Barry Ritholtz maintains a blog named “The Big Picture” and the blog reflects his iconoclastic view of the market economy–he is a strong supporter of the market, yet regularly raises questions about how well the market addresses real economic problems faced by the majority of citizens. His most recent post reinforces the information in yesterday’s blog post. Ritholtz looks at the accumulation of wealth since the Great Financial Recession (GFC) of 2008-09 and the distribution of wealth has become increasingly concentrated: “Today, the Top 1% is wealthier than all of the Middle Class. This is a relatively new, post GFC phenomena. It is driven primarily by the rise of asset prices: Stocks, Bonds, Real Estate and Business holdings.This is why the top 20% has recovered to pre-crisis income but the rest economic strata has not.” Ritholtz argues that this concentration of wealth is primarily responsible for the political attractiveness of both Donald Trump and Bernie Sanders.
“The opportunity for economic mobility has shrunk.
“Call this what you will: A plutocracy, an oligopoly, a technocracy, a corporatocracy, a whatever — the massive Post-War middle class expansion that created so much wealth for ordinary families has morphed, starting around 1980, into something else entirely. Today, it has changed into low-tax economy that rewards capital and asset holders, and throws off much less towards the working class than it did last century.
“Hence, the rise of Donald and Bernie. They both exhibit a more similar appeal to their base then you might imagine.”
The analysis begs the political question of which candidate offers an effective response to this maldistribution of wealth. For Ritholtz, the concentration of wealth is something that the market itself could solve: “We have a robust economy yet still have lots of people not participating. We have an unemployment rate at 60-year lows, yet enormous sections of the labor pool are under-employed. Low inflation in the things we want, but higher inflation in the things people need. We simultaneously have great wealth and economic insecurity. That enormous wealth has flowed to mostly to Capital and asset holders, and not to workers or Labor.”
Russian airstrikes near Idlib, Syria, have reportedly killed 29 Turkish soldiers. The strike represents a dramatic escalation of the tension between Turkey and Russia, one which will be difficult for Turkish President Erdogan to ignore. The BBC reports:
“This is a new and dangerous escalation in an increasingly direct conflict between Turkish and Syrian government forces in Idlib. Both sides have suffered losses over the past few weeks. But the latest Turkish casualties come at a precarious moment.
“President Erdogan has threatened to mount a major military operation against President Assad’s forces if they don’t pull back from frontline positions near Turkish troops in Idlib within the next two days.
“For now there’s no sign of that happening. Turkey has already been stepping up its military support for the rebel fighters it backs as they mount a counter offensive to try to win back key towns they’ve recently lost.
“Behind this conflict looms the potential of an even bigger confrontation. Turkey and Russia have backed different sides in Syria, but have come together to broker battlefield deals in the past few years.
“That pragmatic rapprochement is now in doubt. Russian airpower has provided vital support for Syrian forces – if it is now being directed at Turkish military positions, that creates a huge new element of risk.”
There are urgent diplomatic efforts to avoid further escalation, but Turkey and Russia have been unable to reach any solutions since an abortive cease-fire was declared by both sides in 2018. The fighting around Idlib has displaced almost a million civilians and the humanitarian crisis is extreme. The world, however, seems to be indifferent to the suffering of so many.
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