US Policy Changes Vol.35 (Employment/Economy Vol.3 – Middle class, Income, Inequality…)

Here are articles and radio programs on middle class, income, inequality, et al. Excerpts are on our own.

The American Middle Class Meltdown (Radio; 12/14/2015) | Jacob Hacker… @WBUR

Jacob Hacker’s Interview on Rising Inequality “Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class” (Radio; 9/9/2015) | Jacob Hacker (Nation, Inside Charlotteville)

The Split: 19 reason the Democrats will remain divided – and what it means for the party’s future. (6/16/2016) | @newrepublic
…23 leading historians, political scientists, pollsters, artists, and activists…
Jacob Hacker… There’s a sense of, “We went with someone within the system, and look what happened—Republicans still tried to crush that person. So let’s go for the whole thing.” There’s a sense that supporting the Democratic establishment and going the conventional route hasn’t been that productive.

Why Money Flows Uphill:Power brokers choose economic efficiency over equality—in contrast to average Americans—economist Ray Fisman finds in study (12/15/2015) | @sararimer @BUexperts
…economic redistribution policies that benefit the middle class and poor almost always involve a cost in terms of lost, or wasted, resources—known as the “leaky bucket,” the term coined by economist Arthur M. Okun in his famous 1975 book, Equality and Efficiency: The Big Tradeoff. @RFisman’s co-authors are @PJakiela @UofMaryland, Shachar Kariv @UCBerkeley, and Daniel Markovits @YaleLawSch. …
The study, “The distributional preferences of an elite,” examines people’s attitudes toward two tradeoffs that shape social and economic policy: efficiency vs. equality and selfishness vs. fair-mindedness. “The tradeoff between selfishness and fair-mindedness informs the willingness of the haves to make sacrifices in order to aid the have-nots,” Fisman says. “And the tradeoff between efficiency and equality goes to the familiar conundrum of whether economic policy should concentrate on growing the economic pie or on promoting the pie’s even distribution.”
… More importantly, Fisman says, the study found that elites were much less willing to sacrifice efficiency for equality than were average Americans. (That is, elites care more about growing the size of the economic pie than ensuring everyone gets the same-sized slice.) …
… Equality-minded subjects were more likely to work for nonprofit organizations, with a focus on the equality-related rights and interests of the disenfranchised. Efficiency-minded subjects chose the corporate sector.
Fisman:… Studying an elite population is a novelty in itself, since it’s so hard to access…, yet so very important because of their outsized effect on policy. Second, …implications for how we think about confronting the problem of growing inequality in America.
… We are most certainly not invoking supply-side economics, which is essentially a “have-your-cake-and-eat-it-too” theory of income taxation. …under supply-side economics, everyone is better off.
… We measure efficiency by the extent to which the size of the pie—money available in the experiment, in our case—is maximized. It says nothing about how this pie is distributed amongst individuals. …we can use those tax proceeds to distribute income or improve educational opportunities or otherwise help the poor in ways that lead to a more equitable income distribution. In this case, we need to decide how much efficiency we’re willing to trade off for greater equality.
… Participants in the experiment confront this tradeoff when they face different “prices” of giving. You can think about this price as capturing how much societal wealth is lost when a more productive member of society redistributes to a less able—and hence, initially poorer—individual. …
You say that Yale Law students’ commitment to efficiency over equality is astonishing, given that they self-identified as Democrats rather than Republicans—and thus sided with the party of economic equality—by a factor of over nine to one. What about the difference between the rhetorical ideals of a political party and what it does in practice? Some people believe there isn’t much of a difference between Democrats and Republicans…
… In other work, Shachar, Pam, and I find that political affiliation is, for Americans overall, a strong predictor of efficiency orientation. So self-identified Democrats—who lean toward equality orientation—do, in fact, act in a manner that is in keeping with the rhetorical ideals of their party, relative to Republicans…
… What I take away from our study is that policymakers on both sides of the aisle might be more reluctant to implement redistributive tax policies that aim to narrow the gap between the rich and the poor, even if that’s something their constituents want or need. The study’s findings signal this disconnect between the preferences of the electorate and the elected. …

Study of Yale law students helps explain economic inequality, authors say (9/22/2015) | Debra Cassens Weiss @ABAJournal

Yale Professor Daniel Markovits on Economic Equality and Inequality (4/23/2016) | @RockefellerCtr
(1) modern meritocracy has transformed the character of economic inequality; (2) the hyper-meritocracy that has developed in the United States today benefits no one; and (3) merit itself has become a sham. …
According to Markovits, one of the biggest movements away from inequality has been the opening of elite schools to working class children and minority children from any religion or background – but this still has not eliminated inequality from the United States meritocratic structure. A higher share of Yale College students come from the top 1% of the income distribution than from the entire bottom half. The top quarter outweighs the bottom quarter by a ratio of 4:1. …
One student asked Markovits if he believed that, no matter what social structure changes, the economic elite will always find a way to enhance future generations. Markovits responded by citing the iron law of oligarchy: the elite will always manage to capture the greater share of the social share than it deserves and will reproduce this itself. Outstanding schools have in the past and will continue to spend their money and privilege wisely toward producing meritocratic end. …
As Markovits asserted, even if you are at the threshold of the 1%, with an annual income of around $375,000, you are still struggling to find a comfortable family home in areas such as New York, San Francisco, and London. The elite has grown so much that others are pricing you out of this market. The current deal for the elite – work long hours and get paid huge sums of money – is a less great tradeoff for the elite. No one wins…
“My biggest advice… “I for one never accept meetings before noon because the morning is my own time.”

IS AMERICA AN OLIGARCHY? (4/18/2014) | @JohnCassidy @NewYorker
… After examining differences in public opinion across income groups on a wide variety of issues, the political scientists Martin Gilens, of Princeton, and Benjamin Page, of Northwestern, found that the preferences of rich people had a much bigger impact on subsequent policy decisions than the views of middle-income and poor Americans. …
… In their conclusion… When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose. Moreover … even when fairly large majorities of Americans favor policy change, they generally do not get it.”
… Gilens and Page do not use the term “oligarchy”… which would imply that a small ruling class dominates the political system to the exclusion of all others. They prefer the phrase “economic élite domination,” which is a bit less pejorative.
… “Rather often, average citizens and affluent citizens (our proxy for economic elites) want the same things from government.” …
…three causal variables: the views of Americans in the ninetieth percentile of the income distribution (the rich), the views of Americans in the fiftieth percentile (the middle class), and the opinions of various interest groups, such as business lobbies and trade unions.
…when the economic élites support a given policy change, it has about a one-in-two chance of being enacted. … When the élites oppose a given measure, its chances of becoming law are less than one in five. …
… on many issues, the rich exercise an effective veto. If they are against something, it is unlikely to happen. This is obviously inconsistent with the median-voter theorem—which holds that policy outcomes reflect the preferences of voters who represent the ideological center…
… “The probability of policy change is nearly the same (around 0.3) whether a tiny minority or a large majority of average citizens favor a proposed policy change.” …

The costs of inequality: Increasingly, it’s the rich and the rest (w charts; 2/8/2016) | @cpazzanese @HarvardMagazine
… Personified by outsider candidates Bernie Sanders and Donald Trump, economic inequality has resonated with broad swaths of nervous voters on both the left and right. …
Lawrence Katz @HarvardEcon, says the most damaging aspects of the gap between the top 1 percent of Americans and everyone else involve the increasing economic and political power that the very rich wield over society, along with a growing educational divide, and escalating social segregation in which the elites live in literal and figurative gated communities.
… “…rising inequality with stagnant mobility, which means that the consequences of where you start out, whether it’s in a poor neighborhood, whether it’s from a single-parent household, are more consequential today than in the past. Your ZIP code and the exact characteristics of your parents seem to matter more,”…
“It’s long been known that the better educated, those with higher incomes, participate more” in politics on “everything from voting to contacting politicians to donating,” said Theda Skocpol @HarvardSoc. “What is quite new in recent times is … very systematically, that government really responds much more to the privileged than to even middle-income people who vote.”
… Backers with both influence and access often help to shape the political agenda. The result is a kind of velvet rope that can keep those without economic clout on the sidelines, out of the conversation.
… But many politicians probably don’t realize it at all because … politicians spend a lot of their time asking people to give money to them [who] don’t think it’s a good idea to change that,”…
… @lessig @Harvard_Law. In Congress, he said, “They focus too much on the tiny slice, 1 percent, who are funding elections. In the current election cycle [as of October], 158 families have given half the money to candidates. That’s a banana republic democracy…
Christopher “Sandy” Jencks @Kennedy_School… three key factors: … The share of income gains flowing to the top 1 percent of earners doubling as a result of deregulation, globalization, and speculation in the financial services industry. …
“We have some of the lowest rates of upward mobility of any developed country in the world,” said Nathaniel Hendren @HarvardEcon…
… Median household income when last reported in 2013 was at a level first attained in 1989, adjusting for inflation. That’s a long time to go without any gains,” said Jan Rivkin @HarvardHBS…
…Claudia Goldin @HarvardEcon… “If you reduce gender inequality to zero, you’ve closed inequality … by a very small percent,”…
Rivkin says that the pressures of globalization and technological change and the weakening of labor unions have had a major impact. But he disagrees that political favoritism toward business interests and away from ordinary citizens is the primary reason for burgeoning inequality. Rather, he says that sustained underinvestment by government and business in “the commons” — the institutions and services that offer wide community benefits, like schools and roads — has been especially detrimental. …
Partisan gridlock in Washington, D.C., has diminished the effectiveness of government — perhaps the most essential and powerful tool for addressing inequality and citizens’ needs.
… “The optimism… Medicare and the Earned Income Tax Credit… I think that if national policy more approximated the upper third of state and local policies, the U.S. would have a lot of hope,”…
“Strong regulation and strong support for collective control over…
…@bsachs @Harvard_Law… Unions used to wield both economic and political clout, but legislative and court decisions reduced their effectiveness as economic actors, cutting their political influence as well. …
…“unbundling” unions’ political and economic activities, allowing them to serve as political organizing vehicles for low- and middle-income Americans, even those whom a union may not represent for collective bargaining purposes.
…Sachs wrote in a 2013 Yale Law Review article…
Still, given the historic labor and wage trend lines, Goldin said the economic forces that perpetuate unequal wages — and inequality more broadly — won’t simply disappear even with a spate of new laws.
… Drawing on an idea from @desaimihira @HarvardHBS, Rivkin suggests… That money could then go back into investment in “the commons,” where “lots of common ground” exists among business, labor, policymakers, educators, and others. …