Economy

The Case of the Vanishing Middle Class

Timothy Noah's The Great Divergence deftly explores the roots and resurgence of American inequality.

Did Timothy Noah catch a wave or anticipate one? In 2010, Noah, a longtime public-policy reporter now at The New Republic, wrote a ten-part series in Slate about American economic inequality. This was at a time when the most discussed issue in U.S. politics was how much government Tea Partiers aimed to slash and how quickly we must balance the budget—even in the face of the worst downturn in eight decades. Then, about a year after the Slate series, Occupy Wall Street and its proxies around the country seemingly awakened the nation to the vast disparity of wealth between the top 1 percent and the rest of us.

France Reacts Against Austerity

François Hollande and Nicolas Sarkozy will face off in a May 6 runoff election after the Socialist challenger won 28.6 percent of the vote in the first round of the French presidential elections yesterday.

The Man the Banks Fear Most

Wall Street's gone largely unpunished for its role in 
wrecking the economy—until New York Attorney General 
Eric Schneiderman came along.

Steven Moors
Steve Moors

A New Kind of Gold Standard?

(Flickr/tao_zhyn)

In the latest issue of the magazine, I have a piece examining a strange and growing trend in some conservative circles—pushing states to adopt alternative currencies to the federal dollar. The basic concern is one you've probably heard from Ron Paul: The Federal Reserve can't be trusted, the national debt is out of control, so the U.S. dollar, backed only by faith in the government, may become worthless. (The story outlines some of the more obvious economic problems with this theory.)

To deal with the concern, problem-solving state lawmakers have started introducing bills to create a second currency, one of gold and silver. Sounds like a fringe concept right? 

Spain's Fiscal Fanaticism

The country's newly elected conservative government is pursuing austerity with zeal.

(AP Photo/Daniel Ochoa de Olza)

It is a well-known maxim that to keep repeating the same action and expect a different result is a symptom of madness. It is hard to find a different way to account for the persistence of Eurozone leaders in inflicting punishing austerity on countries belonging to the common currency, a strategy that has proved both fiscally ineffective and socially destructive.

In recent days, the focus of the crisis has returned to Spain, and for good reason. The country suffers from the highest unemployment rate in Europe: 24 percent, and it’s more than 50 percent among those 15 to 24. Despite this catastrophic state of affairs, the relatively new, conservative Spanish government—elected last November with 46 percent of the vote on a platform of austerity and structural reform—recently unveiled a budget proposal that, in the words of Budget Minister Cristobal Montoro, is the strictest since the death of Franco in 1975. The total fiscal adjustment for 2012 is a massive 27 billion euros. The goal is to bring Spain’s budget deficit down from 8.5 percent of gross domestic product (GDP) to 5.3 percent.

Mad Money

With right-wing fears rising over the Federal Reserve’s monetary policy, Republican state legislators want to 
create their own currencies.

(Eric Palma)

In January 2011, the advocacy group Utah Sound Money released a 30-second ad designed to stir up support for a new bill in the state legislature. “The almighty dollar’s not looking so almighty these days,” the announcer intones as storm clouds fill the screen. “The feds have us tap-dancing at the edge of financial ruin.” A small map of the U.S. totters along a rising red graph of debt. Suddenly, blue skies open as a giant gold coin floats down, using the Constitution as a parachute. “Restoring an inflation-proof, sound-money option offers a time-tested option,” the announcer concludes over the laughter of children at play. Viewers are then urged to support the Utah Sound Money Act.

Sponsored by Representative Brad Galvez, a Republican, the bill would make gold and silver coins from the U.S. Mint legal tender in the state. Although no businesses or individuals are compelled to use them, Galvez’s bill requires the state to accept the coins for tax payments or any government fees. Galvez says he was motivated by a fear that the nation’s mounting debt could lead to a loss of faith in the dollar, resulting in hyperinflation and possibly a currency collapse. He wanted to protect Utah, he says, from this calamity by creating an alternative to “fiat” currency, under which the dollar is backed by the “faith and credit” of the U.S.—not, as it once was, by gold reserves.

Top Ten Tax Facts

Think you know a lot about government revenue? Think again.

(Flickr/401K)

This piece is the fifth in a six-part series on taxation, and a joint project by The American Prospect and its publishing partner, Demos.

Talking about Labor Law Reform with Richard Kahlenberg

A conversation with the Century Foundation’s Richard Kahlenberg

(AP Photo.Rutland Herald, Cassandra Hotaling Hahn)

For a company trying to ward off unionization, firing a union activist is a great investment. While the National Labor Relations Act bans such retaliation, its process is slow and its penalties are minimal. Every time Democrats have controlled the presidency and Congress, unions have pushed reforms to the law—and every time they’ve come up short. In their new book, Why Labor Organizing Should Be a Civil Right, the Century Foundation’s Richard Kahlenberg and labor lawyer Moshe Marvit propose a new approach to labor law reform: add protection against anti-union discrimination to the Civil Rights Act.

With Corporate Taxes, Less Is More

The federal government can lower rates for companies while increasing revenue.

(Flickr/rexboggs5)

This piece is the fifth in a six-part series on taxation, and a joint project by The American Prospect and its publishing partner, Demos.

Can Occupy Our Homes Move Congress?

A conversation with Representative Keith Ellison.

(AP Photo/Alex Brandon)

With Occupy Our Homes—the growing movement to fight foreclosures and evictions—community organizations and Occupy activists have teamed up in cities throughout the country to defend at-risk homeowners, pressure banks to renegotiate mortgages, and keep families in their homes. This effort has resulted in some impressive local victories. At the same time, the scope of the foreclosure crisis calls out for federal remedies.

An E-Book a Day Keeps Amazon at Bay

Today's Balance Sheet

The Economist

The Department of Justice is going after Apple and five publishing companies, suing them for colluding to raise e-book prices. Amazon, the current leader in e-book sales thanks to the Kindle and the company's early domination of the market, takes a loss on their $9.99 books in order to pull in customers. Apple took a different route with its e-book store, allowing publishers to set the price and then taking a commission, also known as agency pricing.

The Weakness of the Buffett Rule

Pete Souza/The White House

Now that America's burning hunger for Mitt Romney has overflowed, and he really is the Republican nominee-to-be, the Obama campaign must settle on its anti-Romney strategy. Or more properly, they will reveal to us the anti-Romney strategy they settled on many months ago. One central component will be an argument about taxes, contrasting Obama's approach with the Republican one, and the cornerstone of that argument looks to be the "Buffett Rule." Which is kind of unfortunate. The Buffett Rule is, I'm quite sure, good politics. Believe you me, the Obama campaign wouldn't be going whole-hog on it if they hadn't already polled and focus-grouped it within an inch of its life. What it isn't is particularly good policy.

Taxing Wall Street Speculation

There's another, better way to go after the 1 percent than the Obama administration's proposed "Buffett rule."

(Flickr/401K)

This piece is the third in a six-part series on taxation, and a joint project by The American Prospect and its publishing partner, Demos.

As the White House mounts a major campaign to sell the “Buffett Tax” this week, there is another, better tax on the 1 percent that Washington should be considering: A financial-transaction tax—better known as a financial speculation tax (FST).

Reintroducing the Buffet Rule

(michael_reuter/Flickr)

Later this afternoon, in Florida, President Obama will make his push for the Buffet rule, a policy which would ensure a minimum 30 percent tax rate for individuals making more than $1 million per year. There’s no chance that it will pass either chamber of Congress, but that’s not the point; the proposal is meant to place Democrats on the side of tax fairness and present the GOP as tied to the interests of the wealthy Americans. The Republican response is that this is an attempt to draw attention away from the economy and its sluggish performance over the last three years.

Pages