Monday, January 20, 2014

Dr. King's "Revolution of Values"

A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand we are called to play
the good Samaritan on life's roadside; but that will be only an initial act. One day we must come to see that the whole Jericho road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life's highway. True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring. A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth.
                                                                          Martin Luther King

"IMF warns on threat of income inequality"

Financial Times:
The International Monetary Fund has highlighted the threat posed to the global economy by growing income inequality as the world’s business and political leaders prepare to head off to the World Economic Forum in Davos this week.

Friday, January 17, 2014

Uh, oh! "Brooks Worst Column Ever!"

Robert Kuttner, piling on @ American Prospect, lowers the bar in considering today's Brooks offering a milestone of sorts:
Well, this is getting to be a habit. Alert readers may recall that a few weeks ago, I wrote a piece about Tom Friedman’s worst column ever, plugging efforts by a billionaire hedge fund friend to persuade college students that their enemy was Social Security. 

Now, Friedman’s colleague David Brooks has written an even worse column. It’s really hard to determine Brooks’ worst column ever, since he seems to turn out one every week.
Brooks’ latest piece, in Friday’s Times, begins inauspiciously, “Suddenly, the whole world is talking about income inequality.” (Where has Brooks been, Jupiter?)
Paul Krugman, the "Liberal Conscience" animated by fairly conventional Keynsianism, further diminishes Our Mr. Brooks:

Why We Talk About the One Percent

Many people in Washington, even those willing to concede that inequality has been rising rapidly, are uncomfortable talking about the famous 1 percent — perhaps because it sounds too populist, too much like an invitation to crowds with pitchforks. For a long time respectable discussion focused on the top 20 percent; today I see my colleague David Brooks talking about the top 5 percent.
But framing the discussion in terms of some broader group is in this case deeply misleading. Here’s what the Piketty-Saez numbers tell us about the top 5 percent (incomes in 2012 dollars):
            Piketty and Saez 
If you look at the bottom 4 percent of the top 5, you see good but not spectacular income gains. These are the kinds of gains that you might be able to explain in terms of skills, assortative mating, and so on. But the top 1 percent is in a different universe altogether. And in fact the gains within the top 1 percent are concentrated in an even smaller group: this is a Pareto distribution thing, in which the higher the income the greater the percentage gains.
The point is that using wider definitions than the one percent is, in effect, diluting the wolves of Wall Street by lumping them in with the upper middle class. Not the same story at all.

Another terrible David Brooks column

Dean Baker @ CEPR Beat the Press challenges the ignorant ramblings of one David Brooks, Big City Newspaper Columnist and Pop Sociologist:
David Brooks is sweating hard trying to defend the one percent against the rest of the country and reality. His column today desperately warns readers:

"Some on the left have always tried to introduce a more class-conscious style of politics. These efforts never pan out. America has always done better, liberals have always done better, when we are all focused on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness."

Funny, I thought Social Security, the Fair Labor Standards Act (i.e. the 40-hour workweek), the National Labor Relations Board, and other products of the New Deal were pretty big accomplishments. Much of this was done quite explicitly with a sense of class consciousness. These were all measures that were backed by mass movements that sought to ensure that working people got their share of the economic pie. Good thing we have David Brooks to tell us the opposite.

This is far from the only place where Brooks seems to be at odds with reality. Brooks condemns focusing on inequality because it leads to ineffective policies like raising the minimum wage. He then cites a study by Joseph J. Sabia and Richard V. Burkhauser telling readers:

"Consistent with some other studies, they find no evidence that such raises had any effect on the poverty rates.

"That’s because raises in the minimum wage are not targeted at the right people."

Actually the Sabia and Burkhauser study goes against the overwhelming majority of other studies on the topic as summarized in this analysis by University of Massachusetts professor Arin Dube.

Wednesday, January 1, 2014

Record low of unemployed Americans recieiving benefits

Huffington Post:
A record-low 25 percent of unemployed Americans will receive benefits now that Congress has allowed the federal program to expire, according to data from the Department of Labor compiled by House Democrats on the Ways and Means Committee.

The number is the lowest since the Department of Labor began keeping records in 1946. Before Congress let the federal unemployment benefit-assistance plan expire on Dec. 28, 38 percent of unemployed Americans who paid unemployment taxes were receiving unemployment insurance either through their state or the federal government...

A Tale of Two Rands - Unemployment Benefits and Economic Illiteracy

Rand Paul - well-known foe of economic illiteracy - arguing that "extending unemployment benefits to two years does a disservice to the unemployed.":
Economic illiteracy condemns us to well-intentioned, big-hearted, but small-brained
responses to real problems.

Millions of people are out of work. We all have sympathy for those who are unemployed and I believe it is our moral obligation as a society to take care of those who cannot take care of themselves. Liberal pundits try to argue that Democrats are the only ones who care about the poor and unemployed, but the truth is, caring doesn't help unless it is linked to good policy...

According to a study by Rand Ghayad and William Dickens for the Federal Reserve Bank of Boston, employers will choose a less-skilled worker who has been unemployed for two months over a worker with more skills who has been unemployed for two years. So yes, extending unemployment benefits to two years does a disservice to the unemployed...conservatives who argue for shorter unemployment benefits actually have more concern for the worker than liberals who believe in no limits... (Bold added)

Rand Ghayad, the economist Paul cites, @The Atlantic, countering that based on his research "there's no reason to cut unemployment benefits:

Rand Paul says he cares about the unemployed."...

So why does he want to end unemployment benefits for people who have been out of work for 6 months or longer? Well, Paul cites my work on long-term unemployment as a justification—which surprised me, because it implies the opposite of what he says it does.