Saturday, February 01, 2014

Saturday Morning Links

Assorted content for your weekend reading.

- Justin Fox questions whether traditional studies tracking the distribution of wealth by quintiles do much good when the most obvious economic faultline is between the (give or take) 1% and everybody else:
Something really dramatic is going on up there in the top 5%, the top 1%, the top 0.01%. But while economists know some things about the impact of increasing overall income inequality, they still don’t know all that much about what this 1% stuff means. In their new paper, Chetty, Hendren, Kline, Saez, and Turner write that their finding of steady intergenerational income mobility “may be surprising in light of the well-known negative correlation between inequality and mobility across countries.” A possible explanation, they continue, is that
[M]uch of the increase in inequality has been driven by the extreme upper tail … [and] there is little or no correlation between mobility and extreme upper tail inequality — as measured e.g. by top 1% income shares — both across countries and across areas within the U.S. Instead, the correlation between inequality and mobility is driven primarily by “middle class” inequality.
That’s the thing about this rise in “extreme upper tail inequality” — most pronounced in the U.S. but by now a clearly global phenomenon. It is one of the most dramatic economic developments of the past quarter century. And it seems like it might be bad thing. But conclusive economic evidence for its badness is hard to find.

Yes, there are theories: All that wealth sloshing around in the top 1% leads to more bubbles and crashes. Extreme wealth corrupts the political process.  Income inequality may be slowing overall economic growth. And, as my colleague Walter Frick put it in an email when I brought this up, “given the diminishing marginal utility of income, it’s hugely wasteful for the super rich to have so much income.”
I think we’re eventually going to have to figure out what if anything to do about exploding high-end incomes without clear guidance from the economists. This is a discussion where political and moral considerations may end up predominating. And as Harvard’s Greg Mankiw made clear in his maddeningly inconclusive Journal of Economic Perspectives essay on inequality last summer, these are areas in which economists possess no comparative advantage.
- Meanwhile, Michael Rozworski notes that spin about increased "average real wages" is based largely on upper-end gains - missing both the stagnation of Canada's median wage, and the number of workers left out of the workforce altogether. And Gary Bloch highlights how a meager minimum wage leads to worse health outcomes for everybody. 

- PressProgress rightly mocks the CFIB for pointing to the temporary foreign worker program - the most obvious Con effort to prioritize the constant supply of cheap, powerless and disposable labour for even the most abusive of employers over the well-being of Canadian workers - as an example of businesses being hard done by.

- Peter O'Neil reports on the respective efforts of Kennedy Stewart and Brad Trost to facilitate public participation through petitions and MP authority to vote on their own committee chairs. And it's for the best that Stewart's bill has already passed second reading with multipartisan support.

- Finally, Susan Delacourt questions the wisdom of political choices which cut seniors adrift in the name of a perpetual youth movement. But particularly when it comes to the Cons' attacks on pensions and services, I'd think the issue is less one of age than ideology: it's to be expected that people past their peak earning stage may need more public services and supports to compensate, meaning that a party determined to render government useless will inevitably operate contrary to their interests.

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