Friday, November 18, 2016

Unsustainable Income Inequality

This is an excerpt from a longer story that I did last year about Thomas Piketty's book Capital in the Twenty-First Century. To see the full story, click here.

The Other End of the Pay Scale: Supermanagers and Their Pay
Meanwhile, at the other end of the pay scale, we have another graph that destroys an entire imperial wardrobe of false justification, prevarication, and artful misdirection. Figure 9.8 compares income for the top 10 percent in the United States versus Europe (in this case Great Britain, Sweden, France, and Germany). It's on page 324 of the book; it's also in the Technical Appendix: click here.

The chart goes back to 1900, but for our purposes the story begins around 1980, when salaries for what Piketty calls supermanagers started to skyrocket in the United States (pp. 291, 294). Top salaries also increased in Europe, but to a much lesser degree.

Piketty says "what primarily characterizes the United States at the moment is a record level of inequality of income from labor (probably higher than in any other society at any time in the past, anywhere in the world, including societies in which skill disparities were extremely large." (P. 265.)

He adds, "The increase was largely the result of an unprecedented increase in wage inequality and in particular the emergence of extremely high remunerations at the summit of the wage hierarchy, particularly among top managers of large firms." (P. 298.)

And he observes, "It is hard to imagine an economy and society that can continue functioning indefinitely with such extreme divergence between social groups." (P. 297.)

Monday, November 14, 2016

For Athena

Athena Ford was 33 years old when she died on October 23, 2016. About a year before she had been a passenger - with her seatbelt fastened - in a  violent car crash that left her with a traumatic brain injury.

I'm having difficulty dealing with my grief. Athena and I were soldiers together in the campaign to get Obamacare passed, and we wound up walking from Philadelphia to Washington to promote the cause. It was a stunt. There were, I believe, eight of us. We had a lot of support, but it was a grueling march.

When we got to Baltimore, Athena wasn't feeling very well, and in a church where the historian Taylor Branch talked with us and an attentive audience, including my friend Greg Cukor, our organizers found a doctor to evaluate her.

I never knew what the doctor said, but she continued the walk, and we finished together.

About the organizers. One was Dave Ninehouser, who was my roommate in various hotels on the trip. A great guy.

One day, we were a little confused about what our various headquarters wanted us to do. In addition to walking, there were side missions to meet people and talk with them.

Dave, who had the unfortunate responsibility to be a force of authority in our little commune, said, "Well, they're in charge. They must know what they're doing."

We all waited a beat, and then everyone, including Dave, laughed heartily. It was a sixties moment.

When we got to Washington, a crowd of people greeted us in front of Union Station, and then we walked one last leg up to a Senate office building. There, in a cavernous caucus room, Harry Reid told us he was going to pass the bill.

And, by God, he did.

Now, with the election of Donald Trump as president, it looks like the Affordable Care Act may be repealed.

How do I feel about that? I feel like walking to Washington again. Only Athena won't be there. And that breaks my heart.

See also Follow the Yellow Brick Road, Having Fun Reforming Health, and We Were There All Along.

Friday, November 11, 2016

What Can Pierre Laval Tell Us About Donald Trump?

Pierre Laval is remembered today, if at all, for his role as a high official in France's Vichy government during World War II. However, he also was a very prominent politician before the war, serving as foreign minister and prime minister. His behavior in those pre-war roles may give us some clues as to what we may expect from a President Trump. Here is historian Robert Paxton's take:

"Personally, Laval brought to foreign and financial affairs the supreme self-confidence of a self-made man, contempt for the cautious upper-class rituals of professional diplomats and international bankers, techniques of direct bluff talk, and the inveterate fixer's enjoyment of knot-cutting, which had worked so well at Chateldon and Aubervilliers. This political and personal mixture was disastrous. Laval rushed into delicate affairs with inexperienced directness. In 1931 his personal negotiations with German Chancellor Bruning and President Hoover did nothing to stem the world financial crisis or to ease Franco-German relations. In 1935 he seemed to give Mussolini a free hand in Abyssinia, was unable to prevent the storm that followed in French and British public opinion, and managed to antagonize everyone. It is not clear to this day what he told Mussolini. After negotiating a mutual security agreement with Stalin in 1935, he made no effort to have it ratified at home."

This is on pages 27 and 28 of Robert O. Paxton, Vichy France (1972).