Tag: Wealth inequality

Invisible Hands and Brandished Fists: The Three Dimensions of Power

Posted on by Jochen Szangolies

by Jochen Szangolies

If you started saving one dollar every second ever since the first ground was broken at stonehenge, you would now have saved as much as the US loses thanks to tax avoidance by the top 1% of earners per year. Image credit: Priyank V on Unsplash

I have once again been thinking about power, and once again I feel ill at ease with it. Yet while I do consider myself somewhat badly equipped for this pursuit, I nevertheless feel, “in these trying times”, a certain responsibility to not cozy up with pursuits closer to my heart and talents, but invest some portion of my time and ability into examining the mechanisms of control as they are exerted in the world. After all, as before, one may hope that slow and steady going may substitute for knack and knowledge, and perhaps even help those otherwise sidelined to enter the conversation.

The prompt for the present swerve out of my lane was provided by a colleague’s lunchtime question, after the conversation had inevitably landed on the topic of what flavor of future dystopia awaits. “But how,” he started (or nearly enough so), “are the billionaires in their bunkers going to keep themselves in charge?” After all, what’s to stop the armies of servants they depend upon to uphold their lavish lifestyles from just, well, murdering them and taking their shit?

The question invites an immediate followup: what’s stopping us now? Not murdering, as such—but even just applying equal standards to the wealthy stands to free up resources capable of addressing a great many injustices in the world. According to a recent estimate by the US Department of the Treasury, the top 1% of earners dodge about $163 billion in annual taxes. (If you, like virtually everyone, have trouble conceptualizing these sorts of numbers, I find it helps to convert them to time scales: if a dollar is a second, then a million dollars are about eleven and a half days, while a billion dollars are roughly 31.7 years; the avoided sum of taxes then takes us back 5165 years, back to when the first phases of Stonehenge started construction. By contrast, the median US income for a full-time worker is about $63,000, or roughly 17.5 hours.)

Clearly, there is much good that could be done with that sort of money. As a semi-random example, according to estimates it would take from 10 to 30 billion dollars annually to end homelessness in the US, essentially eradicating a major source of suffering. And nobody would have to get murdered—or even unduly inconvenienced: this is money that is already legally owed, simply by having the 1% pay their fair share. Studies project an added revenue of up to $12 dollars per dollar invested in audits of high income individuals. So why aren’t we out there demanding equal treatment for the wealthy? Read more »

Sunday, July 27, 2025

Inheritance Tax Is Largely Irrelevant to the Problem of Economic Inequality

Posted on by Thomas Wells

by Thomas R. Wells

Source

Lots of people think that a few people controlling a very large share of a society’s economic power is a bad thing. It is unfair that some should have so much while so many have so much less. It is inefficient that so much wealth lies in the hands of people who already have everything they could reasonably desire. It gives some people an outsized influence on decisions that affect the whole society, and on democratic politics itself (previously). And so on.

These people often also worry that economic inequality is increasing and becoming entrenched as the rich pass their excessive wealth on to their children and more and more wealth ends up concentrated in ever fewer hands. Many of them think increasing inheritance tax is necessary to stop this. But this solution relies on a mistaken understanding of how wealth is actually transmitted between generations.

Many leftist commentators seem to believe something like the following argument:

Premise 1: Rich people passing on their wealth to their children after they die is an important cause of rising economic inequality

Premise 2: Rising economic inequality is bad

Premise 3: Without higher inheritance taxes economic inequality will continue to rise

Conclusion: Therefore, inheritance taxes should be raised

I accept premise 2, but reject premises 1 and 3 because they are based on significant misunderstandings of how the world actually works. Read more »

Sunday, April 6, 2025

The Ideological Assault on Society

Posted on by Kevin Lively

by Kevin Lively

Helpful information leaflets distributed by the Ad Council in their 1976 campaign to educate the average American.

“-isms” are dangerous things. Weighty ideologies with wide sweeping narratives packed into a neat little bundle, whose slogans are repeated ad-nauseam until the word itself becomes the message and any empirical weight the narrative may have had recedes into the background. Capitalism, Marxism, Constitutional Originalism, Fascism, Liberalism, Socialism, Anarchism, Statism or Nihilism. Thinking in such terms, or worse self-identifying with them, is often the death knell of actual thought. Much more ominously: action in defense of the ideology gains a higher moral prerogative than the consequences of the action itself. The only reasonable course in drawing inspiration from such streams of thought is to choose to consciously grapple with the inherent messiness of the fact that no fixed system of beliefs will ever offer permanent solutions in a human society living on an exponential technological slope. Looking at population growth from a Malthusian perspective, an English lord who died almost a hundred years before the discovery of penicillin, seems almost as daft as criticizing labor relations in China for being Communist, where it doesn’t seem like the workers have much control over the means of production.

A striking aspect of very strong “-ism” people is how they tend to consciously or unconsciously mirror their supposed ideological rivals. For example, one of the best sources of quantitative Marxist analysis on wealth and power in society is the leading business newspaper the Financial Times (FT); with the caveat that all the values are reversed. This point is repeatedly brought up by the hosts of the alternative media outlet Novara Media who alternate between self-identifying as either Socialist or Communist, yet whose diverse roster of guests on their Downstream podcast from across the political spectrum almost all concur that FT is the world’s leading source of news. For college students, maybe these “-isms” are not so dangerous, unless they happen to hold green-cards and their “-isms” run afoul of the present US administration. The real danger to society at large is when people wielding inordinate amounts of power and influence and who, crucially, are unaccountable to the public, are true believers in one “-ism” or another. Read more »

Tuesday, February 4, 2025

What Was So Great About America Again?

Posted on by Kevin Lively

by Kevin Lively

The re-election of Donald Trump has prompted a spectrum of reactions among those who are . . . unenthusiastic . . . at this outcome. One common reaction I’ve observed among progressive friends and those who enthusiastically rather than grudgingly vote Democrat is confusion. Many reactions are understandable: dread about the implications for climate change, concern for the human rights of undocumented migrants in the US, or a low-grade panic over the fact that the Supreme Court has literally vested the office with immunity against legal persecution for assassinations, although apparently Obama’s assassinations of US citizens get a pass. Confusion, however, is only explicable as a consequence of a media ecosystem which rarely manages to coherently discuss many of the serious issues in American society, and crucially the role of policy choices by the government under both Democratic and Republican leadership which either failed to address or directly exacerbated these problems.

As any very stable genius glancing at a red hat in public can tell you, the appeal which won Mr. Trump his first democratic victory is ultimately rooted in nostalgia. But nostalgia for what exactly? Was American really greater in the past than it is now? And if so what changed and why?

Well this is a layered question. There is of course the obvious fact that for a non-negligible share of Trump voters this nostalgia is rooted in a time before the Civil Rights Act extended de jure if not de facto equal rights to non-white, non-christian, non-heteronormative non-men. If nothing else one can look at the day one rescinding of Diversity, Equity, Inclusion and Accessibility programs across the federal government and its contractors as an appeasement to that crowd. However, while this discrimination is indisputably a crucial aspect of American society and will continue to severely negatively affect human rights in the US, it is also not the only reason for Trump’s election. This in evidence from the increases Trump made among non-white voters, although the total numbers are still biased towards white men.

For the moment however, I do not want focus specifically on the very important issue of racism and discrimination, and instead look to other causes for support for Trump, although the USA being what it is, it will still permeate the discussion. Let’s start with the short term. Assuming there was a modicum of greatness in Trump’s first term we can look to an April 2024 New York Times / Sienna poll for what voters remembered about 2017-2021. Read more »

Monday, August 7, 2023

Let the Unrigging Begin

Posted on by Jerry Cayford

by Jerry Cayford

The rigged rules that govern our economy are being rewritten right now. And the fight is fierce. “The most powerful agency you’ve never heard of” (as the media calls the Office of Information and Regulatory Affairs) is revising its main guidance telling federal agencies how to structure regulations. That is, OIRA is rewriting the rules that federal agencies must follow in writing their own rules that govern the industries they regulate.

What makes this rulemaking earthshaking is that the people doing it are trying to unrig decades of rigged rules, and getting pushback from powerful players. The magnitude of the stakes can be seen in the public comments on OIRA’s revision of its guidance, Circular A-4. It’s complicated, obviously, but there is one point on which everything else turns—OIRA’s most controversial and consequential proposal. I am going to explain that central point.

Here is a thumbnail. Agencies are required to use Cost–Benefit Analysis (CBA) to justify their regulations as increasing overall social welfare. A huge contributor to the rigged rules in our society is that this formally mandated Cost–Benefit Analysis has a logical fallacy at its core that systematically favors the wealthy: it defines social welfare as increased by more total wealth (productivity), regardless of who gets the money. This definition of welfare forces federal agencies to design their regulations to maximize wealth, which inevitably favors those who already have it, for many reasons that I throw together under the adage “It takes money to make money.” Think of wealth production as an industry with economies of scale and barriers to entry.

The new proposal changes the rules. It tweaks CBA to weight the dollars a policy generates according to who gets them (and who pays them), instead of just counting the total. It is not a new idea, but it is a radical one, and the hornets’ nest is buzzing. Read more »