Tag Archives | income inequality

Soaring Profits Do Not Equal Investment

It is taken for granted in conservative circles at that lower taxes on the rich will lead to greater investment in the economy, and therefore jobs—but the data tell a very different story. This analysis comes from Gerald Friedman of Dollars & Sense:

Net Investments and Profits

“The share of national income going to investment (net of depreciation of existing plant and machinery) has been declining since the beginning of the “neoliberal” era, around 1980. Since the start of the Great Recession, net investment as a share of GDP has plummeted to its lowest level since the 1930s. This sharp drop in investment comes despite sharply rising profits.”

Monetary Policy Isn’t Working: The Federal Reserve has helped to shorten past recessions by driving down interest rates to lower the cost of borrowing and so spur investment. During the current crisis, the Fed has conducted an aggressive monetary policy, raising the money supply to lower interest rates.… Read the rest

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The New Feudalism In Silicon Valley

valleyVia the Weekly Standard, Charlotte Allen writes that the tech bastion offers a preview of where society as a whole is headed:

Master and servant. Cornucopian wealth for a few tech oligarchs plus relatively steady but relatively low-paying work for their lucky retainers. No middle class, unless the top 5 percent U.S. income bracket counts as middle class. Silicon Valley is a tableau vivant of what many economists and professional futurologists say is the coming fate of America itself, a fate to which Americans, if they can’t embrace it as some futurologists hope, should at least resign themselves.

The increasing ability of computers to perform ordinary tasks will inexorably transform America into an income oligarchy in which the top 15 percent of people—with skills “that are a complement to the computer”—will enjoy “cheery” labor-market prospects and soaring incomes, while the bottom 85 percent, that is to say, 267 million out of America’s 315 million people, will be lucky to find Walmart-level jobs or scrape together marginal “freelance” livings running $25-a-pop errands for their betters via TaskRabbit (say, picking up and delivering a pair of designer shoes).

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Switzerland To Vote On Radically Limiting CEOs’ Pay Nationwide

ZurichMontageMost likely with fists clenched and all the blood drained from its face, the Wall Street Journal reports:

Switzerland is expected to vote later this year on a proposal to place further limits on executive pay, the latest effort to govern corporate compensation in a country that recently approved some of the world’s strictest say-on-pay rules.

The Young Socialists have collected more than 100,000 signatures—the threshold needed to call a vote—in support of a referendum to limit executive salaries to 12 times those of a company’s lowest-paid employee.

The campaign, dubbed the 1:12 Initiative for Fair Pay, is named for the organizers’ belief that no one in a company should earn more in one month than the lowest-paid employee makes in a year.

The Swiss Federal Council, the country’s cabinet, has advised the parliament to recommend that voters reject the proposal. However a poll earlier this month showed 49.5% of respondents were in favor of the 1:12 Initiative, 40.5% against and 10% undecided.

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100 Wal-Mart Workers Arrested In Nationwide Protests Last Week

walmartIncluding three attempting to deliver a petition to a Wal-Mart executive’s Manhattan office. Imagine how awkward that would have been! Buzzfeed reports:

100 Walmart workers protesting low wages and illegal retaliation against strikers were arrested in 11 cities on Thursday. In response to Walmart’s inaction, workers announced widespread, massive strikes and protests will take place on Black Friday in 2013.

The New York Police Department arrested three Walmart strikers who wanted to meet with an executive. The protesters planned to deliver a petition directly to company board member Christopher Williams’ Fifth Avenue office. The petition demands Walmart provide employees with a livable, annual wage of $25,000, and stop punishing workers who stand up for their rights. Walmart fired or disciplined at least 60 strikers who protested in June.

Walmart spokesperson Kory Lundberg said that these demonstrations are “just a show.”

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Financial Insecurity Causes Temporary IQ Drop Of 13 Points

moneyHow poverty impacts people, via the Seattle Times:

People worrying about having enough money to pay bills tend to lose temporarily the equivalent of 13 IQ points, scientists found when they gave intelligence tests to shoppers at a New Jersey mall and farmers in India.

Dealing with financial strain consumes so much mental energy that people struggling to make ends meet often have little brainpower left for anything else, leaving them more susceptible to bad decisions that can perpetuate their situation, according to the new study.

Mullainathan and colleagues tested the same 464 farmers in the sugar-cane fields of India before and after the harvest and their IQ scores improved by 25 percent when their wallets fattened. Before the harvest, the farmers take out loans and pawn goods. After they sell their harvest, they are flush with cash.

In the New Jersey part of the study, the scientists tested about 400 shoppers at Quaker Bridge Mall, presenting them with scenarios that involved a large and a small car-repair bill.

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Rich People Feel Poor If They Have Less Than $5 Million

wealthyVia ThinkProgress, a survey of investors reveals the self-perception of the affluent in our deeply unequal society. More than two-thirds of millionaires do not feel that they are wealthy, and two-fifths of those with more than $5 million still feel non-wealthy:

Rich investors say that it takes at least $5 million to feel wealthy, according to a new investor sentiment report from UBS.

They also define being wealthy not as having a certain amount of money, but having “no financial constraints on what they do.” That does indeed likely come with a large price tag.

The inflation of how much the rich thinks it takes to be rich comes at a time of skyrocketing income inequality. The good news for the uber rich is that less than 20 percent have a pessimistic view of the long-term economic outlook. That differs sharply from the general population, as half of Americans say the economy is getting worse.

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It’s Time To Introduce A Global Minimum Wage

global minimum wage

Al Jazeera, Dr. Jason Hickel argues that a global minimum wage is not only just, but doable:

Because of neoliberal economic policies imposed over the past few decades, companies now have the power to rove the globe in search of what CEOs refer to as the “best investment conditions”.

So workers are made to face a stark choice: accept dangerous conditions and minimum wages of $0.21 per hour, or lose their jobs. The constant threat of replacement keeps workers cheap and docile, to the tremendous benefit of corporate profits.

The problem with globalisation is that capital has been globalised while the rules that protect people from it have not. If we’re going to have a global labour market, it stands to reason that we need a global system of labour standards [and] a global minimum wage.

Not only is it now conceivable to have a global minimum wage system, it’s also – for the first time in history – quite doable.

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Chinese Factory Workers Take Their American CEO Hostage

ceo_chipChip Starnes, CEO of Specialty Medical Supplies, flew to his company’s factory in China to lay off 30 workers as a first step in shifting production to India, where wages are lower. It is difficult to feel sorry for him regarding what subsequently occurred. Via Libcom:

Workers at a medical supplies factory in Beijing, China, have taken the owner of the factory hostage. He has been locked in his office for several days, and subject to sleep deprivation techniques. The action was taken following a dispute over unpaid wages and severance pay.

The factory boss, Chip Starnes, visited the factory last week to lay-off thirty workers. He gave them a redundancy payment and then intended on leaving. As soon as the rest of the workers on shift realised what was happening they thought the entire factory was about to close down and barricaded him in his office.

When interviewed, workers also claimed that their action was also due to unpaid wages over the last few months.

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Largest Protests In Decades Fill Major Cities Of Brazil

Initially a response to a hike in public transportation prices, the unrest is centered around the country's wealth inequality and spending of public money on lavish stadiums in preparation for the 2014 World Cup. Russia Today reports:
Mass protests continued throughout Brazil on Monday, with hundreds of thousands of demonstrators converging in Sao Paulo, Rio de Janeiro, Belo Horizonte, the capital of Brasilia and other cities. Protests initially began last week following a government announcement of an increase in public transportation costs, which brought out students and young workers and led to more than 250 arrests. In a sign that public dissatisfaction was still simmering, soccer fans booed president Dilma Rousseff on Monday during the opening of a two-week tournament at a stadium in the capital Brasilia. The heckling only intensified when the president of the global soccer body, FIFA, reprimanded the crowed for failing to show the president “respect.”
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The United States’ Capitals Of Inequality

inequalityPueblo Lands on the areas of the U.S. pushing economic disparities to new extremes:

Welcome to the San Francisco Bay Area. The epicenter of the tech industry. The global vortex of venture capital. One of the most brutally unequal places in America, indeed the world.

In the distribution of income and wealth, California more resembles the neocolonial territories of rapacious resource extraction than it does Western Europe. The only states that compare to California’s harsh inequalities are deep southern states structured by centuries of racist fortune building by pseudo-aristocratic ruling classes, and the East Coast capitals of the financial sector.

It’s a strange club, the super-inequitable states of the U.S. This list pairs the bluest coastal enclaves of liberal power with the reddest Southern conservative states. In terms of wages and wealth these places have a lot in common.

The economies of Louisiana, Mississippi, and Alabama remain bound by racial inequalities founded in slavery and plantation agriculture; the wealthy elite of all three states remain a handful of white families who control the largest holdings of fertile land, and own the extractive mineral and timber industries, and the regional banks.

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