Our friends Giorgio and Gemma, visiting here from Rome, had this impression from a recent trip to New York: workers in New York are scared. Security staff enforced seemingly trivial rules – don’t step across this line – in a way that they couldn’t explain otherwise.
Workers watch you so nervously when they themselves are watched closely and their jobs are insecure. Continue reading
Gravity-defying CEO pay is not a payment for talent. It’s not looting by the executives, either. It’s the outcome of principal-agent relationship in a market where new technologies combined with regulatory dereliction have created a lot of winner-take-all situations.
More of that, and a few links, below. But first, what prompts this Continue reading
Margaret Jacobson and Filippo Occhino of the Federal Reserve Bank of Cleveland provide a nice charting of changes in
* the shares of income going to labor (wages, salaries) and to capital (profits, interest) from 1947 to present, and
* the concentration (i.e., inequality) of income within each share, from 1979 to present.
The data are for the USA. The share of income going to labor has been declining for some time – since 1970 or 1980, depending on which data series you use.
Since capital income is more highly concentrated (most working age adults have labor income, but little or no capital income), an increased capital share produces increased inequality even if nothing else changes. But, also, there’s been increased concentration (inequality) within both the labor and capital shares.
Increased inequality within the labor share is well known. It is also well known that, in the distribution of overall (labor+capital) income, the top 0.1% have seen a much larger growth of their income than the top 1%, who have in turn seen a larger growth than the top 10%; and since those top slices of total income all get large shares of capital income, increased inequality within the capital share is no surprise. It’s nice, though, to see it plotted and explained so clearly.
Despite Sweden’s reputation for equality, the rioting has exposed a faultline between a well-off majority and a minority, often young people with immigrant backgrounds, who cannot find work, lack education and feel marginalised.
…. The gap between rich and poor in Sweden is growing faster than in any other major nation, according to the OECD, although absolute poverty remains uncommon.
A possibly connected fact: Sweden has become one of the world’s few net exporters of intellectual property – one of the big ones along with the US, UK, and France. Thesis: an economy based on intellectual monopoly is one of the major drivers of inequality of income, and reduced social mobility. Continue reading
Nicholas Shaxson and John Christensen have a new book (free PDF here) arguing that specialization in finance, like specialization in oil, is bad for a country. Continue reading
Richard Murphy reports that the OECD’s deliberations on [tax] base erosion and profit-shifting (BEPS) are showing familiar signs of going nowhere. He points to the disproportionate emphasis given to the views of “business” stakeholders – I put business in scare quotes because I doubt that SMEs have much input here, this is going to be mostly the same multi-national businesses who are evading tax in the first place – read the report, and correct me if I’m wrong. So, if you hold a lot of shares in companies that record all their profits in places where they don’t have to pay tax, you can take some comfort. Otherwise, prepare for further austerity.
A few weeks back I linked to this Guardian piece, upbeat about the OECD’s sudden interest in reducing, rather than abetting, corporate tax avoidance. I posted that because it was a nice surprise, coming from the OECD; on the assumption that the OECD acts according to the wishes of its member governments, it seemed to be an indication that, perhaps, the erosion of national tax bases had gone far enough to bring on a serious reconsideration of the ludicrous and growing tax gift that we have all been giving to multinational corporations.
Now Bloomberg has to go and spoil cast doubt on that. They detail the revolving door between the top levels of the OECD’s tax unit and the accounting and legal firms that help corporations minimize their tax payments. And they conclude by noting that the latest OECD tax chief – the new broom Continue reading
Frederick Guy 