Friday, January 25, 2013

Inequality Is Holding Back the Recovery

January 19, 2013, 6:47 pm

The re-election of President Obama was like a Rorschach test, subject to many interpretations. In this election, each side debated issues that deeply worry me: the long malaise into which the economy seems to be settling, and the growing divide between the 1 percent and the rest — an inequality not only of outcomes but also of opportunity. To me, these problems are two sides of the same coin: with inequality at its highest level since before the Depression, a robust recovery will be difficult in the short term, and the American dream — a good life in exchange for hard work — is slowly dying.

Politicians typically talk about rising inequality and the sluggish recovery as separate phenomena, when they are in fact intertwined. Inequality stifles, restrains and holds back our growth. When even the free-market-oriented magazine The Economist argues — as it did in a special feature in October — that the magnitude and nature of the country’s inequality represent a serious threat to America, we should know that something has gone horribly wrong. And yet, after four decades of widening inequality and the greatest economic downturn since the Depression, we haven’t done anything about it.

A fifth of our kids live in poverty — an aberration among rich nations.
There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth. While the top 1 percent of income earners took home 93 percent of the growth in incomes in 2010, the households in the middle — who are most likely to spend their incomes rather than save them and who are, in a sense, the true job creators — have lower household incomes, adjusted for inflation, than they did in 1996. The growth in the decade before the crisis was unsustainable — it was reliant on the bottom 80 percent consuming about 110 percent of their income.

Second, the hollowing out of the middle class since the 1970s, a phenomenon interrupted only briefly in the 1990s, means that they are unable to invest in their future, by educating themselves and their children and by starting or improving businesses.

Third, the weakness of the middle class is holding back tax receipts, especially because those at the top are so adroit in avoiding taxes and in getting Washington to give them tax breaks. The recent modest agreement to restore Clinton-level marginal income-tax rates for individuals making more than $400,000 and households making more than $450,000 did nothing to change this. Returns from Wall Street speculation are taxed at a far lower rate than other forms of income. Low tax receipts mean that the government cannot make the vital investments in infrastructure, education, research and health that are crucial for restoring long-term economic strength.

Fourth, inequality is associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile and vulnerable. Though inequality did not directly cause the crisis, it is no coincidence that the 1920s — the last time inequality of income and wealth in the United States was so high — ended with the Great Crash and the Depression. The International Monetary Fund has noted the systematic relationship between economic instability and economic inequality, but American leaders haven’t absorbed the lesson.

Our skyrocketing inequality — so contrary to our meritocratic ideal of America as a place where anyone with hard work and talent can “make it” — means that those who are born to parents of limited means are likely never to live up to their potential. Children in other rich countries like Canada, France, Germany and Sweden have a better chance of doing better than their parents did than American kids have. More than a fifth of our children live in poverty — the second worst of all the advanced economies, putting us behind countries like Bulgaria, Latvia and Greece.

Our society is squandering its most valuable resource: our young. The dream of a better life that attracted immigrants to our shores is being crushed by an ever-widening chasm of income and wealth. Tocqueville, who in the 1830s found the egalitarian impulse to be the essence of the American character, is rolling in his grave.

Bryan Patrick/The Sacramento Bee, via Associated Press Protesters at California State University, Sacramento, railed against cuts to higher education in April 2011.

Even were we able to ignore the economic imperative of fixing our inequality problem, the damage it is doing to our social fabric and political life should prompt us to worry. Economic inequality leads to political inequality and a broken decision-making process.

Despite Mr. Obama’s stated commitment to helping all Americans, the recession and the lingering effects of the way it was handled have made matters much, much worse. While bailout money poured into the banks in 2009, unemployment soared to 10 percent that October. The rate today (7.8 percent) appears better partly because so many people have dropped out of the labor force, or never entered it, or accepted part-time jobs because there was no full-time job for them.

High unemployment, of course, depresses wages. Adjusted for inflation, real wages have stagnated or fallen; a typical male worker’s income in 2011 ($32,986) was lower than it was in 1968 ($33,880). Lower tax receipts, in turn, have forced state and local cutbacks in services vital to those at the bottom and middle.

Most Americans’ most important asset is their home, and as home prices have plummeted, so has household wealth — especially since so many had borrowed so much on their homes. Large numbers are left with negative net worth, and median household wealth fell nearly 40 percent, to $77,300 in 2010 from $126,400 in 2007, and has rebounded only slightly. Since the Great Recession, most of the increase in the nation’s wealth has gone to the very top.

Meanwhile, as incomes have stagnated or fallen, tuition has soared. In the United States now, the principal way to get education — the only sure way to move up — is to borrow. In 2010, student debt, now $1 trillion, exceeded credit-card debt for the first time.

Student debt can almost never be wiped out, even in bankruptcy. A parent who co-signs a loan can’t necessarily have the debt discharged even if his child dies. The debt can’t be discharged even if the school — operated for profit and owned by exploitative financiers — provided an inadequate education, enticed the student with misleading promises, and failed to get her a decent job.

Instead of pouring money into the banks, we could have tried rebuilding the economy from the bottom up. We could have enabled homeowners who were “underwater” — those who owe more money on their homes than the homes are worth — to get a fresh start, by writing down principal, in exchange for giving banks a share of the gains if and when home prices recovered.

Obama bailed out banks but didn’t invest enough in workers and students.
We could have recognized that when young people are jobless, their skills atrophy. We could have made sure that every young person was either in school, in a training program or on a job. Instead, we let youth unemployment rise to twice the national average. The children of the rich can stay in college or attend graduate school, without accumulating enormous debt, or take unpaid internships to beef up their résumés. Not so for those in the middle and bottom. We are sowing the seeds of ever more inequality in the coming years.

The Obama administration does not, of course, bear the sole blame. President George W. Bush’s steep tax cuts in 2001 and 2003 and his multitrillion-dollar wars in Iraq and Afghanistan emptied the piggy bank while exacerbating the great divide. His party’s newfound commitment to fiscal discipline — in the form of insisting on low taxes for the rich while slashing services for the poor — is the height of hypocrisy.

There are all kinds of excuses for inequality. Some say it’s beyond our control, pointing to market forces like globalization, trade liberalization, the technological revolution, the “rise of the rest.” Others assert that doing anything about it would make us all worse off, by stifling our already sputtering economic engine. These are self-serving, ignorant falsehoods.

Market forces don’t exist in a vacuum — we shape them. Other countries, like fast-growing Brazil, have shaped them in ways that have lowered inequality while creating more opportunity and higher growth. Countries far poorer than ours have decided that all young people should have access to food, education and health care so they can fulfill their aspirations.

Our legal framework and the way we enforce it has provided more scope here for abuses by the financial sector; for perverse compensation for chief executives; for monopolies’ ability to take unjust advantage of their concentrated power.

Yes, the market values some skills more highly than others, and those who have those skills will do well. Yes, globalization and technological advances have led to the loss of good manufacturing jobs, which are not likely ever to come back. Global manufacturing employment is shrinking, simply because of enormous increases in productivity, and America is likely to get a shrinking share of the shrinking number of new jobs. If we do succeed in “saving” these jobs, it may be only by converting higher-paid jobs to lower-paid ones — hardly a long-term strategy.

Globalization, and the unbalanced way it has been pursued, has shifted bargaining power away from workers: firms can threaten to move elsewhere, especially when tax laws treat such overseas investments so favorably. This in turn has weakened unions, and though unions have sometimes been a source of rigidity, the countries that responded most effectively to the global financial crisis, like Germany and Sweden, have strong unions and strong systems of social protection.

As Mr. Obama’s second term begins, we must all face the fact that our country cannot quickly, meaningfully recover without policies that directly address inequality. What’s needed is a comprehensive response that should include, at least, significant investments in education, a more progressive tax system and a tax on financial speculation.

The good news is that our thinking has been reframed: it used to be that we asked how much growth we would be willing to sacrifice for a little more equality and opportunity. Now we realize that we are paying a high price for our inequality and that alleviating it and promoting growth are intertwined, complementary goals. It will be up to all of us — our leaders included — to muster the courage and foresight to finally treat this beleaguering malady.

Joseph E. Stiglitz, a Nobel laureate in economics, a professor at Columbia and a former chairman of the Council of Economic Advisers and chief economist for the World Bank, is the author of “The Price of Inequality.”

Here’s A Video Of Two Men Experiencing Labor Contractions 

Girls this is 2 funny....and I am quite amazed that they lasted that long.

Jan. 24, 2013
Watch This Hilarious Video Of Men Experiencing Childbirth
A Dutch TV program had a brilliant idea: have men put on devices that simulate childbirth contractions and film the results. Hilarity ensues

Grover Norquist Tax Orgy: 'The Onion' Breaks Corporate Income Tax Affair (VIDEO)

Grover Norquist: 'I Engaged In A Week-Long Drug-Filled Orgy With Corporate Income Taxes'
First Posted: 01/12/2012 2:50 pm Updated: 01/12/2012 2:50 pm

"I engaged in a week-long, drug-fueled orgy with corporate income taxes."

It doesn't get any more cut and dried -- or shocking -- than that.
Founder of Americans for Tax Reform, Grover Norquist has been outed by "The Onion" as carrying on a sordid fling with taxes*.
The paper reported Thursday that scandalous photos had surfaced revealing a decades-long affair between Norquist and his sworn enemy. Later that day, Norquist appeared in front of cameras admitting all of the salacious details.
Over the last 28 years, I have carried on multiple affairs with numerous kinds of taxes; income taxes, sales taxes and, even, estate taxes.... I was leading a selfishly double life, buying presents for and taking exotic trips with capital gains taxes and transfer taxes. In 2004, I engaged in a week-long, drug-fueled orgy with corporate income taxes, a decision I now wholeheartedly regret. And in 2010, at the height of my misconduct, while in Paris, I strongly flirted with a European style value-added tax.
Signers of Norquist's "Taxpayer Protection Pledge," included current GOP presidential hopefuls, have yet to respond to Norquist's shocking announcement.

*As a reminder, "The Onion" is a satirical newspaper and this is a fake scandal. Norquist is a long-time fan of "The Onion," and is well-regarded as having a fine sense of humor. This would seem to prove it.

Not so fast: Women on frontlines 'distracting,' say critics

By Erin McClam, Staff Writer, NBC News

Critics of the Pentagon’s decision to allow women to serve in many combat positions accused the military of putting social experimentation and political correctness ahead of the fighting power of American troops.

The decision, announced Thursday by Defense Secretary Leon Panetta, appeared to be met mostly with approval on Capitol Hill — and jubilation among women who have served in the armed forces.

But others, including some combat veterans, Republicans in Congress and culturally conservative groups, expressed deep reservations or outright opposition.

One former Marine infantryman, Ryan Smith, said that combat readiness could be harmed by the decision. In an Op-Ed article published Thursday in The Wall Street Journal, Smith focused on some of the more unseemly aspects of combat service.

During the American-led invasion of Iraq in 2003, he wrote, his unit went more than a month without showering and then was lined up naked to be pressure-washed.

“It would be distracting and potentially traumatizing to be forced to be naked in front of the opposite sex, particularly when your body has been ravaged by lack of hygiene,” Smith wrote. “In the reverse, it would be painful to witness a member of the opposite sex in such an uncomfortable and awkward position.

“The relationships among members of a unit can be irreparably harmed by forcing them to violate societal norms,” he concluded.

Republican Rep. Duncan Hunter of California, a Marine combat veteran who served two tours in Iraq and a third in Afghanistan, said that the question was whether the change would “actually make our military better at operating in combat and killing the enemy.”

“What needs to be explained is how this decision, when all is said and done, increases combat effectiveness rather than being a move done for political purposes,” Hunter said in a statement. A spokesman told NBC News that the congressman believes the decision was rushed, and that it was unclear how the Pentagon reached its decision.

Sen. John McCain, R-Ariz., and a former prisoner of war in Vietnam, quickly announced his support for Panetta’s decision. But he said Thursday that he wants to be sure “to make sure that the standards, particularly the physical standards, are met so that the combat efficiency of the units are not degraded.”

For the past 10 years, women in the U.S. military have served at the frontlines in Iraq and Afghanistan but never as ground combat troops. That will soon change as a ban against women in combat is lifted. NBC's Jim Miklaszewski reports and retired Col. Jack Jacobs gives his take.

In remarks as he was entering a confirmation hearing for Sen. John Kerry as secretary of state, McCain said that allowing women in combat was “the right thing to do.”

When a reporter suggested that American military women were already in combat roles — more than 150 women have died and nearly 1,000 have been wounded in the wars in Iraq and Afghanistan — McCain said, “Well, not really.”

“It’s one thing to be some place where a rocket hits and be wounded, and it’s another thing to be out there on a night raid against al-Qaida,” McCain said. “But the fact is that this is a — I support this decision, and I think that women are fully qualified to carry out that mission.”

A senior defense official told NBC News on Wednesday that exceptions would probably remain, and that elite special operations positions among the Navy SEALs, Army Rangers and Delta Force, another branch of the Army, would probably stay closed to women.

There were about 166,000 women serving in active duty in 2011, the most recent year for which figures are available. They accounted for about 14 percent of the active armed forces. Women were most represented in the Air Force, at 19 percent, and least in the Marines, 6 percent.

There were about 36,000 women among active-duty officers, or about 17 percent.

Polls consistently show broad support for allowing women in combat roles. Support ran almost 3-to-1 in a Quinnipiac University poll conducted last February.

Still, a conservative Christian activist group, Concerned Women for America, was blunt in its opposition to the shift.

“The point of the military is to protect our country,” the group’s president, Penny Nance, said in a statement. “Anything that distracts from that is detrimental. Our military cannot continue to choose social experimentation and political correctness over combat readiness.”

Some critics of Panetta’s decision expressed concern that women would not be able to meet physical-fitness requirements of the military, or that the standards for physical fitness would be lowered, weakening the force, to make them fair to women.

Anne Coughlin, a University of Virginia law professor who helped form a group that inspired a lawsuit against Panetta last year, opposing the ban, said that she saw no merit in any of the arguments for the ban.

Arguments about unit cohesion, she said, rely on a stereotype — that men and women will get up to “mischief” in close quarters. She said that she applauded strict fitness requirements, physical and psychological, and that there was no reason to expect that the military would endanger troops by lowering them.

“Some women, just like some men, may not be able to satisfy some of those standards,” she told NBC News in a telephone interview. “It seems preposterous to me to think that the secretary of defense and the people who are in charge of designing the military standards would put the nation in peril in this way, and they are certainly not be being asked to do that.”

Related: 'It's about time!': Female veterans cheer over women's right to fight

Do women have mettle to qualify for special forces?

The Pentagon has given women the go-ahead to be grunts, but will they also be joining elite special units such as Delta Force or Navy SEALs?

The chairman of the Joint Chiefs of Staff said he believes there are women in the military today who would meet the rigorous screening requirements for special forces.

That's no easy feat — for man or woman.

To become a Navy SEAL, for instance, the ideal candidate will swim 500 yards in nine minutes, do 90 push-ups in two minutes, 85 curl-ups in two minutes, 18 pull-ups in two minutes, and run 1.5 miles in under 10 minutes.

Marine Special Operations wannabes need to swim 300 meters in a utility shirt and trousers, tread water for 10 minutes while clothed, and hike 12 miles with a 45-pound load in under four hours

Delta Force, which is so secretive that the Army doesn't even acknowledge its existence, recruits members of other special forces units who have already proven their physical mettle.

Then, according to the book "Inside Delta Force," it makes them complete land-navigation courses that include an 18-mile nighttime trek with a 40-pound backpack and a 40-mile march over rough terrain.

Women who've passed the Army's grueling Sapper Leader course say they're well-prepared to enter combat, and in some cases, better prepared than men. NBC's Jim Miklaszewski reports.

No problem says Kate Wilder, a retired lieutenant colonel who was the first woman to qualify for the Army's Special Forces in 1980.

"Just to get into the course, I had to pass the male advanced PT class, which was the toughest class at the time," she said. "I was in my 20s, in top condition.

"If I could do it, these young women who are so in shape today can do it," she said.

Wilder said she got into the course but was told just before graduation that she failed a field exercise. She filed a sex-discrimination complaint and a judge found she was unfairly denied qualification.

Now 61, Wilder said many of the physical screenings for the Green Berets and similar units are are tests of endurance and agility, not brute force.

She remembered trouble she had with a course of overhead bars she had to complete. "My trainer told me, 'It's not strength, it's technique," she recalled.
 "And one day I just got it. But there were a lot of men who couldn't master the bars.

"There is nothing today's women physically can't do and if she can't do it right away, she can be trained to do it," Wilder said.