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  • feedwordpress 08:01:04 on 2018/06/18 Permalink
    Tags: economics, fiscal policy, , Modigliani, monetary fiscal debate, , national debt, tax policy,   

    “I’m living so far beyond my income that we may almost be said to be living apart”*… 

     

    The U.S. national debt is once again raising alarm bells. Federal borrowing from outside investors expanded rapidly over the past decade, totaling more than $15 trillion in 2018, and it is projected to grow even faster over the next ten years under current law. Major budget legislation signed by President Donald J. Trump, along with continued growth in entitlements and higher interest rates, will see the debt nearly double by 2028 [PDF], coming close to the size of the entire U.S. economy.

    If the debt continues to grow at an unsustainable level, it could expose the country to a number of dangers, economists say. In the extreme, the risk rises that Washington’s lenders, many of whom are foreign, could suddenly lose confidence, demand higher interest rates, and potentially trigger a fiscal crisis. Short of that, the rising debt could gradually squeeze discretionary spending and deny the country tools it needs for security and economic stability. Bringing the debt into check, experts say, will likely require politically difficult decisions to either curb entitlement spending, significantly raise taxes, or both…

    A backgrounder from the Council on Foreign Relations: “The National Debt Dilemma.”

    It should be noted that there are those who disagree with CFR (and the many others) who see the need to bring the deficit into balance via reduced spending and/or higher taxes: “The Radical Theory That the Government Has Unlimited Money.”

    * e e cummings

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    As we parse “prudence,” we might send carefully-calculated birthday greetings to Franco Modigliani; he was born on this date in 1918.  An economist, he originated the life-cycle hypothesis, which attempts to explain the level of saving in the economy, suggesting that consumers aim for a stable level of consumption throughout their  lifetime (for example by saving during their working years and then spending during their retirement)– for which he was awarded the Nobel Prize in Economics in 1985.

    Among his other accomplishments, he initiated the Monetary/Fiscal Debate when he (and co-author Albert Ando) wrote a scathing critique of an early 1960s paper by Milton Friedman and David Meiselman.  Freidman and Meiselman had argued (in effect) that monetary policy was the only effective tool in managing an economy; Modigliani and Ando pointed out flaws in their analysis and made the case for fiscal measures (effectively, government spending) as equally-effective tools.  The debate– known by the antagonists’ initials as the AM/FM Debate– rages to this day.

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  • feedwordpress 08:01:48 on 2018/06/03 Permalink
    Tags: economics, , , mathematical economics, , merit, RGD Allen, , , wealth inequality   

    “Oh, I am fortune’s fool!”*… 

     

    The distribution of wealth follows a well-known pattern sometimes called an 80:20 rule: 80 percent of the wealth is owned by 20 percent of the people. Indeed, a report last year concluded that just eight men had a total wealth equivalent to that of the world’s poorest 3.8 billion people.

    This seems to occur in all societies at all scales. It is a well-studied pattern called a power law that crops up in a wide range of social phenomena. But the distribution of wealth is among the most controversial because of the issues it raises about fairness and merit. Why should so few people have so much wealth?

    The conventional answer is that we live in a meritocracy in which people are rewarded for their talent, intelligence, effort, and so on. Over time, many people think, this translates into the wealth distribution that we observe, although a healthy dose of luck can play a role.

    But there is a problem with this idea: while wealth distribution follows a power law, the distribution of human skills generally follows a normal distribution that is symmetric about an average value. For example, intelligence, as measured by IQ tests, follows this pattern. Average IQ is 100, but nobody has an IQ of 1,000 or 10,000.

    The same is true of effort, as measured by hours worked. Some people work more hours than average and some work less, but nobody works a billion times more hours than anybody else.

    And yet when it comes to the rewards for this work, some people do have billions of times more wealth than other people. What’s more, numerous studies have shown that the wealthiest people are generally not the most talented by other measures.

    What factors, then, determine how individuals become wealthy? Could it be that chance plays a bigger role than anybody expected? And how can these factors, whatever they are, be exploited to make the world a better and fairer place?…

    A new computer model of wealth creation confirms that the most successful people are not the most talented, just the luckiest. Learn more at: “If you’re so smart, why aren’t you rich? Turns out it’s just chance.

    * Shakespeare, Romeo and Juliet

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    As we muse on merit, we might send carefully-calculated birthday greetings to a forbearer of the researchers who did the work recounted above, Sir Roy George Douglas Allen; he was born on this date in 1906.  A mathematician and statistician turned economist, he was a leader in the field of mathematical economics, writing a number of influential texts including  Mathematical Analysis for EconomistsStatistics for Economists, and Mathematical Economics.

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  • feedwordpress 08:01:01 on 2018/05/31 Permalink
    Tags: Allais, , economics, , , John Hicks, , Samuelson, , Yannis Varoufakis   

    “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it”*… 

     

    As you grow up and experience more of the ups and downs of the economy, you will notice a piece of mindbending hypocrisy: during the good times, bankers, entrepreneurs—rich people in general—tend to be against government. They criticize it as a “brake on development,” a “parasite” feeding on the private sector through taxation, an “enemy of freedom and entrepreneurship.” The cleverer among them even go so far as to deny that government has any moral right, or duty, to serve society, by claiming that “there is no such thing as society—there are just individuals and families,” or “society is not well defined enough for the state to be able to serve it.” And yet, when a crash occurs that is brought on by their actions, those who have delivered the fieriest of speeches vehemently opposing substantial government intervention in the economy suddenly demand the state’s aid. “Where is the government when we need it?” they yelp.

    This is not a new contradiction[**]…

    Yannis Varoufakis, the motorcycle-riding economist who served as Greece’s Minister of Finance through the depths of their recent financial crisis, offers some plain speaking on economics in general and banking in particular: “A letter to my daughter about the black magic of banking.”

    See also this.

    * John Kenneth Galbraith, Money: Whence it came, where it went

    ** Indeed: “Since those who rule in the city do so because they own a lot, I suppose they’re unwilling to enact laws to prevent young people who’ve had no discipline from spending and wasting their wealth, so that by making loans to them, secured by the young people’s property, and then calling those loans in, they themselves become even richer and more honored.”   – Plato, The Republic

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    As we contemplate capital, we might send neoliberal birthday greetings to Maurice Félix Charles Allais; he was born on this date in 1911.  He won the 1988 Nobel Prize in Economics “for his pioneering contributions to the theory of markets and efficient utilization of resources.”  Indeed, the Nobel Committee suggested that Allais might be considered (with Paul Samuelson and John Hicks) ” the principal architect of the neoclassical synthesis” (in large measure because they formalized the notion of self-regulating markets).

    Samuelson said “had Allais earliest writings been in English, a generation of economic theory would have taken a different course” and the Nobel Prize should have been awarded to him much earlier.  John Maynard Keynes, whose ideas the trio very selectively used, thought that Allais and the emerging neo-liberal idea were dangerously wrong.

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  • feedwordpress 08:01:35 on 2018/03/30 Permalink
    Tags: Communist Manifesto, economics, Engels, Franz Oppenheimer, , , , ,   

    “All that is solid melts into air”*… 

     

    As a partner in a corporate advisory firm and a professor of law and finance, we are true believers in free-market capitalism — hardly natural latter-day communists, let alone successors to Marx and Engels. But we do believe the time is ripe for a rewrite of their Manifesto. Like the inhabitants of mid-19th century Europe, we live, according to Oxford University’s Professor Alan Morrison, “in the wake of a calamitous financial crisis and in the midst of whirlwind social change, a popular distaste of financial capitalists, and widespread revolutionary activity”. We have imagined what Marx and Engels would have written in 2018, naming the new, updated version “The Activist Manifesto”…

    So how did the two of us come to take on the renovation of the Manifesto? The answer, improbably perhaps, is our interest in a linchpin of modern free-market capitalism: shareholder activism. We have published academic studies on the phenomenon. We have advised many of the largest hedge funds as they take substantial stakes in hundreds of comp­anies, shaking up complacent boards and advocating for changes in corporate strategy and capital structure. And we have advised companies that themselves have pursued change. These activists may not be what Marx and Engels had in mind, but they are revolutionaries of a kind…

    In our redrafting, we have had to go far beyond merely substituting “communism” with “activism”. The “Pope and Tsar, Metternich and Guizot, French Radicals and German police-spies” and others in Marx’s and Engels’ sights have gone. We have introduced their modern counterparts: “the corporate Haves, the elites, the billionaires, the establishment politicians of the Republican and Democratic parties, Conservatives and Labour, the talking heads at Davos, the echo chambers of online media and fake news.” But we have kept much of the rhetoric along with Marx’s and Engels’ relentless focus on economic inequality. Two centuries after Marx’s birth, and however much communism has rightly been discredited, a great deal of the argument is as relevant now as it was then. The Manifesto’s theories about the problems of capitalism and the capitalist mode of production continue to be cited in critiques of unfettered markets, and the document’s historical analysis is cited by modern scholars and taught in universities today. Some historians have cited it as the most influential text of the 19th century. Its reverberations are still felt today…

    The original Manifesto’s top 10 “pretty generally applicable” proposals wouldn’t get a passing grade today in any setting. Left and right alike reject its arguments on labour and property. Even leaders of so-called communist states embrace markets and decentralisation. Take North Korea, the country that has most resisted capitalism: since 2012, it has started to encourage entrepreneurship and a formal (if reluctant) acceptance of brand-led marketplaces. However, one aspect of the original still resonates: the document was, fundamentally, an attack on inequality. We think it is obvious that Marx and Engels would be appalled by the present-day distribution of wealth. We imagine they would write something like this. “By the start of our 21st century, we are faced with the extraordinary fact that the top one per cent of the world’s population own the same resources as the remaining 99 per cent. Those at the bottom are less upwardly mobile than in previous generations; entrance to wealthy gated communities is blocked, not only by private security forces, but also by the increasingly prohibitive costs of healthcare, technology and education. There is the dominant force of mass incarceration, with millions of poor, minorities and powerless walled off from the rulers they might threaten. The Haves have never in history held so much advantage over the Have-Nots.”…

    Two champions of capitalism, Rupert Younger (co-author of The Reputation Game and director of Oxford University’s Centre for Corporate Reputation) and Frank Partnoy (a writer and professor of law and finance who is joining the faculty at UC Berkeley this summer) explain their redrafting: “What would Karl Marx write today?

    Read their revised manifesto in full (and use the “rollover” function to compare it to the original) at activistmanifesto.org.

    * Karl Marx and Friedrich Engels in Chapter One of The Communist Manifesto  (also the title of a wonderful book by Marshall Berman)

    ###

    As we reckon with revolution, we might send Hobbesian birthday greetings to Franz Oppenheimer; he was born on this date in 1864.  An economist and sociologist, we wrote prolifically (40 books and 400 essays) and influentially on political organization and the idea of the nation.   His best-known work is probably Der Staat (The State) which reflected his rejection of the concept of the “social contract” and his “conquest theory of the state.”  Like Marx, Oppenheimer considered capitalism a system of exploitation, and capital revenues the gain of that exploitation; he saw the state as the original creator of inequality.  So not surprisingly, his thinking has been influential among libertarians, communitarians, and anarchists.

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  • feedwordpress 08:01:09 on 2018/03/27 Permalink
    Tags: , economics, Great Recession, , Modern Monetary Theory, , Obama, ,   

    “Anyone who lives within their means suffers from a lack of imagination”*… 

     

    Modern Monetary Theory’s basic principle seems blindingly obvious: Under a fiat currency system, a government can print as much money as it likes. As long as country can mobilize the necessary real resources of labor, machinery, and raw materials, it can provide public services. Our fear of deficits, according to MMT, comes from a profound misunderstanding of the nature of money.

    Every five-year-old understands money. It’s what you give the nice lady before she hands you the ice cream cone—an object with intrinsic value that can be redeemed for goods or services. Through the lens of Modern Monetary Theory, however, a dollar is nothing but a liability issued by the US government, which promises to accept it back in payment of taxes. The dollar in your pocket represents a debt owed you by the federal government. Money isn’t a lump of gold but rather an IOU.

    This mildly metaphysical distinction ends up having huge practical consequences. It means the federal government, unlike you and me, can’t run out of cash. It can run out of things money can buy—which will drive up their price and be manifest in inflation—but it can’t run out of money. As Sam Levey, a graduate student in economics who tweets under the name Deficit Owls told me, “Macy’s can’t run out of Macy’s gift certificates.”

    Especially for those who want the government to provide more services to citizens, this is a convincing argument, and one that can be understood by non-economists…

    Everyone knows governments need to tax before they can spend. What Modern Monetary Theory presupposes is, maybe they don’t.  Offered for interest (and with no endorsement): “The Radical Theory That the Government Has Unlimited Money.”

    * Oscar Wilde

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    As we crank up the printing press, we might recall that it was on this date in 2009, several months into the Great Recession, President Barack Obama met with the CEOs of America’s 13 largest financial institutions to discuss a path out of the economic trough onto which the U.S. had descended.  Finding them suspicious of his new (Democratic) administration and worried that he would be less generous to their companies than President Bush and his administration had been, Obama opened by suggesting…

    My administration is the only thing between you and the pitchforks… But you need to show that you get that this is a crisis and that everyone has to make some sacrifices…I’m not out there to go after you. I’m protecting you. But if I’m going to shield you from public and congressional anger, you have to give me something to work with on these issues of compensation. Help me help you Everybody has to pitch in. We’re all in this together.

    The result was a series of compromises that survived the Obama Administration, but that are now being systematically undone under the Trump Administration.

    See also “13 Bankers.”

    Kenneth D. Lewis, the chief executive of Bank of America, with other bank executives outside the White House after the meeting with President Obama

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  • feedwordpress 08:01:46 on 2018/03/18 Permalink
    Tags: , economics, Gilded Age, , monopology, , , , , , Wells Fargo   

    “These days, the bigger the company, the less you can figure out what it does”*… 

     

    Late 19th-century Americans loved railroads, which seemed to eradicate time and space, moving goods and people more cheaply and more conveniently than ever before. And they feared railroads because in most of the country it was impossible to do business without them.

    Businesses, and the republic itself, seemed to be at the mercy of the monopoly power of railroad corporations. American farmers, businessmen and consumers thought of competition as a way to ensure fairness in the marketplace. But with no real competitors over many routes, railroads could charge different rates to different customers. This power to decide economic winners and losers threatened not only individual businesses but also the conditions that sustained the republic.

    That may sound familiar. As a historian of that first Gilded Age, I see parallels between the power of the railroads and today’s internet giants like Verizon and Comcast. The current regulators – the Federal Communications Commission’s Republican majority – and many of its critics both embrace a solution that 19th-century Americans tried and dismissed: market competition…

    The current controversy about the monopolistic power of internet service providers echoes those concerns from the first Gilded Age. As anti-monopolists did in the 19th century, advocates of an open internet argue that regulation will advance competition by creating a level playing field for all comers, big and small, resulting in more innovation and better products. (There was even a radical, if short-lived, proposal to nationalize high-speed wireless service.)

    However, no proposed regulations for an open internet address the existing power of either the service providers or the “Big Five” internet giants: Apple, Amazon, Facebook, Google and Microsoft. Like Standard Oil, they have the power to wring enormous advantages from the internet service providers, to the detriment of smaller competitors.

    The most important element of the debate – both then and now – is not the particular regulations that are or are not enacted. What’s crucial is the wider concerns about the effects on society. The Gilded Age’s anti-monopolists had political and moral concerns, not economic ones. They believed, as many in the U.S. still do, that a democracy’s economy should be judged not only – nor even primarily – by its financial output. Rather, success is how well it sustains the ideals, values and engaged citizenship on which free societies depend.

    When monopoly threatens something as fundamental as the free circulation of information and the equal access of citizens to technologies central to their daily life, the issues are no longer economic.

    Stanford historian Richard White unpacks an important historical analogue; read it in full at “For tech giants, a cautionary tale from 19th century railroads on the limits of competition.”

    [Image above: source]

    * Michel Faber, The Book of Strange New Things

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    As we wonder if The Invisible Hand is giving us the finger, we might recall that it was on this date in 1852 that Henry Wells and William G. Fargo joined with several other investors to launch their eponymously-named cross-country freight business.  The California gold rush had created an explosive new need, which Wells, Fargo and other “pony express” and stage lines leapt to meet.  It was after the Civil War, in 1866, when Wells, Fargo acquired many of their competitors, that it became the dominant supplier.  (Ever flexible, they adapted again three years later, when the transcontinental railroad was finished.)

    From it’s earliest days, it also functioned as a bank, factoring the shipments of gold that it carried.  Indeed, when Wells, Fargo exited the freight business as a result of government nationalization of freight during World War I, the bank (which merged with Nevada National in the first of a series of “transformative transactions”) continued to operate as “Wells, Fargo,” as indeed it does (albeit under unrecognizably evolved ownership) today.

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  • feedwordpress 08:01:43 on 2018/03/13 Permalink
    Tags: Bank Holiday, , Bubbles, , economics, , , speculation, ,   

    “Fortune’s bubbles rise and fall”*… 

     

    Gordon Gekko talks tulips. Wall Street: Money Never Sleeps / scottab140

    Right now, it’s Bitcoin. But in the past we’ve had dotcom stocks, the 1929 crash, 19th-century railways and the South Sea Bubble of 1720. All these were compared by contemporaries to “tulip mania,” the Dutch financial craze for tulip bulbs in the 1630s. Bitcoin, according some sceptics, is “tulip mania 2.0”.

    Why this lasting fixation on tulip mania? It certainly makes an exciting story, one that has become a byword for insanity in the markets. The same aspects of it are constantly repeated, whether by casual tweeters or in widely read economics textbooks by luminaries such as John Kenneth Galbraith.

    Tulip mania was irrational, the story goes. Tulip mania was a frenzy. Everyone in the Netherlands was involved, from chimney-sweeps to aristocrats. The same tulip bulb, or rather tulip future, was traded sometimes 10 times a day. No one wanted the bulbs, only the profits – it was a phenomenon of pure greed. Tulips were sold for crazy prices – the price of houses – and fortunes were won and lost. It was the foolishness of newcomers to the market that set off the crash in February 1637. Desperate bankrupts threw themselves in canals. The government finally stepped in and ceased the trade, but not before the economy of Holland was ruined.

    Yes, it makes an exciting story. The trouble is, most of it is untrue…

    Drawing on ten years of research for her new book, Tulip mania: Money, Honor and Knowledge in the Dutch Golden AgeAnne Goldgar tells a different story, one that’s just as illuminating, but very different: “Tulip mania: the classic story of a Dutch financial bubble is mostly wrong.”

    Like most trends, at the beginning it’s driven by fundamentals, at some point speculation takes over. What the wise man does in the beginning, the fool does in the end.”  The world went mad. What we learn from history is that people don’t learn from history.   — Warren Buffett, 2006 Berkshire Hathaway annual meeting

    * John Greenleaf Whittier

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    As we curb our enthusiasm, we might recall that it was on this date in 1933 that banks began to re-open after the “Bank Holiday” declared by the Roosevelt Administration to calm the market after bank runs had threatened the nation’s financial system during the Depression.

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  • feedwordpress 09:01:07 on 2018/02/28 Permalink
    Tags: capital investment, economics, , Paul Krugman, stock buy-backs, Tax Act, Tax Cuts and Jobs Act of 2017, ,   

    “It’s always a lot of fun when you win”*… 

     

    Fans of the Tax Cuts and Jobs Act of 2017 have excitedly proclaimed that it will release the “Animal Spirits” of the American economy, hailing it as a spur to investment and a boon to workers.  But as CNN points out:

    The White House has celebrated the tax cut bonuses unveiled by the likes of Walmart, Bank of America, and Disney.

    Yet shareholders, not workers, are far bigger direct winners from the Tax Cuts and Jobs Act of 2017.

    American companies have lavished Wall Street with $171 billion of stock buyback announcements so far this year, according to research firm Birinyi Associates. That’s a record-high for this point of the year and more than double the $76 billion that Corporate America disclosed at the same point of 2017…

    The amount of money allocated so far on bonuses and wage hikes pales in comparison with Wall Street’s buyback bonanza.

    S&P 500 companies have devoted about $5.6 billion to bonuses and wage hikes because of the tax law, according to research from academics Rick Wartzman and William Lazonick as well as the Academic-Industry Research Network. The group added up commitments from the 50 companies in the S&P 500 that had announced plans to reward workers through February 15.

    Indeed, as Marketwatch reports,

    A report by benefits consulting firm Aon Hewitt [finds] that 83% of large companies don’t expect the tax cut to boost salaries at all — just help pay for small bonuses companies like WalMart  and AT&T gave workers, which reporters soon discovered were, themselves, skewed toward higher-paid, longer-tenured employees in many cases…

    And perhaps more fundamentally alarming, the proposed boost that the tax act was supposed to provide to corporate investment– to America’s long-term competitiveness and to the creation of new jobs– seems stuck in the gate; as Marketwatch continues:

    Goldman finds companies have raised guidance on re-investment in their businesses — the putative reason for cutting corporate taxes at all — only 3%…

    …which, given Census Bureau tabulations of past capital expense, would be about $30 Billion– well under 20% of the buy-back activity planned (so far).

    Stock buy-backs have played a powerful role in the performance of the stock markets– which President Trump often conflates with the performance of the economy as a whole– over the last several years; the Financial Times observes:

    Corporate share repurchases have been a powerful driver of the US equity market’s post-crisis recovery and subsequent climb to record highs last month. US companies have bought back about $3.5tn since 2010. Throw in nearly $2tn of dividends and the overall handout to shareholders has been much greater than the Fed’s entire quantitative easing programme. Buybacks started to slow down last year, but there are signs that investors can still count on Corporate America. In fact, companies’ purchases of their own shares appear to have played a role in reversing the recent stock market swoon…

    As the FT points out, while this is a boon to equity investors, it “may be bad news for hopes of an investment-fueled economic boom.”

    Indeed. (See also: “Confidence Tricks“)

    * President Donald J. Trump, on the passage of the recent Tax Act (the Tax Cuts and Jobs Act of 2017)

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    As we wonder about the equity in equities, we might send carefully-calculated birthday greetings to Paul Robin Krugman; he was born on this date in 1953.  A Nobel laureate in economics (for his work in the dynamics of international trade), he is Distinguished Professor of Economics at the Graduate Center of the City University of New York.  But he is much more widely known as a columnist for the New York Times, where he wrote (on November 27, 2017) a piece on the then-pending tax bill: “The Biggest Tax Scam in History.”

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  • feedwordpress 09:01:10 on 2018/02/11 Permalink
    Tags: , economics, Felix Salmon, , , , Oxfam, povery, , University College London   

    “As long as poverty, injustice and gross inequality persist in our world, none of us can truly rest”*… 

     

    Last year saw the biggest increase in billionaires in history, one more every two days. This huge increase could have ended global extreme poverty seven times over. 82% of all wealth created in the last year went to the top 1%, and nothing went to the bottom 50%.

    Dangerous, poorly paid work for the many is supporting extreme wealth for the few. Women are in the worst work, and almost all the super-rich are men. Governments must create a more equal society by prioritizing ordinary workers and small-scale food producers instead of the rich and powerful…

    Late last month, Oxfam released its annual Inequality Report.  As Felix Salmon observes, it’s powerful stuff:

    At the end of this crazy bull market, it’s always worth remembering just how enormous the big winners’ gains have been.

    Specifically, the world’s billionaires – the richest 2,000 people on the planet – saw their wealth increase by a staggering $762 billion in just one year. That’s an average of $381 million apiece. If those billionaires had simply been content with staying at their 2016 wealth, and had given their one-year gains to the world’s poorest people instead, then extreme poverty would have been eradicated. Hell, they could have eradicated extreme poverty, at least in theory, by giving up just one seventh of their annual gains.

    Oxfam is absolutely right, then, to shine a light on the extreme inequality of the world in 2017. Wealth creation is all well and good, but giving new wealth primarily to the world’s billionaires is literally the worst possible way to distribute it. Oxfam’s longstanding proposal for a wealth tax on billionaires makes perfect sense. They don’t need the money; the world’s poorest do. What’s more, as the Oxfam report details, the top 1% too often make their money by exploiting the very poor. Nothing about this is just, especially when a good 35% of billionaire wealth was simply inherited…

    You can download the report (pdf) here; it is well worth the read.

    * Nelson Mandela

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    As we rethink “fair’s fair,” we might recall that it was on this date in 1826 that University College London was founded.  Originally known as London University, it was inspired by the (then) radical ideas of Jeremy Bentham (one of the founders) and created as an alternative to the Anglican universities of Oxford and Cambridge.  UCL was the first secular university in the UK (admitting students regardless of their religion) and the first to admit women.  It is currently the third largest university in the United Kingdom by total enrollment (and largest by postgraduate enrollment), and is consistently ranked among the top universities in the world.

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  • feedwordpress 09:01:33 on 2018/01/28 Permalink
    Tags: Alice Neel, , , , economics, , McKinsey, portraiture, profitability,   

    “It is time for parents to teach young people early on that in diversity there is beauty and there is strength”*… 

     

    A new report from global management consulting firm McKinsey examined 1,000 companies in 12 countries, analyzing both financial data and the gender and ethnic makeup of their workforces. Researchers found that firms with diverse executive teams posted bigger profit margins in their respective sectors than companies lacking diversity.

    Ethnic diversity was more important than gender diversity, according to the study. Companies that ranked in the top 25 percent in terms of the ethnic mix of their executive boards were 33 percent more likely to be profitable than firms in the bottom 25 percent for diversity.

    Women-led companies still had an advantage, however…

    See why defeating discrimination to achieve diversity isn’t just an ethical issue, but also an important economic concern: “Companies with Diverse Executive Teams Are More Profitable: McKinsey.”  Read the McKinsey report here.

    * Maya Angelou

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    As we celebrate variety, we might send powerfully-painted birthday greetings to Alice Neel; she was born on this date in 1900.  A painter of people, landscape, and still life– and a pioneer among women artists– she is probably best remembered for her expressionistic portraits.  Indeed, Barry Walker, curator of modern and contemporary art at the Museum of Fine Arts, Houston, called her “one of the greatest portrait artists of the 20th century.”

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