Economy

Soldiering on an Empty Stomach

AP Images/Keith Srakocic
S ince the start of the Recession, the dollar amount of food stamps used at military commissaries, special stores that can be used by active-duty, retired, and some veterans of the armed forces has quadrupled, hitting $103 million last year. Food banks around the country have also reported a rise in the number of military families they serve, numbers that swelled during the Recession and haven’t, or have barely, abated. About 2,000 food-stamp recipients listed their occupations as active-duty military in 2012, according to the most recent data from the United States Department of Agriculture, which oversees the food-stamp program. It’s a tiny fraction of the 47 million Americans who receive food stamps on an average month. The military also has its own program designed to provide families with additional money for food so that they don’t qualify for food stamps. Uptake is low—only 427 families used it. Those who work on anti-hunger issues worry that there are more complicated reasons...

America's Class System Across The Life Cycle

I am not usually one for a long charticle, but occasionally it's worthwhile to step back and summarize what we know. Here, I tackle America's class system, across the life cycle. 1. Poverty Spikes Stress in Children It starts in the womb . It never lets up . 2. Income Inequality Means Enrichment Inequality More money, more activities. 3. Rapid Schooling Divergence Although there is essentially no observed class-based difference in the cognitive abilities of children in their first year of life, that ends quickly . 4. Logical Consequence of Divergence: Drop Outs Little to no enrichment activities, cognitive abilities stunted by poverty-related stress, and years of falling behind does what you would think it does . 5. Further Behind Than Ever Come College Time These figures probably understate the severity of the gap as well because those on the low end who’d score the worst probably never bother to take the SAT anyways. 6. Traditional College Students: Rich Kids The richer your parents...

Piketty's Triumph

Three expert takes on Capital in the Twenty-First Century, French economist Thomas Piketty's data-driven magnum opus on inequality.

Courtesy of Fondation Jean Jaurès
In the 1990s, two young French economists then affiliated with the Massachusetts Institute of Technology, Thomas Piketty and Emmanuel Saez, began the first rigorous effort to gather facts on income inequality in developed countries going back decades. In the wake of the 2007 financial crash, fundamental questions about the economy that had long been ignored again garnered attention. Piketty and Saez’s research stood ready with data showing that elites in developed countries had, in recent years, grown far wealthier relative to the general population than most economists had suspected. By the past decade, according to Piketty and Saez, inequality had returned to levels nearing those of the early 20th century. Last fall, Piketty published his magnum opus, Capital in the Twenty-First Century , in France. The book seeks to model the history, recent trends, and back-to-the-19th-century future of capitalism. The American Prospect asked experts and scholars in the field of inequality to...

The GOP's Racial Dog Whistling and the Social Safety Net

AP Images/J. Scott Applewhite
Y ou've no doubt heard the famous quote about race in politics spoken by the late Lee Atwater, the most skilled Republican strategist of his generation. Liberals have cited it for years, seeing in it an explanation, right from the horse's mouth, of how contemporary Republicans use "issues" like welfare to activate racial animus among white voters, particularly in the South. Race may be an eternal force in American politics, but its meaning and operation change as the years pass. It's time we took another look at Atwater's analysis and see how it is relevant to today, because it doesn't mean what it once did. Atwater may have been extraordinarily prescient, though not in the way most people think. If a certain word unsettles you, you might want to read something else with your coffee, but it's important we have Atwater's quote, spoken in 1981 during an interview with a political scientist, in front of us: " You start out in 1954 by saying, 'Nigger, nigger, nigger.' By 1968 you can't...

How to Raise Americans' Wages

AP Images/Paul Beaty
O nce upon a time in a faraway land—the United States following World War II—workers reaped what they sowed. From 1947 through 1973, their income rose in lockstep with increases in productivity. Their median compensation (wages plus benefits) increased by 95 percent as their productivity increased by 97 percent. Then, abruptly, the rewards for greater productivity started going elsewhere—to shareholders, financiers, and top corporate executives. Today, for the vast majority of American workers, the link between their productivity and their compensation no longer exists. As economists Robert Gordon and Ian Dew-Becker have established, the gains in workers’ productivity for the past three decades have gone entirely to the wealthiest 10 percent. The portion of the nation’s economy that went to workers’ pay and benefits—which had held remarkably steady from 1947 through 1973 at 66 percent or 67 percent—last year fell to a record low of 58 percent, while profits reached a postwar high...

Tesla, Car Dealers, and Anti-Competitive State Laws

Shoppers at a Tesla showroom in Amsterdam, where such things are legal. (Flickr/harry_nl)
You may not realize it, but car dealers wield an unusual amount of political power in this country. That's partly because they're located in or near pretty much every community everywhere, and also because they're highly organized and clever about using their influence. One of the ways they've done so is get laws passed in state after state making sure that the model under which they operate—one in which independent dealers sell cars, but car companies themselves don't—is the only thing allowed by law. In fact, laws making it difficult or downright illegal for car companies to sell their products directly to customers are on the books in 48 states. This absurd state of affairs hasn't gotten much attention until recently, when Tesla decided it wanted to open its own dealerships to sell people cars. Among the places it has done this is New Jersey, where the company had opened two stores. But earlier this week, the New Jersey Motor Vehicle Commission passed a rule requiring that all auto...

What Is Left?

A response to Harold Meyerson

I was not surprised by the substance of Harold Meyerson’s criticisms of my recent Harper’s essay (“ Nothing Left: The Long, Slow Surrender of American Liberals ,” March 2014). I have known for some time that he and I disagree fundamentally on the reasonable scope of a political left in the United States and, correspondingly, whether one actually exists and/or how to go about building one as an effective social and political force. I was somewhat disappointed, however, at the tired hook to which he tethered his criticism. He characterizes me as viewing the political scene “from space” or a “stratospheric height" which leads me to miss crucial details on the ground. That’s just dismissiveness masquerading as evaluation. I could characterize him as limited by the myopic perspective of the inside-the-Beltway crowd, which renders him incapable of seeing the patterns that those details form and reflect. No doubt, each of us would be to some extent correct about the other, but that doesn’t...

The Inequality Puzzle

A new study shows there's been no decline in intergenerational poverty in the last 30 years, but it doesn't tell the whole story.

Flickr/DonkeyHotey
Flickr/DonkeyHotey I n January, a team of prestigious economists published an authoritative study showing that there had been no decline in intergenerational mobility during the past three decades. The paper, by Harvard’s Raj Chetty and three colleagues, using some 40 million Internal Revenue Service records, found that if you were born in the bottom fifth of the income distribution in 1980–1982, you had about the same chance of moving to the top quintile (about 1 in 12) as someone born at the bottom 30 years earlier. This result was surprising. In recent years, the ability of the affluent to pass along class advantage has intensified in countless ways. Young people from wealthy families are more likely to get into elite colleges and less likely to finish college hobbled with debt. Parents can subsidize unpaid internships useful for networking. The children of the affluent can get help with starter homes, in districts with excellent public schools. And when (grand) children come, they...

Piketty’s Triumph

Three expert takes on Capital in the Twenty-First Century, French economist Thomas Piketty's data-driven magnum opus on inequality.

Courtesy of Fondation Jean Jaurès
I n the 1990s, two young French economists then affiliated with the Massachusetts Institute of Technology, Thomas Piketty and Emmanuel Saez, began the first rigorous effort to gather facts on income inequality in developed countries going back decades. In the wake of the 2007 financial crash, fundamental questions about the economy that had long been ignored again garnered attention. Piketty and Saez’s research stood ready with data showing that elites in developed countries had, in recent years, grown far wealthier relative to the general population than most economists had suspected. By the past decade, according to Piketty and Saez, inequality had returned to levels nearing those of the early 20th century. Last fall, Piketty published his magnum opus, Capital in the Twenty-First Century , in France. The book seeks to model the history, recent trends, and back-to-the-19th-century future of capitalism. The American Prospect asked experts and scholars in the field of inequality to...

Paul Ryan: A Poor Man's Savior of the Poor

AP Images/Charlie Neibergall
AP Images/Charlie Neibergall W isconsin Republican Paul Ryan, chair of the House of Representatives Budget Committee, spent the fall touring poor neighborhoods in an effort to rebrand the GOP as the true saviors of the poor. It was both an effort to mark the 50 th anniversary of Lyndon B. Johnson’s War on Poverty, and to salve the wounds his party felt after its 2012 presidential candidate Mitt Romney put on a monocle and proclaimed the nation to be full of moochers while giggling maniacally over vichyssoise at a fancy dinner party. (OK, he didn’t do that, but he did do this .) Monday, Ryan released a report on the federal programs meant to help low-income Americans. He means it to be a critique of most of those programs, and use the report as a platform from which to argue for reform. If his previous budgets are a guide, he wants to turn most federal programs into block grants for the states. If our history with welfare reform tells us anything, block grants would mean funding for,...

The Home Mortgage Business, Where Cheaters Always Seem to Prosper

AP Images/Carlos Osorio
O cwen is a little company with a dream: to become the nation’s largest mortgage servicer. If they weren’t so uniformly terrible at mortgage servicing, they might even achieve that goal. And while state and federal investigations, multi-billion-dollar fines, and legal threats would seemingly throw a wrench in most companies’ high-minded plans for success, Ocwen is different. Because in America, rank incompetence need not impede a corporate quest, at least not in the financial services industry. As cracks in its public image continue to surface, Ocwen is attempting to pull off one of the most brazen schemes in recent memory: getting what amounts to a cash advance for the very work they can’t seem to do properly. Let’s take a step back. Ocwen is the biggest of a group of “non-bank” servicers, which don’t originate loans themselves. They merely handle the day-to-day accounting of loans for other owners, usually big institutional investors—collecting monthly payments, making decisions on...

Walking on Ukrainian Eggshells

AP Images/Darko Bandic
At times, you have to wonder where Europe’s strategic and economic sense has gone. Consider Ukraine, most of whose citizens clearly wish to become Ukrainian-European and have their country join the European Union. Some of whose citizens died for that this week. Until this week, however, Europe was doing all it could to repel them. Last autumn, Ukrainian President Viktor Yanukovych bitterly disappointed his compatriots by backing off his promise to sign an association document with the EU. The conventional wisdom is that he succumbed to Russian pressure—after all, it’s Russia that supplies Ukraine with its oil and gas. But Russian President Vladimir Putin was also offering Ukraine $15 billion, while the EU was offering it nothing, and telling Yanukovych that any real progress in integrating his country into the Union would depend not only on cleaning up Ukraine’s notoriously corrupt government but also on imposing austerity conditions on its already economically-beleaguered citizens...

How Big Banks Are Cashing In On Food Stamps

AP Images/Rich Pedroncelli
AP Images/Rich Pedroncelli T he Agricultural Act of 2014 , signed into law by President Obama last Friday, includes $8 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP) over the next decade. One way the bill proposes to accomplish these savings is by reducing food stamp fraud. When the new farm bill is enacted, many of America’s hardest working families will experience cuts in services and have trouble putting food on their family’s table. But there will be major gains for an industry that most Americans might not expect: banking. Banks reap hefty profits helping governments make payments to individuals, business that only got better when agencies switch from making payments on paper—checks and vouchers—to electronic benefits transfer (EBT) cards. EBT cards look and work like debit cards, and by 2002, had entirely replaced the stamp booklets that gave the food stamp program its name. SNAP is the most well-known program delivered via EBT, but they also carry...

Just How Much Do Republicans Hate Unions?

The VW plant in Chattanooga. (Photo courtesy of Volkswagen USA)
If you ask Republicans about their antipathy toward unions, they'll say that letting workers bargain collectively reduces a company's ability to act efficiently in the marketplace. If you knew anything about business, the market advocates will patiently explain, you'd understand that unions, with all their rules and conditions and strike threats, only make it harder for the company to make its products. Let management make decisions about things like wages and working conditions, and the result will be higher profits and more jobs, which will benefit everyone. In almost all cases, the corporation agrees; after all, union workers always earn better wages than their non-union counterparts, and they give power to the employees, which no CEO wants. What most people probably don't realize is that this inherently hostile relationship between management and unions isn't something that's inherent in capitalism. In fact, in many places where there are capitalists making lots of money,...

The Ink-Stained Wretches of Wall Street

AP Images/Richard Drew
L ast year, upon the 10 th anniversary of the start of the war in Iraq, newspapers and magazines filled with soul-searching essays from journalists rethinking their advocacy of the invasion, documenting lessons learned and errors made. But a few months later, on the 5 th anniversary of the fall of Lehman Brothers, the unofficial beginning of the financial crisis, virtually nobody wrestled with their failure to anticipate the Wall Street wrecking ball. Indeed, to date, no major news organization has apologized for missing the biggest economic story of the decade, and most business journalists defend their profession, arguing that they sounded the alarm about financial industry greed and the makings of a catastrophe. “The government, the financial industry and the American consumer—if they had only paid attention—would have gotten ample warning about the crisis from us,” said Diana Henriques of The New York Times in 2008. Neither she nor her colleagues have really looked back since. As...

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