CapitalistImperialistPig

Or so claims Megan McArdle . It seems that McArdle read Sean Reardon's NYT article on the growing gap in educational achievement between the wealthy and the rest of America - though based on the internal evidence of her article, it's a little hard to believe she read beyond the first paragraph. It's obvious, she says, heredity and true breeding of IQ account for all the effect. In support of that she cites some stuff she seems to have invented out of whole cloth. In particular, she pointedly ignores all the evidence gathered by Professor Reardon and his students. I didn't like McA (AKA Jane Galt) even before I found that she had been forged in the Koch brothers version of Mordor, and sent out on the world with more or less only their slime trail by way of credential. Some of her Kochtopus history is documented here . What Reardon actually found was that the rapidly growing difference in educational achievement with income is closely correlated with both growing ec...

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland probably didn't restructure my world view quite so drastically as Guns, Germs, and Steel but it is another book packed with deep insights into the way today's world works. Freeland knows her subjects very well, and has spent a couple of decades observing them. It is by no means a "life-styles of the rich and infamous" book, though there is a sampling of that, but rather, a detailed economic history. It's pretty clear that she combines a certain admiration for their intelligence, diligence and entrepreneurial spirit with a well-justified suspicion of the risks their ascendancy poses for the rest of us. I have written extensively on her ideas in these previous reviews , but her final chapter deserves some additional commentary. It's theme is the natural human tendency of those who have scaled the heights to pull up the ladder after them, and the method is t...

The quickest way to get rich is to occupy some valuable resource and collect a lot of rent for doing it. Wikipedia on Rent Seeking: In economics, rent-seeking is an attempt to obtain economic rent by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. One example is spending money on political lobbying in order to be given a share of wealth that has already been created. A famous example of rent-seeking is the limiting of access to lucrative occupations, as by medieval guilds or modern state certifications and licensures. People accused of rent seeking typically argue that they are indeed creating new wealth (or preventing the reduction of old wealth) by improving quality controls, guaranteeing that charlatans do not prey on a gullible public, and preventing bubbles. Many current studies of rent-seeking focus on efforts to capture various monopoly privileges stemming from government regulation of a market. The term ...

Republican's have been quick to play the "class warfare" card, though to date they are the most successful practitioners, having steadily pumped cash to the very rich for nearly two generations now. Chrystia Freeland, in her book Plutocrats , has some hints that Obama's counterattack is aimed at the wrong target. Revolts elsewhere against the power of the super rich have originated mainly in the 1% that Obama targets (and belongs to). Although the 1% make about 15 times as much as the average of the bottom 90%, that pales compared to the factor of 125 multiple for the 0.1% and the much higher multiple for the Romneyesque 0.01%, not to mention the billionaires. The ordinary 1% no they are rich of course, but they are gnawed by envy of the really rich. They have enough money to be in contact with the big rich, but not to enjoy their unique perks. In India, Egypt, and Ukraine, rebellion of the 1% against the special treatment of the super rich oligarchs provided ...

According to one account , the World total of financial assets is about $200 trillion, or something like $28,000 per person, on average. Of course they aren't distributed anything like that. About 2/3 of these assets are held in the US and Europe, with another quarter in Japan and China. Latin America rates less than 3.5%. Despite these imbalances, recent history has seen a dramatic increase in both overall wealth and a decrease in inequality. In the US and some of the Europe the middle class has taken a hit, but their loss (or stagnation) has been the gain of newly middle class populations of China, India,and other rapidly developing countries. The percentages of the very poor have declined sharply globally, though they still represent billions.

It seems that the rich don't like being called on it - the word does rhyme with "bitch" after all. But investment banks do track them. One of the joys of Plutocrats is learning the vocabulary - the euphemisms of the day. A current segmentation is the HNWI (High Net Worth Individuals) and the UHNWI (Ultra High Net Worth Individuals). These respective worthies are defined by their investable funds or (sometimes, alternatively) annual incomes, with typical minima being,respectively, one million dollars and 50 million dollars. Collectively, they control a very large fraction of the World's total wealth. Credit Suisse counts about 30 million HNWI in the world and about 85,000 UHNWI as of 2011. All these people are rich of course, and the UHNWI are very rich, but you still need to increase your wealth by a factor 20 to make the billionaires club - the peak of the financial pyramid is very sharply pointed.

Those familiar with my book reviewing style may recall that I prefer a sort of lengthy argument with an author - I can't wait until I've finished the book to start the review. So let it be with Chrystia Freeland's: Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. This book could have been another cheesey episode of "Lifestyles of the Really Really Rich" but it isn't, though there are tidbits for the incurable voyeur. Freeland is a veteran economics correspondent who has spent a couple of decades interviewing and hobnobbing with her subjects, but she - so far - is more interested in economics than personalities. After making it clear that she sees us in a new "Gilded Age" she takes a long historical look at the originals: the great industrialists of the late nineteenth and early twentieth centuries, AKA the "Robber Barrons." Andrew Carnegie was one of the princes of that crowd, and more than his fellows in...

I have been reading David Cay Johnston's book Free Lunch and it's a very difficult book to read - every few pages I find myself putting the book down in a rage. The American economy grew quite slowly from 1980 until 2005, but it did manage to increase the GDP per capita by 68%. Every penny of this increase, and more, went to the top 10% of money earners. The other 90% actually lost ground. Even among the top ten percent, a vastly disproportionate share went to the top 1%, and even more so to the top 0.1%. Almost all the money went to the rich, the very rich, and the super rich. Why so? Part of the reason is the changed tax structure. Ronald Reagan decreased taxes on the rich and dramatically increased them for the middle class. That theme is not at the core of this book however. The same forces which permitted Reagan to greatly alter the tax structure also led to a number of special privileges which funneled tax dollars into the pockets of the super rich. Modern electoral camp...