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Hometown: Xenia, OH
Member since: Tue Sep 19, 2006, 03:46 PM
Number of posts: 24,691

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Historically, income inequality goes down during recessions/depressions and rises coming out of them


The percent of total income earned by the 1% hit its historic high at 24% in 1928 just before the stock market crash and the onset of the Great Depression. It fell to 15.5% by 1932 even before FDR was inaugurated because of the Great Depression.

Then income inequality rose for the first 4 years of FDR's presidency by a little less than 4% peaking at 19.3% in 1936. While the economy was recovering and the middle class was doing better than in the 1920's the rich gained more than I would have expected in those first 4 years of FDR. After 1936 income inequality started a long and fairly steady decline thanks to New Deal policies until 1978 when its low of under 9% of income going to the top 1%.

The onset of the Great Recession saw income inequality go down (largely due to the dive in the stock market and its effect on the 1%) more than 5% from 23% in 2007 to 18% in 2009 of total income going to the top 1%. Coming out of the Great Recession income inequality increased by a little over 4% in the first 4 years of Obama's presidency from 18.1% to 22.5%.

I suspect that most of this improvement in income inequality going into recessions/depressions is caused by declines in the values of stocks owned by the 1%. And the initial increase in income inequality coming out of recessions/depressions is caused by increases in the value of those stocks. The real value of the New Deal was that it continued to lower income inequality for decades after 1936 when there were no great depressions or great recessions. And then, of course, we largely abandoned New Deal policies.

How exactly would keeping China out of the trade organization that the rest of the world belongs to

have helped? Would keeping it out have kept it a poor, agrarian country isolated from the rest of the world? Apparently the Chinese army and 'hardliners' thought so and thought such a country would be easier for them to control.

Maybe instead of allowing China to join the WTO we should have gone really 'liberal' on them and imposed a Cuba-style trade embargo on those 'lousy communists'. Maybe republicans were right all these years about the value of trade embargoes. I think not.

And are we to believe that the same WTO that we mistakenly allowed China to join was going to 'protect' us from those dreaded poor Mexican workers if only we had not enacted NAFTA?

And the 'international trade as the cause of all our problems' boogeyman has to explain the fact that our level of trade is 1/2 that of Sweden and 1/3 that of Germany. The problems in Sweden and Germany should be 2 to 3 times worse than they are here if international trade is to blame. They are not. Why not?

Great to hear Bernie praise Krugman and Stiglitz so highly. They would be great cabinet members. n/t

TPP may indeed be bad but imports are a small part of our economy compared to Scandinavian countries

which import 2 to 3 times as much as we do. Bernie has said that he will renegotiate NAFTA (and presumably other free trade agreements). I have not heard the specifics of his renegotiation but I hope it includes labor rights, environmental standards and business regulation.

The United States has a $178 billion goods trade deficit with its 20 free trade agreement (FTA) partners.

And our overall trade deficit in 2015 is $736 billion. We do about 40% (39.5%) of our trade with "FTA partners". 24% of our trade deficit is with them. Our trade deficit is worse with non-"FTA partners" than it is with those 20 partners.

This Bernie supporter won't be 'assimilated' but neither will I hand the country over to Trump/Cruz

and their ideological brethren in a fit of self-destructive pique.

If Syria cannot have a functioning democracy, I can acknowledge that Bashar Assad is the 'lesser of two evils' in Syria. If Bernie does not win the Democratic nomination, I can acknowledge that Hillary is the 'lesser of two evils' in the US. I may not be thrilled in either case, but life is not always about being thrilled with your choices.

No. I think the Western middle class is in the top 80% to 95% globally, not the top 1%.

As liberals, shouldn't we be equally concerned about the other human beings on our planet?

Of course we should. And if we don't, nobody will because conservatives certainly are not going to be concerned with poor people anywhere.

Shouldn't we be willing to share the wealth and the jobs and the industries with other countries and peoples?

Should people with more be willing to share with people who have less? That's a pretty good definition of 'liberal'.

We have been very privileged...and like the silver spoon portion of our society, most of that good fortune has been an accident of birth rather than something we have earned.

Winning the 'birth lottery' (witness the Donald) says a lot about your prospects in life. If you or I had been born in Bangladesh or Nigeria, our life prospects would be significantly diminished.

Trade agreements in spite of their ugly local side effects are good for the worlds populations.

I don't know that it is 'trade agreements' themselves. Few of the really poor countries in south Asia or Africa or the rest of the world have trade agreements with Western countries unless you count belonging to the WTO as a 'trade agreement'.

You could make the case that trade, in general, has contributed to the increasing incomes of the worlds poorest 70%. That would not have surprised FDR. Increased global prosperity was one of the reasons he wanted to promote international trade after WWII.

The problem is not disruption due to trade agreements, it's the failure of the social safety net including job training and housing/food assistance.

True. That is why progressive countries can trade 2 to 3 times as much as the US and have stronger unions and middle classes than the US has. They provide the safety nets, progressive taxes, business regulation, etc. that FDR provided to the US.

We shouldn't be trade isolationists any more than we should be political isolationist.

True indeed. Trump and Cruz are classic republican isolationists like Coolidge and Hoover of the pre-FDR era. They love walls and tariffs; they want to break our international agreements; withdraw from international organizations, etc. Basically they are the opposite of what FDR was trying to accomplish.

And that's the BIG difference between Bernie and Donald on trade.

Donald Trump, another free trade critic in the 2016 presidential race, has vowed to violate the North American Free Trade Agreement and World Trade Organization treaties by imposing tariffs that clearly violate the deals. Sanders, by contrast, has more respect for the conventions of international law. He told the paper that he would maintain the existing deals as he sought to replace them.

"They should be renegotiated," Sanders told the Inquirer. "We have an agreement, legally we have agreement. But they should be renegotiated."

Bernie will renegotiate the agreements - NAFTA, WTO, etc. He respects "the conventions of international law".

Trump will 'rip them up'. He has no respect for any form of international law. He will act unilaterally to "make America great again."

Thank you Bernie.
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