal and ethical ground. If enacted, they may ignite a political backlash that will set minority communities back rather than helping them move forward."
Click here to read article.
July 1, 2020
Letter to U.S. Political Leaders and Media
What wasn’t said at last week’s Congressional hearings on Covid-19 should raise alarm. Federal officials testified the CDC plans to issue “more targeted” testing "guidelines" for states and nursing homes. More advice is not enough. After five months and more than 120,000 virus deaths, lack of federal and state action -- and adequate funding -- for testing in nursing homes is homicide by negligent policy...
July 14, 2020
Yes! Credit to CMS Administrator Verma and the Administration. We've been calling on the feds to deploy rapid, comprehensive testing for nursing home residents and staff for 4 months. This is a major step toward reducing deaths from the pandemic. Now, make sure to include long term care providers not directly regulated by CMS, such as assisted living facilities, in the testing program. About 1.5 million live in nursing homes and one million in assisted living.
June 15, 2020
Thanks to the Washington Examiner for running this article.
"The current Medicaid regime is a mixture of bad and good. It often renders low quality nursing home care. But Medicaid does provide universal long-term care coverage, a rarity in American social policy. That’s a good thing. Medicaid needs to be upgraded – not gutted. Long-term care insurance and personal savings simply can’t fill the gap cutting Medicaid would leave." ...
"Witness the Trump administration’s delegation of most of the responsibility for the COVID-19 nursing home policy to the states. It recommended, for example, that states make sure COVID-19 testing gets done in nursing homes rather than having CMS require it nationally. Washington’s failure to take the lead on testing can’t bode well for nursing home quality and mortality rates."
Detroit Industry - Diego Rivera
Three policy recommendations include: "Capital gains tax rates need to be aligned more closely with marginal income tax rates, since large gaps lead to repackaging of income, reducing the redistributive effects of tax, creating horizontal inequity, and biasing measures of vertical inequality."
Awakening Slaves - Michelangelo
"In this talk, I present some of the figures & tables gathered in my book Capital and Ideology (2020) - an economic, social & political history of inequality regimes, from trifunctional and colonial societies to post-communist, post-colonial hyper-capitalist societies. As compared to Capital in the 21st Century (2014): Capital and Ideology is less western-centered, more political and focuses on the fragilities and the transformation of inequality ideologies. A much better book (I believe!)"
New Book by Anne Case and Angus Deaton
Comment: Excellent new paper. Remember Macro 101: national savings = national investment? This takes Keynes one step further. Instead of being invested, savings glut at top generates rents, increases systemic inequality, through increased lending to bottom 90%. Who pays high credit card interest and transaction fees, and who profits, e.g.?
Great Flower Moon - Richard Coleman
Posted April 16, 2020 and updated as noted
Pinpointing Disease Pathways, Treatments: Which (If Any) of The Dots Connect?
Changes in blood chemistry - hypoxia - bloods clots - organ damage
New link between hypoxia and blood clot risk (posted April 23)
U.S. races to stock up on dialysis supplies as kidney failure ravages virus patients – Politico Approximately 20 percent of coronavirus patients in intensive care around the city need the kidney treatment, often for weeks.
Sense of Smell
Letter to the Washington Post, Other Media - April 3, 2020
The Washington Post and other newspapers have done yeoman work in covering the coronavirus outbreak. Getting reliable and thoughtful information to the public quickly plays a critical role in helping to coordinate responses and saves lives. Unfortunately, the normal practice of restricting access to paid subscribers slows down dissemination of critical information, particularly to lower-income people.
Until this national emergency is over, the Post and other media should "ungate" all coverage related to the pandemic. That way people and organizations that subscribe can quickly get the word out about latest developments. This would be a great service to the public.
Karl Polzer/Center on Capital & Social Equity
Anchored Boats (1919) by Jonas Lie
March 3, 2020 - Letter to the Washington Post
The Post’s March 3 article “Bernie Sanders and Elizabeth Warren want a wealth tax. Wealthy Swiss say their model could work for America” raises key issues of tax fairness and enforcement.
Why would it be unfair to tax the super wealthy on total net assets when middle-class homeowners already are taxed on the value of homes largely financed through debt on which they pay interest to banks (whose profits flow disproportionately to the wealthiest)? Existing American wealth taxes -- state and local property taxes -- now finance most K-12 education. A national wealth tax could be used to make school funding more equitable and lessen the tax burden on the middle class. We already tax the middle class on property it partially owns. So why not tax the wealthiest on the value assets they own lock, stock and barrel?
Incentives are key to enforcement. A progressive wealth tax -- rising in increments from point A to point B -- could be enforced by applying the maximum rate to all households with wealth over a given threshold, and leaving it up to filers to document to the IRS that the lowest allowable rate is appropriate. Finally, a reasonable tax rate could provide an incentive for investment that spurs economic growth. A high rate could stifle it.
Karl Polzer/Center on Capital & Social Equity
A full time worker paid the federal minimum wage earns 13% of the average national income per worker in the US -- the lowest level since the creation of the minimum wage in 1938.
Source: Gabriel Zucman.
"Fastest way to cut carbon emissions is a 'fee' and dividend, top leaders say," Washington Post, 2/14/20
The article above is an example of how the virtue of economic analysis can't be measured by the pound or aggregate number of titles. The insight of a single analyst can contain more wisdom than collective opinion of 100.
Jan. 28, 2020 at 5:40 p.m. EST
The Jan. 25 news article “At Davos, enthusiasm for trees but not a carbon tax” did not mention an important reason political leaders might balk at levying higher carbon taxes. Carbon taxes, including those on gasoline, are highly regressive, affecting lower-income people much more than higher-income. For example, if gas taxes were doubled in the Washington area, most well-paid professionals would have enough capital (or access to credit) to easily switch to a hybrid vehicle. Over the life of the vehicle, their savings in fuel and taxes would probably cancel out any initial expense. In contrast, for lack of capital, a person driving a used gas guzzler to two low-paying jobs would be stuck driving the gas guzzler along with higher fuel costs.
Hiking fuel taxes would make it even harder for the growing share of the U.S. population working low-paying jobs to make ends meet and raise families. Carbon taxes would be more equitable and politically feasible if governments also made sure that workers struggling to pay their bills could afford the switch to clean-energy technology.
Karl Polzer, Falls Church
The writer is founder of the Center on Capital & Social Equity.
Response to WaPo dialogue stemming from our letter on carbon taxes
Dear Washington Post Editors:
Sabrina S. Fu made excellent points in her Feb. 4 letter “Quit saying ‘carbon tax.’ It’s a fee and dividend” addressing concerns I raised in a letter last week. Her proposal, however, would work best an ideal political world where one can control opponents' and skeptics' language used to frame an issue. My concern over tax fairness would remain because in the legislative bargaining process -- including a last-minute deal in conference committee -- the redistribution part of the proposal could easily be watered down, or eliminated, while the regressive "tax" or "fee" would become law.
Why don’t we start by applying her proposal to the current gasoline tax? If it survives the legislative process and works for current energy taxes, then move on to carbon writ large. Bottom line: advocates for low- and middle-income people trying to survive today need to keep a sharp eye on idealistic proposals coming from the better-situated trying to save the planet in the next century.
CCSE work on this issue:
Half of Americans Have No Retirement Savings. Here's How Congress Can Look Out for Them - Washington Examiner Op-ed (2018)
Aug. 7, 2019
By letting banks charge excessive credit card fees, US raises prices for all, shifts billions of $$$ to the wealthier
There are many mechanisms through which the financial establishment systematically drains money from workers struggling to pay their bills. Some hum along in plain sight while regulators and members of Congress barely take notice. Such is the case with the $80 billion in fees that banks will extract from credit and debit card transactions this year.
While other countries have lowered credit card transaction costs, either through non-bank market innovation (in China) or regulation (in the European Union, Australia, and other nations), U.S. policymakers empower banks and credit card networks to levy what amounts to a doubly regressive national sales tax...
(Also see the note on excessive credit card interest rates beginning on p. 6.)
A winner for the poor? Soda machine offers lower price for cash in Poulsbo, WA
Photo by Tom Hahler
Letter to Washington Post - Nov. 17, 2019
The Post’s call for vigorous debate on capitalism raises issue of its role as honest broker
Today’s lead editorial (“Capitalism itself is on the 2020 ballot: Every billionaire is not a policy failure, but each can afford to pay more”) begins by defending core values of capitalism. It then endorses higher taxes on the super wealthy to temper growing inequality. On the critical issue of how much more wealthy people should pay toward government operation and programs, the editorial is silent. It ends with a call for vigorous and informed debate over these critical issues during the 2020 election.
Along the way, by carefully acknowledging that its current owner, Jeff Bezos, bought the Post from the “civic minded” Graham family six years ago, the editors raise another important issue. That is whether one of the world’s most influential sources of news and public opinion can maintain both neutrality and vigor in the debate over capitalism if owned by one of the world’s richest people. As the debate deepens, this potential conflict of interest may become more awkward and harder to explain.
Karl Polzer, Founder, Center on Capital & Social Equity
Saez/Zucman's "The Triumph of Injustice: How the Rich Dodge Taxes and How To Make Them Pay"
Branko Milanovic's "Capitalism, Alone"
Map of golf clubs in and around San Francisco
Warning: Read the article above at your own risk. Author declaims any responsibility for variation in sense of humor. Note that some links in this article are intended to provide useful information, others irony.
NRA HQ in the Northern Virginia suburbs.
States strike back in federal court on AHPs
CCSE asked to co-sign amicus brief opposing U.S. Labor Dept.'s AHP rule, which increases risk of stripped-down benefits (e.g. no mental health coverage), healthplan insolvency, and consumers being defrauded.
Congressional Budget Office - July 2019
Findings: "In an average week in 2025, the $15 option would boost the wages of 17 million workers who would otherwise earn less than $15 per hour. Another 10 million workers otherwise earning slightly more than $15 per hour might see their wages rise as well. But 1.3 million other workers would become jobless, according to CBO’s median estimate. There is a two-thirds chance that the change in employment would be between about zero and a decrease of 3.7 million workers. The number of people with annual income below the poverty threshold in 2025 would fall by 1.3 million." … Similar, but smaller effects for minimum wage of $12 … Ditto for $10 minimum wage.
MIT Living Wage Calculator Provides Powerful Tool for State and Local Policymakers
Many U.S. households earning less than a living wage: MIT analysis
"Across all family sizes, the living wage exceeds the poverty threshold, often used to identify need. State minimum wages provide for only a portion of the living wage. For two adult, two children families, the minimum wage covers 73.0% of the living wage at best in the District of Columbia and 41.8% at worst in Virginia. This means that families earning between the poverty threshold ($25,298 for two working adults, two children on average in 2018) and the living wage $67,146) on average for two working adults, two children per year before taxes), may fall short of the income and assistance they require to meet their basic needs."
Example: Maryland is one of the wealthiest states in the U.S., but income varies widely by region. This has made it difficult for the legislature to set a uniform minimum wage.
Possible option: Set a statewide minimum wage at $15/hour (or other level) and let local governments reduce it up to a fixed percentage (say 30%) to account for regional differences. It's important to index any minimum to inflation.
If crimes against children can’t be stopped from within, the Vatican & its subsidiaries need purging from the outside: Letter to Washington Post
Every Catholic and every U.S. citizen should carefully read The Post’s Feb. 20 front-page article “ ‘The tragedy that keeps playing out.’ ” It is the latest in an endless stream of detailed evidence that the church power structure is incapable of changing from within to protect children in its care from sexual abuse. Senior church officials should be charged with criminal negligence for failing to remove predators they employ from positions from which they could injure children. Billions of dollars should be removed from the Vatican and its subsidiaries through the courts and distributed to victims. Still, would they change their ways?
Until this systemic problem is forcibly corrected, every church, school and other Catholic facility whose employees come into contact with children should undergo thorough inspection every year on the presumption that abuse may be occurring. If this cannot be corrected from within, then the Catholic Church should be broken up and reorganized. The same should happen with any church operating this way. Jesus commands that those in power do not harm those in their care, particularly children.
America: Build This Wall! :)
The stand off over building a border wall sadly embodies the narrow-mindedness of America’s leaders and disrespects the creative potential of American capitalism. It’s an undeniable fact that Donald, Chuck and Nancy are thinking way too small to discern the proper dimensions of a win-win agreement that could profit the United States for centuries...
Distribution of Household Income before/after Transfers and Taxes: CBO
Summary of slides released November 2018
In 2015, household income was unevenly distributed: Households at the top of the income distribution received significantly more income than households at the bottom of the distribution.
Before accounting for the effects of means-tested transfers and federal taxes:
- Average income among households in the lowest quintile (or fifth) of the income distribution was about $20,000.
- Average income among households in the highest quintile was about $292,000.
- Within the highest quintile, income was highly skewed toward the very top of the distribution: Among households in the bottom half of the highest quintile (the 81st to 90th percentiles), average income was $157,000; among the 1.2 million households in the top 1 percent of the distribution, it was $1.9 million.
The combined effect of means-tested transfers and federal taxes in 2015 was, on average, to increase income at the bottom of the income distribution and decrease income at the top of the distribution.
After accounting for the effects of means-tested transfers and federal taxes:
- Average income among households in the lowest quintile of the income distribution was about $33,000.
- Average income among households in the highest quintile was about $215,000.
- Among households in the bottom half of the highest quintile, average income was $125,000; among households in the top 1 percent, it was $1.2 million.
Below: Taxes, transfers resulted in significantly more income growth from 1979-2015 for the bottom income group than the middle three, while the top income group was held harmless.
Would Adam Smith favor policies creating a more inclusive economy?
Karl Polzer – Center on Capital & Social Equity
In a recent op-ed, I suggested that Congress establish a universal retirement savings system, possibly funded by a tiny tax on financial market transactions. In another, that growing income and wealth inequality has shrunk Social Security’s revenue and that taxing capital gains and high earnings could help the program stay solvent without cutting benefits. What would Adam Smith, the father of modern economic analysis, think of taxing financial transactions and capital gains? The notion of including all workers in saving and ownership of working capital? Helping correct the tendency of modern capitalism to concentrate wealth? Although conservative economists often cite Smith as a siren of an unfettered market, he might give these proposals serious consideration. Times have changed. Yet his manner of reasoning remains vital in addressing issues we face today.
Milanovic previews 'Capitalism, alone'
- "Improved quality of education and much easier access to education for all—that is, investing for stronger public education rather than the opposite trend of ever stronger private education.
- "Deconcentraton of ownership and income from capital through the use of tax incentives, a long and arduous process.
- "Employee stock ownership plans.
- "Higher taxation of inheritance (not current income).
- "Change in the rules re. financing of political campaigns (especially in the United States)."
Growing inequality has shrunk Social Security’s tax base. Revitalizing it could restore solvency without cutting benefits.
As the graying and outsized baby boom generation claims Social Security benefits, Americans increasingly doubt whether the program can pay all that it has promised – or even continue to cut checks at all. In their annual report released June 5, Social Security’s Trustees warn that, unless Congress acts to restore the program’s long-term solvency, by 2034 it will only have sufficient funds to pay 77 cents of each dollar currently promised. By then, the Social Security trust fund will be empty and the program will lack legal authority to pay out more than it can bring in through earmarked taxes. An adjustment this size in 2018 would drop the average annual Social Security payment of $16,848 to $12,973. Most older Americans depend on Social Security for all or most of their income.
The longer Congress plays chicken on this issue, the greater the risk that changes such as tax increases or benefit cuts, or a combination, will have major economic impacts on retirees and workers. The trustees’ report emphasizes the growing ratio of retirees receiving benefits to workers contributing payroll taxes as a major force impinging on the program’s solvency. Underlying factors include the size of the baby boom generation and a lower birth rate. But other forces are at work. Growing wealth and income inequality have significantly eroded Social Security’s tax base.
First, wealth inequality: As Americans at the top of the economic spectrum continue to amass equities, bonds, and other assets, the portion of national income from capital investment has increased significantly, pushing down the portion earned through labor. In the United States, labor’s share of earnings fell about eight percentage points between 1995 and 2013 (compared to a bit over three percentage points in other Organization for Economic Co-operation and Development countries). Since Social Security relies primarily on a tax on labor for its sustenance, the relative growth of capital income gradually is choking off a source of revenue.
Second, income inequality: As part of its structure to promote fairness between economic classes, Social Security replaces relatively more lifetime income for lower-wage workers than those with higher wages – but also caps wages subject to its payroll tax, in part to increase the net value of Social Security in the eyes of higher earners. The wage cap for 2018 is $128,400. Over the past several decades, wages of lower-income Americans have stagnated, while those at the top have grown significantly. As a result, the trustees note that portion of wage income taxed by Social Security has dropped by about six percentage points (see p. 144). In agency jargon, the “taxable ratio” of payroll fell from 88.6 percent in 1984 to 82.6 percent in 2000, and has fluctuated near the latter level since then. Social Security Administration (SSA) actuaries assume the ratio will remain about 82.5 percent over the next decade. In summary, unless the tax cap on earnings keeps up with the growing prosperity of those at the top, Social Security’s tax base shrinks as a portion of national income.
America's Inequality and What To Do about It
The Poor Will Always Be with Us. Will the Middle Class?
"The top 1 percent saw their wealth increase by 156 percent (from 1989 to 2013), while parents in the bottom half saw their wealth shrink by 260 percent. About a third of all families with children in 2013 had no wealth, only debt."
"Rising Inequality and the Changing Structure of Political Conflict" - Piketty lecture at the Kennedy School
Extreme Income Inequality: Brazil, India, the Middle-East and South Africa
In all of these four regions, top 10% earners receive more than 50% of national income. These societies are characterized by a dual social structure, with an extremely rich group at the top whose income levels are broadly comparable to their counterparts in high-income countries, and a much poorer mass of the population. The authors highlight the importance of the historical legacy of social segregation and of modern institutions in shaping income disparities.
Which Way Is Your Country Headed?
Analysis including Housing Assets Finds Piketty May Have Underestimated Wealth Gap
"One of the most intensely debated economic questions in recent years is the relationship between real returns on wealth, and the real rate of growth. In his influential book, Piketty (2014) argued that if the return to capital exceeded the rate of economic growth, rentiers would accumulate wealth at a faster rate than incomes grow. Comparing returns to growth, or “r minus g'' in Piketty's vernacular, we uncover that in fact “r >> g” for more countries, more years, and more dramatically than Piketty himself reported."
These two figures show that the only exceptions to “r>>g” happen in very special periods: the years in or right around wartime. In the pre-WW2 period, r minus g was on average 5% per annum (excluding WW1). As of today, this gap is still quite large – in the range of 3%–4% – and it narrowed to 2% during the 1970s oil crises, before widening in the years leading up to the Global Crisis.
"We show that income inequality has increased in nearly all world regions in recent decades, but at different speeds. The fact that inequality levels are so different among countries, even when countries share similar levels of development, highlights the important roles that national policies and institutions play in shaping inequality."
How Humans Extract Rent from Nature's Gifts
"As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the licence to gather them, and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land, and in the price of the greater part of commodities, makes a third.”
Lucas Chancel & Thomas Piketty,
This chart shows that collective income accruing to India's “middle 40” rose to just over 45 percent by the early 1980s, while that of the top 10 percent declined from about 37 percent in 1951 to 30 percent. After 1990 the two trends reverse. The top 10 percent garnered more than 55 percent of all income in 2014, almost double its share in the early 1980s, while the middle 40 percent’s share fell to just over 30 percent.
U.S. Tax Policy Should Boost Retirement Savings for All Workers, Not Just the Wealthiest
Center on Capital & Social Equity - October 2017
Current tax breaks for retirement savings mainly subsidize the top half of the income distribution, leaving almost half the workforce out of the system. Part of the federal tax subsidy for 401(k)s should be rechanneled into a retirement savers tax credit that all workers get ($500 to $1,000 a year).
In 2017 employees can put up to $18,000 in tax-deferred defined contribution plans (e.g., 401(k)s) and those 50 or older can put aside an additional $6,000. Total employee and employer contributions are limited to $54,000. The Tax Policy Center estimates that in 2016 the tax savings from all tax-qualified pension and defined contribution accounts averaged about $1,040 per taxpayer. (No kidding: 1040.) These tax savings, however, were extremely tilted toward the well-off. Only 4.4 percent of workers in the lowest fifth of the income distribution received any tax benefit and their average tax savings in 2016 was $20. In contrast, 82 percent of the highest-paid quintile received a tax benefits with an average benefit of $4,750. About 48 percent of the middle fifth received a tax benefit with an average savings of $580.
The result of this tax policy? About half the American population has put aside virtually nothing for retirement, while many wealthy people are being paid to save money they would have saved anyway. It’s clear that retirement savings tax breaks could be better targeted. For more information see:
- Distribution of Tax Benefits by Family Income
- Retirement Tax Incentives Are Ripe for Reform Current Incentives Are Expensive, Inefficient, and Inequitable
- Who Benefits from Asset Building Tax Subsidies?
- Estimates of a Proposal to Establish Guaranteed Retirement Accounts, Financed by Reduced Limits on Current Law Contributions to Defined Contribution Retirement Saving Plans
- There's a Better Way To Target Retirement Savings Tax Breaks
"Worry not at all about inequality if it is achieved by smart betterment....But do worry about inequality if it is achieved by using the government to get protection for favored groups. It is what a large government, worth capturing to get the protection, is mainly used for, to the detriment of most of the people off-stage."
Are Workers Receiving the EITC Being Shortchanged on Social Security?
updated October 2017
..."Under the current system, a person whose highest earnings averaged $15,000 a year over 35 years would end up with about $10,542 in annual Social Security benefits – the same as a worker averaging $15,000 wages plus various amounts of EITC. A worker averaging $20,000 in wages would end up with $1,600 (15%) more in annual Social Security benefits compared with another with the same total income but instead averaging $15,000 wages and taking home $5,000 in EITC. Similarly, someone averaging $25,000 in wages would end up with $3,200 (30%) more in Social Security benefits than a counterpart averaging $15,000 and receiving $10,000 in EITC."
Green lines: current law Purple: proposed increases
D's Push for Major EITC Expansion
Two members of Congress are teaming up to bring much-needed relief to low-wage workers and their families through an expanded Earned Income Tax Credit (EITC).
Senator Sherrod Brown (D-OH) and Representative Ro Khanna (D-CA) introduced the Grow American Incomes Now (GAIN) Act in both the House and Senate. Currently, a family of three can receive a maximum EITC of $6,318, while workers without dependent children can receive at most a $510 credit. The legislation would roughly double the EITC for eligible workers raising children and increase the credit for workers without dependent children nearly six fold. The bill also lowers the qualifying age for the EITC from 25 to 21.
Expanding the EITC is a good idea. However, as the share of workers' income provided by government subsidies rises, the case becomes stronger for the federal government to begin making corresponding payments to Social Security. Also, a way to simplify tax policy might be to coordinate the EITC and Child Tax Credit (CTC) in the following way: the EITC could be based solely on income, not family structure. The refundable component of the Child Tax Credit could be expanded to provide additional income for low- and middle-income families.
September 2017 - Karl Polzer
Expanding Use, Scope of the EITC & Child Tax Credit: a Win-Win for Workers and Employers
This paper makes the case that helping employees access the Earned Income Tax Credit and Child Tax Credit – along with supporting bipartisan legislation to expand these programs – can help industries with large numbers of low-to-middle wage workers. In the long-term care field, such a strategy can improve worker income through government wage supplements, thus encouraging more to enter the workforce. Increased labor supply would dampen employer wage costs – all while expanding the range of affordable services providers can offer. This could result in hundreds of millions of dollars of added value in worker earnings as well as provider and customer savings.
From Soviets to Oligarchs: Inequality and Property in Russia 1905-2016
"...(T)op income shares are now similar to (or higher than) the levels observed in the U.S. ... inequality has increased substantially more in Russia than in China and other ex-communist countries in Eastern Europe. ...the wealth held offshore by rich Russians is about three times larger than official net foreign reserves, and is comparable in magnitude to total household financial assets held in Russia."
High earnings of labour are an advantage to the society - Adam Smith
“Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.”
-- The Wealth of Nations (originally published in 1776)
For the last eight years of Liu Xiaobo’s life, the Chinese authorities robbed him of his liberty and his dignity. But in the state-enforced silence surrounding Liu’s stage-managed death, the words of his Nobel Prize lecture ring out even louder: “Freedom of expression is the foundation of human rights, the source of humanity, and the mother of truth.”
"Natural forces of a market economy and capitalism will drive that disparity unless government does things to help." Buffett says EITC should be expanded so workers can have decent lives. (See CCSE article on this site about relationship of EITC and Social Security.)
Thomas Piketty, Li Yang, Gabriel Zucman
Researchers find that the share of public property in China'snational wealth has declined from about 70% in 1978 to 30% in 2015...
"The top 10% income share rose from 27% to 41% of national income between 1978 and 2015, while the bottom 50% share dropped from 27% to 15%. China’s inequality levels used to be close to Nordic countries' and are now approaching U.S. levels."
Robin Hood Tax Reform - May 2017
How Modest Changes in Health, Retirement Tax Breaks Could Produce Major Gains in US Health Access, Financial Security – at Little or No Added Government Cost
..."The positive impacts of two such changes discussed below could include 1) lowering the rate of health care cost inflation; 2) providing revenue to help subsidize health insurance for the unemployed; 3) creating seed money and a low-cost infrastructure for a universal retirement savings system; and 4) increasing retirement security for low- and middle-income people; and 5) helping people save for long-term care costs. Looking at benefit tax exclusion is already on the table as Congress faces the unsavory chore of developing a fix for the Affordable Care Act’s clumsily designed “Cadillac” health plan excise tax. Most importantly, these changes could result in greater economic fairness and inclusion."
Eyes on the Prize: Universal Health Insurance Is the Goal
Charles Krauthammer’s March 31 op-ed, “The road to single-payer health care,” was largely on point. However, it is important to separate the concepts of “single-payer,” which is a means toward a goal, and “universal coverage,” which should be the primary goal. Universal coverage can be achieved without having the government cover every citizen. Even if government programs cover most citizens, there will always be multiple payers, including individuals and taxpayers; a universal system also could allow employer plans to operate. Ironically, creating a larger government role in sponsoring and subsidizing health insurance could result in a more competitive market for providing services. Karl Polzer - April 2, 2017
updated Dec. 14, 2016
Obama Signs Bipartisan Bill To Speed Miracle Cures to Market. Who Will Have Access to the New Technology? Who Won’t?
In a city that’s witnessed trench warfare between Congress and the White House during the last six years of the Obama Administration, this was a rare moment: a bipartisan love fest. On Dec. 13, 2016, President Obama signed the "21st Century Cures Act," which includes expanded funding to push medical technology through the development pipeline. “We are bringing to reality the possibility of new breakthroughs to some of the greatest health-care challenges of our time,” Obama said. “It is wonderful to see how well Democrats and Republicans in the closing day of this Congress came together around a common cause.”
The legislation was backed by a coalition of interests, including the powerful pharmaceutical industry, academia, and consumer groups supporting speedier medical research. Its few critics have mainly argued that the popular funding provisions “mask a worrisome loosening of regulations at the Food and Drug Administration that could put patients at risk.”
Hardly anyone, however, is asking the million-dollar question: Which Americans will end up having access to new miracle cures, many of which promise to be extremely expensive? And, who will not? The country’s patchwork of health insurance already is rationing expensive new technology to some populations, particularly low-income people. Congress, meanwhile, has begun a fractious debate over repealing, and possibly replacing, the Affordable Care Act (ACA). So, while lawmakers have just put their collective foot on the technology gas pedal, they may soon slam the brakes on funding for expanded coverage, potentially throwing millions of Americans into the ranks of the uninsured...
Traditions of Democracy
"The tradition of Jefferson and Jackson might recede, but it could never disappear. It was bound to endure in America so long as liberal capitalistic society endured, for it was the creation of the internal necessities of such a society. American democracy has come to accept the struggle among competing groups for the control of the state as a positive virtue -- indeed, as the only foundation for liberty. The business community has been ordinarily the most powerful of these groups, and liberalism in America has been ordinarily the movement on the part of other sections of society to restrain the power of the business community. This was the tradition of Jefferson and Jackson, and it has been the basic meaning of American liberalism."
Excerpt from Chapter 37, "The Age of Jackson," Arthur M. Schlesinger, Jr.
Federal Reserve researchers probe economic inequality, policies that could spread U.S. income gains
The increase in U.S. income inequality since 1970 has generated large welfare gains for households in the top 20% of the income distribution and significant welfare losses for those in the bottom 80%, according an analysis published by the Federal Reserve Bank of San Francisco. The modeling found that some of the impact of this upward income shift was mitigated by "the dramatic rise in government redistributive transfers, which have doubled as a share of U.S. output over the same period."
The analysis concludes: "Alternative simulations imply that a relatively modest boost in the historical growth rate of government redistributive transfers, accompanied by modestly higher average tax rates, could have achieved small but equal welfare gains for all households. Overall, our results suggest that there is room for policy actions that could offset the negative consequences of rising income inequality."
June 30, 2016
Reflections on American Wealth Concentration – and What To Do About It
Just over one year ago, the Center on Capital & Social Equity (CCSE) began exploring the phenomenon of growing wealth concentration and inequality, while advocating for a more inclusive form of capitalism. Following are some general observations.
Over the past year, the issue of economic inequality in the United States has moved from the backburner to center stage. Much credit for this goes to Sen. Bernie Sanders’ attack on the “top one percent” in his run for the Democratic nomination. While there is ample reason to question many details of his proposals, Sanders’ call for an increased role for government in providing opportunity and essential services resonated with many Americans who feel they have been left out of the economic mainstream. Yet the problems posed by rising economic inequality are deeply rooted and go well beyond the disproportional gains of the top one percent. They will be harder to address than portrayed in election rhetoric and require judicious use of public resources.
Three observations can be made about economic inequality in the United States. First, income and wealth inequality have grown steadily since the 1980s, suggesting that some of the causes are structural in nature. Second, high levels of inequality increase the risk of political and economic instability. Finally, moving toward an economy that is less unequal and offers opportunity to more Americans will require major changes in public policy and shifts in spending.
Life Expectancy Gap is Large - and Expanding
The gap in life expectancy between the richest 1% and poorest 1% was 14.6 years for men and 10.1 years for women. A study published in the Journal of the American Medical Association also found that inequality in Americans' life expectancy is growing over time.
How the U.S. Retirement Savings System Magnifies Wealth Inequality
Karl Polzer, Center on Capital & Social Equity
Economic inequality and wealth concentration have have emerged as central issues in the U.S. presidential race. While these concerns appear to have risen to the forefront quite suddenly, forces driving wealth concentration have been building for decades. As analysts probe the dynamics beneath these trends, they may find that America's shift to a defined contribution retirement system is playing an increasing role in the concentration of wealth...
So, What Does Jesus Say about Wealth Concentration and Inequality?
In recent years, the tendency for wealth to concentrate in the hands of a powerful few has come under scrutiny, prompting concern about growing inequality from political and religious leaders, most notably Pope Francis. While excessive wealth concentration is likely lead to greater social ills and unrest, how to rein in growing inequality is a more difficult question. Should we move away from capitalism and the market system? Develop a more socialist model? Reform capitalism from inside to benefit people more equitably? ...
Investigators Detail Growth of Extreme Poverty in U.S.
Virginia's push to end veteran homelessness faces steep challenges
On Nov. 11, 2015, Virginia Gov. Terry McAuliffe announced that the state was the first to "functionally" end homelessness among veterans of the U.S. armed forces. To assist two veterans living on the street not aware of the program, the Center on Capital & Social Equity contacted the governor's office, asking how veterans can gain access to housing and other services under the collaboration involving state, federal, and local government agencies.
The Virginia Department of Veterans Services provided information (click on the button below), including contact points at the local and state levels where veterans and their advocates can begin the process of finding temporary or permanent housing.
To follow up, we contacted three Northern Virginia jurisdictions and found an array of barriers to functionally ending veteran homelessness. These problems include lack of knowledge on the part of local officials of the state's initiative; lack of affordable and subsidized housing resources; high housing prices; lack of shelter space (for example, Fairfax County has 1 million residents but only three homeless shelters that can't meet wintertime demand); unwillingness by many street people to seek help (for a variety of reasons); coordination issues between state and local, local and local, and federal and state and local agencies; bottlenecks like having to go through shelters to gain access to housing, when shelter space is limited; and many other factors.
While helping one of the veterans gain access to temporary shelter and services, we reported these issues back to the state officials who said they will take steps to increase awareness of the governor's initiative, including posting information about the program on a state website. For more detail, see our correspondence with state and local officials, which can be accessed by clicking the second button below.
Let’s sell health insurance “across states lines” – through Medicare
Republicans, stop with being the party of “no.” It’s time to step up to the plate and seize the initiative on health policy...
Playing Immigration Piñata
Deception and hypocrisy are no strangers to politics. This seems particularly true in recent incantations about illegal immigration. Republican presidential candidates – other than Jeb Bush – mostly want to round up illegals and dump them into Mexico. Donald Trump wants to spend billions to build a massive wall in the wrong place...
How Can U.S. Policy Reduce Financial Risk for the Very Old?
CCSE explores ways to reduce retirement risk and pay for long term care in Society of Actuaries monograph.
Finding: 401(k)rule changes including new "sub-accounts" could help seniors better save for needs in very old age.
Retirement Strategy: When Should I Start Receiving Social Security Checks?
Americans can begin taking Social Security between ages 62 and 70. Waiting to take Social Security can increase the amount on your check significantly. Collecting Social Security benefits early has the opposite effect.
When to start depends on many factors including your life situation, needs and plans. Most Americans begin taking Social Security early.
The U.S. Consumer Financial Protection Bureau offers this planning tool and other information to help people work through this decision.
A Dream Deferred
What happens to a dream deferred?
Does it dry up
like a raisin in the sun?
Or fester like a sore--
And then run?
Does it stink like rotten meat?
Or crust and sugar over--
like a syrupy sweet?
Maybe it just sags
like a heavy load.
Or does it explode?
Still I Rise
You may write me down in history
With your bitter, twisted lies,
You may tread me in the very dirt
But still, like dust, I'll rise.
Does my sassiness upset you?
Why are you beset with gloom?
'Cause I walk like I've got oil wells
Pumping in my living room.
Just like moons and like suns,
With the certainty of tides,
Just like hopes springing high,
Still I'll rise.
Did you want to see me broken?
Bowed head and lowered eyes?
Shoulders falling down like teardrops.
Weakened by my soulful cries.
Does my haughtiness offend you?
Don't you take it awful hard
'Cause I laugh like I've got gold mines
Diggin' in my own back yard.
You may shoot me with your words,
You may cut me with your eyes,
You may kill me with your hatefulness,
But still, like air, I'll rise.
Does my sexiness upset you?
Does it come as a surprise
That I dance like I've got diamonds
At the meeting of my thighs?
Out of the huts of history's shame
Up from a past that's rooted in pain
I'm a black ocean, leaping and wide,
Welling and swelling I bear in the tide.
Leaving behind nights of terror and fear
Into a daybreak that's wondrously clear
Bringing the gifts that my ancestors gave,
I am the dream and the hope of the slave.
Easter Essay: Is the Golden Rule Enough? Mathematics of the Two Great Commandments
Whether people see themselves as Christians, followers of other faiths, or atheists, all are pulled by the power of many gods: the god of money, the god of technology, the nymph of new electronic gadgets, satyrs of TV and the worldwide net, and so on. In adoration of possessions, money, and power, atheists and believers are equal -- even deeply religious in the way that Paul sarcastically described the polytheistic statuary of Athens as evidence of its faith. Some of today’s humanists and atheists are more Christian in spirit and behavior than nominal Christians. And, unlike some Christians, many have thought through their views on religion and feel they need to have moral justification they can explain. The conventional morality of good people often is a humanism expressed by the Golden Rule.
Jesus taught the Golden Rule two thousand years ago, as one of two great principles. But to Jesus the Golden Rule, while essential, is incomplete without a first principle. Jesus preached the Golden Rule in the Sermon on the Mount. "Therefore, whatever you want men to do to you, do also to them, for this is the Law and the Prophets." (Mat 7:12 NKJV).) Here he is speaking to a large crowd that can't hear him that well and needs a simple guideline.
Later, speaking to religious leaders, he aligns the Golden Rule with the first commandment. In Matthew 22:34-40, "hearing that Jesus had silenced the Sadducees, the Pharisees got together. One of them, an expert in the law, tested him with this question: ‘Teacher, which is the greatest commandment in the Law?’ " To this audience, Jesus provides more context: "'Love the Lord your God with all your heart and with all your soul and with all your mind.' This is the first and greatest commandment. And the second is like it: 'Love your neighbor as yourself.' All the Law and the Prophets hang on these two commandments."
The interaction of the two great commandments shows why the second commandment is not sufficient and why God -- an overarching Spirit that connects individual people -- is necessary, even for a functional morality. For example, if we only love our neighbor as ourselves -- and we happen to be filled with hate and rage for ourselves -- then we won't treat our neighbors very well. The Golden Rule can remedy part of this problem by changing the focus from "loving" to "treating" neighbors as we would have them treat us -- thereby imposing our view of ideal behavior and not raw emotion as the standard. But that won't work for some people either, especially those who lack a model of ideal behavior. So, these folks still might act destructively to people around them.
The idea of a single God, or life force, connecting all people creates a vertical pull toward a connecting spirit (the first commandment) to accompany the horizontal equity of the second commandment. Mathematically, the second commandment is nothing more than a simple equation: Love for me = Love for you. The first commandment is a command to maximize Love to the limit of capacity. Without the first commandment, the potential of a person's love would be limited by inherited and culturally absorbed defects and injuries. The two commandments can be seen as consistent with scientific theories of evolution. The first commandment reflects the biological imperative that no individual can carry on life on his or her own. Individuals must interact and communicate with others to continue the stream of life. The Golden Rule suggests that individuals have the freedom to choose the way they interact and communicate with others. Perhaps those with greater faith and sense of fairness are more likely to pass along their genes. --
Karl Polzer, Easter 2017
"In God We Trust" was adopted as the official motto of the United States in 1956 as an alternative or replacement to the unofficial motto of E pluribus unum, which was adopted when the Great Seal of the United States was created and adopted in 1782. Secularists have expressed objections to its use and have sought to have the religious reference removed from the currency. Wikipedia, 2015
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