Saturday Morning Links

This and that for your weekend reading.

- Joseph Stiglitz wraps up the New York Times' series on inequality by summarizing how the gap between the rich and the rest of us developed, as well as how it can be reduced:

The American political system is overrun by money. Economic inequality translates into political inequality, and political inequality yields increasing economic inequality. In fact, as he recognizes, Mr. Piketty’s argument rests on the ability of wealth-holders to keep their after-tax rate of return high relative to economic growth. How do they do this? By designing the rules of the game to ensure this outcome; that is, through politics.

So corporate welfare increases as we curtail welfare for the poor. Congress maintains subsidies for rich farmers as we cut back on nutritional support for the needy. Drug companies have been given hundreds of billions of dollars as we limit Medicaid benefits. The banks that brought on the global financial crisis got billions while a pittance went to the homeowners and victims of the same banks’ predatory lending practices.
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We need not just a new war on poverty but a war to protect the middle class. Solutions to these problems do not have to be newfangled. Far from it. Making markets act like markets would be a good place to start. We must end the rent-seeking society we have gravitated toward, in which the wealthy obtain profits by manipulating the system.

The problem of inequality is not so much a matter of technical economics. It’s really a problem of practical politics. Ensuring that those at the top pay their fair share of taxes — ending the special privileges of speculators, corporations and the rich — is both pragmatic and fair. We are not embracing a politics of envy if we reverse a politics of greed. Inequality is not just about the top marginal tax rate but also about our children’s access to food and the right to justice for all. If we spent more on education, health and infrastructure, we would strengthen our economy, now and in the future. Just because you’ve heard it before doesn’t mean we shouldn’t try it again.

We have located the underlying source of the problem: political inequities and policies that have commodified and corrupted our democracy...Widening and deepening inequality is not driven by immutable economic laws, but by laws we have written ourselves.

- And Carol Goar writes that U.S. municipal governments are beginning to fill the vacuum left by a dysfunctional federal system when it comes to boosting wages and reducing inequality.

- Meanwhile, Susie Cagle discusses the need for unions and workers to seek each other out in adapting to new forms of employment. And Jordan Brennan reminds us of the role the labour movement played in developing Canada's middle class, while recognizing that it figures to be all the more important in countering more sophisticated corporate wealth extraction schemes:

While many opponents of the labour movement readily concede that unions played an important historical role in elevating the conditions and compensation of work, this concession is invariably followed by the assertion that today’s unions are an impediment to economic progress. A brief encounter with the facts suggests otherwise.

Average hourly earnings (adjusted for inflation) are a good approximation for the level of prosperity in a society. In Canada, this metric closely tracks union density over the past century. Between 1910 and 1940, union density grew modestly and hourly earnings grew by 43 per cent. Between 1940 and 1977, density more than doubled and hourly earnings tripled. Between 1977 and 2012, density declined and hourly earnings stagnated, rising a paltry three per cent.
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Using econometric techniques, we can determine what impact a change in unionization has on the national wage bill, and hence on average annual per person earnings. It turns out that for every percentage point change in unionization (up or down), the bottom 99 per cent of the Canadian workforce sees their annual income adjusted by nearly $500.

This implies that if unionization were to be halved from its current level — falling from 32 to 16 per cent — resulting, perhaps, from a dramatic change in labour laws of the kind proposed by conservative politicians in multiple jurisdictions, average incomes for the bottom 99 per cent of the workforce would decline from $48,062 to $40,560. That’s a 16 per cent drop.

Why? As the ranks of organized labour swell and collective bargaining pushes up labour compensation, corporate earnings margins are squeezed and the corporate profit share of national income is reduced, which leaves less firm revenue for executive compensation and dividends. Weaker unions, by contrast, translate into stagnant wages and provide the opening for increased executive compensation, plush dividends and heightened inequality.

- On the subject of wage suppression mechanisms, the Globe and Mail and David Macdonald both argue that we should be encouraging permanent immigration rather than following the corporate preference for easily-exploited temporary foreign workers. And Renata D'Alesio reports that the Cons' tough talk about cracking down on abusive employers has been based on zero information as to which employers have actually violated labour laws. 

- Finally, Lana Payne notes that Peter MacKay's latest misogynist eruptions are just the tip of the iceberg when it comes to sexism in politics - particularly under a Con government determined to squelch any discussion of sex and gender equality.