Follow by Email

Saturday, October 20, 2018

The Powerlessness of the Most Powerful [feedly]

The Powerlessness of the Most Powerful
https://www.project-syndicate.org/commentary/powerlessness-of-most-powerful-by-javier-solana-2018-10

Oct 20, 2018 JAVIER SOLANA

The president of the leading global power has made it clear that he has no interest in getting involved in resolving any of the world's shared problems, dressing up his foreign policy as one of "principled realism." But there is nothing principled or realistic about it.

MADRID – The annual General Debate of the United Nations General Assembly is one of the most notable events on the international diplomatic calendar. As usual, this year's meeting, during the last week of September, brought together a long list of world leaders, although perhaps the term "world leader" should no longer be used so lightly. The president of the leading global power has made it clear that he has no interest in getting involved in resolving any of the world's shared problems. Unfortunately, he is not alone.



For those of us who put our faith in international cooperation as a necessary complement to economic globalization, the General Assembly debate revealed a bleak panorama. Certain leaders' short-term interests, often presented as "national interests," are one of the factors roiling international relations more than any time since the end of the Cold War. But the rise of nationalist populism is less the cause than the result of rifts that have been forming for some time.

As with any economic process, globalization has a distributive dimension, which means that it is bound to generate frustration for some groups of people. The center of the Western political spectrum has tended to underestimate the impact of rising inequality within countries, focusing instead on the benefits of market opening and integration, such as the unprecedentedly rapid reduction in global poverty. Understandably, however, not everyone is consoled by such outcomes.

It is not only goods, services, and capital that circulate through the global economy. Ideas circulate, too. So globalization, like democracy, is vulnerable to itself, because it puts at its opponents' disposal a set of tools that they can use to sabotage it. Aware of this, the "nationalist international" driven by US President Donald Trump and his ideological fellow travelers has mobilized anxiety and alienation to launch a (somewhat paradoxical) crusade to globalize their particular anti-globalization discourse.

Addressing the UN General Assembly, Trump stated openly that, "We reject the ideology of globalism, and we embrace the doctrine of patriotism." He lavished praise on other states, such as Poland, that follow his example. Should Brazilians elect the far-right presidential candidate Jair Bolsonaro, they will join the wave of national populism threatening to raze the world's multilateral institutions.

Yet globalism and patriotism are not incompatible concepts. Trump's invocation of patriotism has no aim other than to whitewash his nationalist and nativist tendencies. Rhetorical traps of this type can catch us with our guard down, above all when the person who resorts to them is a leader who is known for serving his ideas raw. But it is evident that the Trump administration, too, worries about keeping up appearances.

There are many other examples. At the UN, Trump sought to give his foreign policy a patina of coherence by calling it "principled realism." In international relations, realism is a theory that regards states as the central actors and units of analysis, relegating international institutions and law to an ancillary status. Principles such as human rights are usually set aside, though countries may deploy them selectively to advance their interests.

This is precisely what Trump does when he criticizes the repression of the Iranian regime, while failing to denounce similar practices in other countries. But no self-respecting realist would exaggerate the threat posed by Iran, or allow a flurry of compliments from Kim Jong-un to cloud their vision regarding North Korea.

"America will always choose independence and cooperation over global governance, control, and domination," Trump told the UN. In theory, cooperation is not incompatible with the realist paradigm. For example, realists could conceive of the US trying to offset China's geopolitical rise by bolstering its alliances in the Asia-Pacific region, especially with Japan and South Korea.

But the Trump administration has called into question the security umbrella that it provides for these countries, not even exempting them from its protectionist trade measures (although the recent update of the bilateral agreement with South Korea seems to have calmed the waters). This disconcerting behavior has extended to other traditional US allies, such as the European Union, revealing that Trump is extraordinarily reluctant to cooperate. When he does, he seldom favors the alliances that most fit his country's strategic interests.

Regarding China, US diplomacy openly uses the term "competition," despite the friendly relations that Trump claims to maintain with Xi Jinping. The ongoing trade (and technology) war between the two countries, along with the bouts of friction in the South China Sea, seem to presage an uncontrollable spiral of confrontation.

Nonetheless, this scenario (which the realist school might foresee) can be avoided, especially if we shore up the existing structures of multilateral governance, which can help us to manage shifts in the balance of power. It is clear that China does not always adhere to international norms, but the right response is to uphold these norms, not to bulldoze them. Unfortunately, the US is opting for the latter course in many areas, such as commercial relations.

In his General Assembly speech, China's foreign minister, Wang Yi, did not stress the realpolitik that his country often promotes; instead, he mentioned the concept of "win-win" no less than five times. If Trump – together with the rest of the nationalist international – continues to reject this notion of mutual benefits, he will likely manage to slow down not only China's growth, but also that of the US.

Even more alarming, spurning multilateral cooperation means dooming the world to resignation in the face of existential issues such as climate change, a negligent stance that the Trump administration has adopted with relish. America's abdication of leadership under Trump raises an obvious question: What good is it to be the world's dominant power if, in the face of the greatest global challenges, its government chooses to condemn itself to powerlessness?


Javier Solana

Writing for PS since 2004 
97 Commentaries

Javier Solana was EU High Representative for Foreign and Security Policy, Secretary-General of NATO, and Foreign Minister of Spain. He is currently President of the ESADE Center for Global Economy and Geopolitics, Distinguished Fellow at the Brookings Institution, and a member of the World Economic Forum's Global Agenda Council on Europe.


 -- via my feedly newsfeed

Notes on Global Convergence (Wonkish and Off-Point) [feedly]

Notes on Global Convergence (Wonkish and Off-Point)
https://www.nytimes.com/2018/10/20/opinion/notes-on-global-convergence-wonkish-and-off-point.html


Figure 1CreditCreditConference Board, Total Economy Database

For readers obsessed with the Trumpification of America and the looming election, I'm with you – I try not to check FiveThirtyEight more than five times a day, but it's hard. If you can't bear to think about anything else, don't read this; rest assured that this blog post isn't coming at the expense of writing about the core issue of the moment, it's a rest break, a bit of vacation in the head.

OK, that said, I read two things in the past few days that had me thinking about the biggest economic story there is: the dramatic rise of some formerly very poor nations, and the concomitant shift of the world's economic center of gravity away from the West.

One was a new paper by Patel, Sandefur, and Subramanianpointing out that overall global convergence in per capita GDP, which used to be largely absent in the data, has become very pronounced since 1990, with really fast growth in middle-income economies. The other was a tweet by my CUNY Stone Center colleague Branko Milanovic, pointing out that convergence among Western economies seems to have stalled.

I'd argue that these observations are really part of the same story. Let me start with Branko's observation.  

The way I'd make sense of this observation is to argue that the West has already converged, in terms of technology and productivity. The remaining differences in GDP per capita mainly reflect different social choices over things like vacation time and retirement age, and there's no reason to expect those differences to go away.

I won't do a full statistical analysis, but let me give the example of France versus the US. Figure 1 shows French productivity – real GDP per hour worked – relative to the US, and relative real GDP per capita. What you see is that French productivity has matched that of the US for many years (it was actually higher for a while, although that was probably a composition effect reflecting an older work force.) French real GDP per capita has, however, slid relative to US levels. Why?

Image
Figure 1CreditConference Board, Total Economy Database

Partly it's fewer people working – not prime-age adults, who are more likely to be employed in France, but mainly pre-seniors, 55-65, encouraged to retire by more generous pension policies. Even more important, the French take vacations; we don't (and often aren't allowed to.) 

So these are just different choices. And while France does need more pension reform (it has done some already), it's far from clear that overall French choices are worse. On many quality of life indicators, like life expectancy (Figure 2), America has fallen behind.

Image
Figure 2CreditOECD

The end of Western convergence, then, isn't an indicator of some kind of failure. Meanwhile, the coming of rapid convergence by emerging markets is a huge success story.

When I was in grad school in the 1970s, I thought I should do development economics – because it was clearly the most important subject – but didn't, because it was too depressing. At that point it was mostly non-development economics, the study of why Third World countries seemed to fall ever further behind the West. True, we were already seeing a growth takeoff in smaller East Asian economies, but few saw this as a trend that would spread to China and India.

Then something happened; we still don't know exactly what. It's a good guess that it has something to do with hyperglobalization, the unprecedented surge in world trade made possible by breaking up value chains and moving pieces of production to lower-wage countries. But we don't really know even that.

One thing is clear: at any given time, not all countries have that mysterious "it" that lets them make effective use of the backlog of advanced technology developed since the Industrial Revolution. Over time, however, the set of countries that have It seems to be widening.

Once a country acquires It, growth can be rapid, precisely because best practice is so far ahead of where the country starts. And because the frontier keeps moving out, countries that get It keep growing faster. Japan's postwar growth was vastly faster than that of the countries catching up to Britain in the late 19th century; Korea's growth from the mid-60s even faster than Japan's had been; China's growth faster still.

The It theory also, I'd argue, explains the U-shaped relationship Subramanian et al find between GDP per capita and growth, in which middle-income countries grow faster than either poor or rich countries. Countries that are still very poor are countries that haven't got It; countries that are already rich are already at the technological frontier, limiting the space for rapid growth. In between are countries that acquired It not too long ago, which has vaulted them into middle-income status, but are able to grow very fast by moving toward the frontier.   

The result is a world in which inequality among countries is declining if you look from the middle upward, but rising if you look from the middle down. Fundamentally, however, it's a story of diminishing Western exceptionalism, as the club of countries that can take full advantage of modern technology expands.

Oh, and rising inequality within Western countries means that if you look at the global distribution of household incomes, you get Branko's elephant chart.

It's not entirely a happy story. That concentration of income and wealth at the top is worrisome, not just economically, but for its political and social implications; it's one reason US democracy is teetering on the edge. And there are still hundreds of millions of people left out. But there's also a lot of good news in the picture.

I now return you to our regular political anxiety.


 -- via my feedly newsfeed

Friday, October 19, 2018

Krugman: The Trump Tax Scam, Phase II [feedly]

The Trump Tax Scam, Phase II
https://www.nytimes.com/2018/10/18/opinion/taxes-medicare-social-security-midterms.html

When the Trump tax cut was on the verge of being enacted, I called it "the biggest tax scam in history," and made a prediction: deficits would soar, and when they did, Republicans would once again pretend to care about debt and demand cuts in Medicare, Medicaid and Social Security.

Sure enough, the deficit is soaring. And this week Mitch McConnell, the Senate majority leader, after declaring the surge in red ink "very disturbing," called for, you guessed it, cuts in "Medicare, Social Security and Medicaid." He also suggested that Republicans might repeal the Affordable Care Act — taking away health care from tens of millions — if they do well in the midterm elections.

Any political analyst who didn't see this coming should find a different profession. After all, "starve the beast" — cut taxes on the rich, then use the resulting deficits as an excuse to hack away at the safety net — has been G.O.P. strategy for decades.

Oh, and anyone asking why Republicans believed claims that the tax cut would pay for itself is being naïve. Whatever they may have said, they never actually believed that the tax cut would be deficit-neutral; they pushed for a tax cut because it was what wealthy donors wanted, and because their posturing as deficit hawks was always fraudulent. They didn't really buy into economic nonsense; it would be more accurate to say that economic nonsense bought them.



That said, even I have been surprised by a couple of things about the G.O.P.'s budget bait-and-switch. One is the timing: I would have expected McConnell to hold his tongue until after the midterms. The other is the lying: I knew Donald Trump and his allies would be dishonest, but I didn't expect the lies to be as baldfaced as they are.

What are they lying about? For starters, about the causes of a sharply higher deficit, which they claim is the result of higher spending, not lost revenue. Mick Mulvaney, Trump's budget director, even tried to claim that the deficit is up because of the costs of hurricane relief.

The flimsy justification for such claims is that in dollar terms, federal revenue over the past year is slightly up from the previous year, while spending is about 3 percent higher.

But that's a junk argument, and everyone knows it. Both revenue and spending normally grow every year thanks to inflation, population growth and other factors. Revenue during Barack Obama's second term grew more than 7 percent a year. The sources of the deficit surge are measured by how much we've deviated from that normal growth, and the answer is that it's all about the tax cut.

Dishonesty about the sources of the deficit is, however, more or less a standard Republican tactic. What's new is the double talk that pervades G.O.P. positioning on the budget and, to be fair, just about every major policy issue.      

 

What do I mean by double talk? Well, consider the fact that even as McConnell blames "entitlements" (that is, Medicare and Social Security) for deficits, and declares (falsely) that Medicare in particular is "unsustainable," Paul Ryan's super PAC has been running ads accusing Democrats of wanting to cut Medicare. The cynicism is breathtaking.

But then, it's no more cynical than the behavior of Republicans like Dean Heller, Josh Hawley and even Ted Cruz who voted to repeal the Affordable Care Act, which protects Americans with pre-existing medical conditions, or supported a lawsuit trying to strip that protection out of the act, and are now running on the claim that they want to … protect people with pre-existing conditions.

The point is that we're now in a political campaign where one side's claimed position on every major policy issue is the opposite of its true position. Republicans have concluded that they can't win an argument on the issues, but rather than changing their policies, they're squirting out clouds of ink and hoping voters won't figure out where they really stand.

Why do they think they can get away with this? The main answer is obviously contempt for their own supporters, many of whom get their news from Fox and other propaganda outlets that slavishly follow the party line. And even in appeals to those supporters who rely on other sources, Republicans believe that they can neutralize the deep unpopularity of their actual policies by misrepresenting their positions, and win by playing to racism and fear.

But let's be clear: G.O.P. cynicism also involves a lot of contempt for the mainstream news media. Historically, media organizations have been remarkably unwilling to call out lies; the urge to play it safe with he-said-she-said reporting has very much worked to Republicans' advantage, given the reality that the modern G.O.P. lies a lot more than Democrats do. Even the most blatant falsehood tends to be reported with headlines about how "Democrats say" it's false, not that it's actually false.

Anyway, at this point Republicans are proclaiming that war is peace, freedom is slavery, ignorance is strength and the party that keeps trying to kill Medicare is actually the program's greatest defender.

Can a campaign this dishonest actually win? We'll find out in less than three weeks.

Follow The New York Times Opinion section on Facebook and Twitter (@NYTopinion), and sign up for the Opinion Today newsletter.

Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman -- via my feedly newsfeed

Brad DeLong: Why Is Donald Trump Waging a Trade War? DeLong FAQ [feedly]


Brad DeLong, former asst secy of the Treasury under Larry Summers and Clinton, asks a very important question.


Why Is Donald Trump Waging a Trade War? DeLong FAQ
https://www.bradford-delong.com/2018/10/why-is-donald-trump-waging-a-trade-war-delong-faq.html

DeLong FAQ: Why Is Donald Trump Waging a Trade War? You ask: who are the people who would want to see this U.S.-China trade war happen? We have been unable to find any. Usually pressure to wage a trade war bubbles up from powerful economic groups that are or that believe they are being gravely injured by imports. Usually there are large advertisements in the New York Times and the Washington Post saying that it is time for the country to get behind the president, who is trying to keep other countries from taking unfair advantage of Americans.

We have not had any of that this time. There has been no mobilization of economic interests that favor a trade war.

In large part, there has been no mobilization because the costs of trade war are high relative to benefits. The economies are deeply intertwined at the industrial and sub-industrial level because it has become so cheap and so profitable to send plans and goods across the Pacific, and huge numbers of people have taken advantage of it.

There are people who will cheer a trade war. With them, however, they are cheering not because they see it as making America or their part of America richer happens. It is, instead, much more cheering the local sports team of your municipality when it wins a victory—they have won something, and so you cheer for them. However, what it would mean or what it would take for Trump to "win" this trade war is unclear.

Viewed as an economic policy I think, as I have said before, that the only people who seem to believe in this trade war are Donald Trump, Peter Navarro, and Trade Representative Robert Lighthizer—and I have a hard time believing that Lighthizer believes what he finds himself saying.

Certainly the Republicans in Congress have major, major disagreements with the policy. They have been quiet. I believe they have been quiet because they accept the principal that to make the president of your party look weak or stupid is to put your side's majority and possibly your seat at risk. That is not how it is is supposed to work. Political scientists have a lot to think about in terms of the foundations of their understanding of the American government.

I hope that after this November Republicans in Congress will decide that their electoral future requires that they be much more representatives of the people than cheerleaders for Trump, and that we will see a 25th Amendment remedy. I do not expect this hope to be realized. I think the chances are pretty good that we will have an informal, silent coup—like when Howard Baker became effective acting president during the second Reagan administration. But I will probably be wrong.

This is not a situation I ever expected the United States to be in.

It is now more than two years since then-IMF Deputy Managing Director Min Zhu asked me what we people in the United States are going to do to fix our broken political system. I had no good answer to him then. I have no good answer for him now.

#globalization  #orangehairedbaboons  #delongfaq

 -- via my feedly newsfeed

Law and Economics [feedly]

Nice when science confirms the class aspects of the US legal system


Law and Economics
http://crookedtimber.org/2018/10/18/law-and-economics/

I've been waiting for this paper to drop, ever since Suresh told me about it last year. It's groundbreaking. What it does is to take Steve Teles' qualitative work on the conservative legal movement, and then ask a simple question: if we start with the qualitative evidence about the program's intentions, then FOIA the hell out of George Mason University to find out which judges attended the Manne seminars, and then apply cutting edge econometrics and natural language processing to their decisions, what are we going to find out?

Some selected quotes (as well as one quote that isn't in the current version, but will likely be in the next) under the fold, for those who are interested in the headline findings.

we find that, post Manne attendance, judges render conservative verdicts in economics-relevant cases. Further, using the 100% sample of machine-coded circuit cases, we find that Manne attendees subsequently are more likely to rule against regulatory agencies, for example the EPA and NLRB. Next we look at criminal sentencing in the district courts. We find that Manne attendance is associated with harsher prison sentences imposed. We show that the difference in sentencing harshness between Manne and non-Manne judges is highest after the 2005 Booker decision gave more discretion to judges in sentencing.

We find that Manne attendance is associated with disparate sentencing. The results are consistent with judges learning a theories of simple deterrence and the use of stereotypes as being economically efficient … –that discrimination in prices and in punishment can be analyzed in terms of economic efficiency (documented in the Manne program archives). … Exploiting random panel composition, we document extensive spillovers consistent with both peer and learning effects. Having an economics trained judge on the authoring judge's previous panel impacts the decision. There is no effect in a set of placebo cases … There are spillovers on rulings against regulatory agencies.


Law and economics' key criticism of regulatory policies is that they have perverse, unintended economic consequences. In the domain of labor regulation, law and economics scholars (and judges) wrote extensively against New Deal labor law and union protections …. In EPA regulation, almost all environmental regulations can be construed as a form of government expropriation that limits how property owners can develop their property. Reliance on economic analysis in antitrust has attained nearly complete consensus.

By the 1960s, the Supreme Court had read into previous statutes a variety of anti-competitive social and political goals, such as protecting small traders from their larger and more efficient rivals as well as curbing inequality in the distribution of income and undue influence of large business. The law-and-economics movement advanced the initially controversial view that the antitrust laws should promote economic efficiency and consumer welfare, rather than shield individuals from competitive market forces or redistribute income across groups of consumers. In the recent time period, judges who attended law-and-economics training were less likely to have their antitrust decisions appealed (Baye and Wright 2011).

A more controversial branch of law and economics is the use of incentives reasoning in criminal law. In Becker's (1968) analysis of crime and punishment, the notion of "rational criminals" works against the then-prevailing wisdom of crime as a product of mental illness. This change in perspective motivates deterrence (more police, more punishment) rather than rehabilitation (more social services and mental health treatment) as the preferred focus of crime policy.



The influence of economics on legal thought is, in part, due to a controversial economics training program for sitting judges, the Economics Institute for Federal Judges. … The course was founded and organized by Henry Manne, an influential conservative in the early law and economics movement. The institute was the the flagship program of the Law and Economics Center, the first academic research center devoted to law and economics. It was funded mainly by donations from conservative foundations and business interests. …By 1990, forty percent of federal judges had attended this program. … at least in principle, the program was billed as a non-partisan tool to help judges understand their decisions

In terms of the main lessons, the program strove for ideological balance. Both conservative and liberal economic thinkers were invited. Empirical panels could include both Orley Ashenfelter and John Lott, for example. … The instruction may have been more emphatically delivered by the conservative instructors. Manne himself (who taught part of the course) articulated the view that insider trading was economically efficient. Another instructor, Professor Goetz, defended "'Unequal' Punishment for 'Equal' Crime," arguing that discrimination in punishment can be economically efficient.

In more recent years, the annual reports include instructors with known conservative stances on immigration (George Borjas), crime (James Q. Wilson), and family law (Jennifer Roback Morse, founder of the anti-LGBT Ruth Institute). … In a Fortune magazine article (May 21, 1979), instructors quotes indicate how normative the economics instructors intended to be. Alchian said, "I'm trying to change your view of the world, to show you that what you thought was bad really may not be." On damages and deterrence, Demsetz said motivated increase in sanctions as, "[an agent is] not likely to be caught, [so] the threat of simple damages may not be a tough enough deterrent" and the moral hazard associated with damages: "The plaintiffs may wait a long time before they complain, because they want damages to pile up."

On environmental law, Alchian stated, "Give me a capsule that will magically clean all the air in Los Angeles … Beg me to crush it. … I won't crush the capsule. Because, if I do, poor blacks will have to pay $20 a month more for land rental. … the black in Watts, already used to living with bad air, loses his discount for doing that." On equal opportunity and discrimination, Feldstein said, "you should be asking questions like, `Is it more likely to be this than that ?' ", but no empirical skepticism towards antitrust theory was articulated.



The program has a recognized conservative bias, yet the attending judges are effusive in their praise regardless of ideological standpoint. What is the impact on observed judge decisions? …We focus on two agencies the Law and Economics movement specifically criticized: the National Labor Relations Board and the Environmental Protection Agency. .. Manne judges exhibit a sharp and sudden increase in propensity to vote against federal labor and environmental regulatory agencies. … The differences-in-differences analysis … renders a consistent picture that Manne judges become more conservative after the training relative to their colleagues. …

this indicates the Manne program accounts for 28-42% of the rise in judicial conservatism. If peers and precedent also impact the non-Manne judges, then the true Manne impact may … explain an even larger portion of the historical shift. … Judges increase sentence lengths by 7 percent and any sentence by 2 percentage points after Manne attendance. …United States v. Booker loosened the formerly mandatory U.S. Sentencing Guidelines and offers a policy experiment to analyze the effects of judicial discretion. … economics trained judges render more severe sentences in the fiscal years after Booker. …the racial disparity in sentencing between black and white defendants is larger for Manne-trained judges than their colleagues. In addition, the gender disparity in sentencing between make and female defendants is larger for Manne-trained judges than their colleagues. …

Manne attendance increases use of economics language for Manne judges across both economics and non-economics cases. … Judges who sit with economics-trained judges start to use more economics
language, consistent with a learning effect.

And not in the article – but highly relevant – is this quote from a reminiscence of Henry Manne's influence:

Finally, Manne paid very careful attention to the content of the conference and to the approaches and positions of the attendees. None of the many Manne conferences that I attended were ideological directly. There was no clear or, to my mind, subterranean agenda. Nevertheless, while Manne, both in terms of content and attendees, provided for balance, he did not provide for too much balance. As befits a clever market-maker, Manne's balance was ingenious. Commonly, extremely prominent liberal economists would attend—such as Paul Samuelson or Ken Arrow. Though both are irrepressible, their positions were often cabined by topics far from familiar to them. Similarly, Manne would typically invite liberal economists to teach at his Judges' programs. His faculties uniformly showed political and ideological balance. But again, Manne was in charge of the curriculum. A liberal economist teaching supply and demand is hardly dangerous. A liberal economist becomes dangerous when addressing how to improve the world with unlimited spending of other citizens' tax monies. That, Henry Manne would never allow.

 -- via my feedly newsfeed

Top 1.0 percent reaches highest wages ever—up 157 percent since 1979 [feedly]

Top 1.0 percent reaches highest wages ever—up 157 percent since 1979
https://www.epi.org/blog/top-1-0-percent-reaches-highest-wages-ever-up-157-percent-since-1979/

Newly available wage data for 2017 show that annual wages grew far faster for the top 1.0 percent (3.7 percent) than for the bottom 90 percent (up only 1.0 percent). The top 0.1 percent saw the fastest growth, up 8.0 percent—far faster than any other wage group. This fast wage growth for the top 0.1 percent reflects the sharp 17.6 percent spike upwards in the compensation of the CEOs of large firms: executives comprise the largest group in both the top 1.0 and top 0.1 percent of earners. The fast wage growth of the top 1.0 percent in 2017 brought their wages to the highest level ever, $719,000, topping the wage levels reached before the Great Recession of $716,000 in 2007. The wages of the top 0.1 percent reached $2,757,000 in 2017, the second highest level ever, roughly only 4 percent below their wages in 2007.

These are the results of EPI's updated series on wages by earning group, which is developed from published Social Security Administration data. These data, unlike the usual source of our wage analyses (the Current Population Survey) allow us to estimate wage trends for the top 1.0 and top 0.1 percent of earners, as well as those for the bottom 90 percent and other categories among the top 10 percent of earners. These data are not topcoded, meaning the underlying earnings reported are actual earnings and not "capped" for confidentiality.

Figure A

As Figure A shows, the top 1.0 percent of earners now earn by 157.3 percent more than they did in 1979. Even more impressive is that those in the top 0.1 percent had more than double that wage growth, up 343.2 percent since 1979 (Table 1). In contrast, wages for the bottom 90 percent only grew 22.2 percent in that time. Since the Great Recession, the bottom 90 percent enjoyed very modest wage growth, with annual wages (i.e., reflecting growing annual hours as well as higher hourly wages) up just 5.4 percent over the eight years from 2009 to 2017. In contrast, the wages of the top 0.1 percent grew 29.8 percent from 2009 to 2017 (Table 1).

Wages fell furthest among the top 0.1 and 1.0 percent of earners during the financial crisis and, as noted above, the top 0.1 percent have not yet recovered their prior earnings (though they now have just had their second best year ever).

Table 1

These disparities in wage growth reflect a major change in the distribution of wages since 1979. The bottom 90 percent earned 69.8 percent of all earnings in 1979 but just 60.9 percent in 2017. In contrast the top 1.0 percent increased its share of earnings from 7.3 percent in 1979 to 13.4 percent in 2017, a near doubling. The growth of wages for the top 0.1 percent is the major dynamic driving the top 1.0 percent earnings as the top 0.1 percent more than tripled its earnings share from 1.6 percent in 1979 to 5.2 percent in 2017.

Table 2
VISIT WEBSITE
 -- via my feedly newsfeed

Thursday, October 18, 2018

Enlighten Radio:The "No Name Yet" Labor Beat Radio Show Returns

John Case has sent you a link to a blog:



Blog: Enlighten Radio
Post: The "No Name Yet" Labor Beat Radio Show Returns
Link: http://www.enlightenradio.org/2018/10/the-no-name-yet-labor-beat-radio-show.html

--
Powered by Blogger
https://www.blogger.com/