7 October 2017   Leave a comment

The Urban Institute has published a study on wealth inequality in the US and it shows that it is worsening significantly over time.  Additionally, the report breaks down both wealth and income inequality by race and ethnicity and the discrepancies among these groups is even more distorted.  The summary from the report reads as follows:

Average wealth has increased over the past 50 years, but it has not grown equally for all groups. Between 1963 and 2016,

  • families near the bottom of the wealth distribution (those at the 10th percentile) went from having no wealth on average to being about $1,000 in debt,
  • those in the middle more than doubled their wealth,
  • families near the top (at the 90th percentile) saw their wealth increase fivefold,
  • and the wealth of those at the 99th percentile—in other words, those wealthier than 99 percent of all families—grew sevenfold.

These changes have increased wealth inequality significantly. In 1963, families near the top had six times the wealth (or, $6 for every $1) of families in the middle. By 2016, they had 12 times the wealth of families in the middle.

The trend toward greater income and wealth inequality cannot be sustained politically or economically indefinitely.  At some point, the legitimacy of the system will be completely undermined.

 

One reason why wealth inequality has deepened so significantly can be found in the chart below.  Those that had enough money to buy stocks have been greatly enriched.  Unfortunately, most Americans do not own stocks directly.  Moreover, globalization has repressed wage growth as the balance of economic power has shifted away from labor and more to those owning capital.

S&P

 

The Catalonian independence referendum did not mysteriously appear.  As this chart from Zero Hedge indicates, the independence movement has a very long and deep history.  Estat Catalá even has its own Facebook Page.  The chart also highlights the historical tension between the regional sentiments and the fascist leanings of the central government although the current Spanish government does not fall into that category.

 

As Congress begins to debate tax reform and President Trump begins to unravel President Obama’s Climate Change Program, it is instructive to read Oil Change International’s report on fossil fuel subsidies.  The summary of the report suggests that significant revenue could be generated by ending tax subsidies for the fossil fuel industries:

  • The United States federal and state governments gave away $20.5 billion a year on
    average in 2015 and 2016 in production subsidies to the oil, gas, and coal industries,
    including $14.7 billion in federal subsidies and $5.8 billion through state-level incentives.
    At the state level, this is likely a significantly conservative estimate, given limits to
    available data.
  • Repeated proposals by the Obama White House to remove some of the most damaging
    federal subsidies were thwarted in large part due to the cozy relationship between
    Congress and the fossil fuel industry. In the 2015-2016 election cycle oil, gas, and coal
    companies spent $354 million in campaign contributions and lobbying and received
    $29.4 billion in federal subsidies in total over those same years – an 8,200% return
    on investment.
  • The cost of federal fossil fuel subsidies to American taxpayers is equivalent to the
    projected 2018 budget cuts from Trump’s proposals to slash 10 public programs and
    services, including supports for America’s most vulnerable children and families.
    Misplaced priorities, not a scarcity of resources, are driving this administration’s efforts
    to balance the national budget at the expense of the most vulnerable.

The fossil fuels industries receive significantly greater subsidies than do the industries producing renewable energy.

energy subsidies

Posted October 7, 2017 by vferraro1971 in World Politics

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