Arquivo da tag: Desigualdade

Drought Frames Economic Divide of Californians (New York Times)

COMPTON, Calif. — Alysia Thomas, a stay-at-home mother in this working-class city, tells her children to skip a bath on days when they do not play outside; that holds down the water bill. Lillian Barrera, a housekeeper who travels 25 miles to clean homes in Beverly Hills, serves dinner to her family on paper plates for much the same reason. In the fourth year of a severe drought, conservation is a fine thing, but in this Southern California community, saving water means saving money.

The challenge of California’s drought is starkly different in Cowan Heights, a lush oasis of wealth and comfort 30 miles east of here. That is where Peter L. Himber, a pediatric neurologist, has decided to stop watering the gently sloping hillside that he spent $100,000 to turn into a green California paradise, seeding it with a carpet of rich native grass and installing a sprinkler system fit for a golf course. But that is also where homeowners like John Sears, a retired food-company executive, bristle with defiance at the prospect of mandatory cuts in water use.

“This is a high fire-risk area,” Mr. Sears said. “If we cut back 35 percent and all these homes just let everything go, what’s green will turn brown. Tell me how the fire risk will increase.”

The fierce drought that is gripping the West — and the imminent prospect of rationing and steep water price increases in California — is sharpening the deep economic divide in this state, illustrating parallel worlds in which wealthy communities guzzle water as poorer neighbors conserve by necessity. The daily water consumption rate was 572.4 gallons per person in Cowan Heights from July through September 2014, the hot and dry summer months California used to calculate community-by-community water rationing orders; it was 63.6 gallons per person in Compton during that same period.

Now, California is trying to turn that dynamic on its head, forcing the state’s biggest water users, which include some of the wealthiest communities, to bear the brunt of the statewide 25 percent cut in urban water consumption ordered by Gov. Jerry Brown. Cowan Heights is facing a 36 percent cut in its water use, compared with 8 percent for Compton.

Other wealthy communities that must cut 36 percent include Beverly Hills and Hillsborough, a luxury town in Silicon Valley. Along with Compton, other less wealthy communities facing more modest cuts include Inglewood, which has been told to reduce its water consumption by 12 percent over what it was in 2013.

The looming question now, with drought regulations set to be adopted next month, is whether conservation tools being championed by this state — $10,000-a-day fines for water agencies, higher prices for bigger water users or even, in the most extreme cases, a reduction in water supplies — will be effective with wealthy homeowners. Since their lawns are more often than not tended to by gardeners, they may have little idea just how much water they use.

Gail Lord in her garden in Cowan Heights, which is facing a 36 percent cut in its water use.CreditMonica Almeida/The New York Times 

As it is, the legality of conservation — the practice of charging higher water rates to people who consume more for big water use — came under question when a court ruled that a tiered-pricing system used by an Orange County city ran afoul of the State Constitution and sent it back to allow the city to try to bring it into compliance.

“The wealthy use more water, electricity and natural gas than anyone else,” said Stephanie Pincetl, the director of the California Center for Sustainable Communities at the University of California, Los Angeles. “They have bigger properties. They are less price sensitive. So if you can afford it, you use it.”

“Then it becomes a moral question,” she said. “But lots of wealthy people don’t pay their own bills, so they don’t know what the water costs.”

Brown Lawns vs. Lush Ones

In Compton, where residents often pay their bills in cash or installments, lawns are brown and backyard pools are few or empty. In Cowan Heights, where residents are involved in a rancorous dispute with a water company over rate increases, water is a luxury worth paying for as homeowners shower their lush lawns and top off pools and koi ponds.


The Times asked Californians for their thoughts on the drought and how it affects them.

John Montgomery, Oak Park : “It doesn’t matter whether you are conservative or liberal, a religious fundamentalist or a raging athiest, rich or poor, we all need drinking water, and we all eat things that need water to grow to be very simple about it.”

Stephen Babatsias, Los Angeles: “Rich neighborhoods with lush gardens, like Hancock Park, are still as rich and lush looking as before, filled with oxygen and opulent foliage. Everything looks and feels the same so far.”

Edie Marshall, Davis: “Call it fatalistic, but why should I try even harder when so many have done little or nothing? I’m not going to cut back on my showers while rich people in southern California have nice lawns”

Kathleen Naples, Avalon: “Catalina Island has a desal plant with old diesel generators which could be updated and co-generation could be used. Edison runs it very poorly. This is a tourist economy, so tourists waste water and residents are fined and suffer shut-offs.”

Cheryl Trout, Palm Desert: “We are in a 5,000 home golf course community, which has recycled it’s waste water since it was built for watering golf courses and community landscaping. It would be nice if that water could also be used for individual yards. More communities need to switch to this model.”

Daniel Sawyer, San Bernardino: “I am pretty conscientious about water, energy, and waste, so I appreciate this official acknowledgement of the problem. I foresee a lot of Californians paying fines and fees because they will recklessly continue to waste water despite Governor Brown’s orders.”

“Just because you can afford to use something doesn’t mean you should,” said Aja Brown, the mayor of Compton, as she sat in her second-floor office with windows overlooking the light-rail Blue Line tracks that cut through town. “We’re all in this together. We all have to make sure we consume less.”

Hints of class resentment can be heard on the streets of Compton.

“I have a garden — it’s dying,” said Ms. Barrera, the housekeeper, as she left the water department at Compton City Hall, where she had just paid a $253 two-month water bill. “My grass is drying. I try to save water. In Beverly Hills, they have a big garden and run laundry all the time. It doesn’t matter.”

Rod Lopez, a contractor from Compton who tends to homes here and along the wealthy Newport Beach coast, said he was startled at the different attitudes he found toward water consumption in communities just 30 miles apart.

“I work in Newport Beach: I see water running all day long,” he said. “We’ve gotten so tight over here. Everything is irrigated over there. They may get fined for it — they don’t care. They have the money to pay the fines.”

Compton and Cowan Heights, which is 10 miles from Disneyland, could hardly be more different, and it is not only a matter of water. The median household income in Compton is $42,953, and 26 percent of the population lives below the poverty line; 67 percent of the population is Hispanic. In North Tustin, the census-designated community that includes Cowan Heights, the median household income is $122,662, and less than 3 percent of the population lives below the poverty line; 84 percent of the population is white.

Since the first homes sprang up in Cowan Heights in the 1950s in what had been hilly horse pastures, water and money have made this neighborhood of doctors, lawyers and wealthy retirees bloom. Even as the drought has worsened and water rates have climbed, residents have continued consuming hundreds of gallons a day and paying — albeit with more than a little grousing — water bills that have soared to $400 or $500 a month.

Many people say they are trying to use less: They are capping their sprinkler systems, installing expensive new drip-watering systems or replacing their thirsty lawns with starkly beautiful desert landscapes. But they can also afford to buy their way out of the drought, assuming that fines will be the primary punishment for those who do not conserve, and that the water will keep flowing for those who can pay.

Some Cowan Heights residents say their neighbors have enough money not to pay heed to rising prices, and are content to let their landscapers use as much water as necessary to keep their homes in bloom. Landscapers’ trucks are parked around nearly every twisting road, tending to avocado and lemon trees, plush lawns, and riots of purple hibiscus and scarlet bougainvillea.

“They don’t even think about it,” said Gail Lord, a resident who keeps a blog cataloging the gardens around Cowan Heights.

Salvador Garcia, a gardener, mowed a lawn in Compton, where 26 percent of the population lives below the poverty line and which is already using less water by financial necessity.Credit Monica Almeida/The New York Times 

On Deerhaven Drive, Craig Beam and his wife saw their water-scarce future after a landscaper stomped at the base of their Chinese elm and declared the roots hollow and parched. “Nobody’s going to go broke around here paying their water bills,” Mr. Beam said.

Still, in a sign that even the wealthy have their limits, the drought is exacerbating a dispute between Cowan Heights residents and their for-profit water provider, the Golden State Water Company, offering a glimpse of fights to come as local water agencies impose higher prices to meet California’s new conservation mandates. The neighborhood is bristling with lawn signs reading, “Stop the Water Ripoff!”

Calculating Costs

Residents complain their water bills have soared as Golden State Water imposed a three-tier pricing system that charges more for higher water use, the kind of conservation pricing that state water regulators are championing. The company is now seeking to add a fourth, even higher price tier. “Golden State Water’s rates reflect the true cost to operate and maintain the water system,” said Denise Kruger, a senior vice president of the company.

That has not appeased water users.

Ms. Lord and her husband, Alan Bartky, outside their home in Cowan Heights, where the median household income is $122,662. CreditMonica Almeida/The New York Times 

“Water is a necessity of life,” said Mr. Sears, the retired food-company executive, whose bimonthly water bills regularly run $400 or $500 but went as high as $756 last September. “It should not be sold as a commodity.”

Thirty miles away, the economy in Compton is on the upswing as this region comes out of the recession. Still, Compton Boulevard, the axis around which the 127-year-old community was settled, is filled with reminders of the poverty and crime that are still here: Check-cashing stores and bail bondsmen. Many homes have gates over their windows.

Compton has a storied history of gang wars and has produced some of the bigger names in rap music, including Kendrick Lamar and Ice Cube. The unemployment rate in Compton was 11.8 percent in February, compared with 6.7 percent statewide. (There are no comparable numbers for Cowan Heights, since it is an unincorporated region.)

This city is a neat grid of postage-stamp-size front lawns, many of them brown or choked with weeds. There are few pools or ornamental fountains in this part of the county; the fountains in front of City Hall have been turned off.

After not budging for 25 years, water prices began rising in 2005 and have increased about 93 percent since then. The city, which has 81,963 water consumers, has also set up a two-tiered system to charge heavier users more, though it remains to be seen if that and other tiered systems will be challenged in the wake of the court ruling in Orange County last week. A typical water bill here is $70 a month.

Alysia Thomas with her daughter Raven and son Darian outside their home in Compton, where a typical water bill is $70 a month. Credit Monica Almeida/The New York Times 

“To me the issue is keeping down the cost,” said Ms. Thomas, 41, the stay-at-home mother. “Conservation is a cost-saving thing for me.” She leaned over the fence of her home that she shares with her husband and children, looking over her compact patch of lawn that surrounds her home and another small cottage, where her mother lives.

Chad Blais, the deputy director of public works at Compton, said people often paid their water bill in cash or pleaded for an extension. “We do have a large community that is month-to-month on their pay,” he said. “They don’t have a high water usage mainly because they can’t afford it. They’ll call and tell us they’re choosing to pay for food or medicine.”

Under Governor Brown’s 25 percent statewide reduction order, about 400 local water agencies are responsible for cuts ranging from 4 percent to 36 percent. Water companies are limiting how often people can water their yards — twice a week for Golden State customers — and barring them from washing down pavement or using drinking water to wash a car.

If water providers cannot get customers to conserve enough voluntarily, they can resort to financial penalties: Golden State said it would fine offenders in Cowan Heights and other communities it serves $500 a day.

California’s water-control board has zeroed in on Cowan Heights and its 5,399 water customers as some of the most spendthrift water users. The benchmark measurement from last summer put it high on the list of 94 water districts that must cut their water use by 36 percent under the proposed new rules.

Compton residents often pay their water bills in cash or installments at City Hall.Credit Monica Almeida/The New York Times 

“It is somewhat of an outlier,” Toby Moore, the chief hydrogeologist for Golden State Water, said of Cowan Heights. “There’s been a lot of investment into those properties, so water use is higher to address the landscaping of those properties.”

Some people in Cowan Heights are planning to let their lawns go brown, though more out of a spirit of conservation than economic necessity.

“We’ll replace that with rocks,” said Dr. Himber, the neurologist, as he and his landscaper walked the grounds.

Ms. Lord, the blogger, walked around her home, tucked amid flower-splashed hillsides behind a stately automated gate, and surveyed her roses with a fatalistic eye. “Doomed,” she said, nodding at the flowers, blooming wedding-white and dance-hall pink. “Doomed.”

‘A Bad Message’

About 80 percent of the water in this state is used by agriculture, so the amount of water that might be saved by cuts in wealthy and relatively sparsely populated areas will not be large.

But the disparity in behavior is a matter of concern among state water regulators, as is the worry that high prices will not have the same kind of impact on water use in, say, Cowan Heights as they might in Compton.

“That is the challenge,” said Jeffrey Kightlinger, the general manager of the Metropolitan Water District of Southern California, which provides water for about 19 million people. “We are finding it works with 90 percent of the public. You still have certain wealthy communities that won’t bother. And the price penalty doesn’t impact them. It sends a bad message.”

David L. Feldman, who studies water policy at the University of California, Irvine, said a big risk for state water regulators would be if the public concluded that water-conservation policies were “falling disproportionately on those who are less able to meet those goals.”

Ms. Barrera, the housekeeper, said she had thought she was doing her part, and she spoke of the lush gardens and sweeping pools she sees in Beverly Hills.

“I’m using a lot less,” Ms. Barrera said. At that, she glanced down at the just-paid water bill she was still holding in her hand. “But I guess it’s not enough.”

Oxfam: Em 2016, 1% mais ricos terão mais dinheiro que o resto do mundo (Carta Capital)

19/1/2015 – 09h33

por Redação da Carta Capital

pobreza Oxfam: Em 2016, 1% mais ricos terão mais dinheiro que o resto do mundo

A redução da pobreza é um dos eixos da agenda de desenvolvimento pós-2015. Crianças na favela de Kallayanpur, uma das favelas urbanas em Daca, Bangladesh. Foto: ONU/Kibae Park 

ONG britânica divulga dados sobre a desigualdade social no mundo para tentar guiar as discussões do Fórum Econômico Mundial

Um estudo divulgado nesta segunda-feira 19 pela ONG britânica Oxfam afirma que, em 2016, as 37 milhões de pessoas que compõem o 1% mais rico da população mundial terão mais dinheiro do que os outros 99% juntos. O relatório tem o objetivo de influenciar as discussões a serem travadas no Fórum Econômico Mundial (FEM), que reúne os ricos e poderosos no resort suíço de Davos entre 21 e 24 de janeiro.

O estudo da Oxfam é baseado no relatório anual sobre a riqueza mundial que o banco Credit Suisse divulga anualmente desde 2010. Na versão mais recente, divulgada em outubro 2014, o Credit Suisse mostrou que o 1% mais rico (com bens de 800 mil dólares no mínimo) detinha 48,2% da riqueza mundial, enquanto os outros 99% ficavam com os 51,8%. No grupo dos 99%, também há uma significativa desigualdade: quase toda a riqueza está nas mãos dos 20% mais ricos, enquanto as outras pessoas dividem 5,5% do patrimônio.

No estudo divulgado nesta segunda, a Oxfam extrapolou os dados para o futuro e indica que em 2016 o 1% mais rico terá mais de 50% dos bens e patrimônios existentes no mundo. “Nós realmente queremos viver em um mundo no qual o 1% tem mais do que nós todos juntos?”, questionou Winnie Byanyima, diretora-executiva da Oxfam e co-presidente do Fórum Econômico Mundial. Em artigo publicado no site do FEM, Byanyima afirma que o fórum tem em 2015 o duplo desafio de conciliar a desigualdade social e as mudanças climáticas. “Tanto nos países ricos quanto nos pobres, essa desigualdade alimenta o conflito, corroendo as democracias e prejudicando o próprio crescimento”, afirma Byanyima.

A diretora da Oxfam lembra que há algum tempo os que se preocupavam com a desigualdade eram acusados de ter “inveja”, mas que apenas em 2014 algumas personalidades como o papa Francisco, o presidente dos Estados Unidos, Barack Obama, e a diretora do Fundo Monetário Internacional (FMI), Christine Lagarde, manifestaram preocupação com a desigualdade social. “O crescente consenso: se não controlada, a desigualdade econômica vai fazer regredir a luta contra a pobreza e ameaçará a estabilidade global”, afirma.

A Oxfam mostra que a riqueza do 1% é derivada de atividades em poucos setores, sendo os de finanças e seguros os principais e os de serviços médicos e indústria farmacêutica dois com grande crescimento em 2013 e 2014. A Oxfam lembra que as companhias mais ricas do mundo usam seu dinheiro, entre outras coisas, para influenciar os governos por meio de lobbies, favorecendo seus setores. No caso particular dos Estados Unidos, que concentra junto com a Europa a maior parte dos integrantes do 1% mais rico, o lobby é particularmente prolífico, afirma a Oxfam, para mexer no orçamento e nos impostos do país, destinando a poucos recursos que “deveriam ser direcionados em benefícios de toda a população”.

Para a Oxfam, a desigualdade social não deve ser tratada como algo inevitável. A ONG lista uma série de medidas para colocar a diferença entre ricos e pobres sob controle, como fazer os governos trabalharem para seus cidadãos e terem a redução da desigualdade como objetivo; a promoção dos direitos e a igualdade econômica das mulheres; o pagamento de salários mínimos e a contenção dos salários de executivos; e o objetivo de o mundo todo ter serviços gratuitos de saúde e educação.

* Publicado originalmente no site Carta Capital.

Brain circuit differences reflect divisions in social status (Science Daily)

Date: September 2, 2014

Source: University of Oxford

Summary: Life at opposite ends of primate social hierarchies is linked to specific brain networks, research has shown. The more dominant you are, the bigger some brain regions are. If your social position is more subordinate, other brain regions are bigger.


Group of young barbary macaques (stock image). The research determined the position of 25 macaque monkeys in their social hierarchy and then analyzed non-invasive scans of their brains that had been collected as part of other ongoing University research programs. The findings show that brain regions in one neural circuit are larger in more dominant animals. The regions composing this circuit are the amygdala, raphe nucleus and hypothalamus. Credit: © scphoto48 / Fotolia

Life at opposite ends of primate social hierarchies is linked to specific brain networks, a new Oxford University study has shown.

The importance of social rank is something we all learn at an early age. In non-human primates, social dominance influences access to food and mates. In humans, social hierarchies influence our performance everywhere from school to the workplace and have a direct influence on our well-being and mental health. Life on the lowest rung can be stressful, but life at the top also requires careful acts of balancing and coalition forming. However, we know very little about the relationship between these social ranks and brain function.

The new research, conducted at the University of Oxford, reveals differences between individual primate’s brains which depend on the their social status. The more dominant you are, the bigger some brain regions are. If your social position is more subordinate, other brain regions are bigger. Additionally, the way the brain regions interact with each other is also associated with social status. The pattern of results suggests that successful behaviour at each end of the social scale makes specialised demands of the brain.

The research, led by Dr MaryAnn Noonan of the Decision and Action Laboratory at the University of Oxford, determined the position of 25 macaque monkeys in their social hierarchy and then analysed non-invasive scans of their brains that had been collected as part of other ongoing University research programs. The findings, publishing September 2 in the open access journal PLOS Biology, show that brain regions in one neural circuit are larger in more dominant animals. The regions composing this circuit are the amygdala, raphe nucleus and hypothalamus. Previous research has shown that the amygdala is involved in learning, and processing social and emotional information. The raphe nucleus and hypothalamus are involved in controlling neurotransmitters and neurohormones, such as serotonin and oxytocin. The MRI scans also revealed that another circuit of brain regions, which collectively can be called the striatum, were found to be larger in more subordinate animals. The striatum is known to play a complex but important role in learning the value of our choices and actions.

The study also reports that the brain’s activity, not just its structure, varies with position in the social hierarchy. The researchers found that the strength with which activity in some of these areas was coupled together was also related to social status. Collectively, these results mean that social status is not only reflected in the brain’s hardware, it is also related to differences in the brain’s software, or communication patterns.

Finally, the size of another set of brain regions correlated not only with social status but also with the size of the animal’s social group. The macaque groups ranged in size between one and seven. The research showed that grey matter in regions involved in social cognition, such as the mid-superior temporal sulcus and rostral prefrontal cortex, correlated with both group size and social status. Previous research has shown that these regions are important for a variety of social behaviours, such as interpreting facial expressions or physical gestures, understanding the intentions of others and predicting their behaviour.

“This finding may reflect the fact that social status in macaques depends not only on the outcome of competitive social interactions but on social bonds formed that promote coalitions,” says Matthew Rushworth, the head of the Decision and Action Laboratory in Oxford. “The correlation with social group size and social status suggests this set of brain regions may coordinate behaviour that bridges these two social variables.”

The results suggest that just as animals assign value to environmental stimuli they may also assign values to themselves — ‘self-values’. Social rank is likely to be an important determinant of such self-values. We already know that some of the brain regions identified in the current study track the value of objects in our environment and so may also play a key role in monitoring longer-term values associated with an individual’s status.

The reasons behind the identified brain differences remain unclear, particularly whether they are present at birth or result from social differences. Dr Noonan said: “One possibility is that the demands of a life in a particular social position use certain brain regions more frequently and as a result those areas expand to step up to the task. Alternatively, it is possible that people born with brains organised in a particular way tend towards certain social positions. In all likelihood, both of these mechanisms will work together to produce behaviour appropriate for the social context.”

Social status also changes over time and in different contexts. Dr Noonan added: “While we might be top-dog in one circle of friends, at work we might be more of a social climber. The fluidity of our social position and how our brains adapt our behavior to succeed in each context is the next exciting direction for this area of research.”


Journal Reference:

  1. MaryAnn P. Noonan, Jerome Sallet, Rogier B. Mars, Franz X. Neubert, Jill X. O’Reilly, Jesper L. Andersson, Anna S. Mitchell, Andrew H. Bell, Karla L. Miller, Matthew F. S. Rushworth. A Neural Circuit Covarying with Social Hierarchy in Macaques. PLoS Biology, 2014; 12 (9): e1001940 DOI:10.1371/journal.pbio.1001940

Why We’re in a New Gilded Age (The New York Review of Books)

Paul Krugman

MAY 8, 2014 ISSUE

Capital in the Twenty-First Century
by Thomas Piketty, translated from the French by Arthur Goldhammer
Belknap Press/Harvard University Press, 685 pp., $39.95



Thomas Piketty in his office at the Paris School of Economics, 2013. Emmanuelle Marchadour

Thomas Piketty, professor at the Paris School of Economics, isn’t a household name, although that may change with the English-language publication of his magnificent, sweeping meditation on inequality, Capital in the Twenty-First Century. Yet his influence runs deep. It has become a commonplace to say that we are living in a second Gilded Age—or, as Piketty likes to put it, a second Belle Époque—defined by the incredible rise of the “one percent.” But it has only become a commonplace thanks to Piketty’s work. In particular, he and a few colleagues (notably Anthony Atkinson at Oxford and Emmanuel Saez at Berkeley) have pioneered statistical techniques that make it possible to track the concentration of income and wealth deep into the past—back to the early twentieth century for America and Britain, and all the way to the late eighteenth century for France.

The result has been a revolution in our understanding of long-term trends in inequality. Before this revolution, most discussions of economic disparity more or less ignored the very rich. Some economists (not to mention politicians) tried to shout down any mention of inequality at all: “Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution,” declared Robert Lucas Jr. of the University of Chicago, the most influential macroeconomist of his generation, in 2004. But even those willing to discuss inequality generally focused on the gap between the poor or the working class and the merely well-off, not the truly rich—on college graduates whose wage gains outpaced those of less-educated workers, or on the comparative good fortune of the top fifth of the population compared with the bottom four fifths, not on the rapidly rising incomes of executives and bankers.

It therefore came as a revelation when Piketty and his colleagues showed that incomes of the now famous “one percent,” and of even narrower groups, are actually the big story in rising inequality. And this discovery came with a second revelation: talk of a second Gilded Age, which might have seemed like hyperbole, was nothing of the kind. In America in particular the share of national income going to the top one percent has followed a great U-shaped arc. Before World War I the one percent received around a fifth of total income in both Britain and the United States. By 1950 that share had been cut by more than half. But since 1980 the one percent has seen its income share surge again—and in the United States it’s back to what it was a century ago.

Still, today’s economic elite is very different from that of the nineteenth century, isn’t it? Back then, great wealth tended to be inherited; aren’t today’s economic elite people who earned their position? Well, Piketty tells us that this isn’t as true as you think, and that in any case this state of affairs may prove no more durable than the middle-class society that flourished for a generation after World War II. The big idea of Capital in the Twenty-First Century is that we haven’t just gone back to nineteenth-century levels of income inequality, we’re also on a path back to “patrimonial capitalism,” in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties.

It’s a remarkable claim—and precisely because it’s so remarkable, it needs to be examined carefully and critically. Before I get into that, however, let me say right away that Piketty has written a truly superb book. It’s a work that melds grand historical sweep—when was the last time you heard an economist invoke Jane Austen and Balzac?—with painstaking data analysis. And even though Piketty mocks the economics profession for its “childish passion for mathematics,” underlying his discussion is a tour de force of economic modeling, an approach that integrates the analysis of economic growth with that of the distribution of income and wealth. This is a book that will change both the way we think about society and the way we do economics.


What do we know about economic inequality, and about when do we know it? Until the Piketty revolution swept through the field, most of what we knew about income and wealth inequality came from surveys, in which randomly chosen households are asked to fill in a questionnaire, and their answers are tallied up to produce a statistical portrait of the whole. The international gold standard for such surveys is the annual survey conducted once a year by the Census Bureau. The Federal Reserve also conducts a triennial survey of the distribution of wealth.

These two surveys are an essential guide to the changing shape of American society. Among other things, they have long pointed to a dramatic shift in the process of US economic growth, one that started around 1980. Before then, families at all levels saw their incomes grow more or less in tandem with the growth of the economy as a whole. After 1980, however, the lion’s share of gains went to the top end of the income distribution, with families in the bottom half lagging far behind.

Historically, other countries haven’t been equally good at keeping track of who gets what; but this situation has improved over time, in large part thanks to the efforts of the Luxembourg Income Study (with which I will soon be affiliated). And the growing availability of survey data that can be compared across nations has led to further important insights. In particular, we now know both that the United States has a much more unequal distribution of income than other advanced countries and that much of this difference in outcomes can be attributed directly to government action. European nations in general have highly unequal incomes from market activity, just like the United States, although possibly not to the same extent. But they do far more redistribution through taxes and transfers than America does, leading to much less inequality in disposable incomes.

Yet for all their usefulness, survey data have important limitations. They tend to undercount or miss entirely the income that accrues to the handful of individuals at the very top of the income scale. They also have limited historical depth. Even US survey data only take us to 1947.

Enter Piketty and his colleagues, who have turned to an entirely different source of information: tax records. This isn’t a new idea. Indeed, early analyses of income distribution relied on tax data because they had little else to go on. Piketty et al. have, however, found ways to merge tax data with other sources to produce information that crucially complements survey evidence. In particular, tax data tell us a great deal about the elite. And tax-based estimates can reach much further into the past: the United States has had an income tax since 1913, Britain since 1909. France, thanks to elaborate estate tax collection and record-keeping, has wealth data reaching back to the late eighteenth century.

Exploiting these data isn’t simple. But by using all the tricks of the trade, plus some educated guesswork, Piketty is able to produce a summary of the fall and rise of extreme inequality over the course of the past century. It looks like Table 1 on this page.

As I said, describing our current era as a new Gilded Age or Belle Époque isn’t hyperbole; it’s the simple truth. But how did this happen?



Piketty throws down the intellectual gauntlet right away, with his book’s very title:Capital in the Twenty-First Century. Are economists still allowed to talk like that?

It’s not just the obvious allusion to Marx that makes this title so startling. By invoking capital right from the beginning, Piketty breaks ranks with most modern discussions of inequality, and hearkens back to an older tradition.

The general presumption of most inequality researchers has been that earned income, usually salaries, is where all the action is, and that income from capital is neither important nor interesting. Piketty shows, however, that even today income from capital, not earnings, predominates at the top of the income distribution. He also shows that in the past—during Europe’s Belle Époque and, to a lesser extent, America’s Gilded Age—unequal ownership of assets, not unequal pay, was the prime driver of income disparities. And he argues that we’re on our way back to that kind of society. Nor is this casual speculation on his part. For all that Capital in the Twenty-First Century is a work of principled empiricism, it is very much driven by a theoretical frame that attempts to unify discussion of economic growth and the distribution of both income and wealth. Basically, Piketty sees economic history as the story of a race between capital accumulation and other factors driving growth, mainly population growth and technological progress.

To be sure, this is a race that can have no permanent victor: over the very long run, the stock of capital and total income must grow at roughly the same rate. But one side or the other can pull ahead for decades at a time. On the eve of World War I, Europe had accumulated capital worth six or seven times national income. Over the next four decades, however, a combination of physical destruction and the diversion of savings into war efforts cut that ratio in half. Capital accumulation resumed after World War II, but this was a period of spectacular economic growth—the Trente Glorieuses, or “Glorious Thirty” years; so the ratio of capital to income remained low. Since the 1970s, however, slowing growth has meant a rising capital ratio, so capital and wealth have been trending steadily back toward Belle Époque levels. And this accumulation of capital, says Piketty, will eventually recreate Belle Époque–style inequality unless opposed by progressive taxation.

Why? It’s all about r versus g—the rate of return on capital versus the rate of economic growth.

Just about all economic models tell us that if g falls—which it has since 1970, a decline that is likely to continue due to slower growth in the working-age population and slower technological progress—r will fall too. But Piketty asserts that r will fall less than g. This doesn’t have to be true. However, if it’s sufficiently easy to replace workers with machines—if, to use the technical jargon, the elasticity of substitution between capital and labor is greater than one—slow growth, and the resulting rise in the ratio of capital to income, will indeed widen the gap between r and g. And Piketty argues that this is what the historical record shows will happen.

If he’s right, one immediate consequence will be a redistribution of income away from labor and toward holders of capital. The conventional wisdom has long been that we needn’t worry about that happening, that the shares of capital and labor respectively in total income are highly stable over time. Over the very long run, however, this hasn’t been true. In Britain, for example, capital’s share of income—whether in the form of corporate profits, dividends, rents, or sales of property, for example—fell from around 40 percent before World War I to barely 20 percent circa 1970, and has since bounced roughly halfway back. The historical arc is less clear-cut in the United States, but here, too, there is a redistribution in favor of capital underway. Notably, corporate profits have soared since the financial crisis began, while wages—including the wages of the highly educated—have stagnated.

A rising share of capital, in turn, directly increases inequality, because ownership of capital is always much more unequally distributed than labor income. But the effects don’t stop there, because when the rate of return on capital greatly exceeds the rate of economic growth, “the past tends to devour the future”: society inexorably tends toward dominance by inherited wealth.

Consider how this worked in Belle Époque Europe. At the time, owners of capital could expect to earn 4–5 percent on their investments, with minimal taxation; meanwhile economic growth was only around one percent. So wealthy individuals could easily reinvest enough of their income to ensure that their wealth and hence their incomes were growing faster than the economy, reinforcing their economic dominance, even while skimming enough off to live lives of great luxury.

And what happened when these wealthy individuals died? They passed their wealth on—again, with minimal taxation—to their heirs. Money passed on to the next generation accounted for 20 to 25 percent of annual income; the great bulk of wealth, around 90 percent, was inherited rather than saved out of earned income. And this inherited wealth was concentrated in the hands of a very small minority: in 1910 the richest one percent controlled 60 percent of the wealth in France; in Britain, 70 percent.

No wonder, then, that nineteenth-century novelists were obsessed with inheritance. Piketty discusses at length the lecture that the scoundrel Vautrin gives to Rastignac in Balzac’s Père Goriot, whose gist is that a most successful career could not possibly deliver more than a fraction of the wealth Rastignac could acquire at a stroke by marrying a rich man’s daughter. And it turns out that Vautrin was right: being in the top one percent of nineteenth-century heirs and simply living off your inherited wealth gave you around two and a half times the standard of living you could achieve by clawing your way into the top one percent of paid workers.

You might be tempted to say that modern society is nothing like that. In fact, however, both capital income and inherited wealth, though less important than they were in the Belle Époque, are still powerful drivers of inequality—and their importance is growing. In France, Piketty shows, the inherited share of total wealth dropped sharply during the era of wars and postwar fast growth; circa 1970 it was less than 50 percent. But it’s now back up to 70 percent, and rising. Correspondingly, there has been a fall and then a rise in the importance of inheritance in conferring elite status: the living standard of the top one percent of heirs fell below that of the top one percent of earners between 1910 and 1950, but began rising again after 1970. It’s not all the way back to Rasti-gnac levels, but once again it’s generally more valuable to have the right parents (or to marry into having the right in-laws) than to have the right job.

And this may only be the beginning. Figure 1 on this page shows Piketty’s estimates of global r and g over the long haul, suggesting that the era of equalization now lies behind us, and that the conditions are now ripe for the reestablishment of patrimonial capitalism.


Given this picture, why does inherited wealth play as small a part in today’s public discourse as it does? Piketty suggests that the very size of inherited fortunes in a way makes them invisible: “Wealth is so concentrated that a large segment of society is virtually unaware of its existence, so that some people imagine that it belongs to surreal or mysterious entities.” This is a very good point. But it’s surely not the whole explanation. For the fact is that the most conspicuous example of soaring inequality in today’s world—the rise of the very rich one percent in the Anglo-Saxon world, especially the United States—doesn’t have all that much to do with capital accumulation, at least so far. It has more to do with remarkably high compensation and incomes.


Capital in the Twenty-First Century is, as I hope I’ve made clear, an awesome work. At a time when the concentration of wealth and income in the hands of a few has resurfaced as a central political issue, Piketty doesn’t just offer invaluable documentation of what is happening, with unmatched historical depth. He also offers what amounts to a unified field theory of inequality, one that integrates economic growth, the distribution of income between capital and labor, and the distribution of wealth and income among individuals into a single frame.

And yet there is one thing that slightly detracts from the achievement—a sort of intellectual sleight of hand, albeit one that doesn’t actually involve any deception or malfeasance on Piketty’s part. Still, here it is: the main reason there has been a hankering for a book like this is the rise, not just of the one percent, but specifically of the American one percent. Yet that rise, it turns out, has happened for reasons that lie beyond the scope of Piketty’s grand thesis.

Piketty is, of course, too good and too honest an economist to try to gloss over inconvenient facts. “US inequality in 2010,” he declares, “is quantitatively as extreme as in old Europe in the first decade of the twentieth century, but the structure of that inequality is rather clearly different.” Indeed, what we have seen in America and are starting to see elsewhere is something “radically new”—the rise of “supersalaries.”

Capital still matters; at the very highest reaches of society, income from capital still exceeds income from wages, salaries, and bonuses. Piketty estimates that the increased inequality of capital income accounts for about a third of the overall rise in US inequality. But wage income at the top has also surged. Real wages for most US workers have increased little if at all since the early 1970s, but wages for the top one percent of earners have risen 165 percent, and wages for the top 0.1 percent have risen 362 percent. If Rastignac were alive today, Vautrin might concede that he could in fact do as well by becoming a hedge fund manager as he could by marrying wealth.

What explains this dramatic rise in earnings inequality, with the lion’s share of the gains going to people at the very top? Some US economists suggest that it’s driven by changes in technology. In a famous 1981 paper titled “The Economics of Superstars,” the Chicago economist Sherwin Rosen argued that modern communications technology, by extending the reach of talented individuals, was creating winner-take-all markets in which a handful of exceptional individuals reap huge rewards, even if they’re only modestly better at what they do than far less well paid rivals.

Piketty is unconvinced. As he notes, conservative economists love to talk about the high pay of performers of one kind or another, such as movie and sports stars, as a way of suggesting that high incomes really are deserved. But such people actually make up only a tiny fraction of the earnings elite. What one finds instead is mainly executives of one sort or another—people whose performance is, in fact, quite hard to assess or give a monetary value to.

Who determines what a corporate CEO is worth? Well, there’s normally a compensation committee, appointed by the CEO himself. In effect, Piketty argues, high-level executives set their own pay, constrained by social norms rather than any sort of market discipline. And he attributes skyrocketing pay at the top to an erosion of these norms. In effect, he attributes soaring wage incomes at the top to social and political rather than strictly economic forces.

Now, to be fair, he then advances a possible economic analysis of changing norms, arguing that falling tax rates for the rich have in effect emboldened the earnings elite. When a top manager could expect to keep only a small fraction of the income he might get by flouting social norms and extracting a very large salary, he might have decided that the opprobrium wasn’t worth it. Cut his marginal tax rate drastically, and he may behave differently. And as more and more of the supersalaried flout the norms, the norms themselves will change.

There’s a lot to be said for this diagnosis, but it clearly lacks the rigor and universality of Piketty’s analysis of the distribution of and returns to wealth. Also, I don’t thinkCapital in the Twenty-First Century adequately answers the most telling criticism of the executive power hypothesis: the concentration of very high incomes in finance, where performance actually can, after a fashion, be evaluated. I didn’t mention hedge fund managers idly: such people are paid based on their ability to attract clients and achieve investment returns. You can question the social value of modern finance, but the Gordon Gekkos out there are clearly good at something, and their rise can’t be attributed solely to power relations, although I guess you could argue that willingness to engage in morally dubious wheeling and dealing, like willingness to flout pay norms, is encouraged by low marginal tax rates.

Overall, I’m more or less persuaded by Piketty’s explanation of the surge in wage inequality, though his failure to include deregulation is a significant disappointment. But as I said, his analysis here lacks the rigor of his capital analysis, not to mention its sheer, exhilarating intellectual elegance.

Yet we shouldn’t overreact to this. Even if the surge in US inequality to date has been driven mainly by wage income, capital has nonetheless been significant too. And in any case, the story looking forward is likely to be quite different. The current generation of the very rich in America may consist largely of executives rather than rentiers, people who live off accumulated capital, but these executives have heirs. And America two decades from now could be a rentier-dominated society even more unequal than Belle Époque Europe.

But this doesn’t have to happen.


At times, Piketty almost seems to offer a deterministic view of history, in which everything flows from the rates of population growth and technological progress. In reality, however, Capital in the Twenty-First Century makes it clear that public policy can make an enormous difference, that even if the underlying economic conditions point toward extreme inequality, what Piketty calls “a drift toward oligarchy” can be halted and even reversed if the body politic so chooses.

The key point is that when we make the crucial comparison between the rate of return on wealth and the rate of economic growth, what matters is the after-tax return on wealth. So progressive taxation—in particular taxation of wealth and inheritance—can be a powerful force limiting inequality. Indeed, Piketty concludes his masterwork with a plea for just such a form of taxation. Unfortunately, the history covered in his own book does not encourage optimism.

It’s true that during much of the twentieth century strongly progressive taxation did indeed help reduce the concentration of income and wealth, and you might imagine that high taxation at the top is the natural political outcome when democracy confronts high inequality. Piketty, however, rejects this conclusion; the triumph of progressive taxation during the twentieth century, he contends, was “an ephemeral product of chaos.” Absent the wars and upheavals of Europe’s modern Thirty Years’ War, he suggests, nothing of the kind would have happened.

As evidence, he offers the example of France’s Third Republic. The Republic’s official ideology was highly egalitarian. Yet wealth and income were nearly as concentrated, economic privilege almost as dominated by inheritance, as they were in the aristocratic constitutional monarchy across the English Channel. And public policy did almost nothing to oppose the economic domination by rentiers: estate taxes, in particular, were almost laughably low.

Why didn’t the universally enfranchised citizens of France vote in politicians who would take on the rentier class? Well, then as now great wealth purchased great influence—not just over policies, but over public discourse. Upton Sinclair famously declared that “it is difficult to get a man to understand something when his salary depends on his not understanding it.” Piketty, looking at his own nation’s history, arrives at a similar observation: “The experience of France in the Belle Époque proves, if proof were needed, that no hypocrisy is too great when economic and financial elites are obliged to defend their interest.”

The same phenomenon is visible today. In fact, a curious aspect of the American scene is that the politics of inequality seem if anything to be running ahead of the reality. As we’ve seen, at this point the US economic elite owes its status mainly to wages rather than capital income. Nonetheless, conservative economic rhetoric already emphasizes and celebrates capital rather than labor—“job creators,” not workers.

In 2012 Eric Cantor, the House majority leader, chose to mark Labor Day—Labor Day!—with a tweet honoring business owners:

Today, we celebrate those who have taken a risk, worked hard, built a business and earned their own success.

Perhaps chastened by the reaction, he reportedly felt the need to remind his colleagues at a subsequent GOP retreat that most people don’t own their own businesses—but this in itself shows how thoroughly the party identifies itself with capital to the virtual exclusion of labor.

Nor is this orientation toward capital just rhetorical. Tax burdens on high-income Americans have fallen across the board since the 1970s, but the biggest reductions have come on capital income—including a sharp fall in corporate taxes, which indirectly benefits stockholders—and inheritance. Sometimes it seems as if a substantial part of our political class is actively working to restore Piketty’s patrimonial capitalism. And if you look at the sources of political donations, many of which come from wealthy families, this possibility is a lot less outlandish than it might seem.

Piketty ends Capital in the Twenty-First Century with a call to arms—a call, in particular, for wealth taxes, global if possible, to restrain the growing power of inherited wealth. It’s easy to be cynical about the prospects for anything of the kind. But surely Piketty’s masterly diagnosis of where we are and where we’re heading makes such a thing considerably more likely. So Capital in the Twenty-First Century is an extremely important book on all fronts. Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.

Taking On Adam Smith (and Karl Marx) (New York Times)


APRIL 19, 2014

PARIS — Thomas Piketty turned 18 in 1989, when the Berlin Wall fell, so he was spared the tortured, decades-long French intellectual debate about the virtues and vices of communism. Even more telling, he remembers, was a trip he took with a close friend to Romania in early 1990, after the collapse of the Soviet empire.

“This sort of vaccinated me for life against lazy, anticapitalist rhetoric, because when you see these empty shops, you see these people queuing for nothing in the street,” he said, “it became clear to me that we need private property and market institutions, not just for economic efficiency but for personal freedom.”

But his disenchantment with communism doesn’t mean that Mr. Piketty has turned his back on the intellectual heritage of Karl Marx, who sought to explain the “iron laws” of capitalism. Like Marx, he is fiercely critical of the economic and social inequalities that untrammeled capitalism produces — and, he concludes, will continue to worsen. “I belong to a generation that never had any temptation with the Communist Party; I was too young for that,” Mr. Piketty said, in a long interview in his small, airless office here at the Paris School of Economics. “So it’s easier in a way to reopen these big issues about capitalism and inequality with a fresh eye, because I was too young for that fight. I don’t have to justify myself as being pro-communist or pro-capitalist.”

In his new book “Capital in the Twenty-First Century” (Harvard University Press), Mr. Piketty, 42, has written a blockbuster, at least in the world of economics. His book punctures earlier assumptions about the benevolence of advanced capitalism and forecasts sharply increasing inequality of wealth in industrialized countries, with deep and deleterious impact on democratic values of justice and fairness.

Branko Milanovic, a former economist at the World Bank, called it “one of the watershed books in economic thinking.” Paul Krugman, winner of the Nobel in economic science and a columnist for The New York Times, wrote that it “will be the most important economics book of the year — and maybe of the decade.” Remarkably for a book on such a weighty topic, it has already entered The New York Times’s best-seller list.

“Capital in the Twenty-First Century,” with its title echoing Marx’s “Das Kapital,” is meant to be a return to the kind of economic history, of political economy, written by predecessors like Marx and Adam Smith. It is nothing less than a broad effort to understand Western societies and the economic rules that underpin them. And in the process, by debunking the idea that “wealth raises all boats,” Mr. Piketty has thrown down a challenge to democratic governments to deal with an increasing gap between the rich and the poor — the very theme of inequality that recently moved both Pope Francis and President Obama to warn of its consequences.

Mr. Piketty — pronounced pee-ket-ee — grew up in a political home, with left-wing parents who were part of the 1968 demonstrations that turned traditional France upside down. Later, they went off to the Aude, deep in southern France, to raise goats. His parents are not a topic he wants to discuss. More relevant and important, he said, are his generation’s “founding experiences”: the collapse of Communism, the economic degradation of Eastern Europe and the first Gulf War, in 1991.

Those events motivated him to try to understand a world where economic ideas had such bad consequences. As for the Gulf War, it showed him that “governments can do a lot in terms of redistribution of wealth when they want.” The rapid intervention to force Saddam Hussein to unhand Kuwait and its oil was a remarkable show of concerted political will, Mr. Piketty said. “If we are able to send one million troops to Kuwait in a few months to return the oil, presumably we can do something about tax havens.”

Would he want to send troops to Guernsey, the lightly populated tax haven in the English Channel? Mr. Piketty, soft-spoken, barely laughed. “We don’t even have to do that — just simple basic trade policy, trade sanctions, would do the trick right away,” he said.

A top student, Mr. Piketty took a conventional path toward the French elite, being admitted to the rarefied École Normale Supérieure at 18. His doctoral dissertation on the theory of redistribution of wealth, completed at 22, won prizes. He then decamped to teach economics at the Massachusetts Institute of Technology before returning two years later to France, disappointed with the study of economics in America.

“My Ph.D. is mostly about pure economic theory because that was the easiest thing to do, and I was hired at M.I.T. as a young assistant professor doing economic theory,” he said. “I was young and successful at doing this, so it was an easy way. But very quickly I realized that there was little serious effort at collecting historical data on income and wealth, so that’s what I started doing.”

Academic economics is so focused on getting the econometrics and the statistical interpolation technique correct, he said, “you don’t really think, you don’t dare to ask the big questions.” American economists too often narrow the questions they examine to those they can answer, “but sometimes the questions are not that interesting,” he said. “Trying to write a real book that could speak to everyone meant I could not choose my questions. I had to take the important issues in a frontal manner — I could not escape.”

He hated the insularity of the economics department. So he decided to write large, a book he considers as much history as economics, and one that is constructed to lead the general reader by the hand.

He is also not afraid of literature, finding inspiration in the descriptions of society in the realist novels of Jane Austen and Balzac. Wealth was best achieved in these stories through a clever marriage; everyone knew that inherited land and capital was the only way to live well, since labor alone would not produce sufficient income. He wondered how that assumption had changed.

As he extended his work on France to the United States in collaboration with Emmanuel Saez, a professor of economics at the University of California, Berkeley, he saw that the patterns of the early 20th century — “the top 10 percent of the distribution was full of rental income, dividend income, interest income” — seemed less prevalent from the 1970s through the early 1990s.

“It took me a long time to realize that in effect we were returning slowly in the direction of the previous equilibrium, and that we were part of a long transitory process,” he said. When he started working on the issue in the late 1990s, “there was no way this could be understood so clearly — having 20 additional years of data makes a big difference to understanding the postwar period.”

His findings, aided by the power of modern computers, are based on centuries of statistics on wealth accumulation and economic growth in advanced industrial countries. They are also rather simply stated: The rate of growth of income from capital is several times larger than the rate of economic growth, meaning a comparatively shrinking share going to income earned from wages, which rarely increase faster than overall economic activity. Inequality surges when population and the economy grow slowly.

Mr. Piketty’s work is a challenge both to Marxism and laissez-faire economics. The book’s core finding, based on centuries of data, is that the rate of growth of income from capital is several times larger than the rate of economic growth, meaning a shrinking share going to income earned from wages. CreditEd Alcock for The New York Times

The reason that postwar economies looked different — that inequality fell — was historical catastrophe. World War I, the Depression and World War II destroyed huge accumulations of private capital, especially in Europe. What the French call “les trentes glorieuses” — the roughly 30 postwar years of rapid economic growth and shrinking inequality — were a rebound. The American curve, of course, is less sharp, given that the fighting was elsewhere.

A higher than normal rate of population and economic growth helped reduce inequality, along with higher taxes on the wealthy. But the professional and political assumption of the 1950s and 1960s, that inequality would stabilize and diminish on its own, proved to be an illusion. We are now back to a traditional pattern of returns on capital of 4 percent to 5 percent a year and rates of economic growth of around 1.5 percent a year.

So inequality has been quickly gathering pace, aided to some degree by the Reagan and Thatcher doctrines of tax cuts for the wealthy. “Trickle-down economics could have been true,” Mr. Piketty said simply. “It just happened to be wrong.”

His work is a challenge both to Marxism and laissez-faire economics, which “both count on pure economic forces for harmony or justice to prevail,” he said. While Marx presumed that the rate of return on capital, because of the system’s contradictions, would fall close to zero, bringing collapse and revolution, Mr. Piketty is saying the opposite. “The rate of return to capital can be bigger than the growth rate forever — this is actually what we’ve had for most of human history, and there are good reasons to believe we will have it in the future.”

In 2012 the top 1 percent of American households collected 22.5 percent of the nation’s income, the highest total since 1928. The richest 10 percent of Americans now take a larger slice of the pie than in 1913, at the close of the Gilded Age, owning more than 70 percent of the nation’s wealth. And half of that is owned by the top 1 percent.

Mr. Piketty, father of three daughters — 11, 13 and 16 — is no revolutionary. He is a member of no political party, and says he never served as an economic adviser to any politician. He calls himself a pragmatist, who simply follows the data.

But he accepts that his work is essentially political, and he is highly critical of the huge management salaries now in vogue, saying that “the idea that you need people making 10 million in compensation to work is pure ideology.”

Inequality by itself is acceptable, he says, to the extent it spurs individual initiative and wealth-generation that, with the aid of progressive taxation and other measures, helps makes everyone in society better off. “I have no problem with inequality as long as it is in the common interest,” he said.

But like the Columbia University economist Joseph E. Stiglitz, he argues that extreme inequality “threatens our democratic institutions.” Democracy is not just one citizen, one vote, but a promise of equal opportunity.

“It’s very difficult to make a democratic system work when you have such extreme inequality” in income, he said, “and such extreme inequality in terms of political influence and the production of knowledge and information. One of the big lessons of the 20th century is that we don’t need 19th-century inequality to grow.” But that’s just where the capitalist world is heading again, he concludes.

Mr. Saez, his collaborator, said that “Thomas combines great perfectionism with great impatience — he both wants to do things well and do things fast.” He added that Mr. Piketty has “incredible intuition for economics.”

The last part of the book presents Mr. Piketty’s policy ideas. He favors a progressive global tax on real wealth (minus debt), with the proceeds not handed to inefficient governments but redistributed to those with less capital. “We just want a way to share the tax burden that is fair and practical,” he said.

Net wealth is a better indicator of ability to pay than income alone, he said. “All I’m proposing is to reduce the property tax on half or three-quarters of the population who have very little wealth,” he said.

Published a year ago in French, the book is not without critics, especially of Mr. Piketty’s policy prescriptions, which have been called politically naïve. Others point out that some of the increase in capital is because of aging populations and postwar pension plans, which are not necessarily inherited.

More criticism is sure to come, and Mr. Piketty says he welcomes it. “I’m certainly looking forward to the debate.”

Return of the oppressed (Aeon)

From the Roman Empire to our own Gilded Age, inequality moves in cycles. The future looks like a rough ride


Jack Whinery and family, homesteaders photographed in Pie Town, New Mexico, October 1940. Photo courtesy the Library of CongressJack Whinery and family, homesteaders photographed in Pie Town, New Mexico, October 1940. Photo courtesy the Library of Congress

Peter Turchin is professor of ecology and mathematics at the University of Connecticut and vice president of the Evolution Institute. He co-authored Secular Cycles (2009).

Today, the top one per cent of incomes in the United States accounts for one fifth of US earnings. The top one per cent of fortunes holds two-fifths of the total wealth. Just one rich family, the six heirs of the brothers Sam and James Walton, founders of Walmart, are worth more than the bottom 40 per cent of the American population combined ($115 billion in 2012).

After thousands of scholarly and popular articles on the topic, one might think we would have a pretty good idea why the richest people in the US are pulling away from the rest. But it seems we don’t. As the Congressional Budget Office concluded in 2011: ‘the precise reasons for the rapid growth in income at the top are not well understood’. Some commentators point to economic factors, some to politics, and others again to culture. Yet obviously enough, all these factors must interact in complex ways. What is slightly less obvious is how a very long historical perspective can help us to see the whole mechanism.

In his book Wealth and Democracy (2002), Kevin Phillips came up with a useful way of thinking about the changing patterns of wealth inequality in the US. He looked at the net wealth of the nation’s median household and compared it with the size of the largest fortune in the US. The ratio of the two figures provided a rough measure of wealth inequality, and that’s what he tracked, touching down every decade or so from the turn of the 19th century all the way to the present. In doing so, he found a striking pattern.

We found repeated back-and-forth swings in demographic, economic, social, and political structures

From 1800 to the 1920s, inequality increased more than a hundredfold. Then came the reversal: from the 1920s to 1980, it shrank back to levels not seen since the mid-19th century. Over that time, the top fortunes hardly grew (from one to two billion dollars; a decline in real terms). Yet the wealth of a typical family increased by a multiple of 40. From 1980 to the present, the wealth gap has been on another steep, if erratic, rise. Commentators have called the period from 1920s to 1970s the ‘great compression’. The past 30 years are known as the ‘great divergence’. Bring the 19th century into the picture, however, and one sees not isolated movements so much as a rhythm. In other words, when looked at over a long period, the development of wealth inequality in the US appears to be cyclical. And if it’s cyclical, we can predict what happens next.

An obvious objection presents itself at this point. Does observing just one and a half cycles really show that there is a regular pattern in the dynamics of inequality? No, by itself it doesn’t. But this is where looking at other historical societies becomes interesting. In our bookSecular Cycles (2009), Sergey Nefedov and I applied the Phillips approach to England, France and Russia throughout both the medieval and early modern periods, and also to ancient Rome. All of these societies (and others for which information was patchier) went through recurring ‘secular’ cycles, which is to say, very long ones. Over periods of two to three centuries, we found repeated back-and-forth swings in demographic, economic, social, and political structures. And the cycles of inequality were an integral part of the overall motion.

Incidentally, when students of dynamical systems (or, more colourfully, ‘chaoticians’ such as Jeff Goldblum’s character in the filmJurassic Park) talk about ‘cycles’, we do not mean rigid, mechanical, clock-like movements. Cycles in the real world are chaotic, because complex systems such as human societies have many parts that are constantly moving and influencing each other. Despite this complexity, our historical research on Rome, England, France, Russia and now the US shows that these complex interactions add up to a general rhythm. Upward trends in variables (for example, economic inequality) alternate with downward trends. And most importantly, the ways in which other parts of the system move can tell us why certain trends periodically reverse themselves. Understanding (and perhaps even forecasting) such trend-reversals is at the core of the new discipline of cliodynamics, which looks at history through the lens of mathematical modelling.

So it looks like the pattern that we see in the US is real. Ours is, of course, a very different society from ancient Rome or medieval England. It is cut off from them by the Industrial Revolution and by innumerable advances in technology since then. Even so, a historically based model might shed light on what has been happening in the US over the past three decades.

First, we need to think about jobs. Unless other forces intervene, an overabundance of labour will tend to drive down its price, which naturally means that workers and their families have less to live on. One of the most important forces affecting the labour supply in the US has been immigration, and it turns out that immigration, as measured by the proportion of the population who were born abroad, has changed in a cyclical manner just like inequality. In fact, the periods of high immigration coincided with the periods of stagnating wages. The Great Compression, meanwhile, unfolded under a low-immigration regime. This tallies with work by the Harvard economist George Borjas, who argues that immigration plays an important role in depressing wages, especially for those unskilled workers who compete most directly with new arrivals.

Immigration is only one part of a complex story. Another reason why the labour supply in the US went up in the 19th century is, not to put too fine a point on it, sex. The native-born population was growing at what were, at the time, unprecedented rates: a 2.9 per cent growth per year in the 1800s, only gradually declining after that. By 1850 there was no available farmland in Eastern Seaboard states. Many from that ‘population surplus’ moved west, but others ended up in eastern cities where, of course, they competed for jobs with new immigrants.

This connection between the oversupply of labour and plummeting living standards for the poor is one of the more robust generalisations in history. Consider the case of medieval England. The population of England doubled between 1150 and 1300. There was little possibility of overseas emigration, so the ‘surplus’ peasants flocked to the cities, causing the population of London to balloon from 20,000 to 80,000. Too many hungry mouths and too many idle hands resulted in a fourfold increase in food prices and a halving of real wages. Then, when a series of horrible epidemics, starting with the Black Death of 1348, carried away more than half of the population, the same dynamic ran in reverse. The catastrophe, paradoxically, introduced a Golden Age for common people. Real wages tripled and living standards went up, both quantitatively and qualitatively. Common people relied less on bread, gorging themselves instead on meat, fish, and dairy products.

The tug of war between the top and typical incomes doesn’t have to be a zero-sum game, but in practice it often is

Much the same pattern can be seen during the secular cycle of the Roman Principate. The population of the Roman Empire grew rapidly during the first two centuries up to 165AD. Then came a series of deadly epidemics, known as the Antonine Plague. In Roman Egypt, for which we have contemporary data thanks to preserved papyri, real wages first fell (when the population increased) and then regained ground (when the population collapsed). We also know that many grain fields were converted to orchards and vineyards following the plagues. The implication is that the standard of life for common people improved — they ate less bread, more fruit, and drank wine. The gap between common people and the elites shrank.

Naturally, the conditions affecting the labour supply were different in the second half of the 20th century in the US. An important new element was globalisation, which allows corporations to move jobs to poorer countries (with that ‘giant sucking sound’, as Ross Perot put it during his 1992 presidential campaign). But none of this alters the fact that an oversupply of labour tends to depress wages for the poorer section of the population. And just as in Roman Egypt, the poor in the US today eat more energy-dense foods — bread, pasta, and potatoes — while the wealthy eat more fruit and drink wine.

Falling wages isn’t the only reason why labour oversupply leads to inequality. As the slice of the economic pie going to employees diminishes, the share going to employers goes up. Periods of rapid growth for top fortunes are commonly associated with stagnating incomes for the majority. Equally, when worker incomes grew in the Great Compression, top fortunes actually declined in real terms. The tug of war between the top and typical incomes doesn’t have to be a zero-sum game, but in practice it often is. And so in 13th-century England, as the overall population doubles, we find landowners charging peasants higher rents and paying less in wages: the immiseration of the general populace translates into a Golden Age for the aristocrats.

As the historian Christopher Dyer wrote, life was good for the upper-crust English around 1300. They drank more wine and spent their spare cash building or refurbishing castles, cathedrals, and monasteries. They didn’t just enjoy a better living standard; they also grew in number. For example, the number of knights and esquires tripled between 1200 and 1300. But disaster struck in 1348, when the Black Death removed the population surplus (and then some). By the 15th century, while the common people were enjoying their own Golden Age, the aristocracy had fallen on hard times. We can infer the severity of their financial straits from the amount of claret imported from France. Only the gentry drank wine, and around 1300, England imported 20,000 tuns or casks of it from France per year. By 1460, this declined to only 5,000. In the mid-15th century, there were simply fewer aristocrats and they were much poorer.

In the US between around 1870 and 1900, there was another Golden Age for the elites, appropriately called the Gilded Age. While living standards for the majority declined (seen vividly in dwindling average heights and life expectancies), the moneyed classes were enjoying ever more luxurious lifestyles. And just like in 13th-century England, the total number of the wealthy was shooting up. Between 1825 and 1900, the number of millionaires (in constant 1900 dollars) went from 2.5 per million of the population to 19 per million. In our current cycle, the proportion of decamillionaires (those whose net worth exceeds 10 million in 1995 dollars) grew tenfold between 1992 and 2007 — from 0.04 to 0.4 per cent of the US population.

This seems like a peculiar development. The reason for it — cheeringly enough, you might say — is that cheap labour allows many enterprising, hard-working or simply lucky members of the poorer classes to climb into the ranks of the wealthy. In the 19th century, a skilled artisan in the US could expand his workshop by hiring other workers, eventually becoming the owner of a large business; Sven Beckert’s The Monied Metropolis (2003) describes many instances of this story playing out. In America today, enterprising and hard-working individuals start dotcom companies or claw their way into jobs as the CEOs of large corporations.

On the face of it, this is a wonderful testament to merit-based upward mobility. But there are side effects. Don’t forget that most people are stuck with stagnant or falling real wages. Upward mobility for a few hollows out the middle class and causes the social pyramid to become top-heavy. Too many elites relative to the general population (a condition I call ‘elite overproduction’) leads to ever-stiffer rivalry in the upper echelons. And then you get trouble.

In the US, there is famously a close connection between wealth and power. Many well-off individuals — typically not the founders of great fortunes but their children and grandchildren — choose to enter politics (Mitt Romney is a convenient example, though the Kennedy clan also comes to mind). Yet the number of political offices is fixed: there are only so many senators and representatives at the federal and state levels, and only one US president. As the ranks of the wealthy swell, so too do the numbers of wealthy aspirants for the finite supply of political positions.

When watching political battles in today’s Senate, it is hard not to think about their parallels in Republican Rome. The population of Italy roughly doubled during the second century BC, while the number of aristocrats increased even more. Again, the supply of political offices was fixed — there were 300 places in the senate and membership was for life. By the end of the century, competition for influence had turned ugly. During the Gracchan period (139—110BC), political feuding led to the slaughter of the tribunes Tiberius and Gaius on the streets of Rome. During the next century, intra-elite conflict spilt out of Rome into Italy and then into the broader Mediterranean. The civil wars of the first century BC, fuelled by a surplus of politically ambitious aristocrats, ultimately caused the fall of the Republic and the establishment of the Empire.

Beside sheer numbers, there is a further, subtler factor that aggravates internal class rivalry. So far I have been talking about the elites as if they are all the same. But they aren’t: the differences within the wealthiest one per cent are almost as stark as the difference between the top one per cent and the remaining 99. The millionaires want to reach the level of decamillionaires, who strive to match the centimillionaires, who are trying to keep up with billionaires. The result is very intense status rivalry, expressed through conspicuous consumption. Towards the end of the Republic, Roman aristocrats competed by exhibiting works of art and massive silver decorations in their homes. They threw extravagant banquets with peacocks from Samos, oysters from Lake Lucrino and snails from Africa, all imported at great expense. Archaeology confirms a genuine and dramatic shift towards luxury.

The US political system is much more attuned to the wishes of the rich than to the aspirations of the poor

Intra-elite competition also seems to affect the social mood. Norms of competition and extreme individualism become prevalent and norms of co-operation and collective action recede. Social Darwinism took off during the original Gilded Age, and Ayn Rand (who argued that altruism is evil) has grown astonishingly popular during what we might call our Second Gilded Age. The glorification of competition and individual success in itself becomes a driver of economic inequality. As Christopher Hayes wrote in Twilight of the Elites (2012): ‘defenders of the status quo invoke a kind of neo-Calvinist logic by saying that those at the top, by virtue of their placement there, must be the most deserving’. By the same reasoning, those at the bottom are not deserving. As such social norms spread, it becomes increasingly easy for CEOs to justify giving themselves huge bonuses while cutting the wages of workers.

Such cultural attitudes work with economic forces to widen inequality. Economists know very well that few markets are ‘efficient’ in the sense that their prices are set entirely by the forces of supply and demand. Labour markets are especially sensitive to cultural norms about what is fair compensation, so prevailing theories about inequality have practical consequences. And labour markets are also strongly affected by government regulation, as the economist and Nobel laureate Joseph Stiglitz has argued. So let’s consider how politics enters the equation here.

The US, as we saw, breeds strong links between wealth and politics. Some wealthy individuals run for office themselves. Others use their money to support their favoured politicians and policies. As a result, the US political system is much more attuned to the wishes of the rich than to the aspirations of the poor. Kevin Phillips has been one of the most influential voices raised in alarm at the dangers for democracy of growing wealth disparity.

Inverse relationship between well-being and inequality in American history. The peaks and valleys of inequality (in purple) represent the ratio of the largest fortunes to the median wealth of households (the Phillips curve). The blue-shaded curve combines four measures of well-being: economic (the fraction of economic growth that is paid to workers as wages), health (life expectancy and the average height of native-born population), and social optimism (the average age of first marriage, with early marriages indicating social optimism and delayed marriages indicating social pessimism).Inverse relationship between well-being and inequality in American history. The peaks and valleys of inequality (in purple) represent the ratio of the largest fortunes to the median wealth of households (the Phillips curve). The blue-shaded curve combines four measures of well-being: economic (the fraction of economic growth that is paid to workers as wages), health (life expectancy and the average height of native-born population), and social optimism (the average age of first marriage, with early marriages indicating social optimism and delayed marriages indicating social pessimism).

Yet the US political system has been under the influence of wealthy elites ever since the American Revolution. In some historical periods it worked primarily for the benefit of the wealthy. In others, it pursued policies that benefited the society as a whole. Take the minimum wage, which grew during the Great Compression era and declined (in real terms) after 1980. The proportion of American workers who were unionised changed in a similarly cyclical fashion, as the legislative field tilted first one way then the other. The top marginal tax rate was 68 per cent or higher before 1980; by 1988 it declined to 28 per cent. In one era, government policy systematically favoured the majority, while in another it favoured the narrow interests of the wealthy elites. This inconsistency calls for explanation.

It is relatively easy to understand the periods when the wealthy bent the agenda to suit their interests (though of course, not all rich people care exclusively about their own wealth). How, though, can we account for the much more broadly inclusive policies of the Great Compression era? And what caused the reversal that ended the Gilded Age and ushered in the Great Compression? Or the second switch, which took place around 1980?

History provides another clue. Unequal societies generally turn a corner once they have passed through a long spell of political instability. Governing elites tire of incessant violence and disorder. They realise that they need to suppress their internal rivalries, and switch to a more co-operative way of governing, if they are to have any hope of preserving the social order. We see this shift in the social mood repeatedly throughout history — towards the end of the Roman civil wars (first century BC), following the English Wars of the Roses (1455-85), and after the Fronde (1648-53), the final great outbreak of violence that had been convulsing France since the Wars of Religion began in the late 16th century. Put simply, it is fear of revolution that restores equality. And my analysis of US history in a forthcoming book suggests that this is precisely what happened in the US around 1920.

Reforms that ensured an equitable distribution of the fruits of economic growth turned out to be a highly effective counter to the lure of Bolshevism

These were the years of extreme insecurity. There were race riots (the ‘Red Summer of 1919’), worker insurrections, and an Italian anarchist terrorist campaign aimed directly at the elites. The worst incident in US labour history was the West Virginia Mine War of 1920—21, culminating in the Battle of Blair Mountain. Although it started as a workers’ dispute, the Mine War eventually turned into the largest armed insurrection that the US has ever seen, the Civil War excepted. Between 10,000 and 15,000 miners armed with rifles battled against thousands of strikebreakers and sheriff deputies. The federal government eventually called in the Air Force, the only time it has ever done so against its own people. Add to all this the rise of the Soviet Union and the wave of socialist revolutions that swept Europe after the First World War, triggering the Red Scare of 1921, and you get a sense of the atmosphere. Quantitative data indicate that this period was the most violent in US history, second only to the Civil War. It was much, much worse than the 1960s.

The US, in short, was in a revolutionary situation, and many among the political and business elites realised it. They began to push through a remarkable series of reforms. In 1921 and 1924, Congress passed legislation that effectively shut down immigration into the US. Although much of the motivation behind these laws was to exclude ‘dangerous aliens’ such as Italian anarchists and Eastern European socialists, the broader effect was to reduce the labour surplus. Worker wages grew rapidly. At around the same time, federal income tax came in and the rate at which top incomes were taxed began to increase. Somewhat later, provoked by the Great Depression, other laws legalised collective bargaining through unions, introduced a minimum wage, and established Social Security.

The US elites entered into an unwritten compact with the working classes. This implicit contract included the promise that the fruits of economic growth would be distributed more equitably among both workers and owners. In return, the fundamentals of the political-economic system would not be challenged (no revolution). The deal allowed the lower and upper classes to co-operate in solving the challenges facing the American Republic — overcoming the Great Depression, winning the Second World War, and countering the Soviet threat during the Cold War.

It almost goes without saying that there was a racist and xenophobic underside to all this. The co-operating group was mainly native-born white Protestants. African-Americans, Jews, Catholics and foreigners were excluded or heavily discriminated against. Nevertheless, while making such ‘categorical inequalities’ worse, the compact led to a dramatic reduction in overall economic inequality.

The ‘New Deal Coalition’ which ruled the US from 1932 to the late 1960s did so well that the business community, opposed to its policies at first, came to accept them in the post-war years. As the historian Kim Phillips-Fein wrote in Invisible Hands (2010):
Many managers and stockholders [made] peace with the liberal order that had emerged. They began to bargain regularly with the labour unions at their companies. They advocated the use of fiscal policy and government action to help the nation to cope with economic downturns. They accepted the idea that the state might have some role to play in guiding economic life.

When Barry Goldwater campaigned on a pro-business, anti-union and anti-big government platform in the 1964 presidential elections, he couldn’t win any lasting support from the corporate community. The conservatives had to wait another 16 years for their triumph.

But by the late 1970s, a new generation of political and business leaders had come to power. To them the revolutionary situation of 1919-21 was just history. In this they were similar to the French aristocrats on the eve of the French Revolution, who did not see that their actions could bring down the Ancien Régime — the last great social breakdown, the Fronde, being so far in the past.

The US elites, similarly, took the smooth functioning of the political-economic system for granted. The only problem, as they saw it, was that they weren’t being adequately compensated for their efforts. Feelings of dissatisfaction ran high during the Bear Market of 1973—82, when capital returns took a particular beating. The high inflation of that decade ate into inherited wealth. A fortune of $2 billion in 1982 was a third smaller, when expressed in inflation-adjusted dollars, than $1 billion in 1962, and only a sixth of $1 billion in 1912. All these factors contributed to the reversal of the late 1970s.

It is no coincidence that the life of Communism (from the October Revolution in Russia in 1917 to the fall of the Berlin Wall in 1989) coincides almost perfectly with the Great Compression era. The Red Scares of, firstly, 1919—21 and then 1947—57 suggest that US elites took the Soviet threat quite seriously. More generally, the Soviet Union, especially in its early years, aggressively promoted an ideology that was highly threatening to the political-economic system favoured by the US elites. Reforms that ensured an equitable distribution of the fruits of economic growth turned out to be a highly effective counter to the lure of Bolshevism.

Nevertheless, when Communism collapsed, its significance was seriously misread. It’s true that the Soviet economy could not compete with a system based on free markets plus policies and norms that promoted equity. Yet the fall of the Soviet Union was interpreted as a vindication of free markets, period. The triumphalist, heady atmosphere of the 1990s was highly conducive to the spread of Ayn Randism and other individualist ideologies. The unwritten social contract that had emerged during the New Deal and braved the challenges of the Second World War had faded from memory.

What, then, explains the rapid growth of top fortunes in the US over the past 30 years? Why did the wages of unskilled workers stagnate or decline? What accounts for the bitterness of election rhetoric in the US, the growing legislative gridlock, the rampant political polarisation? My answer is that all of these trends are part of a complex and interlocking system. I don’t just mean that everything affects everything else; that would be vacuous. Rather, that cliodynamic theory can tell us specifically how demographic, economic and cultural variables relate to one another, and how their interactions generate social change. Cliodynamics also explains why historical reversals in such diverse areas as economics and culture happen at roughly similar times. The theory of secular cycles was developed using data from historical societies, but it looks like it can provide answers to questions about our own society.

Our society, like all previous complex societies, is on a rollercoaster. Impersonal social forces bring us to the top; then comes the inevitable plunge. But the descent is not inevitable. Ours is the first society that can perceive how those forces operate, even if dimly. This means that we can avoid the worst — perhaps by switching to a less harrowing track, perhaps by redesigning the rollercoaster altogether.

Three years ago I published a short article in the science journalNature. I pointed out that several leading indicators of political instability look set to peak around 2020. In other words, we are rapidly approaching a historical cusp, at which the US will be particularly vulnerable to violent upheaval. This prediction is not a ‘prophecy’. I don’t believe that disaster is pre-ordained, no matter what we do. On the contrary, if we understand the causes, we have a chance to prevent it from happening. But the first thing we will have to do is reverse the trend of ever-growing inequality.

Correction, Feb 13, 2013: When first published, this article misidentified Michael Bloomberg, the mayor of New York City, as an inheritor of a large fortune. In fact he amassed most of his wealth himself.

7 February 2013

Finnish Education Chief: ‘We Created a School System Based on Equality’ (The Atlantic)

An interview with the country’s minister of education, Krista Kiuru

MAR 17 2014, 10:09 AM ET


Finnish education often seems paradoxical to outside observers because it appears to break a lot of the rules we take for granted. Finnish children don’t begin school until age 7. They have more recess, shorter school hours than many U.S. children do (nearly 300 fewer hours per year in elementary school), and the lightest homework load of any industrialized nation. There are no gifted programs, almost no private schools, and no high-stakes national standardized tests.

Yet over the past decade Finland has consistently performed among the top nations on the Programme for International Student Assessment (PISA), a standardized test given to 15-year olds in 65 nations and territories around the world. Finland’s school children didn’t always excel. Finland built its excellent, efficient, and equitable educational system in a few decades from scratch, and the concept guiding almost every educational reform has been equity.  The Finnish paradox is that by focusing on the bigger picture for all, Finland has succeeded at fostering the individual potential of most every child.

I recently accompanied Krista Kiuru, Finland’s minister of education and science, when she visited the Eliot K-8 Innovation School in Boston, and asked her what Finland is doing that we could learn from.

I visited four Finnish schools while researching my book Parenting Without Borders. While there, I frequently heard a saying: “We can’t afford to waste a brain.” It was clear that children were regarded as one of Finland’s most precious resources. You invest significantly in providing the basic resources so that all children may prosper. How do these notions undergird your educational system?

We used to have a system which was really unequal. My parents never had a real possibility to study and have a higher education. We decided in the 1960s that we would provide a free quality education to all. Even universities are free of charge. Equal means that we support everyone and we’re not going to waste anyone’s skills. We don’t know what our kids will turn out like—we can’t know if one first-grader will become a famous composer, or another a famous scientist. Regardless of a person’s gender, background, or social welfare status, everyone should have an equal chance to make the most of their skills.  It’s important because we are raising the potential of the entire human capital in Finland.  Even if we don’t have oil or minerals or any other natural resources, well, we think human capital is also a valuable resource.

How well do you think Finland’s educational system, one based more squarely on equity rather than high achievement, is working?

We created a school system based on equality to make sure we can develop everyone’s potential. Now we can see how well it’s been working.  Last year the OECD tested adults from 24 countries measuring the skill levels of adults aged 16-65, on a survey called the PIAAC (Programme for International Assessment of Adult Competencies), which tests skills in literacy, numeracy, and problem solving in technology-rich environments. Finland scored at or near the top on all measures. But there were differences between age groups.  The test showed that all younger Finns who had had a chance to go to compulsory basic school after the reforms had extremely high knowledge; those who were older, and who were educated before the reforms, had average know-how. So, our educational system is creating people who have extremely good skills and strong know-how—a know-how which is created by investing into education. We have small class sizes and everyone is put in the same class, but we support struggling students more than others, because those individuals need more help. This helps us to be able to make sure we can use/develop everyone’s skills and potential.

I remember being struck by how many vocational or hands-on classes (home economics, art, technology, and so forth) were available to students at every Finnish school I visited.  At one secondary school I visited, kids were cooking breakfast; at another, I saw that all the kids had learned how to sew their own bathing suits.  More than one teacher remarked, “It’s important for students to have different activities to do during the day.” And there seems to be no stigma about vocational education. Is this attitude true of all schools in Finland?

Yes, we definitely believe that for young people handcrafts, cooking, creative pursuits, and sports, are all important. We believe these help young people benefit more from the skills they’re learning in school.

Do you think that this takes time away from academics?

Academics isn’t all kids need. Kids need so much more. School should be where we teach the meaning of life; where kids learn they are needed; where they can learn community skills. We like to think that school is also important for developing a good self-image, a strong sensitivity to other people’s feelings … and understanding it matters to take care of others. We definitely want to incorporate all those things in education.

I also believe that breaking up the school day with different school subjects is very important. We offer a variety of subjects during the school day. We’re also testing out what it’s like to have breaks in the middle of the school day for elementary school students. At a few elementary schools recently we’ve been offering sports, handcrafts, or school clubs during the middle of the school day, rather than just in the morning or after school as we already do. This is to help kids to think of something else, and do something different and more creative during the day.

An American librarian I spoke with, who was a visiting scholar in Finland, was struck by things like the fact that there was no concept of Internet filtering or censorship there. She was struck by how much autonomy was given to children as well as to teachers. At the same time, she noticed how much support teachers in Finland get. She visited one first-grade classroom that was taught by a relatively new teacher,  and seven adults were standing in the back of the room watching the teacher: the master teacher, a specialty subject teacher from her teaching university, her advisor from university, and a couple of other student teachers. Right after the class, they got together and talked about how the lesson went. This sort of observation/debriefing seemed to be quite common. Finland is also well known for investing heavily in continuous professional development. Can you tell me more about this combination of independence and support?

Teachers have a lot of autonomy. They are highly educated–they all have master’s degrees and becoming a teacher is highly competitive. We believe we have to have highly educated teachers, because then we can trust our teachers and know they are doing good work. They do have to follow the national curriculum, although we do have local curriculums as well. But we think that we’ve been able to create good results due to our national, universal curriculum.

We don’t test our teachers or ask them to prove their knowledge. But it’s true that we do invest in a lot of additional teacher training even after they become teachers.

We also trust in our pupils. Of course we give them exams and tests so that we know how they are progressing but we don’t test them at the national level. We believe in our schools because we consider all schools equal. We don’t school shop in Finland and we don’t have to think about which area to live in to go to a good school.

In Finland we are starting to have some issues … in some suburban schools with more immigrants or higher unemployment, but we support those schools by investing more in them, in the struggling schools.

But you know, money doesn’t make for a better education necessarily. We don’t believe that spending on a particular school will make any one of them better so much as focusing on the content of what we do and giving children individual support.

What Alexander The Great Teaches Brazil About Inequality (Worldcrunch)

Eduardo Giannetti (2014-02-21) Article illustrative image

In Parque do Gato, favela life for Brazil’s huge underclass

For the Greek philosopher Diogenes, self-control and self-sufficiency were the essential values. He lived a life with no possessions, except for a cloak, a purse and a barrel made out of clay in which he would sleep.

Intrigued, the emperor Alexander The Great went to visit him. “I’m the most powerful man in the world. Ask what you want and I will give it to you.” Diogenes did not falter: “Yes. Step out of my light, you’re blocking the sun.”

The philosopher and the Emperor are examples of the extreme, and have been used to illustrate Socrates’s theory that, among mortals, those with the fewer possessions are those closest to the gods.

Alexander, a former pupil and patron of Aristotle’s, learned his lesson. When one of his courtiers mocked the philosopher for “turning down” the offer that was put to him, the Emperor replied: “If I were not Alexander, I would like to be Diogenes.” Extremes share much in common.

And so from an ethical point of view, what is wrong with inequality? Our ancient example reminds us that inequality is not bad in itself. What matters instead is the legitimacy of the process that may create it.

The justice — or lack thereof — of the end result depends on the means that brought us there. The crucial question therefore should be: Is the observed inequality essentially a reflection of the difference in talents, efforts and values, or is it the result of a game that was rigged to begin with. In other words, does the disparity come from a deep lack of equity in the initial conditions of life, of the deprivation of basic rights and/or of racial, sexual or religious discrimination?

Billions (and billions) wasted

In the last 20 years, Brazil has made real progress thanks to achievement of economic stability and policies of social inclusion. Still, despite that, the country remains one of the most unequal on the planet. As far as income distribution is concerned, Brazil is the second worst in the G20, the fourth in Latin America and the 12th in the world.

But we must not confuse the symptom with the virus. Brazil’s poor income distribution is the fruit of a grave anomaly: the brutal disparity in the initial conditions of life as well as in the opportunities for young children and teenagers to develop according to their abilities and talents, which would allow them to widen their range of possible choices and more often realize dreams for their future.

Brazil’s “new middle class” gained access to consumption, but not to true civic goods. In the 21st century, half of the population has no sewer system, public education and health are in an appalling state, public transport is a daily nightmare for commuters, about 5% of all deaths — mostly of the poor, the young and black people — are homicides. Finally, one-third of those who have left superior education (if the term actually applies) are functional illiterates.

This doesn’t seem due to a lack of resources, or at least, there is no shortage of resources when the government spends $4.5 billion on Swedish fighter jets, or when it finances the construction of football stadiums for the World Cup, or when it plans to build a bullet-train for $16.7 billion, or $6.7 billion on nuclear submarines. The total amount of subsidies granted by the Brazilian Development Bank (BNDES) to a selected group of partners and companies surpasses the amount spent in the whole Family Allowance welfare program.

No, what is lacking here is simply common sense!

Brazil will continue being a violent and absurdly unjust country, put to shame by its inequality, for as long as the conditions of the family in which a child has the good or bad luck to be born plays the overriding role in defining his future.

Human diversity gave us Diogenes and Alexander The Great. But the lack of a minimum of equity in the initial conditions of life limits greatly the room for choice, rigs the game of income distribution and poisons our society.

Inequality in opportunity to succeed, I dare to believe, is the root of what’s wrong with Brazil.

*Eduardo Giannetti is an economist, lecturer at Cambridge University and writer.

Read the full article: What Alexander The Great Teaches Brazil About Inequality – All News Is Global
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O mundo é para poucos (Carta Capital)

11/2/2014 – 12h57

por Luiz Antonio Cintra, da Carta Capital

criancas1 O mundo é para poucos

Foto: Reprodução/Internet

Em alta desde os anos 70, a concentração da riqueza bate recordes, para a alegria de 1% da população global

Divulgada na abertura do encontro anual da elite econômica global em Davos, na Suíça, a pesquisa “Trabalhando para Poucos”, da ONG inglesa Oxfam, bem poderia se chamar “Vejam o Que os Senhores Conseguiram”. Ganhou manchetes mundo afora ao apontar para a hiperconcentração de riqueza em andamento na quase totalidade dos países ocidentais. Sete em cada dez indivíduos vivem em países onde a desigualdade avançou nas últimas três décadas, informa a Oxfam.

Segundo o estudo, a crise financeira detonada em setembro de 2008 veio a calhar para os mais ricos. O 1% do topo da pirâmide, anota a pesquisa, detém hoje metade da riqueza gerada no planeta. O financista norte-americano Warren Buffett é um exemplo da turma ganhadora: acumulava patrimônio de 40 bilhões de dólares antes da quebra do Lehman Brothers, e nada atualmente em uma piscina recheada de 59 bilhões de moedas. O quarto mais rico do planeta, segundo a lista da Forbes, Buffett é um dos 85 afortunados que, aponta a Oxfam, possuem patrimônio equivalente ao da metade mais pobre da população mundial, ou 3,5 bilhões de cidadãos. “Alguma desigualdade econômica é essencial para conduzir o crescimento e o progresso”, escrevem os responsáveis pela pesquisa. “Os níveis extremos de concentração da riqueza atuais, entretanto, ameaçam excluir centenas de milhões de obter os ganhos de seus talentos e trabalho duro.”

Não é outra coisa o que tem acontecido desde o crash, com maior intensidade nos dois polos mais afetados pela crise, os EUA e a Zona do Euro (exceto a Alemanha). O quadro retratado espelha as opções feitas para enfrentar a crise, desenhadas de acordo com os interesses dos bilionários, constata a ONG. A saída escolhida foi salvar bancos e companhias consideradas “grandes demais para quebrar”, ao mesmo tempo que os gastos públicos eram cortados indiscriminadamente.

O resultado foi uma onda avassaladora de desemprego e a falência de empresas cuja quebra, para as autoridades, teria o efeito positivo de ampliar a eficiência da economia como um todo. Nesse sentido, as políticas adotadas deram certo. O levantamento mais recente da Organização Internacional do Trabalho (OIT) contabiliza 202 milhões de desempregados no mundo, 5 milhões a mais do que no fim de 2012. Mantida a tendência, algo bastante provável, serão 215 milhões sem empregos no fim de 2017, estima Guy Rider, diretor da OIT.

O estudo da Oxfam enumera algumas das causas da concentração crescente. Há décadas a falta de limites minou a representação popular nos Parlamentos. E o lobby das maiores corporações aos poucos tirou do caminho regras e leis forjadas para garantir (ou ampliar, conforme o caso) a concorrência nas economias. Estima-se que os bancos norte-americanos gastaram 1 bilhão de dólares em lobby nos últimos anos para enfraquecer e adiar a legislação em discussão para tornar o sistema financeiro menos arriscado.

A corrupção, a perversidade de sistemas tributários como o brasileiro, que taxa proporcionalmente mais quem tem menos, os subsídios, a redução dos gastos em saúde e educação públicas, a perda de espaço dos sindicatos de trabalhadores e uma rede internacional de paraísos fiscais (em que, estima a ONG, cerca de 18 trilhões de dólares são escondidos para não pagar impostos) também explicam o processo em andamento.

O marco zero dessa tendência, contudo, não tem nada de novo. Especialistas o situam no período que vai do fim da década de 1970 ao início dos anos 80, sob os auspícios da onda neoliberal e da desregulação dos mercados, particularmente o financeiro, sob a batuta ideológica da dupla Ronald Reagan e Margaret Thatcher.

A resultante constatada agora não é um efeito colateral inesperado. Ao contrário. A cartilha Reagan-Thatcher recomendava deliberadamente o corte dos impostos dos mais ricos, em paralelo à redução dos direitos sociais e salários dos mais pobres, com o argumento de que o primeiro movimento garantiria fôlego para o consumo, enquanto o segundo ampliaria a competividade da economia ao reduzir o custo do trabalho. Uma parcela considerável das palavras de ordem pró-desregulação foi tecida, por sinal, justamente no Fórum Econômico de Davos, que nesta edição, diante da escala da tragédia social nos países ricos, procura convencer a opinião pública de que, no fundo, estão preocupados com a distância crescente entre ricos e pobres. Ao custo de 40 mil dólares por participante, vale notar.

Na ponta do lápis, o quadro evoluiu nos EUA conforme o esperado pelos formuladores de tais políticas: a renda dos 10% mais pobres avançou, desde meados dos anos 1980, apenas 0,1% ao ano. Já aquela dos mais ricos cresceu, pela mesma métrica, 1,5%. No Reino Unido, o mesmo movimento: a renda avançou, em média, 0,9% na base da pirâmide e 2,5% entre os 10% do topo. Estudo da Organização de Cooperação e Desenvolvimento Econômico, realizado em 2011, apontou os EUA, o Reino Unido e Israel como “pioneiros” da regressão social entre os mais ricos. A partir dos anos 2000, anota a pesquisa, a tendência incluiu as nações tradicionalmente menos desiguais, caso da Alemanha, Dinamarca, Suécia e outros países nórdicos.

A partir do crash de 2008, a concentração da riqueza ganhou força, resultado da opção de salvar os grandes bancos e corporações. No estudo da Oxfam, o caso norte-americano é mais uma vez destaque: 95% do ganho de renda registrado a partir de 2009 no país foi para o 1% mais rico. E, quanto mais no topo, maiores os ganhos proporcionalmente. Em 2012, por exemplo, enquanto o 1% mais rico ficou com 22% da renda do país, o 0,1% mais afortunado abocanhou 11% do bolo. Um norte-americano do sexo masculino e graduado recebe atualmente, em média, 40% do que recebia quatro décadas atrás.

No artigo “A desigualdade é uma opção”, publicado em outubro de 2013, o Nobel de Economia Joseph Stiglitz, professor da Universidade Columbia, comenta a hiperconcentração em curso. De 1988 a 2008, anota o economista, a renda do 1% mais rico do planeta cresceu cerca de 60%. No mesmo período, a dos 5% mais pobres manteve-se estagnada. “Os ganhos de renda têm sido maiores entre aqueles da elite mundial – executivos financeiros e corporativos dos países ricos – e as amplas ‘classes médias emergentes’ de China, Índia, Indonésia e Brasil. Quem perdeu? Africanos, alguns latino-americanos e cidadãos do Leste Europeu pós-comunista e da antiga União Soviética.”

Apesar de bem-vinda, a discussão em torno da desigualdade em Davos está longe de ser sinal de uma nova postura – e seria loucura supor que haverá ali uma guinada ideológica. Em 2005, o tema ocupou o topo das preocupações dos milionários reunidos na Suíça, àquela altura em companhia dos debates sobre o terrorismo. Em 1994, o tema também foi abordado, quando Klaus Schwab, presidente do fórum, definiu o encontro como uma oportunidade para “um gigantesco brainstorm para líderes empresariais, políticos, científicos e culturais, para analisar todos os pressupostos básicos da humanidade”.

Então, os ouvintes saíram de Davos, embarcaram em seus jatos particulares e foram cultivar suas fortunas.

* Publicado originalmente no site Carta Capital.

The 1% Should Be Afraid: The New Norm in the Workplace Is Unstable (Truthout)

Tuesday, 11 February 2014 10:16

By Laura FlandersTruthout | Interview and Video

(Photo<a href="" target="_blank"> via Shutterstock</a>)(Photo via Shutterstock)

A new study from Oxfam published just ahead of this year’s World Economic Forum meeting in Davos, reported that just one percent of the world’s population controls nearly half of the planet’s wealth and 70 percent of the world’s people live in countries where income inequality has been growing in the last 30 years. In the US, the gap between rich and poor has grown faster than in any other developed country. The top one percent has captured 95 percent of all growth since the putative “recovery” of 2009. This is the “new normal.” Is it sustainable?

Barbara Garson is the author of a series of books describing American working lives at historically important turning points. If this is one of those turning points, it’s one in which the one percent have won:

“That the so-called recovery that everyone is bragging about is this,” Garson told GRITtv in a recent interview. “We’ve recovered, we’ve taken your full-time job away and given you a part-time job, and we’ve given the difference to our stockholders.”

The trouble is, this cockeyed situation is not stable, and even the capitalists, maybe especially the capitalists, should be worried.

“There are capitalist solutions, like redistribution, but they’re not doing it. That may be why we have a socialist solution this time,” she concludes. “If seventeen percent of the houses are vacant, we’ll just move into them.”

Garson’s new book is Down the Up Escalator: How the 99% LiveYou can watch our conversation at

Laura Flanders: So, Barbara, would you call this one of those historically important turning points?

Barbara Garson: Yes, well, we’ve been moving down. Well, that is to say, the wealth gap has been growing since about the seventies in this country, and in the world, too. We’re kind of the leaders in that and brought that model around the world. But the ruling class doesn’t seem to care anymore. They used to be Keynesian; they used to say, uh-oh! wait a minute. If we have fifty percent of the wealth, they can’t buy back what’s produced, we’d better rebalance it and keep going for a while. They seem to have forgotten that.

In a way we’re in a dangerous situation. [The elite] seem to be taking the same attitude on the economy that they’re taking on the environment.

But look at the statistics that they’re looking at. At Davos, people would have heard about growth and GDP going up, about productivity going up, about the stock market having the best record in years. So by their indices, nothing is wrong.

Even they know that a lot of that is in [loaned] money. A lot of their growth is in the same type of derivatives that they were investing in before. They are lending money to people who cannot pay back. They know (I think some of them know), that when you come out of he recession with even greater inequality than when you went into it, they know that they have to keep making the same kind of loans that they made before. Namely, lending money to people to buy houses they cannot afford. Lending money to students to go to college, and the students will never earn enough to pay the money back. That’s dangerous in the long run.

And you think they know this at some level?

I don’t know what each individual knows, but they all used to be the Keynesians. I used to be the socialist, and say, but it isn’t nice. I know you can keep going that way with reoccurring crises, but it isn’t nice. Now I’m the one that’s reminding them that it’s also impossible unless they do the usual Keynesian redistribution, which they used to do every few decades. Now they are just taking more, and more and more.

Let’s talk about the people you followed in your book, Down the Up Escalator, and why you decided to follow these folks in the first place. In your last book, you were following a dollar bill around the world. This time you decided to follow a group of people. Let’s start with the “Pink Slip Club.”

Well, when the recession hit, the publisher wanted a quickie on the recession. So I started interviewing people who lost their jobs, but I gave him a little more than he wanted, which is to say what I discovered is that these people have been going down economically for a long time. They had nothing to fall back on.

[The Pink Slip Club] was a group of friends who met in their church. They were people who earned about fifty thousand dollars a year as a graphics artist, as an insurnace adjuster, those kind of jobs. They lived in Manhattan and they could just make it on their fifty thousand dollars. They thought it would be over very quickly.

They thought the recession would be over quickly.

Yes, they thought the recession would be over quickly and they would find new jobs. They had all found jobs when they first started working – they found jobs quickly [but this time] it just dragged on and on and on.

What finally happened is that two are now working, two aren’t. But this is characteristic of what’s going on since the seventies: The person who had a full-time job as a graphics person in a textbook company now works catch-as-catch-can for those same kinds of companies. In fact, he works through a contractor, so he has no benefits; he’s making a little less an hour; he has no benefits; he has no guarantee of any work; he works when he can. I said to him, did you ever get a job from your old company … And he said no, somebody who still works there in the management told him that they’re sending the work abroad now. They’re not doing it through contractors in New York City. He will never have that kind of job again, nor will new people coming into that industry.

So you’ve got long-term unemployed, then you have people whose jobs have completely transformed.

Some people thought that the downturn that they personally suffered was temporary. I met a woman who had been the top salesperson for a very fancy Fifth Avenue clothing store – the kind that when you go in, you spend thousands of dollars at a time, and she would dress certain women every year. She was their highest grossing saleswoman. Very often, she had a commission. During the recession, they started laying people off. They started giving them shorter hours and then their commission disappeared. She thought it would come back afterwards and then she noticed that they were actually hiring new people during this recession and the new people were coming on with no commissions, and they were young people making $11 an hour. Her position was reduced to that, too. The store did have somewhat of a downturn, but all the time it was planning on what it was going to do afterwards.

I talked to a stockbroker who said, “Oh, I am very glad to hear about that company, because a lot of good developments like that come on during a recession.” That company did lose business, but I mentioned to you the person before who worked for a textbook company? Their business went up continuously, and they also used the recession as an opportunity to make all their permanent people temporary – and that is the new norm.

Let’s talk about the numbers. The numbers I just read from the Oxfam report, do you think this is the new normal in terms of gap between rich and poor?

Unless we do something about it, yes, that’s the direction it’s moving in.

As people talk about “recovery” – we hear a lot about returning to normal. Based on your research, what does the “new normal” in the workplace look like?

We’re coming back, in that there are some more jobs, [but for corporations] a victory has been had during that recession. Those jobs are the jobs I just mentioned: the saleslady who now gets no more commissions. In fact, the company has hired more people, only giving them fewer hours. Those jobs are like the graphic designer that I just mentioned, only now he’s working through contractors and getting a part-time job, and much less pay.

[It all adds up to] more and more money [for the employer]. Those companies are making the same profit; they may be doing a little less business, but they’re making the same profit or a little more. Profit went up about twenty-five percent for American corporations from the beginning of the recession, to its official end in 2009. It’s very unusual during a recession. When we talk about profit, we talk about money that went to the investor.

We heard that ninety percent of all the gains since 2009 have gone directly to that top one percent.

The top one percent not of salary earners, but of investors. That’s money that they have to reinvest.

So [tell me again] why should they be concerned?

If productivity is up, and by the way, it went up ninety-nine percent between 1971 and the beginning of the recession in 2007 and salaries went up just four percent – that means people can’t buy back what they produce. These companies say, okay I have a good idea: Instead of paying you to buy back what you produce, I’ll lend you the money. And they lent us money to buy cars; they lent us money to buy houses that we couldn’t afford.

The other point you raise in this book as in 2009, in the years running up to 2009, so too, today, there’s still an enormous pile of money that that elite one percent doesn’t know what to do with.

Right, when we’re talking about profits increasing by twenty-five percent by the end of the recession, that means that you and I are not worried about money being such a big problem, but if profits that great are going to investors, they put it in brokerage accounts or banks and a bank cannot keep its money in the bank; a bank has to do something with it. If people can’t buy products, then they have to start investing – not in companies that are making more [stuff] – they have to start investing in the derivatives of derivatives.

They are putting money back into the stock market, but the companies aren’t actually producing more. You put money in the stock market, the stock goes up …

You ask the question, why are they doing the same thing again? They have to do something with the profits. If inequality meant, I make thirty thousand dollars a year, you make a million dollars a year, that’s not very nice. You spend a million on a yacht; I take care of your yacht. I sweep it up and I’m still worrying about my children getting into college; that’s not nice, but unfortunately, it’s stable. Capitalism could run this way, but that’s not the million dollars we’re talking about, spending millions of dollars because you earn more than me. When we say, they got more, unequally, their share went up. Their share is of money they made in interest, money they made in investments and they just put that back into brokerage funds, back into banks, and those banks and brokerage funds have to do something with it. They’re doing the same [with] derivatives that they did before.

A man who kind of invented the math for derivatives, Ed Thorp, [someone] asked him after the crash, do you think that the stock market is still safe? He said, well, if we could move the money to Mars that would be better, but we can’t move it to Mars, so we have to put it back into the stock market even though it’s a Ponzi scheme.

So let’s talk about us. You, like Studs Terkel forty years ago, went and interviewed people and came away with a portrait that wasn’t just about numbers, but was really about a reality of life that many of us in the media are kind of numb to, or maybe we’re just not aware of … There’s actually less joy in your book than there was in Studs’ and Studs’ time was hard then. What is it doing to people to be in the situation they’re in?

What’s increasing is their insecurity, and the sense that they should be doing better. People who graduate from college and think that [the problem is] them. “Why am I – graduating from college – only earning $35,000? I was an intern last year. I have all of these bills from college, and my mother thinks I’m stupid; why did I do it this way?” And maybe I’m living back at home. It’s going to take awhile before the parents realize that oh my goodness, the child made the best decision she could. She invested in herself, or she bought a house that was a fixer-upper and it’s just the dollars and cents don’t add up. You’re not being paid enough, and you’re indebted. …We’re doing a bad job of helping them realize that it’s not just them, that this is thenew norm. That the so-called recovery that everyone is bragging about is this: We’ve recovered; we’ve taken your full-time job away and given you a part-time job – and we’ve given the difference to our stockholders. We’ve recovered; let’s breathe a sigh of relief.

What about the people?

What do you think it feels like? It will feel better, I hope, I think. I hope it will feel a little better when you say hey, they did it to us; this is universal; this is not just me, I didn’t choose a stupid school to go to, and a stupid major. I didn’t choose a stupid job. I didn’t fall behind on technology and that’s why I’m a part-timer …

It’s not like we’re too poor to have houses. As a matter of fact, there is a huge vacancy crisis. We don’t have to chop down trees to house everybody. Seventeen percent of housing is vacant right now. There is a place for all of us to move into if we just redistribute our ability to pay for it.

I’m a socialist. I’m frightened because I don’t see our capitalists saying, oops you better have a temporary redistribution. They learned to do that in the ’30s. In fact, they even learned to do that in the 1870s. I don’t see them doing it. We should all be frightened just as we are all frightened about the environment. There are capitalist solutions – redistribution – but they’re not doing it. That may be why we have a socialist solution this time. If 17% of the houses are vacant, we’ll just move into them.

Down the Up Escalator: How the 99% Live: I recommend it. Great stories, great read. Barbara Garson, thank you.

In conjunction with this conversation, GRITtv interviewed six New Yorkers about their work lives: “Juggling Jobs, Fighting Fear.” With work or looking for work, they all had one thing in common, they’re working too damn hard. If you’re working too damn hard – GRITtv wants to hear about it! Post your video, audio, or text at our Facebook page. We’re not ok with the “new normal.”

Copyright, Truthout. May not be reprinted without permission.

Money makes people right-wing, inegalitarian, UK study finds (Science Daily)


February 6, 2014

Source: University of Warwick

Summary: Lottery winners tend to switch towards support for a right-wing political party and to become less egalitarian, according to new research on UK data.

Evidence on Switchers: The Percentage of People Who Switched Right (Conservative), and Previously Did Not Vote Conservative, After a Lottery Win Source: BHPS Data, Waves 7-18. Credit: Source: BHPS Data, Waves 7-18; Graph courtesy of University of Warwick

Lottery winners tend to switch towards support for a right-wing political party and to become less egalitarian, according to new research on UK data by Professor Andrew Oswald of the University of Warwick and Professor Nattavudh Powdthavee of the London School of Economic and the Melbourne Institute of Applied Economic and Social Research, University of Melbourne.

Their study, published as a new University of Warwick working paper under the title “Does Money Make People Right-Wing and Inegalitarian: A Longitudinal Study of Lottery Wins”, shows that the larger the win, the more people tilt to the right. The study uses information on thousands of people and on lottery wins up to 200,000 pounds sterling. The authors say it is the first research of its kind.

The authors believe their paper has wide implications for how democracy works. Professor Oswald said he had become doubtful of the view that morality was an objective choice. “In the voting booth, monetary self-interest casts a long shadow, despite people’s protestations that there are intellectual reasons for voting for low tax rates.”

“We are not sure exactly what goes on inside people’s brains”, said Nick Powdthavee, “but it seems that having money causes people to favour conservative right-wing ideas. Humans are creatures of flexible ethics.”

The authors believe their paper has wide implications for how democracy works. Professor Oswald said he had become doubtful of the view that morality was an objective choice. “In the voting booth, monetary self-interest casts a long shadow, despite people’s protestations that there are intellectual reasons for voting for low tax rates.”

The authors’ paper comments that: “The causes of people’s political attitudes are largely unknown. One possibility is that individuals’ attitudes towards politics and redistribution are motivated by deeply ethical view. Our study provides empirical evidence that voting choices are made out of self-interest.”

Using a nationally representative sample of lottery winners in the UK – the British Household Panel Survey – the researchers have been able to explore the observed longitudinal changes in political allegiance of the bigger winners to the smaller winners. The effect is also sizeable. Winning a few thousand pounds in the lottery has an effect on right-wingness that is just under half of completing a good standard of education (i.e. A-levels) at high school.

The lottery winning effect is far stronger for males than females. The authors are not sure why.

The study has nobody who wins millions and millions. “We’d certainly love to be able to track the views of the rare giant winners”, said Professor Oswald, “if any lottery company would like to work with our research team.”

Journal Reference:

  1. Andrew Oswald, Nattavudh Powdthavee. Does Money Make People Right-Wing and Inegalitarian: A Longitudinal Study of Lottery WinsUniversity of Warwick, February 2014

Schizophrenia Linked to Social Inequality (Science Daily)

Dec. 14, 2012 — Higher rates of schizophrenia in urban areas can be attributed to increased deprivation, increased population density and an increase in inequality within a neighbourhood, new research reveals. The research, led by the University of Cambridge in collaboration with Queen Mary University of London, was published today in the journal Schizophrenia Bulletin.

Dr James Kirkbride, lead author of the study from the University of Cambridge, said: “Although we already know that schizophrenia tends to be elevated in more urban communities, it was unclear why. Our research suggests that more densely populated, more deprived and less equal communities experience higher rates of schizophrenia and other similar disorders. This is important because other research has shown that many health and social outcomes also tend to be optimal when societies are more equal.”

The scientists used data from a large population-based incidence study (the East London first-episode psychosis study directed by Professor Jeremy Coid at the East London NHS Foundation Trust and Queen Mary, University of London) conducted in three neighbouring inner city, ethnically diverse boroughs in East London: City & Hackney, Newham, and Tower Hamlets.

427 people aged 18-64 years old were included in the study, all of whom experienced a first episode of psychotic disorder in East London between 1996 and 2000. The researchers assessed their social environment through measures of the neighbourhood in which they lived at the time they first presented to mental health services because of a psychotic disorder. Using the 2001 census, they estimated the population aged 18-64 years old in each neighbourhood, and then compared the incidence rate between neighbourhoods.

The incidence of schizophrenia (and other similar disorders where hallucinations and delusions are the dominant feature) still showed variation between neighbourhoods after taking into account age, sex, ethnicity and social class. Three environmental factors predicted risk of schizophrenia — increased deprivation (which includes employment, income, education and crime) increased population density, and an increase in inequality (the gap between the rich and poor).

Results from the study suggested that a percentage point increase in either neighbourhood inequality or deprivation was associated with an increase in the incidence of schizophrenia and other similar disorders of around 4%.

Dr Kirkbride added: “Our research adds to a wider and growing body of evidence that inequality seems to be important in affecting many health outcomes, now possibly including serious mental illness. Our data seems to suggest that both absolute and relative levels of deprivation predict the incidence of schizophrenia.

“East London has changed substantially over recent years, not least because of the Olympic regeneration. It would be interesting to repeat this work in the region to see if the same patterns were found.”

The study also found that risk of schizophrenia in some migrant groups might depend on the ethnic composition of their neighbourhood. For black African people, the study found that rates tended to be lower in neighbourhoods where there were a greater proportion of other people of the same background. By contrast, rates of schizophrenia were lower for the black Caribbean group when they lived in more ethnically-integrated neighbourhoods. These findings support the possibility that the socio-cultural composition of our environment could positively or negatively influence risk of schizophrenia and other similar disorders.

Dr John Williams, Head of Neuroscience and Mental Health at the Wellcome Trust said: “This research reminds us that we must understand the complex societal factors as well as the neural mechanisms that underpin the onset of mental illness, if we are to develop appropriate interventions.”

Journal Reference:

  1. J. B. Kirkbride, P. B. Jones, S. Ullrich, J. W. Coid. Social Deprivation, Inequality, and the Neighborhood-Level Incidence of Psychotic Syndromes in East London.Schizophrenia Bulletin, 2012; DOI: 10.1093/schbul/sbs151

Income Inequality and Distrust Foster Academic Dishonesty (APS)

Lucy Hyde – Association for Psychological Science

College professors and students are in an arms race over cheating. Students find new sources for pre-written term papers; professors find new ways to check the texts they get for plagiarized material. But why are all these young people cheating? A new study published in Psychological Science, a journal of the Association for Psychological Science, suggests one reason: income inequality, which decreases the general trust people have toward each other.

Lukas Neville, a doctoral student at Queen’s University in Ontario, was inspired to do the study by his own teaching experience. “I ran into the question of academic dishonesty firsthand,” he says. Like other instructors at universities across North America, he considered using services that automatically check students’ papers for plagiarized material. “But it got me thinking about the actual underlying mechanism that promotes or inhibits academic dishonesty.” He thought the answer might be trust; if students don’t trust each other, some of them might think they have to cheat to keep up with their unscrupulous classmates. And other research has shown that this kind of distrust is more likely to be found in places with high income inequality.

To look at the connection between trust, income inequality, and academic dishonesty, Neville took advantage of data from Google that breaks down search terms by state. Neville found data on searches on phrases like “free term paper,” “buy term paper,” and the names of cheating websites. He compared these to survey data on how trusting people are in each state and a measure of income inequality from the U.S. Census Bureau. He controlled for several other factors that could influence the number of searches, including how many students are in each state, how large the colleges in each state are, and average household income.

Indeed, the data showed that people who live in states with more income inequality were less trusting in general, and those states had more evidence of academic dishonesty. The next step, Neville says, will be to duplicate this finding using laboratory experiments, using pay structure to alter income inequality, then observing the effects on students’ trust and dishonest behavior.

If one of the root causes of cheating is distrust, this could explain why measures like honor codes work, Neville says: when students trust that other people aren’t cheating, they are less likely to cheat themselves. “As educators, there’s not much you can do about the level of inequality in society, but we do have the ability to help foster trust in our colleges and classrooms,” he says.


For more information about this study, please contact: Lukas Neville at

The APS journal Psychological Science is the highest ranked empirical journal in psychology. For a copy of the article “Do Economic Equality and Generalized Trust Inhibit Academic Dishonesty? Evidence From State-Level Search-Engine Queries” and access to other Psychological Science research findings, please contact Lucy Hyde at 202-293-9300 or