The knives come out for Piketty...and they are pretty dull

Kathleen Geier outlines "What Piketty’s Conservative Critics Get Wrong" @ The Baffler:

With his book Capital in the Twenty-First Century, Thomas Piketty has lobbed a truth bomb that has blown up several decades’ worth of received opinion about the way the economy works in capitalist societies. He makes a powerful, meticulously-argued, data-driven case that inequality is a feature of capitalist economies, not a bug. Let to its own devices, wealth tends to become highly concentrated. The only events likely to prevent our society from plunging into a dystopian spiral of inequity are, on the one hand, certain rarely occurring catastrophes, such as war or depression; or, on the other, dramatic government intervention in the economy, in the form of steep taxes on the wealthy.

You can see why conservatives are going to be enraged by this book.

A conservative backlash to Piketty was inevitable; the only surprise is that it’s taken so long to develop. But in the last week or so, responses from the right have finally begun to roll in. Send in the clowns!

Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones

Annie Lowrey @ NYT:

WASHINGTON — The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants.

In essence, the poor economy has replaced good jobs with bad ones. That is the

conclusion of a new report from the National Employment Law Project, a research and advocacy group, analyzing employment trends four years into the recovery.

“Fast food is driving the bulk of the job growth at the low end — the job gains there are absolutely phenomenal,” said Michael Evangelist, the report’s author. “If this is the reality — if these jobs are here to stay and are going to be making up a considerable part of the economy — the question is, how do we make them better?”

The report shows that total employment has finally surpassed its pre-recession level. “The good news is we’re back to zero,” Mr. Evangelist said.

But job losses and gains have been skewed. Higher-wage industries — like accounting and legal work — shed 3.6 million positions during the recession and have added only 2.6 million positions during the recovery. But lower-wage industries lost two million jobs, then added 3.8 million.

Most of the jobs added during the recovery have been in lower-wage industries...

U.S. is a world leader in class conflict over government spending

Political science Prof. Larry Bartels at WaPo:

(Data from International Social Survey Programme; tabulation by Larry Bartels)

The United States does less to redistribute income than virtually any other economically “advanced” democracy. So why does class conflict loom so much larger in U.S. public opinion about government spending than in other affluent democracies? The answer may have something to do with our peculiar system of taxation.

The claim that America is riven by class conflict may come as a surprise to people who like to think that “There are no classes in America,” as Rick Santorum put it during his 2012 presidential campaign. But the fact is that rich and poor Americans disagree about government spending to an extent virtually unmatched elsewhere in the world.

Paul Krugman talks Piketty's "Capital In The 21st Century" with Bill Moyers

Rand Paul is either an idiot or a calculated propagandist...or both

More Krugman on The Crazy:

I can easily understand it when people don’t know the facts about economic statistics; you need a fair bit of background knowledge even to know how to look these things up. It’s more surprising when people don’t know what they don’t know — when they make confident assertions that can be proved false in a few seconds by anyone who does know these things.

I had a one-on-one encounter with Rand Paul over such a case; there our heads were, talking on TV, and he insisted that government employment had risen under Obama. (It has actually plunged.) At the very least, you’d think he would have learned a lesson from the experience.

But no. There he goes, saying, "When is the last time in our country we created millions of jobs? It was under Ronald Reagan … "

Hmmm:

It’s not just that more jobs were created under Clinton, who raised taxes on the rich, than under Reagan; I wonder how many people know that more jobs were created under Jimmy Carter than under either Bush?

But I guess I really do understand it: according to right-wing theology, The Blessed Reagan’s tax cuts must have created far more jobs than the policies of evil redistributors. And so that’s what must have happened. Hey, Clinton was probably cooking the books.

Liberal Facts and "Conservative" Crazy

Krugman @ NYTs on The Crazy:

“The facts have a well-known liberal bias,” declared Rob Corddry way back in 2004 — and experience keeps vindicating his joke. But why?

Not long ago Ezra Klein cited research showing that both liberals and

conservatives are subject to strong tribal bias — presented with evidence, they see what they want to see. I then wrote that this poses a puzzle, because in practice liberals don’t engage in the kind of mass rejections of evidence that conservatives do. The inevitable response was a torrent of angry responses and claims that liberals do too reject facts — but none of the claims measured up.

Just to be clear: Yes, you can find examples where *some* liberals got off on a hobbyhorse of one kind or another, or where the liberal conventional wisdom turned out wrong. But you don’t see the kind of lockstep rejection of evidence that we see over and over again on the right. Where is the liberal equivalent of the near-uniform conservative rejection of climate science, or the refusal to admit that Obamacare is in fact reaching a lot of previously uninsured Americans?

The rich got richer

In what is beginning to sound like a "Dog Bites Man" story from the WSJ:

The rich got richer, the poor got poorer.

A recent article by Labor Department senior economist Aaron Cobet highlights the sharp disparity between the wealthiest and poorest Americans in the aftermath of the 2007-2009 recession.

“While average income has returned to pre-recession levels, income gains have been distributed unevenly,” Mr. Cobet said.

The economist mined Labor Department data to show that the top 20% of earners accounted for more than 80% of the rise in household income from 2008-2012. Income fell for the bottom 20%.

More "Capital in the 21st Century"

Martin Wolff reviews Thomas PIketty's opus @ The Financial Times. Read at link or below:

French economist Thomas Piketty has written an extraordinarily important book. Open-minded readers will surely find themselves unable to ignore the evidence and arguments he has brought to bear.

Karl Polyani Explains It All

Robert Kuttner has an excellent appreciation of the great critic of free market fundamentalism, Karl Polyani and his essential book, The Great Transformation, @ American Prospect:

The Great Transformation, written for a broad audience, is witty and passionate

as well as erudite. The prose is lyrical, despite the fact that English was Polanyi’s third language after Hungarian and German.

Contrary to libertarian economists from Adam Smith to Hayek, Polanyi argued, there was nothing “natural” about the free market. Primitive economies were built on social obligations. Modern commercial society depended on “deliberate State action” by and for elites. “Laissez-faire” he writes, savoring the oxymoron, “was planned.”

Libertarian economists, who treat the market as universal—disengaged from local cultures and historic time—are fanatics whose ideas end in tragedy. Their prescription means “no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in the economic system.”

Like Marx, Polanyi begins in England, the first fully capitalist nation. In Polanyi’s telling, the slow shift from a post-feudal to a capitalist economic system accelerated in the 18th century, when the enclosure movement (“a revolution of the rich against the poor”) deprived the rural people of historic rights to supplement incomes by grazing domestic animals on common land, and the industrial revolution began to undermine craft occupations.

The Single Mother, Child Poverty Myth

This is an essential insight, given the dominant narrative about marriage, single-parenthood and poverty rampant not just among the usual suspects of the right but among many liberals.

Matt Breuning @ Demos:

I see it often claimed that the high rate of child poverty in the US is a function of family composition. According to this view, the reason childhood poverty is so high is that there are too many unmarried parents and single mothers, and those kinds of families face higher rates of poverty. The usual upshot of this claim is that we can't really do much about high rates of childhood poverty, at least insofar as we can't force people to marry and cohabitate and such.

One big problem with this claim is that family composition in the US is not that much different from family compositions in the famed low-poverty social democracies of Northern Europe, but they don't have anywhere near the rates of child poverty we have.

A number of studies have tested this family composition theory using cross-country income data and found, again and again, that family composition differences account for very little of the child poverty differences between the US and other countries...

More here.

The Crisis of Long-Term Unemployment

Economic Policy Institute:

(L)ong-term unemployment is elevated for workers at every education level… while there is considerable variation in long-term unemployment rates across groups—which is always true, in good times and bad—the long-term unemployment rate is substantially higher now than it was before the recession started for all groups. The long-term unemployment rate is between 2.9 and 4.3 times as high now as it was six years ago for all age, education, occupation, industry, gender, and racial and ethnic groups. Today’s long-term unemployment crisis is not at all confined to unlucky or inflexible workers who happen to be looking for work in specific occupations or industries where jobs aren’t available. Long-term unemployment is elevated in every group, in every occupation, in every industry, at all levels of education.

Financial Transaction Tax Gains Traction

High-frequency trading accounts for roughly half of all stock market volume in the United States. Michael Lewis' recent book on the gaming of markets by high-frequency traders makes a financial transaction tax increasingly attractive.  Nelson Schwartz @ NYTs:

It’s not every day that you find a fan club for new taxes, especially among economists and legal experts.

But a burst of outrage in recent days generated by Michael Lewis’s new book about the adverse consequences of high-frequency trading on Wall Street has revived support in some quarters for a tax on financial transactions, with backers arguing that a tiny surcharge on trades would have many benefits.

“It kills three birds with one stone,” said Lynn A. Stout, a professor at Cornell Law School, who has long followed issues of corporate governance and securities regulation. “From a public policy perspective, it’s a no-brainer.”

Not only would the tax reduce risk and volatility in the market, Professor Stout said, but it would also raise much-needed revenue for public coffers while making it modestly more expensive to engage in a practice that brings little overall economic benefit.

The "Too Big To Fail" Subsidy

David Dayen @ American Prospect:

Financial reformers in both parties have insisted for years that the largest banks remain too big to fail, and that Dodd-Frank did not cleanse the system of this reality. You can mark down this week as the moment that this morphed into conventional wisdom. In successive reports, two of the more small-c conservative economic institutions, without any history of agitating for financial reform—the Federal Reserve and the International Monetary Fund—both agreed that mega-banks, in America and abroad, enjoy a lower cost of borrowing than their competitors, based on the perception that governments will bail them out if they run into trouble. This advantage effectively works as a government subsidy for the largest banks, allowing them to take additional risks and threaten another economic meltdown. With institutional players like the Fed and the IMF both identifying the same problem, Wall Street grows more and more isolated, setting up the possibility of true reform.