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12/16 http://query.nytimes.com/gst/fullpage.html?res=9C0CEFD6133BF93AA1575BC0A966958260&sec=&pagewanted=print Let history be a guide. \_ recent history has not seen the concentration of wealth we're seeing - maybe santa clara+l.a.+manhattan will stay rich, and avg locations eat it \_ Why the fascination with concentration of wealth? It's captial that allows us to create companies, which create jobs. It's not surprising that the more specialized we get, the more capital is used to create industry. \_ Through out Chinese hisotry, 9 out of 10 dynasties fell not because of the ruler being brutal, but rather, over concentration of wealth. Over concentration of wealth will eventually made into policies which denies opporunity for the mass to get ahead, thus, re-enforce the wealth which they have amassed. The brightest would no longer have a chance to go to school because it's too expensive. The skilled wouldn't have a chance to use it. The offspring of the super-wealthy would just sitting on their butt and complains the mass is not working hard enough and don't deserve the opportunity they demanded. \_ You got the trees. Here's the forest: "9 out of 10 dynasties" fell *because* they were dynastic and not at all democratic and thus completely unresponsive to the needs and wants of the people. \_ it's a balance. no one likes communism, and no one likes an aristocracy. the problem is over the last five years there has been a significant shift to the latter. the impt question is: are we getting closer to or further away from what's good for America? \_ Both are government and economic entities. As long as we have a functional democracy, where's the problem? \_ Big assumption. \- without getting into a longer answer, there is also a positive feedback loop. if i am so wealthy, all i need the gov for is defense, then i'm willing to lobby for lower taxes at the cost of say public education, social safety insurance or medical social safety net [because i can self-insure]. we havent totally gotten to the point where people can opt for lower support for say fire and police protection by self-insuring ... while those haven't gone private, there are definitely class shenanigans that area too [people of course talk about gated communities with private security, but a more sublte example might be something like piedmont "opting" out of oakland ... i dont know the history of how piedmont emerged, but my understading is piedmont has about 10 cops while the oakland police beat that surrounds it is larger and has 2 cops. i bet if you were teleported into a piedmont and the nearest oakland school, you could guess with a high probability which one you had been sent to in each teleportation trial. \P if there is no cooperation/social contract via progressive taxation, you are more likely to end up in a sub-pareto equillibrium rather than adopting optimal outcome ... since optimal outcome often has distributional consequences, so you can only get their either via coercsion or enforced side payments. in the context of a corporation, once the trickle down to the rank and file goes below some threshold, incentive based performance doesnt really work any more ... if my marginal dollar of productivity goes 99% to people 4 steps up from me in the org chart, what's the point? all liberals should be able to answer the question "why should we have a progressive tax code". i guess that was pretty long. \_ yeah could you point to some wikipedia articles or concise urls, i get asked this a lot by my liberotarian friends and i really would like to defend myself articulately. \- dood, the internet is not the be all and end all of learning. read "the procedural republic and he unencumbered self". i dont know if it is avail on the public WEEB. it is available via JSTOR. this isnt the kind of thing to look for in a wikipedia article. if you are really interested, i probably have a pdf i can dig up. the short version of the answer is "when society makes investment, the rich disproportionately reaps the rewards" sort of like when up to $1m of mortage interest is deductable that disporpropiratioantely benefits people buying million dollar houses rather than $200k houses. similar logic applies to NIH research (an agency i dont remember hearing criticized as as much as say the Dept of Educ). also many "xfers" to the wealthy are not in the form of easy to see cash xfers [welfare, food stamps] but more subtle [nicer parks, faster police response time]. finally there are some deeper criticisms of measuring efficiency/risk/etc in dollars terms, but hat is beyond the scope of this motd post. if you are a berkeley student, consider taking philosophy 115, political philosophy. samuel scheffler would be a good person to take this from. --psb \- I'll add one thing: generally the way Lib'tarians operationalize force/fraud is rather self-serving, just like most countrys' notion of what constitudes "free trade" or a resonable IP regime is totally self serving. the world is a complicated palce and all "one line" philosophies are inadequate, whether it is Libertarianism [force/fraud], Jebus and the Golden Rule, Communism [each according to needs/means], Original Intent/Plain meaning jurisprudence, untilitariamsim etc. \- BTW, I'd be interested if you could ask your little liberatrian friends if they would get rid of the SEC. \_ Could you try to capitalize words on occasion or simply point to the wiki article? \_ Hey, don't restrict his form of expression with your bourgeois grammer rules, you facist! \_ grammar \_ Same to you! \_ It turns out that an economists blog I read it talking about \_ It turns out that an economist's blog I read is talking about this very same subject right now -ausman http://www.csua.org/u/hre "How Inequality of Wealth Destroys Liberty" \- JAMES AUSMAN ADVISORY: i assume you know this, but some of this may be the tail end of something that errupted a few mos ago: http://en.wikipedia.org/wiki/Inequality_Debate_of_2006 but of course for thoughtful people, this is a perennial issue. as your web site suggest, it was discussed a 100yrs ago. this is not a bad book: http://www.amazon.com/dp/0815764758 |
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| query.nytimes.com/gst/fullpage.html?res=9C0CEFD6133BF93AA1575BC0A966958260&sec=&pagewanted=print August 29, 1990 California Sees Housing Boom Become Slump By RICHARD W STEVENSON, SPECIAL TO THE NEW YORK TIMES LEAD: On front lawns in many cities along the California coast, the for-sale sign has become almost as common as the palm tree, and to some sellers seemingly as permanent. After several years of breathtaking price increases and demand so strong that houses were snapped up within hours of being listed, California's giant real estate market has slowed drastically. On front lawns in many cities along the California coast, the for-sale sign has become almost as common as the palm tree, and to some sellers seemingly as permanent. After several years of breathtaking price increases and demand so strong that houses were snapped up within hours of being listed, California's giant real estate market has slowed drastically. Just as in the Northeast in recent years, California sellers accustomed to huge annual increases in housing prices have been shocked by how low the offers have come in. Some are dropping their prices to meet the highest bid, and housing prices are now falling in many areas. But in other cases they are either taking their houses off the market or leaving them on and refusing to budge much on the price. Volume of Sales Down As a result, the pace of housing sales in California has been dropping even more quickly than the price. Figures released Monday by the California Association of Realtors indicated that the rate of houses sold fell in July to its lowest level since December 1985. The seasonally adjusted annualized rate of sales last month for existing single-family houses was 419,943, down 15 percent from July 1989. And while prices in some inland cities like Sacramento continue to rise, prices are dropping in the population centers along the Pacific Coast. The median price of a single-family house sold in Monterey was down 93 percent from July 1989, and in Los Angeles it was down 45 percent. Prices in Santa Barbara dropped 29 percent from a year earlier. Statewide, the median house price in July, at $194,099, was down 37 percent from a year earlier, when the statewide figure peaked at $201,653. After the heady atmosphere that made this one of the nation's most overheated housing markets for the past several years, the new reality has come as a shock. Starting in 1986, prices rose as much as 30 percent annually in some areas, with the sharpest increases in 1987 and 1988. Even with such increases, buyers found themselves in bidding wars that often pushed the selling price above the original asking price. Their willingness to pay reflected a belief that the house would be worth even more within a few months. The ''buy at any price'' mentality seemed by late last year to have finally outrun the ability or willingness of many people to buy a house, and has disappeared this year. With the sales rate down and so many houses on the market, the pressure to lower prices is even greater, and many analysts expect prices to fall further, particularly if the national economy, now burdened by the Middle East crisis, descends into a recession. But while the rapid deceleration of the housing market on the California coast resembles that of the Northeast, there are a number of important differences. Since prices in the Northeast have been falling longer and farther than here, more sellers have taken losses. And the Northeast's economy is weaker than California's. In the view of many real estate agents here, the slump is nothing more than a temporary cooling. Californians continue to recite a litany of factors they think will keep the housing market from going into a steep dive, including the state's diversified economy, widespread restrictions on building that have limited the supply of housing and its strong population growth. No Strength Left Despite such optimism, the housing market in California is so enervated that the Kaufman & Broad Home Corporation, the state's largest house builder, recently started offering to pay closing costs for new-house buyers, an incentive worth about $10,000. The Marina City Club, a condominium complex in Marina Del Rey, has cut prices up to 22 percent. A developer in Lancaster, in the Mojave Desert north of Los Angeles, recently cut prices on some houses to less than $200,000, from $245,000, infuriating owners of identical neighboring houses who paid the developer full price just a few months ago. More than a year ago, Charles M Harker put a three-bedroom, two-bath house in the Los Angeles suburb of La Canada on the market for $497,500. The house, which he bought and remodeled as an investment, remains unsold, with the price slashed to $445,000 and Mr Harker and a partner close to the point where their chance for a profit would evaporate. The owner was being transferred, and had turned down an offer to sell the house to his company for $325,000, convinced that he could get a higher price. The company has had the house on the market through another broker for $319,900 and just accepted an offer that Ms Pettijohn said was probably in the $315,000 range. Except for those who bought at the peak last year and must sell now, most homeowners are still far ahead on paper after the double-digit price increases of previous years. As a result, banks and savings and loan associations in California report no upswing in foreclosures on residences, and most analysts say the state's financial institutions will weather the slump without any significant damage. The Economy Is Rattled Still, the downturn is extremely unsettling in California, where analysts already see signs of vulnerability in an economy that has enjoyed robust growth longer than almost every other region of the country. The economy is being rattled by huge layoffs in the aerospace and military contracting industries. Commercial real estate developers and brokers are being battered by a glut of new office space. Permits for construction of residential housing declined to an annual rate of about 160,000 in June from an average of 238,000 last year, prompting the beginning of a decline in construction jobs. And some analysts say California's economy and its housing market are in for tougher times. Sacramento and other inland cities, where prices are far lower than along the coast, continue to see increases in sales volume and price. In a state where only 18 percent of households can afford the median-priced house, according to the Realtors association, the lowest-priced houses are selling briskly. But most of the state is facing a wrenching readjustment. Jim and Marilou Brown put their house near Santa Barbara up for sale in June 1989, asking $289,000, roughly the same price that a similar house down the street had sold for a few months earlier. Mr Brown, a newspaper editor, moved immediately to Florida with the couple's son to start a job there, while Mrs Brown stayed behind for what they thought would be several months. An 11-Month Ordeal But the house did not sell until May, 11 months later, and only after the Browns dropped their price by nearly 10 percent, to $263,000. In the end, after accounting for capital gains taxes and $25,000 in improvements they made, Mr Brown said they barely came out ahead despite having purchased the three-bedroom house at the beginning of the boom in 1986 for $187,000. Ms Pettijohn, the broker from Orange County, said she got a call the other day from an investor who had stopped buying properties last fall, asking her to suggest some good values. |
| www.csua.org/u/hre -> economistsview.typepad.com/economistsview/2006/12/how_inequality_.html December 21, 2006 "How Inequality of Wealth Destroys Liberty" Economic inequality has been the topic of much discussion lately. Today while doing some Christmas shopping and thinking about some of the issues, I remembered (vaguely) the book Equality written in 1897 by Utopian Socialist Edward Bellamy. an American author, most famous for his utopian novel set in the year 2000, Looking Backward ... He was the cousin of Francis Bellamy, most famous for creating the Pledge of Allegiance to promote the sale of American flags. Heidenhoff's Process (1880), Miss Ludington's Sister (1884), Equality (1897) and The Duke of Stockbridge (1900). His feeling of injustice in the economic system lead him to write Looking Backward: 2000-1887 and its sequel, Equality. According to Erich Fromm, Looking Backward is "one of the most remarkable books ever published in America." It was the third largest bestseller of its time, after Uncle Tom's Cabin and Ben-Hur: A Tale of the Christ. It influenced a large number of intellectuals, and appears by title in many of the major Marxist writings of the day. "It is one of the few books ever published that created almost immediately on its appearance a political mass movement." This political movement came to be known as Nationalism. The Parable of the Water-Tank" from the book Equality, published in 1897, was popular with a number of early American socialists. Less successful than its prequel, Looking Backward, Equality continues the story of Julian West as he adjusts to life in the future. As noted, the book continues the story in Looking Backward with Julian West, who fell into a deep hypnotic sleep in 1887 and did not wake up until the year 2000, learning about and adjusting to life in the year 2000. Leete, a retired physician in Boston who revived him after his 113 year-long slumber. The doctor is explaining the utopian public capitalism of the year 2000 and comparing it to life in the late 1800s. If you have forgotten what life was like for the poor living in the tenements in New York city and other places at this time, it was pretty bad. There is another great and equal right of all men which, though strictly included under the right of life, is by generous minds set even above it: I mean the right of liberty--that is to say, the right not only to live, but to live in personal independence of one's fellows, owning only those common social obligations resting on all alike. "Now, the duty of the state to safeguard the liberty of citizens was recognized in your day just as was its duty to safeguard their lives, but with the same limitation, namely, that the safeguard should apply only to protect from attacks by violence. If it were attempted to kidnap a citizen and reduce him by force to slavery, the state would interfere, but not otherwise. Nevertheless, it was true in your day of liberty and personal independence, as of life, that the perils to which they were chiefly exposed were not from force or violence, but resulted from economic causes, the necessary consequences of inequalities of wealth. Because the state absolutely ignored this side, which was incomparably the largest side of the liberty question, its pretense of defending the liberties of citizens was as gross a mockery as that of guaranteeing their lives. Nay, it was a yet more absolute mockery and on a far vaster scale. "For, although I have spoken of the monopolization of wealth and of the productive machinery by a portion of the people as being first of all a threat to the lives of the rest of the community and to be resisted as such, nevertheless the main practical effect of the system was not to deprive the masses of mankind of life outright, but to force them, through want, to buy their lives by the surrender of their liberties. That is to say, they accepted servitude to the possessing class and became their serfs on condition of receiving the means of subsistence. Although multitudes were always perishing from lack of subsistence, yet it was not the deliberate policy of the possessing class that they should do so. on the other hand, they had endless use for human beings as servants, not only to produce more wealth, but as the instruments of their pleasure and luxury. "As I need not remind you who were familiar with it, the industrial system of the world before the great Revolution was wholly based upon the compulsory servitude of the mass of mankind to the possessing class, enforced by the coercion of economic need." "Undoubtedly," I said, "the poor as a class were in the economic service of the rich, or, as we used to say, labor was dependent on capital for employment, but this service and employment had become in the nineteenth century an entirely voluntary relation on the part of the servant or employee. The rich had no power to compel the poor to be their servants. They only took such as came voluntarily to ask to be taken into service, and even begged to be, with tears. Surely a service so sought after could scarcely be called compulsory." "Tell us, Julian," said the doctor, "did the rich go to one another and ask the privilege of being one another's servants or employees?" "Because, naturally, no one could wish to be another's servant or subject to his orders who could get along without it." "I should suppose so, but why, then, did the poor so eagerly seek to serve the rich when the rich refused with scorn to serve one another? "It was, of course, for the reason that it was the only way the poor could get a living." "You mean that it was only the pressure of want or the fear of it that drove the poor to the point of becoming the servants of the rich?" The distinction between forced service and such service as that would seem quite imperceptible to us. If a man may be said to do voluntarily that which only the pressure of bitter necessity compels him to elect to do, there has never been any such thing as slavery, for all the acts of a slave are at the last the acceptance of a less evil for fear of a worse. Suppose, Julian, you or a few of you owned the main water supply, or food supply, clothing supply, land supply, or main industrial opportunities in a community and could maintain your ownership, that fact alone would make the rest of the people your slaves, would it not, and that, too, without any direct compulsion on your part whatever?" "Suppose somebody should charge you with holding the people under compulsory servitude, and you should answer that you laid no hand on them but that they willingly resorted to you and kissed your hands for the privilege of being allowed to serve you in exchange for water, food, or clothing, would not that be a very transparent evasion on your part of the charge of slaveholding?" "Well, and was not that precisely the relation the capitalists or employers as a class held toward the rest of the community through their monopolization of wealth and the machinery of production?" "There was a great deal said by the economists of your day," the doctor went on, "about the freedom of contract--the voluntary, unconstrained agreement of the laborer with the employer as to the terms of his employment. What hypocrisy could have been so brazen as that pretense when, as a matter of fact, every contract made between the capitalist who had bread and could keep it and the laborer who must have it or die would have been declared void, if fairly judged, even under your laws as a contract made under duress of hunger, cold, and nakedness, nothing less than the threat of death! If you own the things men must have, you own the men who must have them." "But the compulsion of want," said I, "meaning hunger and cold, is a compulsion of Nature. In that sense we are all under compulsory servitude to Nature." That is the whole difference between slavery and freedom. To-day no man serves another, but all the common good in which we equally share. Under your system the compulsion of Nature through the appropriation by the rich of the means of supplying Nature's demands was turned into a club by which the rich made the poor pay Nature's debt of labor not only for themselves but for the rich also, with a vast overcharge besides for the... |
| en.wikipedia.org/wiki/Inequality_Debate_of_2006 Henry Paulson that "rising inequality is mainly a story about rising wages for the highly educated", that "nothing can be done about this trend" and that "it is simply an economic reality, and it is neither fair nor useful to blame any political party." Krugman analyzes the historical chronology of changes in inequality in the 20th century. It leads him to conclude that "it seems likely that government policies have played a big role in America's growing economic polarization" and that "it matters a lot which party is in power -- and more important, which ideology." Andrew Samwick points out that Krugman's personal success puts him in the top 1% and is itself an argument for the importance of education and skills for income. |
| www.amazon.com/dp/0815764758 com Books Delivers, our monthly subscription e-mail newsletters. Discover new releases in your favorite categories, popular pre-orders and bestsellers, exclusive author interviews and podcasts, special sales, and more. I think it is a must read in any college economics, sociology, policy class, and maybe even in advanced high school settings. I consider it a classic and it is keep alongside Smith, Ricardo, Malthus, and Keynes. The ideas expressed by Okun here have withstood the test of time and are especially relevant in light of current government policies. Highly recommended for those who want to deepen their thoughts and broaden their perspectives about the role of markets, government, and how the two relate to one another. See all my reviews I'm writing this review horrified that this book currently has only 3 stars (hopefully my vote will change that). I care because it is a VERY good book, extremeley and interesting and extremely relevant to the functionality of our society. I cannot think of many things that are more important to how our society functions than the issues surrounding equality. This is a very readable way to get thinking about this subject or find others writing clearly summarized. Thinking has developed slightly since this books was written, but the overall ideas still hold. Don't be dissuaded from reading this book by someone who read it because they had to. Clear and thought-provoking, despite some dated examples, February 4, 2002 Reviewer: A reader This short book is nearing its thirtieth birthday, and in spots it shows its age. Its many references to US income levels, for example, have to be (roughly) quadrupled to reflect current patterns. Nonetheless, this is an extremely clear introduction to one of the central political and economic issues of the past century: To what extent should government (and more broadly, society) pursue economic equality? Okun is at his best in pointing out the tradeoffs that both liberals and conservatives must face. Okun argues that with some exceptions, pursuing a great deal of equality will cost society a great deal of efficiency for four reasons: there are fewer incentives for the working rich, fewer incentives for the working poor, less capital investment by the rich, and more administrative costs. On the other hand, singlemindedly pursuing efficiency will cost society a great deal of equality, with the rich getting richer and the poor poorer. Okun clarifies why the tradeoff exists through clever uses of metaphors, most notably his famous "leaks in the (transfer) bucket." Okun ultimately chooses a relatively liberal tradeoff that favors equality, but he always acknowledges the other side's arguments because, like most economists, he respects the powerful efficiency of well-working markets. Just as interestingly, Okun also discusses cases when we all-- liberal and conservative alike-- may agree to emphasize equality. Voting, trials, and other forms of political life, for example, are areas where we all might wish that government (and its propensity for equality, treating all of us as equal) would prevail over the market (and its propensity for inequality, giving some individuals much more influence than others). Yet often the market prevails in such political areas as well, as we see high-priced lawyers gain advantages in trials, and rich campaign contributors gain advantages in voting and lobbying. In such cases, says Okun, the necessarily unequal market has colonized an area--government-- where equality should be the norm. One doesn't have to agree with all of Okun's conclusions to find this a thought-provoking and insightful book. See all my reviews When I attended Reed College, my economics professor assigned this book as a "quick read." Unfortunately, the book is rather dry, and I didn't pull much out of it. If you have the time to actually re-read passages, go ahead and pick it up if the topic interests you. Otherwise, forget about it, because I had one night to read it, and the results were the same as if I didn't read it at all. |