socio-economics

Extreme Linearization results into Extreme Disparities

Extreme linearization leads into extreme exponential distribution resulting into extreme disparities. Top 20% in US earn 50%  income and own 85% wealth. The rest of the 80% earn the rest of 50% and own only 15% of wealth. The question is what or who is EA serving. The 20% or the 80% of the population or is it the income or to the wealth. Or, all put together.

In the context of TARP and the percentages of tax paid by different demographics – who is paying whom? Those who shored up losses by the marginalizing the working class receiving the bail-out?  In other words, to the losses white collar contributed, how much is the blue collar paying in bailout.

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Concentration of wealth in hands of rich greatest on record

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BY DANIEL TENCER

Published: August 15, 2009
Updated 1 day ago

The wealthiest 10 percent of Americans now have a larger share of total income than they ever have in records going back nearly a century — an even larger amount than during the Roaring Twenties, the last time the US saw such similar disparities in wealth.

In recent years, the fact that differences between rich and poor are the greatest they’ve been since the Great Depression has become a popular talking point among liberal-leaning economists.

But an updated study (PDF) from University of California-Berkeley economist Emanuel Saez shows that, in 2007, the wealth disparity grew to its highest number on record, based on US tax data going back to 1917.

According to Saez’s study, which Nobel prize-winning economist Paul Krugman drew attention to at his New York Times blog, the top 10 percent of earners in America now receive nearly 50 percent of all the income earned in the United States, a higher percentage than they did during the 1920s.

“After decades of stability in the post-war period, the top decile share has increased dramatically over the last twenty-five years and has now regained its pre-war level,” Saez writes. “Indeed, the top decile share in 2007 is equal to 49.7 percent, a level higher than any other year since [records began in] 1917 and even surpasses 1928, the peak of stock market bubble in the ‘roaring’ 1920s.”

By comparison, during most of the 1970s the top 10 percent earned around 33 percent of all the income earned in the United States.

The contrast is even starker for the super-rich. The top 0.01 percent of earners in the US are now taking home six percent of all the income, higher than the 1920s peak of five percent, and a whopping six-fold increase since the start of the Reagan administration, when the top 0.01 percent earned one percent of all the income.

There is no consensus among economists on whether large disparities in income lead to economic disruption, but it is hard to ignore the correlation between rising income inequality and the onset of economic crisis. The last time the US saw similar differences in income was in 1928 and 1929, just before the start of the Great Depression.

Saez also broke the numbers down by administration, and found that while the wealthiest few saw their incomes rise as quickly during the Bush years as they did during the Clinton years, the same was not true for the rest of the population.

Saez suggests that the economic growth seen on paper during the Bush years was little more than an illusion for the vast majority of Americans, who saw their income grow much more slowly in the 2002-2007 period than they did during the Clinton years.

During both expansions, the incomes of the top 1 percent grew extremely quickly at an annual rate over 10.3 and 10.1 percent respectively. However, while the bottom 99 percent of incomes grew at a solid pace of 2.7 percent per year from 1993–2000, these incomes grew only 1.3 percent per year from 2002–2007. As a result, in the economic expansion of 2002-2007, the top 1 percent captured two thirds of income growth.
Those results may help explain the disconnect between the economic experiences of the public and the solid macroeconomic growth posted by the US economy since 2002. Those results may also help explain why the dramatic growth in top incomes during the Clinton administration did not generate much public outcry while there has been an extraordinary level of attention to top incomes in the press and in the public debate over the last two years.
Saez, who this spring won the prestigious John Bates Clark Medal for economists under 40, links this disparity to the Bush tax cuts, noting that “top income tax rates went up in 1993 during the Clinton administration (and hence a larger share of the gains made by top incomes was redistributed) while top income tax rates went down in 2001 during the Bush administration.”

TWO MORE RECESSIONS?

The economic crisis that has taken hold over the past year isn’t over, and the world could in fact see two more recessions before the crisis is finally over, says the chief economist of Germany’s influential Deutsche Bank.

Norbert Walter told CNBC that investors are worried about the health of the US dollar, and many countries are facing difficult financial problems because of overspending by governments on bailouts and stimulus. Those things combined could push the world economy downwards not once but two more times in the near future, he said.

“I believe that the rescue packages brought on have been so costly for so many governments that the exit from this fiscal policy will be very painful, very painful indeed,” he said. “Some of us are already talking about a W-shaped recovery. I’d probably talk about a triple-U-shaped recovery because there are so many stumbling blocks here to get out of this.”

“The world is in trouble,” Walter told CNBC.

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TARP for White Collars and a Harp for Blue Collars

Is TARP a Trap?

TARP is not an inclusive system that addresses the blue collars. The auto industry still has to go begging, while the viscous white collared finance service sector gets blessed under TARP.

Hey! you poor blue collar insolent fool can’t you just twiddle on your HARP and sing your blues away. At-least as a rejoinder to the apathetic Nero who is happy fiddling TARP and stoking to your misery, despite having a amok run with your money, while you undeservingly did not dread the drudgery. Or, can you wake-up poor sloth fool, else the Machiavellians will drain you further clean.

 

Unemployed Harpist

Unemployed Harpist

Economics: – The Enterprise, Autonomy for an Enterprising Individual, Sovereignty and Road to Fiefdom

Article by – Srinidhi Boray

Anti- Thesis to John Galt from Atlas Shrugged. Was  John Galt part of Wall Street meltdown? Nope. Could he work towards Health for All through Collective efforts. Nope. He, then can be Apple, that which has no real systemic benefit to mankind’s alleviation, although is the wealthiest (2012). Nope, maybe …probably…in such hesitation….men….mind….and machine..of what higher cause can they ever serve. Many such perplexing questions has been pondered timeles !!!

Also, much misunderstood and much flouted are habeas corpus and one’s prerogatives in the context of an individual, enterprise (collection of individuals) and sovereignity.

An enterprise presumes that it has a behavior. Meaning there is an input of resources, it is processed and then there is an output. All these works against the competition for a commercial company and for the government against the shrinking budget. Overall the behavior of the enterprise is measured by outcome, which is a cumulative and analytical result of the input, the process and the output. All these together perform under the system. Lets call it Sovereignty. It is the sovereignty which introduces the policy and the logic for the system to behave in a certain way. Mostly guided by the socioeconomic criteria.

In the past century there have been two starkly different Sovereignty Systems. One was based on Keynesian Economics developed by British economist John Maynard Keynes – The general Theory of Employment, Interest and Money . Thiswas very popular post world war for nearing three decades. In the Keynesian theory, the sovereignty played a dominant role by constantly regulating the market diminishing the role of  individual businesses. Meaning macroeconomics preceded microeconomics. During this time there also existed another theory proposed by Friedrich August von Hayek. The economics theory lead by  Hayek contrasted that with Keynesian by arguing for lesser intervention by the sovereignty and unleashing the creative individuals in the market place and allowing for market to correct by itself by process of self-regulation. In contrast to Keynesian economics Hayek laid more emphasis on microeconomics & de-regulation rather than sovereignty determined macroeconomics. As an anti-thesis to Keynesian economics, Hayek published ‘Road to Serfdom’. This publication iconoclastically argued that the Keynesian economics inevitably would lead into serfdom (cartoon representation). Hayek’s economics influenced the era beginning with Margaret Thatcher and Ronald Reagan. It was based on Hayek’s theory that globalization was fiercely sought.

For any Enterprising Professional, it is difficult not to acknowledge that in either of the economic theories, Fiefdom was thriving at its hilt. In Hayek era the intrusive state of the Keynesian was replaced by domineering Oligarchy business houses in which domineering and Machiavellian managers manipulated and schemed non-existing business market to advance their own careers . The effect of both the state and oligarchy on the enterprising and ethical individual was to stifle. Although in the Hayek, the individuals certainly did thrive, but then the ‘economy of scale’ lead the small businesses subsequently  to become behemoths and introduce hegemony into the system where creative individual went into oblivion.

Coming back to Enterprise behavior, it can be concluded that the dysfunctional behavior in either of the economics era, was introduced by  the chicaneries that underpins fiefdom. This led to eventual doom in the Wall Street. Today we have both the systems intermingled as evident by the bail out plan and one should wonder with a  shudder about the amok run that is to compound, should fiefdom be allowed un-arrested.

Also, it is but evident that pluralistic framework is emerging where both Keynesian’s sovereign led macroeconomics and the Hayek’s free enterprise microeconomics are blending to form a heterogenous system The sovereignty provides the macrocosm while the individual ingenuity provides impetus to the dynamic microcosm. This means as an Enterprising Individual, one needs to incorporate inclusive perspectives where both the macro and micro coexists, as not being disjointed, rather both being deterministic of each others behavior. ‘Implicate Order’ provides basis for such a scheme of things. And, ‘Syndication’ as a mechanism will prevail providing the needed impetus to the grass root level.

Few years later after writing the above article, came across this soul searching documentary by Jamie Johnson, lineage of Johnson and Johnson family. He talks about 1 Percent who control pretty much everything in America. Very well made and well intioned documentary. In the documentary After hearing President Bush pay tribute “To a hero of freedom – Milton Friedman, he has used a a brilliant mind to advance a moral vision”, Only thing that is left to said is this, now an individual is a soul lost forever in the concrete wilderness of capitalistic corporate that democratic government we create protects. Continue to remain in a straight jacket, at least for now, autonomy for an individual is cause lost forever.