Ten facts you should know about global economic inequality

On this blog, I will mostly concern myself with economic inequality in America. But economic inequality is also an important global phenomenon, so from time to time, I will cover the subject from an international perspective, as well. In that spirit, I'd like to share some basic facts about inequality as it exists on the global level.

1. It's very, very difficult to measure global economic inequality.

One vexing feature about global economic inequality is that it is very hard to measure it . There is no single, standard global household survey that asks people about their income. There are individual national surveys that each country conducts, but those can vary in quality, and questions and methodologies are not standardized. There is also the question of what counts as income: how is the income of subsistence farmers recorded, for example? And does health insurance -- a free and universal social benefit in some countries, part of a private employee benefits package in others -- count as income?

Also, people tend to be notoriously bad at recalling the precise amount of their income (this is especially understandable if your income is in a form other than regular wages). Additionally, both the rich and the poor tend to be underrepresented in these surveys, and many surveys lowball rich peoples' income because they cap the maximum amount disclosed (this is known as topcoding). Finally, there are the problems of currency conversion and reconciling all the household surveys from all the different countries.

Two of the most important data sources for economic inequality studies are the Luxembourg Income Studies and the World Bank. Both these sources have developed methods to harmonize international data. The Luxembourg data consists of a relatively small number of wealthy and middle-income countries, but its data is in-depth. The World Bank covers many more countries, but the data available is not as rich.

No dataset is ever perfect, but it's good to remember that where global inequality is concerned, data quality and survey methodology are even more problematic than usual. See this paper for an excellent discussion of the issues involved.

2. The most popular way to measure economic inequality is with an indicator called the Gini coefficient, with bigger numbers indicating more inequality.

The most popular tool developed by researchers to measure economic inequality is an indicator called the Gini coefficient. I will be going into the technical details of the Gini coefficient in a future post. For now, the most important thing to remember is that the Gini is a number between 0 and 1. 0 represents a condition of perfect equality in which every citizen of a country has the same income, and 1 is a condition of perfect inequality in which one person has everything. In the real world, the Gini coefficients for various countries have ranged from the low .20s to the low .70s -- or, as is the conventional way of saying it, from the low 20s to the low 70s.

3.  Latin America is the most unequal region in the world and the Nordic and central European countries are the most egalitarian, while the is U.S. is among the most unequal developed countries in the world.

How do the various countries and regions of the world rank, in terms of inequality? According to inequality expert and World Bank economist Branko Milanovic, the most unequal countries include South Africa and Brazil, with Gini coefficients in the 60s; the most egalitarian nations are the Nordic countries (Denmark, Norway, Sweden) as well as Slovenia and the Czech Republic, which boast Ginis in the mid-20s. Latin America is the most unequal area of the world, with a Gini that's rarely under 50 points. Africa is almost as unequal, followed by Asia. The least unequal groups of nations are the rich countries (Western Europe, North America, Australia and New Zealand) and post-communist countries, with two major exceptions: the United States and Russia. Both the U.S. and Russia have Ginis over 40, as does, by the way, China.

4. Economic inequality at the global level is significantly higher than economic inequality is within any individual country.

Today, the Gini coefficient for the entire world is about 70, a number that is higher than it is in any nation. The richest five percent of people in the world have 37 percent of the world's income, while the poorest 5 percent have a shockingly low 0.2 percent of global income.

5. Global inequality rose rapidly from the Industrial Revolution through the end of World War II, then plateaued at an extremely high level, where it's remained ever since.

If it's difficult to measure global inequality even today, you can imagine what a formidable task it must be to map the trend historically. Nevertheless, attempts have been made. As best as we can determine, with the beginning of the Industrial Revolution, global economic inequality began to rise rapidly. It continued that rise until after World War II. For the past 50 years or so, it's hovered around around the same very high level, changing very little.

Inequality journalism: my favorite essays and articles of the year

On one of my listservs, we were discussing some of our favorite essays and long-form pieces of journalism from 2013. I thought I'd share my favorites on this blog; the only catch is that I'm only going to list those articles that in some way touch upon the subject of economic inequality, broadly defined. I'm sure there's plenty of great stuff I've missed, but these are some of the pieces that I did happen to catch and enjoy.

But first, a warning: as I started compiling these, I realized that if you're a fragile soul and you start binge-reading them, they may land you in slit-your-wrists territory. Yes, they are that depressing -- at least, most of them are. Kevin Drum's article is not; it's about how the crime rate has fallen dramatically, and may fall further still, if we enact sane lead abatement policies. And the Katie J.M. Baker piece is downright inspiring -- you'll want to move to Denmark, permanently.

But that's kind of the point. The rest of the pieces make America look like a hellhole, a dystopic nightmare from which you wake screaming. Maybe your best plan might be to read them on New Year's Eve during the day, and then go out during the evening and drink yourself blotto to forget.

Kevin Drum, "America's Real Criminal Element: Lead," Mother Jones, January/February 2013 - Kevin Drum takes you through the research and makes a compelling argument that the reason why crime rates have fallen significantly over recent decades is the declining exposure to lead. I believe he has a strong case -- I certainly don't know of another explanation that sounds this plausible and that is a better match to the data.

Rebecca Solnit, "Diary: Google Invades," London Review of Books, February 7, 2013 - A sharp-eyed and sobering personal essay about how the tech boom is destroying the social fabric of San Francisco. This is economic inequality in action, and it ain't pretty.

Haley Sweetland Edwards, "He Who Makes the Rules," Washington Monthly, March/April 2013 - Edwards' scrupulously reported piece about how Washington’s byzantine rule-making process was exploited by Wall Street lobbyists, all but gutting Dodd-Frank. This is how the sausage is made, folks. It's the single best explanation I've read about why and how financial elites continue to dominate our democracy.

Jonathan Cohn, "The Hell of American Day Care," The New Republic, April 15, 2013 - America's scandalously underfunded and under-regulated child care system doesn't serve anyone particularly well, but it's particularly brutal on poor folks. Devastating and heartbreaking.

David Graeber, "On the Phenomenon of Bullshit Jobs," Strike! Magazine, August 17, 2013 - Once, economists and social theorists predicted that in the future, people would enjoy ever-expanding quantities of leisure time and a 15-hour work week. What happened? According to David Graeber, bullshit jobs are what happened. Bullshit jobs are pointless jobs that do not actually need to be done and have no benefit to society. Think: lobbyists, public relations flacks, telemarketers, legal consultants, etc. Moreover, "there seems a general rule that, the more obviously one’s work benefits other people, the less one is likely to be paid for it." This is one of the most insightful and provocative essays I've read in years.

Monica Potts, "What's Killing Poor White Women?" The American Prospect, September 3, 2013 - Researchers have found that, in recent years, unlike every other demographic group in America, the least educated white women have experienced declining longevity -- they've lost a shocking five years from their life span. Moreover, no one knows quite why. Monica Potts talks to researchers and explores various theories; she also interviews poor women and their families. The result is a first-rate piece of journalism that combines empathetic observation and penetrating analysis.

Katie J.M. Baker, "Cockblocked by Redistribution: A Pick-up Artist in Denmark," Dissent, Fall 2013 - An American "pick-up artist" goes to Denmark to hit on women, but keeps getting humiliatingly shut down. Why? It seems that Danish women, empowered by feminism and a robust social democracy, have no tolerance for his sleazy come-ons. Perhaps the single most satisfying piece of journalism I've read all year.

Ann Friedman, "All LinkedIn With Nowhere to Go," The Baffler No. 23, 2013 - Friedman's witty skewering of the popular social media site for desperate job-seekers unmasks it as that ancient American capitalist standby: the aspirational, if futile, self-help project.

Andrea Elliott, "Invisible Child," The New York Times, December 9, 2013 - The Times' heartrending series achieves a feat that is vanishingly rare: it gets inside the head of a person who, in the normal course of events, is completely marginalized and made invisible in our society: a homeless child. A major piece of journalism about an utterly failed public policy and a morally bankrupt mayoral administration.

Walmart -- those bastards!

Folks, right now I'm working a longer post about a different topic, which I won't get around to posting until tomorrow. And on this blog, I will have much, much more to say about Walmart and its impact on wage inequality in the weeks and months to come.

But for now, please read this recent story from Bloomberg Businessweek about the retail giant's latest shenanigans, and kindly note the following points:

1. First, Walmart pays its workers poverty-level wages. But of course!

2. Next, they cobble together a "charitable" organization called "Associates In Critical Need Trust" (ACNT). The ostensible purpose of said organization is to pressure their marginally better off employees into contributing to a charitable fund to help Walmart workers who are impoverished. Because you know Walmart -- they're all heart!

Let's be clear here: contributions hardly seem voluntary. “We’re going to be relentless in encouraging participation," said one corporate memo.

3. Only it turns out that the ACNT is actually an elaborate scam -- little more than a money-laundering scheme to funnel donations to "pro-business" political candidates

4. Finally, to square the circle for you, and translating Walmart-ese into plain English:  "pro-business" means anti-worker -- most notably, these days, anti-minimum wage. The article even mentions the minimum wage as the issue Walmart has been "most vocal" about.

And so, to summarize: Walmart strong-arms its employees into contributing to a so-called "charity" for impoverished workers. But this alleged charity is actually a slush fund for political candidates who will vote for policies -- such as a lower minimum wage -- which will make those workers even more destitute. It's pure evil genius!

Walmart, of course, doesn't so much as bat an eyelid about any of this. The article quotes the usual kool-aid-chugging Walmart flack burbling the standard Walmart happy talk about how the ACNT is "a great way for people who contribute to the PAC to also do good for fellow associates."

But there are also hints that even the sleepy FEC might not be so amused. And the sleaziness of the ACNT scam is so repulsive that even one of Walmart's former employees expressed "discomfort" with it, according to the article.

I have written about Walmart before, and suffice it to say, I will write about it again. It is the modern American Leviathan, our corporate heart of darkness. How much more dark could Walmart be? The answer is none. None more dark.

Inequality Christmas songs

Readers, I apologize for neglecting this blog of late. The demands the holiday season, not to mention life, have pulled me away from my duties here. Also, those of you who follow my work at the Washington Monthly know that I was writing up a storm there over the weekend. My most significant inequality-related post there was this one, about a new report that shows that unions help women at all education levels achieve higher pay and better benefits than their non-union counterparts.

On this Christmas Eve, I wish all of you happy holidays, merry Christmas, a joyous Kwanzaa, a most excellent Festivus, and/or a fun and delightful whatever-you-are-having. Christmas came early for me this year in the form of reader contributions to this blog, for which I thank you all profusely. I am touched by your generosity. I've used some of the money to buy books about inequality, which I will be reading and discussing here.

Moving on to the theme of this post . . . When I was thinking about Christmas music recently, it occurred to me that inequality was a subject of a number of classic and contemporary Christmas songs. With that in mind, I decided to put together a compilation of some of my favorites. I hope you enjoy them.

1. Martha Wainwright, "Rebel Jesus," lyrics here

I'm generally not a big fan of Jackson Browne, but he's written at least one great song, and this is it. It's a Christmas song that, in the manner of the great Pasolini film The Gospel According to St. Matthew, reclaims Jesus Christ as a radical and champion of the poor.  I don't know if Pope Francis has heard this song, but I have a feeling he'd love it. This recording is from the excellent Christmas album The McGarrigle Christmas Hour.


2. The Kinks, "Father Christmas," lyrics here

A song that combines Christmas and class consciousness by one of the greatest rock bands in history. What's not to like?


3. Woody Guthrie, "1913 Massacre," lyrics here

Okay, this is hands-down the most grisly and horrifically depressing Christmas-themed song ever. It was written by Woody Guthrie about a historical event known as the Italian Hall disaster. In Calumet, Michigan on Christmas Eve in 1913, over 500 striking copper miners and their families gathered together at the Hall for a holiday celebration. At some point during the evening, someone falsely yelled "fire," and in the ensuing panic to exit the building 73 people -- 59 of them children -- were trampled to death.

Exactly why this happened has long been disputed. The version believed by many labor supporters, and the one Woody Guthrie tells here, is that the person who yelled "fire" and caused the stampede was an anti-union thug. Recent scholarship lends support to this interpretation, but we may never know for sure.


4. Mel Tormé, "Good King Wenceslas," lyrics here

A number of traditional Christmas carols mention the poor, and the virtue of caring for the poor. This one is based on the legend of a historical king and saint -- King Wenceslas I, who reigned in Bohemia (the modern-day Czech Republic) in the tenth century. The music for this carol is from the 13th century. The lyrics, which are Victorian, concern the titular king's journey through harsh winter weather so that he can donate alms to a needy peasant. The moral of the song is spelled out in its closing lyrics, and it couldn't be clearer:

Therefore, Christian men, be sure,
wealth or rank possessing,
ye who now will bless the poor
shall yourselves find blessing

It's not an especially radical message, to be sure -- merely a blend of traditional Christianity and old-fashioned noblesse oblige. And yet I'm sure the Tea Partiers and Ayn Rand fanboys would shriek about how this is a message that punishes the job creators, encourages the undeserving poor, and turns the safety net into a hammock. But they would, wouldn't they?

There have been countless recordings of this song, but I'm particularly fond of this jazzy one by Mel Tormé, whose singing here smooth-as-silk as ever. It's a bit goofy, and yet somehow it works.

5. The Roches, "Here We Come a Caroling," lyrics here

This song is 19th century in origin. It was one of the Christmas carols that poor people, beggars, and orphans would sing as they went door-to-door to the houses of the well-to-do. In exchange, they would often be offered a bit of food or drink, or a penny, or sometimes just the opportunity to warm themselves by the fire. You hear references to those things in the lyrics: "Bring us out a mouldy cheese/And some of your Christmas loaf" and "Pray think of us poor children/Who wander in the mire."

This version of the song is from what is perhaps my favorite Christmas album ever, The Roches' We Three Kings.


6. Brian Wilson, "We Wish You a Merry Christmas," lyrics here

Another of the caroling songs, this one is goes back to the 16th century. However, "We Wish You a Merry Christmas" seems a good deal less polite than "Here We Come a Caroling." Am I wrong to detect menace in the "We won't go until we get some" refrain? This is a song that certainly seems to bring out the subversive and carnivalesque potential of this holiday.



7. Steeleye Span, "Gower Wassail," lyrics here

My final next-to-last selection is another caroling song. Apparently, the "Gower Wassail" is a traditional Welsh folk song; the English folk rock band Steeleye Span recorded this version of it in 1971. Rarely do I have any patience whatsoever for rock songs with medieval pretensions -- I associate this genre of rock with Spinal Tap-type ridiculousness. But this song is one case where a rock band's cover of an (apparently) medieval folk song actually works. The guitars and pounding drums lend a propulsive tension and urgency to the song. This heightens the drama and desperation illustrated by lyrics such as "we poor wassail boys so weary and cold" and "And if we survive for another new year."


 8. (Added) James Brown, "Santa Claus Go Straight to the Ghetto," lyrics here

A reader reminded me of this one, which I'd forgotten about. I shouldn't have. James Brown riffs on the racial politics of Santa Claus.
 


Have a wonderful holiday, everyone! And while you're sitting at the dinner table scarfing down turkey or Chinese food or whatever your ritual Christmas feast is, ponder this: it's not only these, and other, Christmas songs that deal with inequality. Some of the most enduringly popular Christmas-themed films and novels -- It's a Wonderful Life, A Christmas Carol -- also center on this theme. There's a clear sense that Scrooge and Mr. Potter have too much, and the Cratchits and the citizens of Bedford Falls have too little.

Why is that, do you think? Inequality is hardly a new concern. People have long cared deeply about this subject and been troubled by it. They may not have identified it as "inequality," per se. And they may have believed the solution to the problem to be personal or spiritual rather than political. Research shows that human beings have a strong preference for economic fairness. Throughout history, economic inequality been a central human concern -- no matter how energetically some people may try to convince you, and perhaps themselves, that it doesn't matter.

Your assigned reading for today: a brilliant New York Times series about a homeless child in the most unequal city in America

On this blog, I will frequently writing about about economic inequality in an abstract sense. I'll be reporting on about social science studies about inequality, and focusing on technical issues like research methodology, or how inequality is measured, and the like. That approach to this subject is important. The technical tools of social science can be powerful, and they enable us to examine subjects like inequality in a more rigorously analytical fashion.

But at the same time, I also think it's essential to understand the subject of inequality at a granular level. What that means, ultimately, is shining the spotlight on individual people and their stories. Statistics are important, but statistics don't get people where they live. As Stalin allegedly said, "The death of one man is a tragedy. The death of millions is statistic." That's why stories are so important. Stories are how human beings make sense of the world. As someone once said to me, "stories are data with soul."

So today, I want to a focus on a data point named Dasani.

Dasani is an 11-year old homeless girl who lives in New York City. She is the subject of a stunning five-part series that appeared in the New York Times last week. I strongly encourage you to read all five parts. Almost never does American media even acknowledge the existence of people as poor and marginalized as Dasani, let alone when they're children, so an in-depth portrayal of such a person is extraordinary. Dasani's life story is heartbreaking, and the living conditions she was forced to endure are enraging. For three years, Dasani and her family lived in a homeless shelter in Fort Greene, Brooklyn. Fort Greene, as reporter Andrea Elliott notes, is a neighborhood where "the top 5 percent of residents earn 76 times as much as the bottom quintile." Here's what things were like at the place Dasani and her family called home:

City and state inspectors have repeatedly cited the shelter for deplorable conditions, including sexual misconduct by staff members, spoiled food, asbestos exposure, lead paint and vermin. Auburn has no certificate of occupancy, as required by law, and lacks an operational plan that meets state regulations. Most of the shelter’s smoke detectors and alarms have been found to be inoperable.

[Snip]

Inside, prepackaged meals are served in a cafeteria where Dasani and her siblings wait in one line for their food before heading to another line to heat it in one of two microwaves that hundreds of residents share. Tempers fly and fights explode. The routine can last more than an hour before the children take their first bite.

The Dickensian squalor of the shelter is a direct result of the homeless policies enacted by New York's billionaire mayor:

Yet Dasani’s trials are not solely of her parents’ making. They are also the result of decisions made a world away, in the marble confines of City Hall. With the economy growing in 2004, the Bloomberg administration adopted sweeping new policies intended to push the homeless to become more self-reliant. They would no longer get priority access to public housing and other programs, but would receive short-term help with rent. Poor people would be empowered, the mayor argued, and homelessness would decline.

But the opposite happened. As rents steadily rose and low-income wages stagnated, chronically poor families like Dasani’s found themselves stuck in a shelter system with fewer exits. Families are now languishing there longer than ever — a development that Mr. Bloomberg explained by saying shelters offered “a much more pleasurable experience than they ever had before.” [italics mine]

Could you ever get welfare-hating Americans to start voting like Danish social democrats? A new study suggests it may be easier than you think

The other day, I wrote a post that argued that Americans' attitudes about poverty have been shaped by deep-rooted social attitudes about the "deserving" (hard-working but unlucky) vs. the "undeserving" (lazy and unmotivated) poor. But are national opinions about welfare really set in stone? Recently I stumbled across a surprising new study (H/T Henry Farrell at The Monkey Cage) suggesting that national attitudes about welfare may be far more malleable than anyone had realized. All that's needed to change people's minds, apparently, are a few sentences that prompt them to consider a different baseline assumption.

The study in question was conducted by Danish political scientists and will be published in the peer-reviewed academic journal, Journal of Politics, this month. The authors examined the contrasting social welfare attitudes of Americans and Danes. Citizens of these countries have sharply divergent default assumptions about welfare recipients -- Americans are far more likely to see them as undeserving ("lazy"), while Danes tend toward the opposite view. However, the researchers found that if citizens are given information that challenges their default assumption, their attitudes change.

The authors note that previous research suggests that respondents' beliefs about the "deservingness" of welfare applicants are a strong determinant of their overall attitudes about social welfare policy. This finding applies across cultures, to social democracies with strong social welfare systems like Denmark as well as nations with far more limited public assistance, such as the United States:

[S]tudies in political science have found that social welfare is rejected for recipients perceived as lazy but supported for recipients perceived as unlucky across highly different countries (see, e.g., Oorschot 2000; Petersen 2012; Petersen et al. 2012). In one large analysis, for example, Petersen et al. (2012) showed the existence of a positive correlation between laziness perceptions and welfare opposition in 49 out of 49 studied countries from around the world (including the United States, Peru, Germany, Russia, South Korea, Australia, and Nigeria), and the correlation was significant at conventional levels in all but a single country. According to research on the deservingness heuristic, people across cultures are against providing welfare to those who are unwilling to invest effort to improve their circumstances (“the lazy”) but are supportive of welfare benefits to those making an effort and trying but failing due to forces beyond their control (“the unlucky”).

The authors decided to compare welfare attitudes in the United States and Denmark because of the sharp contrasts between the two countries in their social welfare states and the variables that gave rise to them:

We focus on the United States and Denmark as our sites of study, as these two countries differ substantially on all of the factors that previous research has deemed important in explaining cross-national differences in welfare state support: the structure of welfare state institutions, degree of individualism, and levels of ethnic homogeneity.

They surveyed over 1,000 subjects in each country. Not surprisingly, they found that while Americans are more likely to have negative stereotypes of welfare recipients ("lazy"), the Danish stereotype is that those on welfare are unlucky victims of circumstance.

But the researchers also discovered that when respondents of both countries were provided with information about a hypothetical welfare recipient that challenged their respective stereotypes, their views on welfare policy changed -- dramatically:

Thus, when the man on social welfare is described as lazy, both the American and Danish respondents alike are predominantly opposed to granting social welfare, and there is no significant effect of country (b = .03, p = .182). Likewise, when the man on social welfare is described as unlucky, both the American and the Danish respondents are largely in favor of granting social welfare, and again there is no significant effect of country (b = ‒.01, p = .645).

How the filibuster is helping to create economic inequality

At the Washington Monthly today, I've written a post about a fascinating subject: how the U.S. senate's filibuster has helped create economic inequality. There's a new political science study on the subject, based on data between 1940 and 2006. The authors find that the use of the filibuster, as well as Congressional inaction generally, is associated with increases in economic inequality. The reason? The filibuster helps create a "status quo bias" -- in other words, nothing getting done, no legislation passed that might ease inequality. The filibuster is just one of many countermajoritarian veto points in our political system which makes change difficult -- and conservative do-nothingism more likely. Do read my entire post for more.

Why Ezra Klein is wrong, and Paul Krugman is right

Readers, this weekend, I'm blogging at the Washington Monthly. Among my posts there today is this one, in which I briefly make the case as to why economic inequality as, in President Obama's words, "the defining issue of our time." Ezra Klein has been arguing that economic inequality isn't all that important. Paul Krugman begs to differ, and so do I. Check it out. And while you're at it, have a look at Brad DeLong's, Dean Baker's, Jared Bernstein's, and Steve Randy Waldman's responses as well.

Poverty myths, busted: how the vicious backlash against an essay that went viral illuminates how little most Americans know about being poor

What does a poor person look like to you? When you try to imagine a poor person, do you see an inner city African-American single mother who dropped out of high school? Or perhaps, do you envision a poor, white, Southern, female-headed family living in a trailer park?

Whatever you picture, you most likely have a few strong impressions about this mythical poor person in your head. You believe that this person has been mired in poverty all her life and is likely to remain there. You believe that she has little formal education and no stable work history. Most strongly of all, you believe that there is a clear dividing line between being the conditions we label "poor" and "not poor." There is the poor person who has always been poor and has never had access to any kind of advantages. And then there is you and your (possibly) privileged existence, who has (perhaps) never missed a meal or worried about paying a bill. Never the twain shall meet.

The reality of poverty, however, is very different, and a recent internet controversy offers an excellent opportunity to explore that. Last month, this stunning essay by blogger Linda Tirado about what it's like to be poor struck a nerve, and went viral. (Another great, painfully hilarious internet piece on this theme, by Cracked's John Cheese, can be found here). The essay had grown out of a comment Tirado left on a Gawker thread. It was featured on Jezebel and on the Huffington Post's front page, where it was shared like wildfire. When readers offered to contribute to a fund so she could start a book, Tirado started a GoFundMe page for that purpose, which eventually raised over $60,000. She also signed with a literary agent.

And then, a very disturbing, very ugly backlash kicked in.

Michelle Goldberg has documented the viciousness at The Nation. As Goldberg reports, "the new story" about Tirado "is that she’s nothing but a middle-class fabulist preying on naïve and guilty liberals." Tirado has received death threats and been denounced as a hoaxer by outlets like CNN and the New York Times. Yet she is nothing of the sort.

Though she's not poor now, she has experienced spells of real poverty, and Goldberg has seen the records (court documents about her eviction and records of her Medicaid and WIC enrollment) that prove it. Tirado blames a combination of circumstance and her own bad choices for her economic situation.  “Nobody gets to where I am without a mix of bad luck and bad calls,” Goldberg quotes her as saying.

Someone who, like Tirado, needs to work two jobs to keep herself and her family (just barely) afloat would appear to be working poor by definition -- even if, technically, Tirado's household income placed her well above the poverty line.

So why did some people react so angrily to Tirado, and believe she was somehow scamming them, or lying about being poor? Why couldn't they see a poor person when that person was staring them right in the face?

I believe it has a lot to do with certain misconceptions we have about poverty in this country. Therefore, I'd like to take the opportunity that Tirado's story provides to dispel some popular myths and misconceptions about poverty.

Myth #1: "Linda Tirado grew up middle class, and she's held good jobs in the past. How could she possibly end up poor?"

This ignores the fact that downward mobility is a very real, and very disturbing, problem in America today. A recent study by the Pew Charitable Trusts found that:

A third of Americans raised in the middle class—defined here as those between the 30th and 70th percentiles of the income distribution—fall out of the middle as adults.

The Pew study also found that white women are far more likely to become downwardly mobile than white men.

Conservatives and the minimum wage: still lying after all these years! Plus: wonkeriffic discussion about why the minimum wage does not cause job loss!!

In recent weeks, there has been a lot of talk, and even some action, on one of the most powerful policy tools we have in this country for reducing economic inequality: the minimum wage. See, for example, these columns and blog posts by Arindrajit Dube, Paul Krugman, Jared Bernstein, Brad DeLong, and me, all of them published within a day of each other last week. (Yes, we all got the memo. Clearly, the vast left-wing conspiracy is nothing if not well-organized!). In his speech last week on economic inequality, President Obama expressed strong support for raising the minimum wage.

Even more encouraging are the recent victories for minimum wage increases at the state and local level in places like California, New Jersey, D.C.,  Albuquerque, and Sea-Tac, Washington. Minimum wage campaigns are also active in other cities and states and at the federal level as well. Many of those state and local victories came about through direct initiatives at the ballot box. You see, people really like the minimum wage. It's an issue that consistently polls very well. A Gallup poll released last week found that 76 percent of Americans support an increase in the minimum wage from its current level of $7.25 an hour to $9 an hour. UPDATE: And none other than the Wall Street Journal reports that 63 percent of Americans support a $10 minimum wage.

You know what this means, don't you? Of course you do.

It means the wingnuts will be shrieking and rending their garments about how increasing the minimum wage will throw the country into Great Depression-level rates of unemployment.

And here they come, right on schedule!

Just in the last week, we've seen the following shameless exercises in bogusity: the Heritage Foundation said that raising the minimum wage would "limit the number of jobs available." A top executive at White Castle claimed that such a raise would lead to layoffs. Right-wing economist Douglas Holtz-Eakin argued that increasing the minimum wage "impedes job creation." The Wall Street Journal even charged that there are "mountains" -- did you hear what I said, mountains! -- of evidence that  "minimum wages lead to fewer workers hired." Finally, the Washington Post's ever-delightful Jennifer Rubin -- where do they find these people? -- tweeted that President Obama's inequality speech "suggests he's economically illiterate" and linked to this anti-minimum wage screed by the American Enterprise Institute.

It's time to bring in Kathy Bates, who has something to say about the claim that raising the minimum wage leads to job loss:


Kathy, by the way, is going to be a regular feature of this blog. She will be showing up every time I'm debunking some bullshit claim related to economic inequality. That means she's going to be around quite a lot.

(The above clip is my very favorite moment thus far from this season of American Horror Story: Coven. You do know that American Horror Story is a blast and a hoot and the best, not to mention the gayest, show on TV right now, right?)

Okay, back to the minimum wage.

Why you should care about economic inequality -- and why Americans seeking to live the American dream should go to Denmark

Below is a TED Talk by British academic Richard Wilkinson about how economic inequality harms societies. Like all TED Talks, it's less than 20 minutes, and it only covers the basics. Nevertheless, it provides an excellent introduction to the topic of why you should care about economic inequality, a subject I'll be covering in far greater depth in subsequent posts on this blog.

A few days ago, someone on Facebook asked me just this question. He wondered why anyone should care about inequality -- if we just deal with poverty, isn't that enough? Putting aside for the moment that societies with high poverty rates tend to have high rates of economic inequality as well, and that it can be hard to attend to one of those problems without attending to the other, Wilkinson's talk helps answer my Facebook friend's question.

Wilkinson makes a couple of points well worth emphasizing:

-- Somewhat surprisingly, research shows that economic inequality hurts not only those at the bottom and middle rungs of the economic ladder, but those at the top as well.

-- It doesn't seem to matter much how a society gets to economic equality -- whether it's through a more compressed pre-tax wage structure or post-tax income transfers. Regardless of the policy mechanism it takes to arrive at equality, once a society is relatively economically equal, it tends to perform well on a host of social indicators.

-- Perhaps the most fascinating part of this talk, to me, is when Wilkinson talks about why it is that unequal societies seem to suffer from far higher rates of social pathologies than their more egalitarian counterparts. According to Wilkinson, in unequal societies people live in a state of anxiety about constantly being judged, respected or disrespected, rated as inferior or superior according to their attractiveness, smarts, wealth, etc. This breeds psychosocial insecurities that are a recipe for societal dysfunction.

-- Finally, I liked his quip that,"If Americans want to live the American dream, they should go to Denmark." Indeed.


UPDATE: Honesty compels me to report that Wilkinson's social science methodology has been seriously called into question. I've ordered the book and will read it for myself, but based on an initial perusal, Saunders' critique looks persuasive.

Must-read of the day: New York Times op-ed, "What Obama Left Out of His Inequality Speech: Regulation"

I noted several major sins of omission in President Obama's big economic inequality speech this week. But one thing I didn't emphasize nearly enough was Obama's neglect of an extremely important contributor to rising inequality: the revival of militant laissez-faire ideology and the war on government regulation.

In today's New York Times, there's a splendid Opinionator column by law professor Thomas O. McGarity on this topic titled "What Obama Left Out of His Inequality Speech: Regulation." It's a refreshingly plain-spoken piece. In it, McGarity writes:

History tells us that in periods when protective governmental institutions are weak, irresponsible companies tend to abuse their economic freedom in ways that harm ordinary workers and consumers. The victims are often less affluent citizens who lack the power either to protect themselves from harm or to hold companies accountable in the courts. We are in such a period today.

McGarity says that this although the anti-regulation movement portrayed itself as a grassroots mass movement, from the start it was a stone astroturf hustle:

It also took the determined efforts of a relatively small number of philanthropists and academics to create what I call an “idea infrastructure” around minimalist regulation, popularizing that ideology and persuading Congress, the executive branch, and the courts to scale back constraints on corporations.

Corporate activists — responding in part to a call to action by William E. Simon, a financier and architect of the modern conservative movement, who served as Treasury secretary under Presidents Richard M. Nixon and Gerald R. Ford — devoted tens of millions of dollars to the creation of right-leaning think tanks, media operations and free-enterprise centers in academia, as well as lobbying and public relations firms and “grass-roots” (but actually business-financed) organizations.

Three major things happened as a result of this decades-long deregulation fiesta:

1. Regulatory agencies were severely weakened. Their powers were diminished, their budgets were slashed, they were woefully understaffed, and frequently, the staff that remained were suspiciously cozy towards the interests they were supposed to be overseeing:

But they were remarkably successful in disabling the institutions charged with establishing the rules of responsible corporate behavior and with holding irresponsible companies accountable for breaking those rules. By the mid-2000s, those resource-starved federal agencies that had not become thoroughly captured by the industries they regulated were at best reluctant regulators.

2. Because of the lack of proper regulation, an awful lot of people were needlessly injured, got sick or died:

The deadly oil refinery explosion in Texas City, Tex., in 2005, the financial sector meltdown of 2007-8, the Upper Big Branch mine catastrophe in West Virginia and the Deepwater Horizon oil spill, both in 2010, multiple disease outbreaks because of contaminated peanuts, eggs, hamburgers and seafood, and dozens of motor vehicle and toy recalls were just a few of the visible consequences of the laissez-faire mentality that has pervaded the American political economy.

Link round-up for 12/7/13

While I'm working on a long post, here are some interesting inequality-related links for you to read:

-- An informative article from South Africa's Post newspaper, "Inequality Imperils Mandela's Legacy;"

-- "By George, Britain's Austerity Experiment Didn't Work!" -- the New Yorker's John Cassidy reveals all;

-- In the American Prospect, Catherine Ruetschlin explains why "Yes, McDonald's Can Do Better" (pay higher wages, that is);

-- For Salon, Gary Cohn reports on the California Chamber of Commerce's "job killers" list, a propaganda campaign that has been disturbingly effective in blocking pro-labor legislation -- even though none of its "the sky is falling" predictions ever come true;

-- Working In These Times' Michelle Chen covers labor action at Starbucks;

-- And finally, Scott McLemee reviews the 50th anniversary edition of a classic work of history: Walter Nugent’s The Tolerant Populists: Kansas Populism and Nativism. Populism was a fascinating American political movement that, says Nugent, proposed reforms “to use the government as an instrument on the people’s behalf, rather than on behalf of special interests, monopolies, unregulated banks and other corporations, and (to use today’s term) the one percent.”

The tragedy of South Africa: racial apartheid fell, economic apartheid rose

As a revolutionary, the late Nelson Mandela was somewhat unusual in that he was both a liberal and a leftist. Today, we remember, and celebrate, the liberal elements of Mandela's philosophy and leadership: Mandela the champion of democracy and human rights. But Mandela had also been a man of the left; politically, he was a democratic socialist. Ultimately, the liberal part of his legacy proved to be far stronger than the democratic socialism.

By the time he was elected president in 1994, however, communism had fallen and European social democracy had suffered a series of historic reverses.  Mandela succumbed to pressures to enact the set of neoliberal economic policies known as the "Washington consensus." Mandela, for example, supported nationalizing industries like the banks and mines, but institutions like the World Bank and the International Monetary Fund demanded market-centered reforms.

This is not to cast blame on Mandela; such a course of action was probably all but inevitable, given the power of global capital and American foreign policy. Nor does it diminish Mandela's personal greatness and heroism. But what followed was tragic.

By 2011, South Africa  was ranked as the most economically unequal country in the world. In 2013, fully 47 percent of its citizens live in poverty, over 25 percent of them are unemployed, white South Africans earn six times as much as black South Africans, and growth is slow. Shockingly, rates of economic inequality, poverty, life expectancy, and unemployment are all worse than they were in the apartheid era.

The horror of apartheid lives on, only what had been a racial caste system has morphed into an economic one.

Slavoj Zizek has more on "Mandela's Socialist Failure" here. His essay ends on this provocative note:

If we want to remain faithful to Mandela’s legacy, we should thus forget about celebratory crocodile tears and focus on the unfulfilled promises his leadership gave rise to. We can safely surmise that, on account of his doubtless moral and political greatness, he was at the end of his life also a bitter, old man, well aware how his very political triumph and his elevation into a universal hero was the mask of a bitter defeat. His universal glory is also a sign that he really didn’t disturb the global order of power.

Link round-up, 12/6/13

Here are some inequality-related links for today:

--  Corporate profits have reached a new record high as a share of the GDP (via Brad DeLong at WCEG);

-- Brad DeLong, on our coming chronic discouraged-worker epidemic;

-- Jared Bernstein, "No, A Decent Jobs Report Does Not Mean We No Longer Need an Extension of Unemployment Insurance!";

-- Sarah Jaffe at Working In These Times, "How Big Banks Shortchange Their Workers";

-- David Moberg at Working In These Times, "Unions Furious with Illinois Democrats Over Pension Cuts";

-- and finally, Charles Davis at Vice, "The Exploited Laborers of the Liberal Media". I hope this last one is shared far and wide. The shaming function still does have some power with certain employers who care about their reputations for fairness, such as the ones identified in the article. I realize that many alternative media outlets, including some but not all of those mentioned in the piece, struggle financially. But if an organization truly cannot afford to pay its interns, there is a simple solution at hand. Don't hire them in the first place.

R.I.P. Nelson Mandela, hero of equality

This subject of its blog is inequality. As such, there will be many topics and news stories that I will not be covering -- not because they're not important, but because they don't fit the theme.

But I could hardly fail to take note of the passing of one of the great heroes of equality of our time, Nelson Mandela. It was Mandela who, more than any other single person, was crucial to ending the murderous, decades-long regime of racist oppression and terror known as apartheid.

I'll leave analysis about Mandela's historical importance to South African, and world, history to others who are far more qualified to comment on it. But I did want to make two  points.

First, though this history has now conveniently been sucked down the memory hole, throughout the 1980s, many conservatives were wildly enthusiastic supporters of the monstrous apartheid regime. Margaret Thatcher, of course, smeared Mandela as an "ex-terrorist."  And as this 2000 Salon piece by Joe Conason reported, the Reagan administration worked tirelessly behind the scenes to strengthen the apartheid regime, lending an ever-helpful hand to South Africa's bloodthirsty security and military intelligence agencies. Reagan and the rest of the conservative movement also staunchly opposed economic sanctions to end apartheid. In addition, Reagan, Dick Cheney, and other powerful conservatives supported the apartheid regime's goal of keeping Mandela in prison for the rest of his natural life and opposed Congressional resolutions to free him. Even in 2000, Cheney expressed no regrets about his vote against a resolution favoring Mandela's release, arguing that Mandela had belonged to what he characterized as a "terrorist" organization, the ANC.

Tom Frank's The Wrecking Crew, has more. As Frank wrote in that book, "You don't have to dig deep very deep in the conservative literature of the eighties before you hit South Africa. . . The apartheid government made an ideal love-match for the far right." There's a fun account in the book of Grover Norquist, Jack Abramoff, Howard Phillips, and a gaggle of College Republicans having themselves a wingnut Woodstock in Johannesburg in 1985 -- with white South African apartheid supporters footing the bill. Good times! Frank has much, much more more about the close ties between American conservatives and the apartheid regime -- if this subject interests you, give it a read. UPDATE: Ta-Nehisi Coates has more on apartheid's useful idiots (though I wouldn't exactly call them idiotic myself; most of them knew exactly what they were doing).

The other point I wanted to make is more along the lines of a confession. I'm old enough to remember a time when I had never even heard of Nelson Mandela. In fact, the first time I remember hearing his name was in the song "Free Nelson Mandela" by the British ska revival band The Special A.K.A. Below is a video of the band recording an early version of the song in 1983 for a British TV show.

It's a fascinating time capsule. Partly it's interesting because it's not the hit single version that's most familiar to us. But what's most compelling, and unexpectedly touching, is that it clearly was filmed before Nelson Mandela was Nelson Mandela -- that is, before most people knew who he was. There are title cards that begin at about 3:54 that inform the viewer of some basic facts about  Mandela's imprisonment and the apartheid regime. They are stark reminders of the suffering he endured and the brutal character of the apartheid system.

It reminds you that yes, there was a time before Mandela became a secular saint, before Morgan Freeman played him in a movie. It helps you see that inside the human rights icon lived a flesh-and-blood human being. Do be sure to watch it to the end, because that scroll at the end with the quote from Mandela about why he's willing to give his life for the ideals for freedom and equality is very moving. It's an eloquent epitaph for one of the world's great warriors for social justice. May his fighting spirit live on.

Notes to my readers

First, I apologize for not getting a more substantive post up today. I'm also sorry it didn't go up until late tonight. But life things came up today, as they will do. I will have something meatier up tomorrow, I promise.

Second, a heartfelt thanks to all of you who have sent me such lovely, supportive messages over the past day or so, after I finally got this blog up and running. You guys rock!

Those of you who can afford to donate to this blog, and have done so, are also awesome. As a reminder, you can contribute via PayPal by clicking this link, or the PayPal button at the upper right-hand corner of this page. Your generosity is deeply appreciated. Now I am able to buy some books about inequality that I've had my eye on, which will help me be a better blogger once I've read them. Thanks, and see you tomorrow!

President Obama: economic inequality is "the defining issue of our time"

I see my blogging superpowers are already getting results.

Yesterday I launched this new blog on economic inequality. And today, President Obama gave a major speech on . . . economic inequality.

My take? There was a whole lot of good stuff there. But Pope Francis, whom the President quoted in his speech, would likely have been troubled by the serious sins of omission.

The heart of the speech was here:

The top 10 percent no longer takes in one-third of our income -- it now takes half. Whereas in the past, the average CEO made about 20 to 30 times the income of the average worker, today’s CEO now makes 273 times more. And meanwhile, a family in the top 1 percent has a net worth 288 times higher than the typical family, which is a record for this country

So the basic bargain at the heart of our economy has frayed.  In fact, this trend towards growing inequality is not unique to America’s market economy.  Across the developed world, inequality has increased.  Some of you may have seen just last week, the Pope himself spoke about this at eloquent length.  “How can it be,” he wrote, “that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?”

Obama also spoke about a related problem: declining economic mobility:

“growth alone does not guarantee higher wages and incomes” - See more at: http://www.epi.org/blog/president-obama-hits-notes/#sthash.DG1tbUB6.dpuf

The problem is that alongside increased inequality, we’ve seen diminished levels of upward mobility in recent years.  A child born in the top 20 percent has about a 2-in-3 chance of staying at or near the top.  A child born into the bottom 20 percent has a less than 1-in-20 shot at making it to the top.  He’s 10 times likelier to stay where he is.  In fact, statistics show not only that our levels of income inequality rank near countries like Jamaica and Argentina, but that it is harder today for a child born here in America to improve her station in life than it is for children in most of our wealthy allies -- countries like Canada or Germany or France.  They have greater mobility than we do, not less.

Welcome to Inequality Matters

Welcome to Inequality Matters.

Why this blog, you may well ask?

I'll start with the most blatantly self-serving reason: I want the platform. I get a huge kick out of my weekend blogging stints at the Washington Monthly, but I only get the opportunity to blog there every couple of weeks.  My gig at the Monthly has won me fans, for which I am grateful, and I've racked up some impressive traffic. No less than Paul Krugman called me "the excellent Kathleen Geier" and added, "someone give this woman a bigger job!" As I tweeted at the time, getting a shout-out from Krugman is sort of like getting high-fived by God.

But alas, no one listens to Paul Krugman, and so far that "bigger job" -- or any job -- hasn't materialized. So rather than waiting for the world to beat a path to my door, like some aging starlet lounging at the counter of Schwabs, waiting to be "discovered," I decided to create my own damn "bigger job." As is the case with most new jobs being created in our brave new economy, the pay sucks. But at least the work is steady. And I figure that if this blog leads to something bigger professionally, awesome. If it doesn't, I'll merely have the most creatively and intellectually fulfilling hobby in the world. It's win/win either way.

Enough -- quite enough -- about me. Why this subject? Why inequality?

It has hardly gone without my notice that many of my most popular Washington Monthly posts -- the ones slamming Walmart and the creepy revival of debtors' prisons, for example -- have centered around the theme of economic inequality. Economic inequality is a subject that has long interested me deeply. It first grabbed my interest in a big way when I was in graduate school in a doctoral program in public policy, in the pre-2008 era. At that time, my professors were telling me that something called "skills biased technological change" (SBTC), or technological change that favored "skilled" over "unskilled" workers, was fueling the trend in ever-rising inequality. Even then, I wasn't buying it -- I felt that political and institutional factors were far more important. Soon, I will be writing more about the SBTC thesis and what's wrong with it. But that's when and where my interest started.

So yes, my interest in the subject is longstanding. I also believe there is potentially a decent-sized audience for a blog devoted to this subject. I'm seeing more and more signs of growing economic populism in America and within the Democratic Party. Consider: