Ed,
The few decades following WWII were the best the western world has ever seen and the new world we thought we had is now slipping away. Me, The question is why? Or are there multiple answers many of which we have touched on on this list. And if we know some of the answers is what is lacking is political will? Or has our current paradigm exhausted itself? From: [email protected] [mailto:[email protected]] On Behalf Of Ed Weick Sent: Thursday, September 22, 2011 9:24 AM To: Keith Hudson; RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION Subject: Re: [Futurework] Professional Ethics (of economists) Keith, I do appreciate what you were trying to do, and yes indeed things were much tougher in historic times than they are now. But we do live in the here and now, a time of very high sovereign debt, growing unemployment and changing wealth and power relationships. It is a time in which vital economic information can be passed around secretively at lightening speed and be made to work to the good of the few and the harm of the many. A book on the collapse of Lehman Brothers, "The Devil's Casino", illustrates the latter point. And yes, things will sort themselves out eventually, whatever the world will be like then. But I do mourn the passing of the times we've had. The few decades following WWII were the best the western world has ever seen and the new world we thought we had is now slipping away. Ed ----- Original Message ----- From: Keith Hudson <mailto:[email protected]> To: RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION <mailto:[email protected]> ; Ed Weick <mailto:[email protected]> Sent: Thursday, September 22, 2011 1:09 AM Subject: Re: [Futurework] Professional Ethics (of economists) Ed, I appreciate that you were describing the modern scene. I was putting the present income/wealth gap in historical context. When the present credit crunch is over with I think we'll find that the decreasing differential will have resumed. The FIRE sector will have paid off its debts (or, hopefully, parts will be allowed to go bankrupt), it will have dispensed with a great deal of the present load of ultra-sophisticated derivatives that have yet to play themselves out, and it will be nearer to its traditional size vis-a-vis total GDP (that is, around 5-10%). But still, that's years away yet, and it's the present that's important as regards the social reaction to hard times and whether Western governments will survive in their present form. Keith At 20:56 21/09/2011, you wrote: Keith, I wasn't referring to the 19th Century or medieval times, but to what has happened since WWII, especially to America, where there has been a growing gap between the income of the very rich and the rest of the population. Jacob Hacker and Paul Pierson, two political scientists, write about this in "Winner Take All Politics" as does journalist Chris Hedges in "Death of the Liberal Class". A table in Hacker and Pierson (published 2010) shows a very large increase in the income share of the wealthiest 1% of the American population. Its share of total income moved from about 8% to about 16% between 1975 and 2000. Similar surges have taken place in Canada and the UK, though they were not nearly as large as the US surges. Income shares of the wealthiest in Germany, France and Japan have generally remained static or have fallen a little. Several factors would account for the very rich getting very much richer. One would be the growth of the FIRE (finance, insurance and real estate) sector, in which a great deal of money has been made. Another would be the rising control of politicians by the very wealthy. For example, in the US there is currently no limit in the amount individuals or corporations can contribute to political campaigns, a thing that could mean the conversion of democratic representatives into corporate lobbyists: Obama currently wants to raise the inequitably low taxes of the wealthiest American individuals and corporations, but there's no way the Republicans will let him. Yet another factor is the demise of unions, a very strong force in the maintenance of the middle class in the 1950s to 70s, but now virtually hardly on the scene at all. And of course the fact that a significant proportion of production for the US market has been moved abroad is not helpful in providing ordinary Americans with jobs and a living. I'm not arguing that super-rich Americans aren't good people, and I know that people like Bill Gates, Warren Buffet and others have done some very good things with their money. Nevertheless the situation of the US and probably Canada too is one of hollowing out, with the wealthy getting wealthier, the middle class fading and the poor sinking into ever deeper poverty. Ed ----- Original Message ----- From: Keith Hudson <mailto:[email protected]> To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION <mailto:[email protected]> ; Ed Weick <mailto:[email protected]> Sent: Wednesday, September 21, 2011 10:55 AM Subject: Re: [Futurework] Professional Ethics (of economists) Ed, But the relative gap between the rich and the poor (in the advanced countries) is nowhere near the relative gap between the rich and the poor a century ago. J.P. Morgan was as rich as Warren Buffet, Bill Gates and several more combined. So was Carnegie, so was Rockefeller. In modern day terms each of them was probably a trillionaire. Going back further, Morgan and Co were not as rich in relative terms to the poor as the great landowners of the Middle Ages. Henry VIII (with 49 palaces) and about a dozen more owned half of England. It's true that there has been a recent surge in the gap, but come the double dip the rich are more than likely going to take a relatively larger bashing, too. The gap has only become really outrageous since the credit surge of the last 30 years. It's more than likely that the present gap will be greatly reduced to the long-term historical trend once the present currency catastrophe finally sorts itself out. All in all, the main difference today is a perceptual one. We know a great deal more about the rich than ever before, nor do we have scruples about being envious these days. Previously it was considered a sin to be envious in order to keep us in our place. Today, probably proportionately more money is being left by the rich to foundations and charities -- hundreds of them in recent decades -- than to families. Most of the medical innovations of the last 50 years have been due to research paid for by private foundations, not government-backed science. Just the Rockefeller Foundation and the Howard Hughes Medical Institute alone have probably produced as many new therapies than all US government research spending. Think of the Gate's and Buffet's present and future contributions to medical research and future eradication of some diseases such as malaria all round the world. Meanwhile we in the advanced countries devote less than 1% of our GDPs to the Third World. Keith
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