Saturday, January 10, 2015

Saturday Morning Links

This and that for your weekend reading.

- Robert Ferdman reports on a Pew Research poll showing that wealthier Americans are downright resentful toward the poor - and think the people with the most difficult lives actually have it too easy:
(T)he prevalence of the view might reflect an inability to understand the plight of those who have no choice but to seek help from the government. A quarter of the country, after all, feels that the leading reason for inequality in America is that the poor don't work hard enough.

But as my colleague Christopher Ingraham pointed out last year, to say that the poor have it easy is to ignore how serious their struggle is in comparison to the rest of the population, and especially those with money to spare. The poor are much less likely to have health insurance, much more likely to be the victim of a crime. They don't get the same level of education or have the same food options. Inequality, as my colleague Matt O'Brien wrote, "starts in the crib," and it plays out even in what babies of different socioeconomic backgrounds are fed. And that's just the tip of the iceberg.
- Meanwhile, Amitha Kalaichandran counters that homelessness (like other aspects of poverty and inequality) is anything but a choice. And Sara Mojtehedzadeh reports on how poor neighbourhoods in Toronto rely on payday lenders, and how that only makes matters worse for people already trying to scrape by with very little.

- PressProgress highlights the stagnation of Canadian wages, while Andy Kiersz points out that Canadian household debt is not only higher than the U.S.' today, but also higher than the unsustainable levels that contributed to the 2008 economic meltdown. And Sherri Torjman argues (PDF) that the Cons' regressive income splitting scheme is the last thing Canadian families need at the moment.

- Andrew Jackson discusses the connection between increased reliance on information technology to perform skilled work, and the growing income and wealth gaps:
IT has eliminated middle skilled jobs, and new jobs are being created at the high and the low end of the education and skills spectrum. At the same time, IT development has resulted in huge “winner take all” rewards for a handful of individuals who have pioneered major new applications which have been widely adopted – think Google and Facebook. Compared to the giants of the industrial age, these companies have huge market capitalizations but relatively few workers, and only have to invest modestly in physical capital.

The theory of skill biased technological change tells us a lot but has significant problems as an overall explanatory framework for rising income and wealth inequality. As has been frequently noted, inequality still varies a great deal between advanced industrial countries using the same technologies because institutions, such as unions and labour laws as well as government social and tax policies, make an important difference.

And, as Thomas Piketty showed in his own 2014 best-seller, the ranks of the very rich go far beyond internet billionaires to include those who have inherited wealth, as well as the very well-paid CEOs of “old economy” enterprises who have ruthlessly used IT to cut costs. Technological change may explain why the less skilled are doing badly, but there is a bigger story behind the rise of the super wealthy compared to the merely highly educated.

That said, the authors of the Second Machine Age and their colleague David Autor at MIT make a convincing case that new technology has very much worked against those without very high levels of skills. They make the key point that the elimination of routine jobs by machines results in the relatively unskilled competing for the many lower level jobs which are non routine and cannot be readily automated, such as personal care support workers, hairdressers, cooks and chefs, janitors, security guards and so on. The relative weight of these low productivity, low skill, low pay positions in the job market is increasing, and their pay is flat or falling.
The authors of The Second Machine Age discuss, but do not go so far as to advocate, a basic income for all citizens. But it will be hard to refute the moral and economic logic for spreading the bounty of technological progress to the many if the wealth of the very rich increases as rapidly as the power of the marvellous machines that are now at their service.
- Finally, Bruce Johnstone laments the willingness of resource-obsessed governments to get us stuck in commodity price traps. Which makes for a needed counterpoint to Murray Mandryk's odd position that the point when we recognize we're trapped is no time to try to free ourselves.

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