Infinite Jeff

What the income-inequality denialists and “politics of envy” critics don’t want to see:  pre-tax income and wage data compiled by Thomas Piketty (Paris School of Economics/EHESS) and Emmanuel Saez (Department of Economics, UC Berkeley, Director, Center for Equitable Growth, 2009 John Bates Clark medal winner).

From which data we’ve created a few visual displays of income concentration among the top 1% of U.S. families (the “merely rich”), the top 0.1% of U.S. families (the “very rich”) and the top 0.01% of U.S. families (the “filthy rich”) from 1950 to 2007.  Headlines for 2007:

• The merely rich — 1,498,750 families with incomes of at least $398,900 — had a 23.50% share of all U.S. family income.
• The very rich — 149,875 families with incomes of at least $2,053,000 — had a 12.28% share of all U.S. family income.
• The filthy rich — 14,988 families with incomes of at least $11,477,000 — had a 6.04% share of all U.S. family income.

The income shares of the merely, very and filthy rich in 2007 were all much, much larger than they were in 1950 — 12.82%, 4.39% and 1.22%, respectively.  Compared to the previous secular peak for income concentration in the late 1920’s, the 2007 income share of the merely rich was just shy of the 23.94% record set in 1928.  The 2007 income shares of the very and filthy rich, however, were well in excess of  the previous highs (also set in 1928) of 11.54% and 5.02%, respectively.

If the increase from 1950 to 2007 in the income share of the merely rich was remarkable, the increase in the income share of the very rich was truly exceptional and, as for the filthy rich … un-fucking-believable:

• From a 12.82% income share for the merely rich in 1950 to a 23.50% share in 2007 — an increase of 83%.
• From a 4.39% income share for the very rich in 1950 to a 12.28% share in 2007 — an increase of 180%.
• From a 1.22% income share for the filthy rich in 1950 to a 6.04% share in 2007 — an increase of 395%!

Looked at another way, the increase from 1950 to 2007 in the share of U.S. family income going to the top 1% as a whole was mainly attributable to increases in the income shares going to the very and filthy rich:

• The income share of the top 1%, excluding the filthy rich (i.e., the 99%–99.99% fractile), increased only 51% from 1950 to 2007.
• The income share of the top 1%, excluding the very along with the filthy rich (i.e., the 99%–99.9% fractile), increased only 33% from 1950 to 2007.

The accelerating growth of income concentration within the top 1% is evidence of nothing less than the emergence, especially since the 1980s, of an income plutocracy in the United States:

• As a percentage of the income going to the top 1.0% of U.S. families, the share of the very rich increased from 34.25% in 1950 to 52.23% in 2007.
• As a percentage of the income going to the top 1.0% of U.S. families, the share of the filthy rich increased from 9.52% in 1950 to 25.68% in 2007.

Economics & Finance, Politics filthy rich, income distribution, income inequality, piketty & saez, plutocracy

Economics & Finance, Law, Politics banks, dodd-frank, econolypse, proprietary trading, volcker rule

From today’s paper, the U.S. counterinsurgency strategy in Afghanistan reduced to meaningless chartjunk:

As if Edward Tufte’s diagnosis of the state of our verbal and statistical reasoning in the era of PowerPoint — “Power corrupts; PowerPoint corrupts absolutely” — needed any confirmation.

Make sentences, not bullet points.

Economics & Finance, Law, Politics afghanistan, counterinsurgency, powerpoint, tufte

Marching for comprehensive immigration reform with 200,000 happy flag-wavers, Washington, D.C., 21 March 2010. Over by the Capitol, a much smaller crowd of angry white people raged against health care reform, opposed to the passage of time, afraid of the America spread out before them.

Photography & Design, Politics center for community change, immigration reform, RI4A

Law, Politics lawyers, nuremberg, torture, war crimes

Jim Manzi steps off The Corner and says something truly original about the “effectiveness” debate, an evolutionary argument way smarter than the kind of evidence-free, Saddam-has-WMDs ranting one usually hears in that blighted neighborhood:

Let’s assume arguendo that torture works in the tactical sense that I believe has been used so far in this debate; that is, that one can gain useful information reliably in at least some subset of situations through torture that could not otherwise be obtained. Further, assume that we don’t care about morality per se, only winning: defeating our enemies militarily, and achieving a materially advantaged life for the citizens of the United States. It seems to me that the real question is whether torture works strategically; that is, is the U.S. better able to achieve these objectives by conducting systematic torture as a matter of policy, or by refusing to do this? Given that human society is complex, it’s not clear that tactical efficacy implies strategic efficacy.

When you ask the question this way, one obvious point stands out: we keep beating the torturing nations. The regimes in the modern world that have used systematic torture and directly threatened the survival of the United States — Nazi Germany, WWII-era Japan, and the Soviet Union — have been annihilated, while we are the world’s leading nation. The list of other torturing nations governed by regimes that would like to do us serious harm, but lack the capacity for this kind of challenge because they are economically underdeveloped (an interesting observation in itself), are not places that most people reading this blog would ever want to live as a typical resident. They have won no competition worth winning. The classically liberal nations of Western Europe, North America, and the Pacific that led the move away from systematic government-sponsored torture are the world’s winners.

Now, correlation is not causality. Said differently, we might have done even better in WWII and the Cold War had we also engaged in systematic torture as a matter of policy. Further, one could argue that the world is different now: that because of the nature of our enemies, or because of technological developments or whatever, that torture is now strategically advantageous. But I think the burden of proof is on those who would make these arguments, given that they call for overturning what has been an important element of American identity for so many years and through so many conflicts.

Could it be that when Darwinian competition occurs at the level of national systems, “survival of the fittest” means “survival of the most civilized”?

Law, Politics darwin, evolution, torture, war crimes

Geithner re-announces his public-private plan for toxic assets.  Leaving aside the boring details, the plan amounts to what?

 •  corporate statism

•  crony capitalism

•  lemon socialism

•  Groucho Marxism

The answer, of course, is … all of the above.

Economics & Finance, Politics banks, geithner, ideology, public-private fund, TARP

Nate Silver, live-blogging last night’s Republican response to Obama, as delivered by Bobby “Kenneth the Page” Jindal:

If it sounds like Jindal is targeting his speech to a room full of fourth graders, that’s because he is. They might be the next people to actually vote for Republicans again.

(h/t Matt, as ever)

Politics jindal, kenneth the page, obama

The dean of the bank M&A bar speaks to the Financial Times:

“If the phrase ‘height of stupidity’ has any meaning, it would be shown if they nationalise a US bank,” said Rodgin Cohen, chairman of law firm Sullivan and Cromwell, who has advised on many of the past year’s biggest bank rescue deals and recapitalisations.

Mr Cohen stressed that the nationalisation of a large global bank had never been tested and the unintended repercussions of such a move could be severe, particularly in relation to any of the bank’s foreign subsidiaries. He favours a plan that would infuse banks with more capital and extract bad assets from their balance sheets as quickly as possible, to boost confidence in the institutions.

“Given time, these institutions have enormous earnings capacity,” he said. “If you start to take out these bad assets, we’ll start to see confidence rebuilt.  It can turn around, and it will turn around.”

And when it does turn around, we want to make sure our guys are still in charge so they can privatize the gains and share them with us.

Looks like the rent-seekers have found their mouthpiece.

Economics & Finance, Politics banks, law firms, lawyers, lemon socialism, nationalization

Roubini says that if we don’t like the sound of nationalization, we should call it “receivership” instead.

Calculated Risk suggests “pre-privatization” for a slight shift in emphasis.

Yglesias goes all in:

I say we go further and call it “awesome capitalist cowboys” just to ensure that everything’s really in tune with American cultural norms. Everyone loves cowboys!

Oh, what the hell — call it a “tax cut” and let slip the stress-testers.  Raise up the Resolution Trust Corporation.  Party like it’s 1989.

(h/t Matt for the linguistic trend-spotting)

Economics & Finance, Politics banks, nationalization