The sources of inequality

Tim Noah finishes up his great series on inequality with a nice summary:

Here is a back-of-the-envelope calculation, an admittedly crude composite of my discussions with and reading of the various economists and political scientists cited thus far:

  • Race and gender are responsible for none of it, and single parenthood is responsible for virtually none of it.
  • Immigration is responsible for 5 percent.
  • The imagined uniqueness of computers as a transformative technology is responsible for none of it.
  • Tax policy is responsible for 5 percent.
  • The decline of labor is responsible for 20 percent.
  • Trade is responsible for 10 percent.
  • Wall Street and corporate boards’ pampering of the Stinking Rich is responsible for 30 percent.
  • Various failures in our education system are responsible for 30 percent. [emphasis mine]

And you know what?  This is no accident.  There’s no inevitably to the sad indictment of these last two causes.  This is what, we as a society have chosen through our policy choices.  Noah:

Most of these factors reflect at least in part things the federal government did or failed to do. Immigration is regulated, at least in theory, by the federal government. Tax policy is determined by the federal government. The decline of labor is in large part the doing of the federal government. Trade levels are regulated by the federal government. Government rules concerning finance and executive compensation help determine the quantity of cash that the Stinking Rich take home. Education is affected by government at the local, state, and (increasingly) federal levels. In a broad sense, then, we all created the Great Divergence, because in a democracy, the government is us.

Shame on us.

Don’t give to your wealthy alma mater

I tend to give a little bit of money every year to Duke, but I really like Matt Yglesias’ ongoing crusade against donating money to wealthy, private universities.  There’s a million better things you can do with charitable giving.  Here’s his latest:

It would be more honest to say that Harvard is a business run for the benefit of its faculty and administrators. The business model of this business is the exchange of prestige in exchange for money. Peretz has friends who have money that they are willing to exchange for some prestige, and Harvard intends to take the money. It is what it is.

As an alum, I’d like to pretend to believe that I find this particular transaction outrageous, but it merely goes to illustrate a point I’ve made before. If you’re a person of some means who wants to make a charitable donation to make the world a better place you have a lot of options available to you. And one of the very worst things you could do with that money is give it to a fancy university. If you’ve specifically decided that you want to make a charitable donation to a provider of education services in the United States, you should find one that has a good track record of serving poor students. There are plenty of charter schools and colleges that fit the bill, but none of them are famous fancy schools with multi-billion dollar endowments.

Of course, I don’t give to my PhD alma mater, Ohio State, at all.  I kind of feel like its up to the good people of Ohio to support the institution.

1099 forms and the difference between the parties

So, with the giant health care reform bill, there were surely some mistakes.  That’s okay, nobody says Congress can’t fix them.  This one is a doozy:

To improve compliance, the law requires businesses to file a 1099 tax form identifying anyone to whom they pay $600 or more for goods or merchandise in a year. Businesses will also have to send copies of the form to their vendors, suppliers and contractors.

I.e., Kim would have to actually submit a form if she spent $600 on a new computer from Best Buy to make sure Best Buy isn’t cheating on their taxes.  Yes, nuts, so let’s fix this.  Ezra:

The problem is that the mechanism would mean a lot of paperwork. Enough, actually, that it’s probably worth scrapping it. But that means you need to make up $17 billion.

Republicans wanted to do that by cutting public-health subsidies for the poor. Democrats said no. Democrats wanted to do it by cutting subsidies for oil and gas companies. Republicans said no. Democratscame up with another way to do it, this time by closing a tax loopholethat allows hedge-fund managers to be taxed at a much lower rate than people in other professions. Republicans don’t like this, either.

I really don’t understand the vision of the economy, or of need in general, where it makes more sense to cut public-health spending than treat the income of hedge-fund managers like the income of, say, small-business owners. Is there some reason we want lots more people to enter the hedge-fund industry? Or that government should be directly subsidizing oil and gas production? I can at least understand the rationale for public-health programs. That sort of collective action is something you need government to organize. The presence of generous financial incentives for entering the hedge fund industry really isn’t.

Okay, then, so Republicans are just evil or stupid when it comes to this one.  Any other choices?  Or, they hate small businesses despite all their rhetoric?

Just so you know…

Bill Boettcher complained the other day that I “quote to much.”  Well, Bill better stay away today, because there’s all sorts of great blog posts out there that I know you won’t click through on, but figure there’s a good probability you’ll read my thoughtfully and carefully excerpted quotes.  You’re forewarned.

Moderates and the GOP

As is well known, there are more self-identified “conservatives” than “liberals,” seemingly making things easier for the Republican party.   However, a not insubstantial number of those “conservatives” identify as Democrats whereas pretty much no “liberals” identify as Republicans any more.  (In large part, because a huge Americans are clueless as to what these terms actually mean).   The Democrats tend to make up their disadvantage among the liberal/conservative ranks, by getting the majority of moderates.  With the recent turn of the Republican party, this may even be more so.  PPP reports:

One of the findings on our national poll this week has a lot of relevance to what’s going on in the political world today: only 41% of moderates think there’s a place in the Republican Party for them. You have to wonder this afternoon if Mike Castle includes himself in that 41%.

If I was a Republican Senator up for reelection in 2012 right now who was anywhere to the left of Tom Coburn I’d be getting very nervous about my renomination chances. Last week we looked at a couple folks in the GOP caucus who are up next time and found that both of them could be in a great deal of trouble. It’s not much surprise that Maine Republicans want to purge out the clearly centrist Olympia Snowe by a 63-29 margin. But it was a little startling to see that the GOP base in Texas wanted to replace the pretty reliably conservative Kay Bailey Hutchison with someone even further to the right by a 62-25 spread.

And one thing that was made clear by Christine O’Donnell’s victory is that in this political climate you don’t even have to be a particularly good candidate to catch fire and bump out someone who’s perceived as being too liberal.

Against that overall backdrop it should be no surprise at all that only 21% of moderates identified themselves as Republicans on our most recent national poll to 46% who are Democrats and 32% who are independents.

The political scientist in me is very intrigued to see how this year’s events have an impact that unfolds over the long term.  The good news is, I plan on keeping at this over the long term– one of the reasons I love my job so much.

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