Two Factors Leading to Wealth Redistribution
When taxes are used to provide services for lower income families and
individuals, that amounts to a sort of wealth redistribution. It isn’t exactly like Robin Hood robbing from the
rich and distributing what he plundered to the poor, but the results are
similar. Without such government involvement,
though, wealth also can be redistributed over time if poorer people climb the ladder
and earn more money on their own. This
may take more than one generation, but it happens. But such "Horatio Alger" stories (how many of you remember them?) are becoming rarer and rarer.
One
important factor to be considered which can motivate efforts at wealth
redistribution is (1) the amount of income inequality between
the wealthy and the poor. Another is the (2) degree of social immobility in a
society resulting in those born poor, and their children, remaining poor. This subject
has been addressed directly and obliquely in recent days by both President Obama and
Pope Francis.
An
interesting article tying together income inequality and social immobility appeared in
a recent issue of BloombergBusinessweek (Dec. 5, 2013) and is reproduced below. The accompanying chart illustrates the point being made, and coincidentally, was featured on the "Morning Joe" program on December 23.
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JL
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The Gatsby Curve: How Inequality Became a Household Word
Alan
Krueger stuck his head into the office in Washington, D.C., where the Council
of Economic Advisers keeps its pool of research assistants and offered a deal.
Krueger, then the council’s chairman, needed a name for a graph. He offered a
bottle of wine to the researcher who could come up with the best one. The
winner: “The Great Gatsby Curve.” That was in 2011. Krueger admits now that
he’s not sure he ever delivered the wine.
On
Dec. 4, President Obama gave a speech about income inequality in
Washington. A family in the richest 1 percent, he said, has more than 288
times the wealth of the median family. The likelihood that a child can escape
her parents’ circumstances is lower in America than in “most of our wealthy allies—countries
like Canada or Germany or France.” Although the president didn’t pull out any
graphs, Obama borrowed two ideas for his speech that make inequality easier to
understand: the 1 percent and the Gatsby Curve. In part, the president—and
the pope in Evangelii Gaudium, an Apostolic Exhortation released on
Nov. 24—are able to talk about income inequality because two groups of
economists spent the better part of a decade coming up with easily digestible
ways to describe it.
For
much of the 20th century, academic economists accepted the ideas of Simon
Kuznets, who in 1971 won a Nobel prize for his work on inequality. In the
1950s, Kuznets looked at IRS returns going back to the introduction of the
personal income tax in 1913 and discovered that income inequality had been
dropping in the U.S. He suggested that for developed economies, economic growth
lowered inequality. “It was a nice theory for the golden age of growth,” says Thomas
Piketty, a professor at the Paris School of Economics. Out of curiosity in the
1990s, Piketty, then a young Ph.D. at the Massachusetts Institute of
Technology, applied Kuznets’s approach to tax data for his native France,
eventually running it all the way forward to 1998. Then, with Emmanuel Saez,
another French economist, he did the same for the U.S. In 2003 they published
their finding that income inequality had started to rise in America in the
early 1980s, about a decade after Kuznets accepted his Nobel.
Other
economists, relying on household surveys taken by the U.S. Department of Labor,
also found growing inequality. But the Frenchmen used IRS data that goes back
much further than Labor’s numbers. By 2007, the two were able to show that the
income share of the top 1 percent had reached a level not seen since 1928,
the Jazz Age of F. Scott Fitzgerald’s Jay Gatsby.
Around
the time Piketty began his work on income inequality, economists Gary Solon and
David Zimmerman took a new approach to studying a related topic, social
mobility. Solon and Zimmerman used data from a University of Michigan study of
5,000 families that started in 1968 and continues today. By the late 1980s, the
Michigan study had detailed information on two generations of Americans showing
that social mobility was much less prevalent than previously estimated. The
poor were staying poor, and the rich were staying rich.
In
the late 1990s, Miles Corak at the University of Ottawa applied that approach
to Canada. He also began the complicated econometric work necessary to compare
social mobility among countries. Corak made it possible to see whether the
American Dream measured up to the Danish Dream. (It doesn’t.) In 2004, again
inspired by a theoretical paper by Solon, Corak produced the first version of a
graph that compared developed economies according to income inequality and
social mobility. The graph shows that countries with the highest income
inequality, such as the U.K. and the U.S., are also the most likely to pass
economic status from one generation to another. “I gave it some technical
title,” says Corak, “nothing that sparks the imagination.”
That
had to wait for Krueger. For a speech late in 2011 at the Center for American
Progress, a Washington think tank, Krueger publicly gave Corak’s graph the name
that has stuck. “The Gatsby Curve has been around for a decade,” Corak says.
“Only when it got that label did it become something that people could hook on
to.” Krueger owes someone a bottle of wine. Perhaps Obama does, too.
* * *
Well, what do you think? It's okay to be a bit dubious about
this since it is the work of economists, today's version of history's
alchemists and astrologers, both professions which once had considerable credibility. 
But if you do accept it, particularly the implications illustrated in the graph, look forward to some sort of redistribution of wealth in the United States over the next few decades, probably through government spending on social programs. That is greatly preferable to the possible alternative because, historically, such large inequalities in wealth paired with the inability of families at or near poverty levels to climb out of their predicament has had violent results. Or, one could move to Denmark.
But if you do accept it, particularly the implications illustrated in the graph, look forward to some sort of redistribution of wealth in the United States over the next few decades, probably through government spending on social programs. That is greatly preferable to the possible alternative because, historically, such large inequalities in wealth paired with the inability of families at or near poverty levels to climb out of their predicament has had violent results. Or, one could move to Denmark.
JL
Practical Obamacare Advice: Penalties, Subsidies, Where to Get Help
Instead,
I urged people to contact whomever they normally would buy insurance from. I am now going to get very specific, and if
your are on Medicare, or your employer takes care of your health insurance,
please read on anyway, so you may pass this information on to those who should
be taking advantage of Obamacare, as the Act is affectionately, or critically, referred
to.
The Penalties: If you don’t already have qualifying insurance
or an exemption and don’t enroll by March 31, 2014, the 2014 tax penalty will
be 1% of your yearly income or $95 per adult ($47.50 per child) in your family
for the year, whichever is higher. And
that penalty, aimed at assuring that the private insurance companies providing
the coverage get a representative pool of insureds, increases significantly
every year, so young people who mistakenly believe they won’t have to worry about getting
sick for years should sign on as soon as possible. If they don’t, beside the
penalty, they will be responsible for all of their doctor bills … and once
insurance isn’t involved, doctor and hospital bills
can be astronomical.
Where to Go if your Insurance Agent Can’t Help You:
Aside from the agonies of the official site at www.healthcare.gov, a lot of information
is available from vendors who stand to profit from the Act’s coverages. One is the CVS drugstore chain. I am sure the
other chains such as Walgreen’s provide similar information. But I know that there
is a lot of information available at www.CVS.com/insurance,
including a calculator to help those who choose not to purchase health
insurance figure out what their penalty will cost them. That site also enables one to calculate if
they are eligible for a government subsidy to help pay for their coverage. For example, a single individual earning up
to $45,960, a family of two earning up to $62,040 or a family of four earning
up to $94,200 will qualify for a subsidy.
Other
places to get information are the insurance companies which will be providing
the coverage. In most states, the Blue
Cross/Shield companies are involved in this, 
but of course, other companies such as Cigna, Aetna, United Health Care and Humana are
too. That is why I suggest an agent as
your first step.
For example, in the state of Florida, Florida Blue offers information and the opportunity to purchase the appropriate Obamacare coverage from them at their walk-in centers, on their web sidte at www.floridablue.com or on the phone at 1-888-902-2031.
but of course, other companies such as Cigna, Aetna, United Health Care and Humana are
too. That is why I suggest an agent as
your first step. For example, in the state of Florida, Florida Blue offers information and the opportunity to purchase the appropriate Obamacare coverage from them at their walk-in centers, on their web sidte at www.floridablue.com or on the phone at 1-888-902-2031.
There, I’ve given you a few great alternatives to www.healthcare.gov. (Who
knows? It may even be working nicely by
now.) But
there is no longer any excuse for anyone in this country to live without health
insurance and count on Emergency Rooms, family, charity and ultimately, bankruptcy
courts to handle their health care needs.
Pass this on to anyone you think it will help. Even though coverages will start on January 1, enrollments for 2014 will still be open until the end of March, but not later!
* * * * *
Pass this on to anyone you think it will help. Even though coverages will start on January 1, enrollments for 2014 will still be open until the end of March, but not later!
* * * * *
(Watch the news on whatever TV channel that you prefer,
but be very careful if your primary source of news is Fox! While the news departments of ABC, CBS, NBC,
CNN, MSNBC, Bloomberg and all of the others are busy informing viewers of what
is going on in the world, Fox is always busy mixing attacks on the Affordable Care
Act into whatever else they are reporting. Devote a full day to watching
FoxNews and I would wager that you will find more time is given there to reporting purportedly bad things
about Obamacare than is devoted to ads asking viewers to have their doctors put
them on this or that new pharmaceutical product.
(Fox viewers live in their own world of misinformation, spoken by generally good looking people.)
Fox's Megan Kelly has advised her audience that both Santa and Jesus were white men.
(Fox viewers live in their own world of misinformation, spoken by generally good looking people.)
Fox's Megan Kelly has advised her audience that both Santa and Jesus were white men.
JL
AARP Challenged by AMAC (Who's That?)
Got
a piece of mail the other day offering me membership in a organization trying
to compete with the AARP. Their pitch
was that the AARP is a left wing liberal group supporting the Affordable Care
Act and that I would be better off tearing up my AARP card and joining their
group, the Association of Mature American Citizens (AMAC), which espoused more
conservative principles, such as a pro-life viewpoint, the right to keep and
bear arms and abolishing the death tax as well, of course, as defunding ObamaCare. I threw their stuff in the wastebasket.
Now
I am no great friend of the AARP (I think of it as a benevolent insurance
agency which also lobbies for the interests of senior citizens) but I don’t
think there is anything “evil” about them.
Certainly, nothing to justify switching over to a group whose literature
claims that “soon under big-government ObamaCare, unelected government
bureaucrats on the Independent Patient Advisory Boards will rule over our
national healthcare system.”
The pitch goes on to talk about these frightening “death
panels” and how AMAC lobbies Congress to protect your individual rights from
being taken by big government. It is
tragic that there will be American seniors gullilble enough to fall for this
right wing garbage and join this pathetic organization. ‘Nuff said? If and when you get their mailing, I recommend that you throw it out as I did.
JL
Sid's Corner
HEROES
Sid Bolotin
I
suppose my first hero must have been my father, but I have no direct memory of
that since I only had contact with him for the first twenty-two months of my
life. Perhaps losing him prompted my grasping for filling the void that
resulted from his demise … intensified by stories told to me by my mother.
Be
that as it may, I have always had a delight in characters that are embodiments
of ordinary people doing heroic, beyond ordinary, deeds.
In
my early years there were radio shows starring the likes of “The Lone Ranger”
and “The Green Hornet,” movies with Errol Flynn, and comics such as “The
Phantom.” 
Television brought me “The Rifleman” and “Rawhide.”
Television brought me “The Rifleman” and “Rawhide.”
In
my early years of being a father my role models were found on “Father Knows
Best” and “My Three Sons.”
Even
now, as an octogenarian, I am still intensely moved by movies and books that
depict an everyday individual rising to the occasion to perform extra-ordinary
deeds of courage or moral fortitude … Mandela, F.D.R.,
H.S. Truman, Churchill,
Eisenhower, Rocky, Navy Seals, and Delta Forces who routinely save a Captain Daniels or plunge into enemy territory to take out a Bin Laden, et al.
H.S. Truman, Churchill,
Eisenhower, Rocky, Navy Seals, and Delta Forces who routinely save a Captain Daniels or plunge into enemy territory to take out a Bin Laden, et al.
These
days I have become engrossed by literary characters that embody the traits of
which I speak. Protagonists like Lee Child’s Jack Reacher, Vince Flynn’s Mitch
Rapp, Michael Connelly’s Harry Bosch, and Daniel Silva’s Gabriel Allon are
characters whose training is augmented by their innate motivation to use their
skills to “do the right thing.” These heroes are involved by their
authors in battling the Forces of Evil, the Darkness that surrounds human
existence and must be counterbalanced by the choices of humans to do Good.
As
I read the authors’ thought processes for these various heroes, I am always
reminded of what I learned while studying Kabbalah (Jewish Mysticism), viz.,
that Satan exists because Life is a Cosmic game, and every game requires an
opponent. You have to have someone to play tennis against … interesting
concept.
I
am also reminded of the book “The Hero with a Thousand Faces” written by
world-renowned, comparative mythologist, Joseph Campbell. His works inspired
many…George Lucas, Stanley Kubrick, Bob Dylan, Jerry Garcia, J. K. Rowling, et
al. In the introduction to the book Campbell summarizes his theory of the
journey of archetypical heroes in world mythology as follows:
“A hero ventures forth from the world of
common day into a region of supernatural wonder: Fabulous forces are there
encountered, and a decisive victory is won. The hero comes back from this
mysterious adventure with the power to bestow boons on his fellow man.”
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