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octoberlib

(14,971 posts)
Sun Jan 20, 2013, 03:07 PM Jan 2013

Inequality Is Holding Back The Recovery -NYT Opinionator

Politicians typically talk about rising inequality and the sluggish recovery as separate phenomena, when they are in fact intertwined. Inequality stifles, restrains and holds back our growth. When even the free-market-oriented magazine The Economist argues — as it did in a special feature in October — that the magnitude and nature of the country’s inequality represent a serious threat to America, we should know that something has gone horribly wrong. And yet, after four decades of widening inequality and the greatest economic downturn since the Depression, we haven’t done anything about it.

There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth. While the top 1 percent of income earners took home 93 percent of the growth in incomes in 2010, the households in the middle — who are most likely to spend their incomes rather than save them and who are, in a sense, the true job creators — have lower household incomes, adjusted for inflation, than they did in 1996. The growth in the decade before the crisis was unsustainable — it was reliant on the bottom 80 percent consuming about 110 percent of their income.Second, the hollowing out of the middle class since the 1970s, a phenomenon interrupted only briefly in the 1990s, means that they are unable to invest in their future, by educating themselves and their children and by starting or improving businesses.

Third, the weakness of the middle class is holding back tax receipts, especially because those at the top are so adroit in avoiding taxes and in getting Washington to give them tax breaks. The recent modest agreement to restore Clinton-level marginal income-tax rates for individuals making more than $400,000 and households making more than $450,000 did nothing to change this. Returns from Wall Street speculation are taxed at a far lower rate than other forms of income. Low tax receipts mean that the government cannot make the vital investments in infrastructure, education, research and health that are crucial for restoring long-term economic strength.

Fourth, inequality is associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile and vulnerable. Though inequality did not directly cause the crisis, it is no coincidence that the 1920s — the last time inequality of income and wealth in the United States was so high — ended with the Great Crash and the Depression. The International Monetary Fund has noted the systematic relationship between economic instability and economic inequality, but American leaders haven’t absorbed the lesson.
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http://opinionator.blogs.nytimes.com/2013/01/19/inequality-is-holding-back-the-recovery/?smid=tw-share
24 replies = new reply since forum marked as read
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Inequality Is Holding Back The Recovery -NYT Opinionator (Original Post) octoberlib Jan 2013 OP
What if there was equality and the economy boomed... NoOneMan Jan 2013 #1
Developing clean alternative energy sources bettyellen Jan 2013 #2
So the production of greenie stuff doesn't take energy & resources? NoOneMan Jan 2013 #3
Ok, let's stay dependent on foreign oil! bettyellen Jan 2013 #4
What difference does it really make? NoOneMan Jan 2013 #5
you're right. we should pollute the world even more and maybe have some more wars for oil! bettyellen Jan 2013 #7
That seems to be the case regardless NoOneMan Jan 2013 #9
Great response bettyellen! fleur-de-lisa Jan 2013 #13
tks Lisa! bettyellen Jan 2013 #14
Though its a great straw man NoOneMan Jan 2013 #18
So...you're for keeping impoverished people impoverished? leftstreet Jan 2013 #6
Im for asking difficult questions NoOneMan Jan 2013 #8
The ecosystem is harmed by profit, not by meeting needs leftstreet Jan 2013 #11
The ecosystem is harmed via production NoOneMan Jan 2013 #12
You're talking about Capitalism leftstreet Jan 2013 #19
No, I am talking about production NoOneMan Jan 2013 #20
But I agreed. Production for profit is unsustainable n/t leftstreet Jan 2013 #21
Production for any reason at this rate is unsustainable. NoOneMan Jan 2013 #22
What 'rate?' leftstreet Jan 2013 #23
A rate that produces 30 gigatons of CO2 emissions a year NoOneMan Jan 2013 #24
Money is meant to flow and it's been allowed to stagnate in too few hands for over thirty years. freshwest Jan 2013 #10
How dare you-wanting to punish SUCCESS!!! YoungDemCA Jan 2013 #16
Depends on what one's definition of success is. Serial killers are a success, if it's by body count. freshwest Jan 2013 #17
Octo - Great post! Two things to add socialindependocrat Jan 2013 #15
 

NoOneMan

(4,795 posts)
1. What if there was equality and the economy boomed...
Sun Jan 20, 2013, 03:18 PM
Jan 2013

How do we go about taking 100ppm CO2 out of the atmosphere while everyone is wealthing-it-up, buying and making stuff? Or is that not important?

 

NoOneMan

(4,795 posts)
3. So the production of greenie stuff doesn't take energy & resources?
Sun Jan 20, 2013, 03:46 PM
Jan 2013

Sure, you can create jobs making green infrastructure, but that production will contribute to our precarious situation. These products roll off the line with "carbon debt".

1) At what point will the reduction in the carbon intensity of our energy (presuming we ever get there after the massive amount of production a "green shift" requires) translate to an actual reduction in global emissions? How do we know this point will ever come, especially if it equalizes and increases wealth across the nation, thereby increasing aggregate consumption and standards of living?

2) By expanding the net available energy with green sources, how do we know our dirty sources will not still be used or exported to be used elsewhere?

 

NoOneMan

(4,795 posts)
5. What difference does it really make?
Sun Jan 20, 2013, 03:59 PM
Jan 2013

If we really don't care about reducing global emissions (and I assume we do not since you can't provide substantial answers to my questions), why not plough ahead until we are all dead? Canada has plenty of tar sand oil to offer in exchange for whatever it is the US makes these days.

Besides, there is plenty of domestic oil, coal and natural gas to be had if its simply a matter of buying products from the evil bad guys.

 

NoOneMan

(4,795 posts)
9. That seems to be the case regardless
Sun Jan 20, 2013, 04:23 PM
Jan 2013

Whether we continue business-as-usual or engage in production to fuel a "green shift", we will need energy & resources in both cases. I'm not really enthusiastic about either approach to our empire's decline

 

NoOneMan

(4,795 posts)
18. Though its a great straw man
Sun Jan 20, 2013, 06:19 PM
Jan 2013

I think it is clear that I want to pollute the world least of all, or I wouldn't have brought up the original question. The bottom line is that if we aren't really going to "fix" things and rush to death, then why does it matter if we drive a foreign or domestic car over the cliff?

leftstreet

(36,081 posts)
6. So...you're for keeping impoverished people impoverished?
Sun Jan 20, 2013, 04:10 PM
Jan 2013

That's what I'm hearing



Yes indeed, raising the minimum wage to $20 an hour, instituting non-profit healthcare, raising SS payments, controlling the costs of food and shelter...OMG I hear an ice floe breaking right off!

 

NoOneMan

(4,795 posts)
8. Im for asking difficult questions
Sun Jan 20, 2013, 04:20 PM
Jan 2013

Does equality in a society increase the velocity of energy in the system, thereby accelerating production and correlating to increased emissions according to all evidence we have?

If that is the case, how do we reconcile the need for equality (and economic production) with the need for an ecosystem that can support life? I think I have an answer, as I've stopped to asked the question. Many have not.

leftstreet

(36,081 posts)
11. The ecosystem is harmed by profit, not by meeting needs
Sun Jan 20, 2013, 04:48 PM
Jan 2013

It's good that you're all for asking difficult questions, you're just not asking the right ones

You're asking...what happens to the environment if a couple billion people want a flat screen tv?

You should be asking...why is the environment near such an overwhelming fucked up crisis when so few people actually own tvs?

PROFIT

 

NoOneMan

(4,795 posts)
12. The ecosystem is harmed via production
Sun Jan 20, 2013, 05:09 PM
Jan 2013

All production requires energy and resources that are extracted from the natural environment, and it all produces waste that the environment cannot evolve fast enough to utilize for biological productivity (so it creates imbalances that cause death). Simply put, sharing or hoarding the exploits of the earth still requires that the earth is exploited.


what happens to the environment if a couple billion people want a flat screen tv

No, Im asking what happens if 8 billion of them actually get them, along with a house, a fridge and a car in the garage. Well, at 400 ppm CO2 and mass disparity, its a pretty easy answer if we equalize our standard of living across the globe: planetary-wide extinction level event. Frankly, we are headed close to that already, with all our inequality.


why is the environment near such an overwhelming fucked up crisis when so few people actually own tvs

Because it took billions of years for the earth to evolve to the point where all organisms' processes and waste contribute harmoniously to a delicately balanced system, and we are very quickly, very drastically altering the landscape to the point where the system can no longer function as it has evolved to. This is happening regardless of our malevolence of benevolence; this process does not ask us what our intentions are.


PROFIT

This is magical thinking--we cannot simply produce without profit and negate the effects of production on a delicate system. Especially if GDP remains flat or increases (or do you suggest we scale back GDP). We make too much and consume too much. Hell, 5% of earth's population uses 20% of the energy....spread that level of consumption equally across the world without profit and its not going to go well

leftstreet

(36,081 posts)
19. You're talking about Capitalism
Sun Jan 20, 2013, 06:19 PM
Jan 2013
we cannot simply produce without profit


And you're talking about the problems inherent in Capitalism with sustainability, economic equality and resource depletion.

LOL I'm sorry but that's so old school. Capitalism is spewing out its last bitter, vile breath and it's time to move on.

There are other ways to meet the needs of humanity and the environment, but no, it can't be done based on profit
 

NoOneMan

(4,795 posts)
20. No, I am talking about production
Sun Jan 20, 2013, 06:27 PM
Jan 2013

Prior to the inception of capitalism, this was also a problem. Production requires resources and generates waste that impacts the ecosystem. The difference now is that it has reached such a massive scale since coal/oil (due to tapping in vast stored energy), that the exponential growth has created an unsustainable level of degradation. Capitalism is not necessary for this.


Capitalism is spewing out its last bitter, vile breath and it's time to move on.

Our system is evolving to consume energy more efficiently to facilitate growth. The flaws of capitalism produce disparity, which throttles growth. The system is recognizing these changes and evolving, via liberalism, to produce a system that can increase the velocity of energy at faster rates. If anything, the evolution of the economic system will hurry production, as the past evolutions have as well (or the system would not allow the reforms to be implemented).


There are other ways to meet the needs of humanity and the environment

Are we going to be pulling hybrid cars and solar panels out of fairies' asses? Are we going to create magic wands? Explain in scientific terms, without ideology, how we can uncouple ecological destruction from production.


On Edit: Awesome way to pull a quote out of context. I said "we cannot simply produce without profit and negate the effects of production". IOW, selling items at the cost of the resources and work involved (no profit) still necessitates the resources are mined and the energy is consumed. That was a very disingenuous quote pick.
 

NoOneMan

(4,795 posts)
24. A rate that produces 30 gigatons of CO2 emissions a year
Sun Jan 20, 2013, 06:48 PM
Jan 2013

Basically, I think the most recent studies suggest we need a 6% reduction per year to meet the arbitrary 2C climate targets.

So any rate that emits more than last year's emissions minus 6% (each year forward) is not sustainable. Is that compatible with your no-profit, meet-everyone's needs world? Probably not.

FYI, that 6% used to be 3%. Every year we wait, the scale-back becomes more drastic.

freshwest

(53,661 posts)
10. Money is meant to flow and it's been allowed to stagnate in too few hands for over thirty years.
Sun Jan 20, 2013, 04:24 PM
Jan 2013

That's why income taxes exist, to remove rotting wealth back to work for society.


freshwest

(53,661 posts)
17. Depends on what one's definition of success is. Serial killers are a success, if it's by body count.
Sun Jan 20, 2013, 06:05 PM
Jan 2013

Same with billionaires and extremely large amounts of money. Although that might be redundant as they sometimes go hand in hand...

I've nothing against accumulated effort and increasing prosperity, but it has to give equal consideration to all factors and faces of humanity and the Earth.

JMHO.





socialindependocrat

(1,372 posts)
15. Octo - Great post! Two things to add
Sun Jan 20, 2013, 05:38 PM
Jan 2013

I've been thinking about the tax rates for investments.
Shouldn't the tax rates on investments be higher since they people with money to invest do so and increase their wealth without expending much physical energy and the worker gets $20/hr by directly expending their energy for 8-10 hours a day
and then they're shot for the day. (I understand that we used to need to incentify investing to grow businesses but it seems that people are making pretty good money these days without much risk.)

Second, I have seen my work efforts reap decreasing returns over the past 30 years. Add to that the increase of necessities by 30-65% and sometimes more. I think an added problem is that it dawned on the worker that they were going to have to put more toward retirement if they didn't want to just expire at their desk one day and that would be the end of an unfulfilled dream. So now, they have less money due to inflation (the increased cost of necessities) and they are taking what little is left and putting it away for retirement so that very little money gets spent by the middle class which slows the recovery even more.

Just some thoughts.

Great post!

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