Category Archives: Inequality

News Coverage: Wealth Has Accumulated in Ever-Richer Neighborhoods for the Past 20 Years Thanks to Exclusionary Housing Practices – CityLab

Wealth Has Accumulated in Ever-Richer Neighborhoods for the Past 20 Years Thanks to Exclusionary Housing Practices – CityLab.

[Note: worth clicking on the link for the Urban Institute’s map.]

New Article: “The Banality of Racial Inequality”

New Article: Richard R.W. Brooks, The Banality of Racial Inequality, 124 Yale L.J. 2202 (2015).  [Reviewing Daria Roithmayr, Reproducing Racism: How Everyday Choices Lock in White Advantage (2014).]

Inequality Troubles Americans Across Party Lines, Times/CBS Poll Finds – NYTimes.com

Inequality Troubles Americans Across Party Lines, Times/CBS Poll Finds – NYTimes.com.

New Article: “Reducing Inequality with a Retrospective Tax on Capital”

New Article: James Kwak, Reducing Inequality with a Retrospective Tax on Capital, Cornell J. L. & Pub. Pol’y forthcoming, SSRN May 2015.  Abstract below:

Inequality in the developed world is high and growing: in the United States, 1% of the population now owns more than 40% of all wealth. In Capital in the Twenty-First Century, the economist Thomas Piketty argues that inequality is only likely to increase: invested capital tends to grow faster than the economy as a whole, causing wealth to concentrate in a small number of hands and eventually producing a society dominated by inherited fortunes. The solution he proposes, an annual wealth tax, has been reflexively dismissed even by supporters of his overall thesis, and presents a number of practical difficulties. However, a retrospective capital tax — which imposes a tax on the sale of an asset based on its (imputed) historical values — can reduce the rate of return on investments and thereby slow down the growth of wealth inequality. A retrospective capital tax mitigates or avoids the administrative and constitutional problems with a simple annual wealth tax and can reduce the rate of return on capital more effectively than a traditional income tax. This Article proposes a revenue-neutral implementation of a retrospective capital tax in the United States that would apply to only 5% of the population and replace most existing taxes on capital, including the estate tax and the corporate income tax. Despite conventional wisdom, there are reasons to believe that such a tax could be politically feasible even in the United States today.

New Article: “The Federal Reserve and a Cascade of Failures: Inequality, Cognitive Narrowness and Financial Network Theory”

New Article: Emma Coleman Jordan, The Federal Reserve and a Cascade of Failures: Inequality, Cognitive Narrowness and Financial Network Theory, SSRN May 2015.  Abstract below:

The recent financial crisis hollowed out the core of American middle-class financial stability. In the wake of the financial crisis, household net worth in the U.S. fell by 24%, for a loss of $16 trillion. Moreover, retirement accounts, the largest class of financial assets, took a steep drop in value, as did house prices, and these two classes of assets alone represent approximately 43% of all household wealth. The losses during the principal crisis years, 2007-2009, were devastating, “erasing almost two decades of accumulated prosperity,” in the words of a 2013 report. By the Federal Reserve. Beyond these direct household balance-sheet losses, 1 out of every 4 homeowners were underwater by 2009 with mortgages worth less than the value of their homes. If we add the 3.7 to 5 million foreclosures that forced Americans to move from the economic and emotional stability of family homes, we see a portrait of dramatic financial instability in the wake of the financial collapse. And the Federal Reserve’s commitment to low interest rates, so beloved on Wall Street, has prevented many families from rebuilding their wealth through interest on savings; these “zero-bound” interest rates are an impediment to middle-class recovery from the losses of the crisis.

By contrast, the financial sector, the cause of the crisis, has prospered from adversity, growing to 9% of GDP by 2010 even as it became less efficient. This is one of the highest shares of GDP in the past half century and represents 29% of all profits in America. The financial sector earns profits by pooling funds to bring net savers together with net borrowers in financial contracts, a process known as intermediation. Economist Thomas Philippon of New York University found that the profits from intermediation grew from less than 2% of GDP in 1870 to nearly 6% before the economic crash of 1929. After World War II, financiers gradually increased their share of the economy to 5% by 1980, close to what it had been before the crash. The focused deregulatory agenda of the Reagan administration and Alan Greenspan’s deregulatory passions at the helm of the Fed from 1987 to 2006 swelled the balance sheets of financial firms to the high point of 9% of GDP by 2010.

The return to investors did not match the growth in the financial sector’s share of GDP. So what did investors get for their money? Philippon says it’s impossible to beat the market in part because of high-frequency trading that locks out the ordinary investor through sophisticated high-speed computer transmission of orders with preferential cable and algorithmic access to the trading desks.

Op-Ed: Krugman, Race, Class and Neglect – NYTimes.com

Race, Class and Neglect – NYTimes.com.

Infographic: Income Inequality: It’s Also Bad for Your Health – NYTimes.com

Income Inequality: It’s Also Bad for Your Health – NYTimes.com.

Video: Last Week with John Oliver on The Wealth Gap / Inequality

Here.

-Thanks to Emily B. for the heads up!

News Article: Inequality Has Actually Not Risen Since the Financial Crisis – NYTimes.com

Inequality Has Actually Not Risen Since the Financial Crisis – NYTimes.com.

New Article: ““Continually Reminded of Their Inferior Position”: Social Dominance, Implicit Bias, Criminality, and Race”

New Article: Darren Lenard Hutchinson, “Continually Reminded of Their Inferior Position”: Social Dominance, Implicit Bias, Criminality, and Race, 46 Wash. U. J.L. & Pol’y 23 (2014).  Abstract below:

This Article contends that implicit bias theory has improved contemporary understanding of the dynamics of individual bias. Implicit bias research has also helped to explain the persistent racial disparities in many areas of public policy, including criminal law and enforcement. Implicit bias theory, however, does not provide the foundation for a comprehensive analysis of racial inequality. Even if implicit racial biases exist pervasively, these biases alone do not explain broad societal tolerance of vast racial inequality. Instead, as social dominance theorists have found, a strong desire among powerful classes to preserve the benefits they receive from stratification leads to collective acceptance of group-based inequality. Because racial inequality within criminal law and enforcement reinforces the vulnerability of persons of color and replicates historical injuries caused by explicitly racist practices, legal theorists whose work analyzes the intersection of criminality and racial subordination could find that social dominance theory allows for a rich discussion of these issues.