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"I think Murray and I are basically in agreement about the facts here. If you take narrow enough slices and focus on the media, academia, and civilian government, you can find groups of elites with liberal attitudes on economic and social issues. But I’m also interested in all those elites with conservative attitudes. Statistically, they outnumber the liberal elites. The conservative elites tend to live in different places than the liberal elites and they tend to have influence in different ways (consider, for example, decisions about where to build new highways, convention centers, etc., or pick your own examples), and those differences interest me."
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One way to see this is to consider Murray’s political quiz, “How thick is your bubble,” where he challenges his upper-class readers to assess their points in common to the ordinary Americans. One of Murray’s questions is, “Have you ever participated in a parade not involving global warming, a war protest, or gay rights?” The bit about gay rights is cute, but it also serves to separate out the liberals in the audience. After all, lots of non-elites go to gay rights parades. What if Murray had asked, “Have you ever participated in a parade not involving the pro-life or Tea Party movements?” This might not be the best example; my point is that there are lots of ways to separate the elites from the non-elites. Elites are more likely to know a business executive, more likely to buy a new SUV, more likely to fly business class, more likely to attend professional sporting events (those tickets are expensive!), less likely to rent rather than their homes, less likely to ride public transportation, and so on. Murray’s quiz is interesting but he chooses to separate elites from non-elites in a particular way that makes me think he’s sensitive to the attitudes of politically liberal elites in particular.
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The point of these examples is not that Murray is wrong, either in his prescriptions or in his recommendations—much here depends on one’s economic views about taxation and government spending—but rather that his argument keeps going in two opposite directions at once. From one side he argues that the upper class has good habits that they should transmit to ordinary Americans; on the other side he says that the upper class should become more like the rest of the country. But I can’t see how you can have it both ways. This connects to my earlier point that much could be gained by considering the diversity of attitudes among the upper class.
"Which got me wondering whether the future that is already here might include a class for whom space travel is not merely an interesting idea, but one that is affordable."
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The diminishing marginal utility law dictates that the more money we have, the less utility we get from any additional incremental gain. And this bites the top 1% very hard indeed.
Examine the world around us from the point of view of someone with a net income of $5M/year ...
Food is essentially free; you can afford to spend $1000 per meal, three meals a day, in the most expensive restaurants in London or Tokyo or Manhattan, and not make a dent in your income. (Oddly, even the hyper-rich don't typically spend $1000 on lunch every day: a more realistic expectation might be to dine out expensively twice a week, for $100K/year, and have the best of everything in-house the rest of the time, with a live-in chef, for another $100K/year.)
Clothing is essentially free; want a different $5000 suit for every day of the week? That's going to set you back only $35K! Spouse wants a dozen designer evening gowns a year? That's still going to be on the low side of $200K.
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There are some things that having an income of $5M/year, or even $5Bn/year, can't buy you.
First on the list is health.
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First, writes Galbraith, it is important to understand that most of the current statistics on inequality are flawed. For while economists typically focus on income data – or measures such as the “gini coefficient” – these are extremely crude and tend to focus on outdated ideas about how economies work. Second, he adds, if you crunch the numbers in a more granular and up-to-date way, this challenges some orthodoxies. In particular, most economists (and politicians) have assumed in recent years that the US was becoming more unequal because of industrial change, such as a loss of manufacturing jobs to China.
But Galbraith sees little evidence of this. “At the global level, the data give no support to the vast outpouring in the professional literature arguing that changes in inequality are based on so-called ‘real factors’ such as a race between technology and education,” he writes. “On the contrary, financial factors explain a very large share (practically everything) that can be explained.”
"The once-stable incomes of America's biggest earners now fluctuate dramatically from year to year. And as go the rich, so goes much of the economy. "
"Yes, new tech have recently given us each more options, but this is mainly because new tech tends to make us each richer. Wealth gives options. If our descendants are, as I suspect, much poorer than we, they may well have fewer options than us. And eventually economic growth and tech innovation must slow to a crawl. Our finite universe simply cannot continue our exponential growth rates for a million years. For trillions of years thereafter, possibilities will be known and fixed, and for each person rather limited."
"One of the presentations was by Ole Peters, from the Department of Mathematics at the Imperial College of London. His presentation compared time series analysis with ensemble analysis. Time series analysis takes one realization of a process and runs it over a very long time period and then looks at the distribution over the course of that run, whereas ensemble analysis creates many copies of the process and runs these over a shorter period, and then looks at the distribution of those results. Time series analysis is what you see over many years in one universe, ensemble analysis is what you see when you take many universes and integrate across them to look at the distributional properties.
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"Its only with the collapse of the housing bubble, the onset of the prolonged recession and the proliferation of that last promised technology, the tablet, that network culture has entered more fully into a condition of not only a suspended past but also a suspneded future. The housing bubble itself was a crisis of the future. As history had ended, so now the future ended. Ezra Pound's old cry "Make it new!" could now only be uttered by tired characters in a thought bubble in a New Yorker cartoon. And just as the days after 9/11 gave us a war without end, we are now given a recession without end. The new stationary economy seems punctuated by mini-booms that will buoy markets and epochal crises (like the impending collapse of the Eurozone, the second leg of the Great Recession, and of course everyone's great terror, the collapse of the massive Chinese property bubble). But the Great Recession is itself no longer even something that finance fears. The canny will make billions as before. Everyone else will be poorer, their futures more exhausted, less full of promise than ever. "
In Class Dismissed, John Marsh debunks a myth cherished by journalists, politicians, and economists: that growing poverty and inequality in the United States can be solved through education. Using sophisticated analysis combined with personal experience in the classroom, Marsh not only shows that education has little impact on poverty and inequality, but that our mistaken beliefs actively shape the way we structure our schools and what we teach in them.
Rather than focus attention on the hierarchy of jobs and power—where most jobs require relatively little education, and the poor enjoy very little political power—money is funneled into educational endeavors that ultimately do nothing to challenge established social structures, and in fact reinforce them. And when educational programs prove ineffective at reducing inequality, the ones whom these programs were intended to help end up blaming themselves. Marsh’s struggle to grasp the connection between education, poverty, and inequality is both powerful and poignant.
"Hence, at last, the supreme irony. Those who claim most-fervent dedication to the guiding principle of our Enlightenment: competition, reciprocal accountability and enterprise -- our neighbors who call themselves conservative or libertarian -- have been talked into conflating that principle with something entirely different. Idolatry of private wealth, sacred and limitless. A dogmatic-religious devotion that reaches its culmination in the hypnotic cantos of Ayn Rand."
This is a striking alternative to Smith’s vision. Instead of “the assistance and co-operation of many thousands,” it is an elite caste that provides the vision, brains, and organizational savvy that ensure a thriving economy. They are the Visible Hand of capitalism, and for Carnegie, Rand, and others like them, if you want to know who makes capitalism work, simply stand at the base of the economic pyramid and look up. You’ll find the ‘job creators’ at the very top.
Smith would be highly skeptical of such claims.
"The answer is that an extreme concentration of wealth at the center of our market economy has led to a form of central planning. The concentration of wealth is now in so few hands and is so extreme in degree, that the combined liquid financial power of all of those not in this small group is inconsequential to determining the direction of the economy. As a result, we now have the equivalent of centralized planning in global marketplaces. A few thousand extremely wealthy people making decisions on the allocation of our collective wealth. The result was inevitable: gross misallocation across all facets of the private economy. "
fame, wealth, beauty, genius, power
David Brooks’ latest book, The Social Animal, does not bode well for post-crisis America.
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