The Least, First

Monte Asbury's blog

Posts Tagged ‘Economic

A dramatic graph: income growth by income quintile

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Here’s another great find by the Freakonomics blog.

Dark bars, below, represent income growth across the economic spectrum from 1947-1973.  The least grew the most (br-r-ravo!), and the middle and upper classes did pretty well, too.

The light bars tell a more troubling story.  In recent times (73-05), the smallest incomes grew (as a percentage) the least.  In fact, without exception, the more income a quintile received, the greater was the percent of increase in that quintile’s paycheck. The least (thus), benefited least. The first, the most.

Put another way:  the economy disproportionately rewarded high-income people.  And it hasn’t always been this way.

clipped from freakonomics.blogs.nytimes.com

Economic Growth Across the Income Distribution

Yes, we already know the facts — income inequality has been increasing since the 1970’s. But it can be easy to lose sight of just how important this has been. This presentation of the data — by Claudia Goldin and my former thesis advisor Larry Katz, really hits home:

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Note: The figure plots the annual percentage growth rate in mean real family income by quintile and for the top 5 percent of families for 1947 to 1973 and 1973 to 2005. Incomes are converted to constant dollars using the Consumer Price Index Research Series (CPI-U-RS). The income concept used is the official U.S. Census Bureau measure of pre-tax, post-transfer money income.
Read the full Goldin and Katz posting, over at VoxEU, for a deeper understanding of why. (Hint: It’s education.)
[T]hese data remind us that for most of the distribution there hasn’t been much income growth.

Seeing it in graphic form is startling, eh?

Follow the link to the original article to explore the thesis that this all springs from education issues.

Thought-provoking! What’s your take?

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Why we need government to attack poverty, too

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In recessions, when more people need help, most donors have less to give.

Many not-for-profits simply collapse.  Those that remain often move away from long-term indepence-developing programs, crowded by the increase in immediate needs.

Richard Florida, the economic geographer who writes of places, people, and prosperity, described the situation like this:

clipped from www.creativeclass.com
Richard Florida, an American urban studies the...

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I spent this weekend with a friend who’s a retired corporate CEO, has a personal foundation that
supports local and international projects, and is very savvy in business, finance, and nonprofits. He said he’s heard that as many as half of U.S. nonprofits (charities) will go out of business during the current downturn [...]

  • Many foundations, having seen their endowments dive with the stock market, are cutting back on large grants. In addition, they’re moving from longer-range capacity-building grants to meeting people’s immediate needs (as one foundation director put it, from philanthropy to charity).
  • Arts organizations are seeing their donations and audiences shrinking. Seasons are being cut back, shows canceled. Some of the weaker players are seeking mergers or takeovers by larger organizations.
  • Safety net organizations like free clinics and food banks are flooded with not only the poor but the formerly middle class.
  • Capital building campaigns are dead in the water.
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    I’m no economist, but I see no means to sustain an attack on poverty without resources that are more stable and more broadly shared than voluntary contributions alone could ever be.

    Do you?


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    Obama asks GOP for more than ‘Just say no’

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    President Obama asks those in Congress who object to specific budget proposals to work on “problem solving” rather than “point-scoring,” in yesterday morning’s “Statement on the Budget:”
    clipped from www.dailykos.com
    The answers don’t have to be partisan, and I welcome and encourage proposals and improvements from both Democrats and Republicans in the coming days.

    {{Potd/-- (en)}}
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    But the one thing I will say is this:  With the magnitude of the challenges we face right now, what we need in Washington are not more political tactics — we need more good ideas.  We don’t need more point-scoring — we need more problem-solving.  So if there are members of Congress who object to specific policies and proposals in this budget, then I ask them to be ready and willing to propose constructive, alternative solutions.  If certain aspects of this budget people don’t think work, provide us some ideas in terms of what you do.  “Just say no” is the right advice to give your teenagers about drugs.  It is not an acceptable response to whatever economic policy is proposed by the other party.

    The American people sent us here to get things done
    Let’s pass a budget that puts this nation on the road to lasting prosperity.
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    Written by Monte

    March 18, 2009 at 12:43 pm

    Good news about economic stimuli

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    I’ve posted a few excerpts about how slow and ineffective tax cuts are as an economic stimulus. But (as the saying goes) any jackass can kick a building down.  What does work?

    Beyond the partisan rhetoric, there’s good news.  Here are excerpts from an interview with Mark Zandi, economist with Moody’s Economy.com:

    clipped from money.cnn.com

    Moody’s study suggests extending unemployment benefits, increasing food stamps fastest ways to stimulate economy.

    Lower Wall Street from Under the FDR
    Lower Wall Street; Image by SheepGuardingLlama via Flickr

    The industry research firm Moody’s Economy.com tracked the potential impact of each stimulus dollar, looking at tax rebates, tax incentives for business, food stamps and expanding unemployment benefits. [...]

    The report found that “some provide a lot of bang for the buck to the economy. Others … don’t,” said economist Mark Zandi. [...]

    In findings echoed by other economists and studies, he said the study shows the fastest way to infuse money into the economy is through expanding the food-stamp program. For every dollar spent on that program $1.73 is generated throughout the economy, he said. [...]

    “If someone who is literally living paycheck to paycheck gets an extra dollar, it’s very likely that they will spend that dollar immediately on whatever they need – groceries, to pay the telephone bill, to pay the electric bill,” he said. [...]

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    Food stamps. Direct aid to people short on food. Unemployment benefits. And why? Because it will most likely be spent on practical, immediate needs. The kinds of things that we want to be producing.

    Now there’s a nexus of moral and economic responsibility than anybody ought to be able to back!

    It may be late in the game to impact the first stimulus bill. But hang on to this idea: in all likelihood, this is a recession of several years’ duration, and this is not the last time economic stimuli will be on the table.

    Here’s the moral of the story:

    Food stamps and unemployment benefits are not only good for people who are struggling. They’re good for the entire economy. They’re good for all of us.


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    Written by Monte

    February 13, 2009 at 12:57 pm

    Is it honest to call it “socialism?”

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    Morning Joe

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    The S-word is back.

    For example, watch Morning Joe get exercised about the stimulus proposal’s tax refund to people of low income, followed by analysis from ThinkProgress:

    clipped from thinkprogress.org

    Joe Scarborough: Obama’s Trying To ‘Buy Off People’ With ‘Pure, Straight Socialism’»

    SCARBOROUGH: “You’re not going to get Republicans to line up and support tax cuts for people who don’t pay taxes [...] It’s not even welfare. […] If you want pure straight socialism, if you want to buy off people, do that.”
    There are enormous problems with this analysis. First, Americans benefiting from the tax cut do pay taxes — sales taxes, payroll taxes, social security taxes — even if they don’t pay income tax. In fact, those in the lowest income bracket pay about 4.3 percent of their income to federal taxes. [...]The tax credit isn’t some kind of charity; it’s one of the most effective kinds of tax cuts in terms of stimulating the economy. Moody’s chief ecomomist Mark Zandi showed that the refundable tax credit gives the economy a far greater “bang for the buck” than non-refundable tax cuts, corporate tax cuts, or making Bush’s tax cuts permanent, the “solutions” proposed by conservatives:
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    Follow the link for Zandi’s numbers.

    Meanwhile, if the tax refund plan is indeed a refund, and if can be shown to be among the most quickly effective tax changes for stimulating the economy, isn’t it what we’re looking for?

    And didn’t they teach us in high school that socialism was when the government owns the means of production?  Just how is it that tax refunds accomplish that?

    I don’t recall learning that when poor people spend tax refunds at American businesses, capitalism is on the way out.  It would seem just to have just the opposite effect.


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