Note that widening wealth and income inequality is a non-partisan trend. One of the core goals of the Federal Reserve’s monetary policies of the past 9 years is to generate the “wealth effect”: by pushing the valuations of stocks and bonds higher, American households will feel wealthier, and hence be more willing to borrow and spend, even if they didn’t actually reap any gains by selling stocks and bonds that gained value. In other words, the mere perception of rising wealth is supposed to trigger a wave of renewed borrowing and spending. This perception management only worked on the few households which owned enough of these assets to feel wealthier–the top 5%, the top 6 million out of 120 million households. This chart shows what happened as the Fed ceaselessly goosed financial assets higher over the past 9 years: the gains, real and perceived, only flowed to the top 5% of households earning in excess of $200,000 annually. Spending by the bottom 95% has at best returned to the levels reached a decade ago in 2007.
The urban revival of America’s core inner cities has been a decades-long failed experiment, as deindustrialization coupled with failed liberal policies have created a growing problem of inequality and violent crime. Middle-class advancement was once localized in the core of America’s cities, but that is not so much the case today, as those areas are labeled a ‘barbell economy,’ divided between highly-paid professionals and low-skill service workers. Brookings Institution notes as early as the 1970s, middle-class income in the inner cities started to shrink more than anywhere else. Today, in most US inner cities, the cores are more unequal than their surrounding suburbs, noted geographer Daniel Herz. As the failed American inner city experiment nears the latter stages before a collapsing point, a new report from Time could be the final nail in the coffin for some American inner cities, as the article suggests ‘cities have already reached ‘Peak Millennial’ as young people begin to leave.’
This post was published at Zero Hedge on Dec 20, 2017.
While in Baltimore City, Maryland, death and despair are a few things that are plentiful as the region descends into chaos. Deindustrialization coupled with depopulation started in the 1960s stripping the city of economic wealth. Many don’t want to admit, the city is shrinking as their looking glass is clouded with Kevin Plank’s gentrification narrative. Wealth inequality in the area is some of the widest in the United States with more than 100,000 African Americans with zero dollars to their name, according to JPM. Baltimore is a skeleton of what it once was many decades ago when it had its industries. Now, 46,800 homes are vacant – almost 16% of the housing stock as citizens are either leaving the area or being pushed into multi-family complexes by the city. Neighborhoods are rotting away as the local economy crumbles giving way to a surge in homicides. Baltimore is on track for the worse year ever with a homicide rate the highest in the United States.
This post was published at Zero Hedge on Nov 22, 2017.
Needless but highly profitable forced-upgrades are the bread and butter of the tech industry. One of the enduring mysteries in conventional economics (along with why wages for the bottom 95% have stagnated) is the recent decline in productivity gains (see chart). Since gains in productivity are the ultimate source of higher wages, these issues are related. Simply put, advances in productivity are core to widespread prosperity. *** But that’s only half the problem–productivity gains have flowed to the top of the income-wealth pyramid as financialization and cartels have replaced real-world wealth creation as the source of wealth-income.
The nation’s elites are desperate to misdirect us from the financial and power divide that has enriched and empowered them at the expense of the unprotected many. There are two competing explanatory narratives battling for mind-share in the U. S.: 1. The nation’s social discord is the direct result of Russian social media meddling– what I call the Boris and Natasha Narrative of evil Russian masterminds controlling a vast conspiracy of social media advertising, fake-news outlets and trolls that have created artificial divides in the body politic, or exacerbated minor cracks into chasms. 2. The nation’s social discord is the direct result of soaring wealth/power inequality– the vast expansion of the wealth and power of the nation’s financial elites and their protected class of technocrat enablers and enforcers (the few) at the expense of the unprotected many.
OECD’s recent report, “Preventing Ageing Unequally”, has a wealth of data and analysis relating to old-age poverty and demographic dynamics in terms of poverty evolution. One striking chart from the report shows changes in income inequality across two key demographic cohorts: the Baby Boomers (born at the start of the second half of the 20th Century) and the Millennials (born in the last two decades of the 20th Century):
This post was published at True Economics on Saturday, October 28, 2017.
Former President George W. Bush came out swinging against the current administration on Thursday, and while he did not name President Castro, Dubya blasted that “bigotry seems emboldened” in the U. S., while urging the country to accept “globalization” – the same globalization which both the IMF, the BIS and even the Federal Reserve now agree and warn has led to record wealth inequality in the US – while rejecting “white supremacy.” “Bigotry or white supremacy in any form is blasphemy against the American creed,” Bush said. Former Pres. George W Bush: "Bigotry seems emboldened. Our politics seems more vulnerable to conspiracy theories and outright fabrication." pic.twitter.com/KyQK5vul3j — ABC News Politics (@ABCPolitics) October 19, 2017
This post was published at Zero Hedge on Oct 19, 2017.
Americans across the income spectrum have generally grown wealthier over the past 50 years but those at the top (A. K. A. the “millionaire, billionaire, private jet owners” to use the parlance of our times) have made out much better than the rest of us. As the Urban Institute pointed out today, in 1963, families in the top 90th percentile of household wealth had roughly six times the wealth of families in the middle. By 2016, that had doubled to 12 times. Here’s how that evolution of wealth distribution looks graphically:
This post was published at Zero Hedge on Oct 6, 2017.
There is nothing inevitable about such vast, fast-rising income-wealth inequality; it is the only possible output of our financial and pay-to-play political system. One chart defines the 21st century economy and thus its socio-political system: the chart of soaring wealth/income inequality. This chart doesn’t show a modest widening in the gap between the super-wealthy (top 1/10th of 1%) and everyone else: there is a veritable Grand Canyon between the super-wealthy and everyone else, a gap that is recent in origin. *** Notice that the majority of all income growth now accrues to the the very apex of the wealth-power pyramid. This is not mere chance, it is the only possible output of our financial system. This is stunning indictment of our socio-political system, for this sort of fast-increasing concentration of income, wealth and power in the hands of the very few at the top can only occur in a financial-political system which is optimized to concentrate income, wealth and power at the top of the apex.
If you’ve been following the heated national debate about President Trump’s decision to rescind former President Obama’s Deferred Action for Childhood Arrivals (DACA) program, you know that an economic conventional wisdom has been quickly established. It holds that, whatever you think about the legality, propriety, or morality of ending its legalization process for the young and young-ish residents of the country who arrived as the children of illegal immigrants, the impact on the nation’s growth, employment, and productivity would be disastrous. Sadly – but not surprisingly – an examination of the data reveals this conclusion to be quintessential fakeonomics. Worse, these claims have been spread with techniques that have become all too typical in the nation’s political, policy, and media circles – by endlessly and credulously repeating assertions that are based either on no solid data whatever, or on unusually weak data. Enough examples could be cited to fill a book, so let’s focus for now on one that’s just appeared in America’s leading newspaper (The New York Times) and by no less than a Nobel Prize-winning economist (columnist Paul M. Krugman). As Krugman argued in this morning’s paper, the Trump administration’s position that DACA has ‘denied jobs to hundreds of thousands of Americans by allowing those same jobs to go to illegal aliens’ is not only ‘junk economics.’ But because it’s based on the (equally false, per Krugman) belief that ‘immigrant workers compete with less-educated native-born workers, driving their wages down and increasing income inequality,’ it’s ‘irrelevant.’
This post was published at Zero Hedge on Sep 9, 2017.
As if someone had quietly turned on a light bulb last month illuminating the corporate takeover of America, a series of articles from multiple outlets chronicled the demise of American democracy under the jackboot of the corporate state. David Dayen at the New Republic wrote: ‘Far from selfless arbiters of right and wrong, CEOs are as responsible as anyone in America for skyrocketing inequality, climate crisis, waves of consumer fraud, and the biggest financial meltdown since the Depression. Condemning the unpopular views of an unpopular president whom they see as an inferior businessman is no sacrifice, especially when they are simultaneously plotting with administration officials to win as many perks as possible. CEOs aren’t ‘finding their voice’; they’re finding a way to control government like a marionette, while hiding the strings.’ Last week, Don Kopf, writing for Quartz, provided more clarity. Citing newly released research, Kopf wrote: ‘According to economists Jan De Loecker of Princteon University and Jan Eeckhout of the University College London, this basically describes the US economy since 1980. In a recently released paper, De Loecker and Eeckhout analyzed the balance sheets of listed companies from 1950 to 2014. (In 2014, these firms accounted for around 40% of all sales.) They found that average markups, defined as the amount above cost at which a product is sold, have shot up since 1980. The average markup was 18% in 1980, but by 2014 it was nearly 70%.’
It was only a matter of time until this happened… For years now, the politicos of the Left have embraced a perfectly symbiotic relationship with the ‘progressive’ leaders of Silicon Valley. Tech titans, like Google’s Eric Schmidt who got very cozy with the Hillary Clinton campaign, have poured million of dollars of their tech fortunes into Democratic coffers all while colluding with elected officials, “independent” think tanks and “institutions of higher indoctrination” to ram their progressive agenda down the throats of the American public. It was a great relationship for Democrats because Silicon Valley’s elites had all the money of Wall Street without the negative stigma…until now. Google’s recent problems with censorship, which came first in the firing of James Damore and was quickly followed up by the firing of an “independent” research team at a think tank funded by Google, has exposed what many have known for some time but others were too enamored to see, namely that Silicon Valley companies like Google are every bit as motivated by their relentless pursuit of power and wealth as Wall Street…they’re just better at wrapping their motivations in a nice progressive bow. Unfortunately, the cat is now out of the bag and it has forced a growing number of the Left’s most progressive politicians to distance themselves from America’s new breed of “evil corporations.” As The Hill notes this morning, Senator Elizabeth Warren and Representative Keith Ellison have already started to distance themselves: Google is facing blowback after one of its most prominent critics was fired from a think tank funded by the tech giant. The incident is raising new questions about Google’s influence over think tanks and academic research. The controversy has caught the attention of lawmakers, with Sen. Elizabeth Warren (D-Mass.) calling the firing ‘troubling’ and warning academic institutions not to compromise their work for financial backers. Rep. Keith Ellison (D-Minn.) also tweeted his support for the researchers pushed out of the think tank. Open Markets does terrific work on monopoly power and inequality. Excited for their new chapter!— Rep. Keith Ellison (@keithellison) August 31, 2017
This post was published at Zero Hedge on Sep 4, 2017.
Welcome to the Mexican Paradox. Mexico is nothing if not a land of bewildering contrasts. Economically speaking, the country is a regional powerhouse. On the one hand, it boasts one of the richest ‘official’ billionaires on the planet; on the other, some of the worst income inequality rates in the Western hemisphere. It places 20th on the list of countries with the most millionaires but it’s also home to the 15th largest population of poor people on the planet. A new study released this week reveals that the wealthiest Mexicans, equivalent to 1% of the population, own roughly the same amount of wealth as 95% of the people further down the wealth scale. The study, titled ‘The Distribution and Inequality of Financial and Non-Financial Assets in Mexico’ and published by Miguel ngel del Castillo Negrete of the Autonomous Technological Institute of Mexico, documents how after two-and-a-half decades of rampant financial and trade liberalization in Mexico, the lion’s share of the economic benefits have flowed to a tiny minority. ‘Few countries have embraced economic liberalization, deregulation, and privatization as enthusiastically as Mexico,’ Ricardo Fuentes-Nieva, director of Oxfam Mexico, told BBC World Service. ‘But some groups benefited disproportionately and they are now the richest.’
This post was published at Wolf Street by Don Quijones ‘ Aug 18, 2017.
Anyone who thinks our toxic financial system is stable is delusional. Why are we doomed? Those consuming over-amped “news” feeds may be tempted to answer the culture wars, nuclear war with North Korea or the Trump Presidency. The one guaranteed source of doom is our broken financial system, which is visible in this chart of income inequality from the New York Times: Our Broken Economy, in One Simple Chart.
As a business, if you want to promote equality, the first thing you need to do is make sure you treat your customers unequally based on their gender. I love when people empower themselves by becoming business owners. Running a business is certainly not easy, but it still frees you from certain constraints. For instance, pay is not decided arbitrarily by a boss, it is based on the services you provide. Ironically, one business owner in Australia is using her success to promote inequality. The cafe in Australia touts their discriminatory practices. An article about the cafe on The Mirror reads: Cafe charges men more than women – for a very powerful reason. Yes, for a powerful reason. Their discrimination is powerful because statistically, women earn 18% less than men in Australia. That is why it is okay to discriminate in hiring as well; the cafe called Handsome Her only hires women. And they also give preferential seating to women. Men must get to the back of the bus – or cafe, whatever.
This post was published at Zero Hedge on Aug 7, 2017.
Each new policy destroys another level of prudent fiscal/financial discipline. The primary driver of our economy–financialization–is in a death spiral. Financialization substitutes expansion of interest, leverage and speculation for real-world expansion of goods, services and wages. Financial “wealth” created by leveraging more debt on a base of real-world collateral that doesn’t actually produce more goods and services flows to the top of the wealth-power pyramid, driving the soaring wealth-income inequality we see everywhere in the global economy. As this phantom wealth pours into assets such as stocks, bonds and real estate, it has pushed the value of these assets into the stratosphere, out of reach of the bottom 95% whose incomes have stagnated for the past 16 years. The core problem with financialization is that it requires ever more extreme policies to keep it going. These policies are mutually reinforcing, meaning that the total impact becomes geometric rather than linear. Put another way, the fragility and instability generated by each new policy extreme reinforces the negative consequences of previous policies.
‘District 12: Where you can starve to death in safety.’ ‘ Suzanne Collins, The Hunger Games ‘Happy Hunger Games!’ Effie Trinket, the escort of the District 12 tributes, said. ‘And may the odds be ever in your favor.’ In The Hunger Games novels, an ‘advanced’ and morally corrupt ruling class forces an annual display of mass murder on the children of the lower classes. Everyone is encouraged to watch this patriotic display. It is necessary, after all. It is good for society, they’re told. It promotes peace. It promotes equality. The ruling class uses this Orwellian doublethink to justify (to themselves, mostly) their suppression of independent thinking and their brutal perpetuation of the statist quo. The ruling class obsessively engages in extravagant and pointless displays of gross excess out of boredom. Its members are gregariously gluttonous, voraciously vain, slanderously slothful, wretchedly wrathful, ghastfully greedy, lidlessly lustful and perniciously proud. The lower class, meanwhile, lives in destitution, famine and sickness. They are powerless to lead their own lives. They are little more than tinpot subjects to a high-tech dictatorship based on surveillance, mass-media indoctrination, police oppression and radical inequality.
There is little doubt that America’s bastions of higher indoctrination (a.k.a. “Universities”) have become nothing more than training grounds for future generations of social justice warriors. The war for America’s college campuses has become so heated that liberal administrators, the same people who used to pride themselves on challenging their students to step outside their comfort zone and open themselves up to dissenting opinions, have taken to shutting down free speech when it doesn’t perfectly align with their ‘enlightened’ world view. That said, the Institute on Inequality and Democracy at the University of California Los Angeles, a publicly funded institution mind you, seems to be stepping things up a notch with their recently released ‘Resistance’ handbook for America’s snowflakes. Among other things, the handbook specifically defines “Trumpism” as a movement that “consolidates power through white supremacy, misogyny, nationalism, xenophobia, corporatism, and militarism.” “This resource guide outlines the first steps the UCLA Abolitionist Planning Group has taken to understand Trumpism as a moment in United States politics. Building on long-standing exclusions, Trumpism consolidates power through white supremacy, misogyny, nationalism, xenophobia, corporatism, and militarism. Committed to a philosophy of abolitionism, the Abolitionist Planning Group seeks to understand how urban planning, as discipline and professional practice, can analyze and address the systematic oppressions expanded and institutionalized by the new administration.” The organization calls on urban planners to abide by 4 simple rules:
This post was published at Zero Hedge on Jun 25, 2017.
“[T]he super-rich are absconding with our wealth, and the plague of inequality continues to grow. An analysis of 2016 data found that the poorest five deciles of the world population own about $410 billion in total wealth. As of June 8, 2017, the world’s richest five men owned over $400 billion in wealth. Thus, on average, each man owns nearly as much as 750 million people.” – Paul Buchheit, Alternet “Congressman Steve Scalise, Three Others Shot at Alexandria, Virginia, Baseball Field” – NBC News, June 14, 2017 “4 killed, including gunman, in shooting at UPS facility in San Francisco” – ABC7News, June 14, 2017 “Seriously? Another multiple shooting? So many guns. So many nut-bars. So many angry nut-bars with guns.“ – MarianneW via Twitter “We live in a world where “multiple dead” in San Francisco shooting can’t cut through the news of another shooting in the same day.” – SamT via Twitter “If the rich are determined to extract the last drop of blood, expect the victims to put up a fuss. And don’t expect that fuss to be pretty. I’m not arguing for social war; I’m arguing for justice and peace.” – Yours truly When the social contract breaks from above, it breaks from below as well.
This post was published at Zero Hedge on Jun 16, 2017.