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Inequality - how wealth becomes power (1/2) | (Poverty Richness Documentary) DW Documentary - YouTube
"Germany is one of the world’s richest countries, but inequality is on the rise. The wealthy are pulling ahead, while the poor are falling behind.

For the middle classes, work is no longer a means of advancement. Instead, they are struggling to maintain their position and status. Young people today have less disposable income than previous generations. This documentary explores the question of inequality in Germany, providing both background analysis and statistics. The filmmakers interview leading researchers and experts on the topic. And they accompany Christoph Gröner, one of Germany’s biggest real estate developers, as he goes about his work. "If you have great wealth, you can’t fritter it away through consumption. If you throw money out the window, it comes back in through the front door,” Gröner says. The real estate developer builds multi-family residential units in cities across Germany, sells condominium apartments, and is involved in planning projects that span entire districts. "Entrepreneurs are more powerful than politicians, because we’re more independent,” Gröner concludes. Leading researchers and experts on the topic of inequality also weigh in, including Nobel-prize winning economist Joseph Stiglitz, economist Thomas Piketty, and Brooke Harrington, who carried out extensive field research among investors from the ranks of the international financial elite. Branko Milanović, a former lead economist at the World Bank, says that globalization is playing a role in rising inequality. The losers of globalization are the lower-middle class of affluent countries like Germany. "These people are earning the same today as 20 years ago," Milanović notes. "Just like a century ago, humankind is standing at a crossroads. Will affluent countries allow rising equality to tear apart the fabric of society? Or will they resist this trend?”"

[Part 2: https://www.youtube.com/watch?v=cYP_wMJsgyg

"Christoph Gröner is one of the richest people in Germany. The son of two teachers, he has worked his way to the top. He believes that many children in Germany grow up without a fair chance and wants to step in. But can this really ease inequality?

Christoph Gröner does everything he can to drum up donations and convince the wealthy auction guests to raise their bids. The more the luxury watch for sale fetches, the more money there will be to pay for a new football field, or some extra tutoring, at a children's home. Christoph Gröner is one of the richest people in Germany - his company is now worth one billion euros, he tells us. For seven months, he let our cameras follow him - into board meetings, onto construction sites, through his daily life, and in his charity work. He knows that someone like him is an absolute exception in Germany. His parents were both teachers, and he still worked his way to the top. He believes that many children in Germany grow up without a fair chance. "What we see here is total failure across the board,” he says. "It starts with parents who just don’t get it and can’t do anything right. And then there’s an education policy that has opened the gates wide to the chaos we are experiencing today." Chistoph Gröner wants to step in where state institutions have failed. But can that really ease inequality?

In Germany, getting ahead depends more on where you come from than in most other industrialized countries, and social mobility is normally quite restricted. Those on top stay on top. The same goes for those at the bottom. A new study shows that Germany’s rich and poor both increasingly stay amongst themselves, without ever intermingling with other social strata. Even the middle class is buckling under the mounting pressure of an unsecure future. "Land of Inequality" searches for answers as to why. We talk to families, an underpaid nurse, as well as leading researchers and analysts such as economic Nobel Prize laureate Joseph Stiglitz, sociologist Jutta Allmendinger or the economist Raj Chetty, who conducted a Stanford investigation into how the middle class is now arming itself to improve their children’s outlooks."]
documentary  germany  capitalism  economics  society  poverty  inequality  christophgröner  thomaspiketty  brookehrrington  josephstiglitz  neoliberalism  latecapitalism  brankomilanović  worldbank  power  influence  policy  politics  education  class  globalization  affluence  schools  schooling  juttaallmendinger  rajchetty  middleclass  parenting  children  access  funding  charity  charitableindustrialcomplex  philanthropy  philanthropicindustrialcomplex  status  work  labor  welfare  2018  geography  cities  urban  urbanism  berlin  immigration  migration  race  racism  essen  socialsegregation  segregation  success  democracy  housing  speculation  paulpiff  achievement  oligarchy  dynasticwealth  ownership  capitalhoarding  injustice  inheritance  charlottebartels  history  myth  prosperity  wageslavery  polarization  insecurity  precarity  socialcontract  revolution  sociology  finance  financialcapitalism  wealthmanagement  assets  financialization  local  markets  privateschools  publicschools  privatization 
10 weeks ago by robertogreco
Opinion | The Democrats’ Gentrification Problem - The New York Times
"Research that focuses on the way city neighborhoods are changing by income, race and ethnicity, while not specifically addressed to political consequences, helps us see the potential for conflict within the Democratic coalition.

Robert J. Sampson, a sociologist at Harvard, published a detailed study in 2015 for the St. Louis Federal Reserve of the economic composition of neighborhoods. Overall, he found, “middle-income neighborhoods are tenuous,” while neighborhoods at the top and bottom of the economic ladder have remained strikingly stable."



"Upscale liberal whites “who consider themselves committed to racial justice” tend to be “NIMBYists when it comes to their neighborhoods,” Cain wrote, “not living up to their affordable housing commitments and resisting apartment density around mass transportation stops.”"



"As intraparty economic and racial divisions have increased within the Democratic coalition, the political power of the well-to-do has grown at the expense of racial and ethnic minorities."



"The maneuvers in California are a reflection of a larger problem for Democrats: their inability to reconcile the conflicts inherent in the party’s economic and racial bifurcation."



"Democratic politicians should respond by imposing higher taxes on the wealthy and spending the proceeds on the less well off."



"The progressivity of income taxes has decreased, reliance on regressive consumption taxes has increased, and the taxation of capital has followed a global race to the bottom. Instead of boosting infrastructure investment, governments have pursued austerity policies that are particularly harmful to low-skill workers. Big banks and corporations have been bailed out, but households have not. In the United States, the minimum wage has not been adjusted sufficiently, allowing it to erode in real terms."



Rodrik cites the work of the French economist Thomas Piketty, who argues that political parties on the left have been taken over, here and in Europe, “by the well-educated elite” — what Piketty calls the “Brahmin Left.” The Brahmin Left, writes Rodrik,
is not friendly to redistribution, because it believes in meritocracy — a world in which effort gets rewarded and low incomes are more likely to be the result of insufficient effort than poor luck.
"



"The Democrats will become the party of urban cosmopolitan business liberalism, and the Republicans will become the party of suburban and rural nationalist populism."



"The force that had historically pushed policy to the economic left — organized labor — has for the most part been marginalized. African-American and Hispanic voters have shown little willingness to join Democratic reform movements led by upper middle class whites, as shown in their lack of enthusiasm for Bill Bradley running against Al Gore in 2000 or Sanders running against Clinton in 2016.

The hurdle facing those seeking to democratize elite domination of the Democratic Party is finding voters and donors who have a sustained interest in redistributive policies — and the minimum wage is only a small piece of this. Achieving that goal requires an economically coherent center-left political coalition. It also requires the ability to overcome the seemingly insuperable political divisions between the white working class and the African-American and Hispanic working classes — that elusive but essential multiracial — and now multiethnic — majority. Establishing that majority in a coherent political coalition is the only way in which the economic interests of those in the bottom half of the income distribution will be effectively addressed."
inequality  us  politics  democrats  meritocracy  2018  democracy  taxes  capitalism  capital  gentrification  cities  urban  urbanism  nimbyism  california  policy  progressives  wealth  unions  labor  thomaspiketty  michaellind  danirodrik  elitism  liberalism  neoliberalism  republicans  donaldtrump  race  racism  class  classism  segregation  thomasedsall 
april 2018 by robertogreco
A Discussion of Thomas Piketty’s Capital in the Twenty-First Century: By How Much Is r Greater than g?   Liberty Street Economics
An explanation of the r > g formula central to Thomas Piketty's "Capital in the Twenty-First Century". In essence: when the return from capital exceeds the rate at which economic output is growing, wealth inequality will grow; he argues that this is destined to happen in the coming century.
economics  thomaspiketty  capitalism 
august 2017 by robmiller
Books that have shaped our thinking – Nava PBC
"Recommended reads related to civic tech, health, government, behavioral science, design and engineering

At Nava we have a living Google Doc where we link to books that help us understand the systems and architecture we use. The intention of this document is to form a baseline of readings that new employees will need and to share with other employees good resources for being productive.

Below are some of our favorites from that list:

Sorting Things Out: Classification and its Consequences
by Susan Leigh Star and Geoffrey C. Bowker
This covers, in great detail, the astounding ways that the models we make for the world end up influencing how we interact with it. This is incredibly relevant to our work: the data models we define and the way we classify and interpret data have profound and often invisible impacts on large populations. — Sha Hwang, Co-founder and Head of Creative

Decoded
by Jay Z
Decoded is Jay Z’s autobiography and describes his experience as a black man growing up in an impoverished neighborhood in NYC. In particular, there is a passage about poor people’s relationship to the government that changed the way I think about the perception of those government services that I work to improve. This book showed me that the folks we usually want to serve most well in government, are the ones who are most likely to have had profoundly negative experiences with government. It taught me that, when I work on government services, I am rebuilding a relationship, not starting a new one. Context is so important. It’s a fun, fast read and I used to ask that our Apprentices read at least that passage, if not the whole book, before starting with our team at the NYC Mayor’s Office. — Genevieve Gaudet, Designer

Seeing like a State
by James C. Scott
A reminder that the governance of people at scale can have unintended consequences when removed from people’s daily lives and needs. You won’t think of the grid, property lines, and last names the same way again.— Shelly Ni, Designer

Quiet: The Power of Introverts in a World That Can’t Stop Talking
by Susan Cain
Cain uses data and real world examples of how and why introverts are overlooked in American culture and then discusses how both introverts and extroverts can play a role in ensuring introverts get a seat at the table and a word in the conversation. — Aimee Barciauskas, Software Engineer

Capital in the Twenty-First Century
by Thomas Piketty
This book analyzes the long-term fluctuations in wealth inequality across the globe, from the eighteenth century to present. He exposes an incredibly important issue in a compelling way, using references not just to data, but to history and literature to prove his point. — Mari Miyachi, Software Engineer

Master of the Senate: The Years of Lyndon Johnson III
by Robert A. Caro
Our most underhanded president also brought us Medicaid, Medicare, and civil rights. Was Machiavelli so bad after all? — Alex Prokop, Software Engineer

Praying for Sheetrock
by Melissa Fay Greene
A true, close-up story of McIntosh County, Georgia, a place left behind by the greater Civil Rights movement of the 1960s. This is a story about the civil rights movement that shakes up the community in the 1970s, and this is also a story about burnout, and organizing, and intergenerational trauma. — Shelly Ni, Designer

The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care
by T. R. Reid
Reid explores different models for healthcare in nations across the globe. He’s searching for an understanding of why America’s system is comparatively so expensive and unsuccessful, leaving so many uninsured and unhealthy. There is a great chapter on Ayurvedic medicine which (spoiler alert) seemed to work for the author when he was suffering from a shoulder injury! — Aimee Barciauskas, Software Engineer

Creativity, Inc: Overcoming the Unseen Forces That Stand in the Way of True Inspiration
by Ed Catmull and Amy Wallace
A very enjoyable and inspirational read about the history of Pixar from founder Ed Catmull himself. It delves into what sets a creative company apart and teaches lessons like “people are more important than ideas” and “simple answers are seductive” without reading like a typical business book.— Lauren Peterson, Product Manager

Thinking, Fast and Slow
by Daniel Kahneman
The magnum opus of Nobel laureate Daniel Kahneman. Kahneman is a psychologist but his Nobel is in Economics, and unlike other winners in this category, his win stands the test of time. You will be a much better decision maker after reading this book and understanding the two modes our brains work in: System 1 intuitive “fast” thinking and System 2 deliberate “slow” thinking. It is a beast of a book, but unlike the vast majority of (pop) psychology books, this book distills decades of groundbreaking research and is the basis for so many other psychology books and research that if you read this book carefully, you won’t have to read those other books. There are so many topics in this book, I’ll just link to the Wikipedia page to give you a flavor.— Alicia Liu, Software Engineer

Nudge
by Richard H. Thaler and Cass R. Sunstein
This covers how sensible “choice architecture” can improve the decisions and behavior of people. Much of what’s covered comes from decades of research in behavioral science and economics, and has a wide range of applications — from design, user research, and policy to business and everyday life. — Sawyer Hollenshead, Designer

The Checklist Manifesto: How to Get Things Right
by Atul Gawande
This book is about how checklists can help even experts avoid mistakes. Experience isn’t enough. I try to apply the lessons of this book to the processes we use to operate our software.—Evan Kroske, Software Engineer

The Soul of a New Machine
by Tracy Kidder
This book details the work of a computer engineering team racing to design a computer. While the pace of work for the team is certainly unsustainable and perhaps even unhealthy at times, the highs and lows they go through as they debug their new minicomputer will be familiar to engineers and members of tight-knit groups of all varieties. The rush to finish their project, which was thought to be a dark horse at the beginning of the book, is enthralling and will keep you engaged with this book late into the night. — Samuel Keller, Software Engineer

Release It!: Design and Deploy Production-Ready Software
by Michael T. Nygard
One of the best, most practical books I’ve ever read about creating resilient software on “modern” web architectures. While it may not be the most relevant with regards to cloud-based infrastructure, the patterns and processes described within are still very applicable. This is one of the few technical books I have read cover-to-cover. — Scott Smith, Software Engineer

Design for Democracy
by Marcia Lausen
From an AIGA project to improve the design of ballots— both paper and electronic— following the “hanging chad” drama of the 2000 election, comes this review of best practices for designers, election officials, and anyone interested in the intersection of design and voting.—Shelly Ni, Designer

The Design of Everyday Things
by Donald A. Norman
This is a classic for learning about design and its sometimes unintended consequences. I read it years ago and I still think about it every time I’m in an elevator. It’s a great introduction to a designer’s responsibility and designing in the real world for actual humans, who can make mistakes and surprising choices about how to use the designs you create. — Genevieve Gaudet, Designer

More recommendations from the team
• The Unexotic Underclass
• Open Government: Collaboration, Transparency, and Participation in Practice
• Everybody Hurts: Content for Kindness
• Poverty Interrupted: Applying Behavioral Science to the Context of Chronic Scarcity [PDF]
• Designing for Social Change: Strategies for Community-Based Graphic Design
• Making Comics: Storytelling Secrets of Comics, Manga, and Graphic Novels
• The New New Journalism: Conversations with America’s Best Nonfiction Writers on their Craft
• The Furious Improvisation: How the WPA and a Cast of Thousands Made High Art out of Desperate Times
• The Effective Engineer: How to Leverage Your Efforts In Software Engineering to Make a Disproportionate and Meaningful Impact
• Effective DevOps: Building a Culture of Collaboration, Affinity, and Tooling at Scale"
nava  books  booklists  design  education  health  healthcare  sawyerhollenshed  jayz  susanleighstar  shahwang  geoffreybowker  decoded  jamescscott  seeinglikeastate  susancain  introverts  quiet  thomaspiketty  economics  melissafaygreene  civilrrights  socialjustice  creativity  edcatmull  amyallace  pixar  teams  readinglists  toread  howwethink  thinking  danielkahneman  government  richardthaler  casssunstein  atulgawande  tracykidder  medicine  checklists  process  michaelnygard  software  ui  ux  democracy  donalnorman  devops  improvisation  collaboration  sfsh  journalism  kindness  socialchange  transparency  participation  participatory  opengovernment  open 
may 2017 by robertogreco
Why Are Economists Giving Piketty the Cold Shoulder? | Boston Review
"So where does that leave us, and specifically, where does it leave Capital in the Twenty-First Century, three years after its publication? It seems strange, perverse even, to say that its influence has been “quiet” when it has had great influence on public debate. But what this tour of the landscape of academic economics tells us is that, despite its hostile reception, Piketty’s influence, and that of this book in particular, continues to grow in the academic realm and is not likely to wither and die anytime soon—much as that might pain the harshest critics or the many more who have kept their distance.

For the latter, unfortunately, it is all too easy to keep looking the other way. It is increasingly possible to have a comfortable and rewarding life as a professional economist and never even consider the broad issue of inequality or the controversial explanations for and consequences of it that Piketty offers. Social norms used to require economists to at least take on broad public sentiment and to consider the issues of the day when setting their agendas, but the amount of money available for economics research and teaching has never been higher, no matter the esteem (or lack thereof) in which economists are held by the public. High officials in government, in corporate boardrooms, in courtrooms, and in university administrations, alumni bodies, and boards of trustees still want to hear what economists have to say (or at least to make a point of ostentatiously seeking out their advice and approval), and to have that approval validated in public.

All of which avoids the crucial question: are we actually doing or saying anything to make the economy serve the people who inhabit it? Economists could very easily spend their individual and collective lives avoiding that question as the economy crumbles around them, with Piketty’s book serving as little more than a cry in the wilderness. Right now, there is no assurance it won’t end that way, but by reading between the lines, my suspicion—and hope—is that Piketty is not one in a series of pop–social science fads. Rather, his work on inequality is an agenda-setting and generation-marking intellectual achievement, potentially as explosive (albeit with a longer fuse) in academia as it has been outside of it."
economics  inequality  thomaspiketty  2017  capitalism  neoliberalism  latecapitalism  economists 
may 2017 by robertogreco
Tax havens have no economic justification, say top economists | World news | The Guardian
More than 300 economists, including Thomas Piketty, are urging world leaders at a London summit this week to recognise that there is no economic benefit to tax havens, demanding that the veil of secrecy that surrounds them be lifted.

David Cameron agreed to host the summit nearly a year ago, but the event is in danger of simply turning a spotlight on how the British government has failed to persuade its overseas territories to stop harbouring secretly stored cash.
offshore  taxation  disclosure  ThomasPiketty  AngusDeaton  HaJoonChangNoraLustig  SeffreySachs  Guardian  2016 
may 2016 by inspiral
James Meek · Robin Hood in a Time of Austerity · LRB 18 February 2016
"How like the Middle Ages, if it were so. Behind the twisted rhetoric of a hardworking majority oppressed by a welfare-mad government, a modern version of the medieval world has been constructed, one where the real poor are taxed more heavily than the rich; where most of those who are not rich are burdened by an onerous roster of fees and monopolies levied by remote, unaccountable private landlords; and where many of us live out our lives shackled to an endless chain of private debt.

Since the Thatcher revolution in 1979, British governments have boasted of how they’ve lowered taxes. And they have, except for one section of society: the poorest 20 per cent. In 1977, the least well-off fifth of households paid 37 per cent of their gross income in direct taxes (like income tax) and indirect taxes (like VAT), against 38 per cent for the richest fifth. In 2014, the tax take from the poorest group had gone up to 37.8 per cent, while the taxes paid by the richest had gone down to less than 35 per cent.

Not only does this understate the extent of tax cuts for the top 1 per cent; it shows only part of the burden borne by the least well off. Piketty writes that ‘modern redistribution does not consist in transferring income from the rich to the poor, at least not in so explicit a way. It consists rather in financing public services and replacement incomes that are more or less equal for everyone, especially in the areas of health, education and pensions.’ This is a very cautious definition of the modern social state. Health, education and social security make up the lion’s share of public spending, but they’re intimately linked to a wider set of networks that includes energy, water and transport and, some would argue, should include housing. What these networks have in common is that society has decided they’re essential, and therefore should be universal – that is, we think everyone should have access to them, all the time. The significance of this is that, on the one hand, society takes on itself the obligation to give its poorest members access to these networks, which they wouldn’t otherwise be able to afford; and, on the other, payment to use these networks, if it isn’t funded out of general taxation, becomes in itself a tax, particularly when that network is a monopoly. In Britain, many of these universal networks, such as electricity and water, have been privatised, often twice – once to put them on the stock market, once to put them into the hands of overseas owners. Bills for these services have increased faster than inflation, and take little account of people’s ability to pay. It is the poorest, then, who as well as paying the heaviest combination of indirect and direct taxation bear the brunt of such hybrid public-private taxes as the water tax and the electricity tax.

Other universal networks, such as health and education, haven’t been privatised, but have been through another process that makes them ripe for the introduction of flat fees for usage in future. This process really got going under Labour, and it is a sign of the liberal left’s failure to recognise what it has done that there isn’t a name for it. One word to describe it might be ‘autonomisation’ – the process by which state-run bodies continue to be funded by the state but are run autonomously on a non-profit basis. So state secondary schools become academies, NHS hospitals become NHS foundation trusts, and council estates are transferred to housing associations. The British state is in a condition of rolling abdication, leaving behind a partly privatised, partly autonomised set of universal networks, increasingly run by absentee landlords in the form of global companies and overseas corporate investors, that is disproportionately funded by the poorest payers of taxes, fees and duties, many of whom are also deep in debt.

There is a cynical view which says that as long as the majority of the population feel they’re doing all right, a democratically elected government is safe to squeeze the poor and pamper the rich. But cynicism is a risky thing to rely on when a government is simultaneously cutting spending and shedding control of the universal networks on which its entire population relies. As Hobsbawm writes in Bandits, ‘concentration of power in the modern territorial state is what eventually eliminated rural banditry, endemic or epidemic. At the end of the 20th century it looks as though this situation might be coming to an end, and the consequences of this regression of state power cannot yet be foreseen.’ We’re a long way from the return of the literal outlaw to Nottinghamshire. But we need to remember the insight given our ancestors when they saw through the illusion of the Robin Hood myth, when they saw that the strongbox of silver coins wasn’t just money stolen from each of them individually, but power robbed from them collectively, and that they needed to wield that power collectively as much as they needed their money back. For sure, freedom to choose is a grand thing, and the market will try to help you exercise it. With a bit of money in the bank, a middle-class family might choose to send their child to private school, provided by the market; but that same family can’t choose to build and maintain a universal education network by itself, and the market won’t provide it. With money, you can choose to buy a car, and the market will provide it; but you can’t choose, all by yourself, to build and maintain a universal road network, and the market won’t provide it. To make and keep universal networks requires the authority of the state, an authority that has been absent; and it’s hard to see where that authority might come from if the people don’t find a way to assert their kingship."
2016  jamesmeek  capitalism  politics  policy  welfare  poor  class  rich  wealthdistribution  inequality  taxes  taxation  health  education  thomaspiketty  neoliberalism  autonomization  housing  uk  finance  davidcameron  margaretthatcher  ronaldreagan  stephenharper  us  canada  australia  marcorubio  georgeosborne  power  money  economics  labor  erichobsbawm  government  markets  universalnetworks  infrastructure  via:anabjain 
april 2016 by robertogreco
India’s Literary Festivals Multiply Amid Anxiety Over Free Expression (NYT, 2/23/2016)
A festival in Jaipur drew 330,000 people, testifying to the popularity of what is proving to be a lightning rod for politics and emotions.
india  literature  literaryfestival  margaretatwood  thomaspiketty 
february 2016 by davidkoren
The Melting Away of North Atlantic Social Democracy
French economist Thomas Piketty, of the Paris School of Economics, looked at the major democracies with North Atlantic coastlines over the past couple of centuries. He saw five striking facts: First, ownership of private wealth—with its power to command resources, dictate where and how people would work, and shape politics—was always highly concentrated. Second, 150 years—six generations—ago, the ratio of a country’s total private wealth to its total annual income was about six. Third, 50 years—two generations—ago, that capital-income ratio was about three. Fourth, over the past two generations that capital-income ratio has been rising rapidly. Fifth, the flow of income to the owner of the dollar capital did not rise when capital was relatively scarce, but plodded along at a typical net rate of profit of about 5% per year generation after generation. He wondered what these facts predicted for the shape of the major North Atlantic economies in the 21st century.
talkingpointsmemo  thomaspiketty  economics  wealth  economy 
february 2016 by brendanmcfadden
Mark Zuckerberg and the Rise of Philanthrocapitalism - The New Yorker
"The announcement, on Tuesday, by Mark Zuckerberg and his wife, Priscilla Chan, that, during their lifetimes, they will donate to philanthropic causes roughly ninety-nine per cent of their Facebook stock, which is currently valued at close to forty-five billion dollars, has already prompted a lot of comment, much of it positive. That is understandable. The fact that Zuckerberg, Bill Gates, Warren Buffett, and a number of other billionaires are pledging their fortunes to charity rather than seeking to pass them down to their descendants is already having an impact.

Last year, the Bill & Melinda Gates Foundation, which was founded in 2000, dispensed almost four billion dollars in grants. A big slug of this money went toward fighting diseases like H.I.V., malaria, polio, and tuberculosis, which kill millions of people in poor countries. Zuckerberg and Chan have also already donated hundreds of millions of dollars to various causes, including eradicating the Ebola virus. In their latest announcement, which they presented as an open letter to their newborn daughter, on Zuckerberg’s Facebook page, they said that the Chan Zuckerberg Initiative, the new philanthropic organization that they are setting up, would focus on “advancing human potential and promoting equality.”

It’s not just the size of the donations that the wealthy are making that demands attention, though. Charitable giving on this scale makes modern capitalism, with all of its inequalities and injustices, seem somewhat more defensible. Having created hugely successful companies that have generated almost unimaginable wealth, Zuckerberg, Gates, and Buffett are sending a powerful message to Wall Street hedge-fund managers, Russian oligarchs, European industrialists, Arab oil sheiks, and anybody else who has accumulated a vast fortune: “From those to whom much is given, much is expected.”

Speaking at Harvard in 2007, Gates attributed this quotation to his dying mother. (A slightly different version of it appears in St. Luke’s gospel.) In 2010, Gates and Buffett challenged fellow members of the ultra-rich club to give away at least half of their wealth. Since then, more than a hundred billionaires have signed the “Giving Pledge.” Some of these mega-donors, such as Buffett, are content to let others direct their donations. (In 2006, he signed over much of his fortune to the Gates Foundation.) Increasingly, however, wealthy people are setting up their own philanthropic organizations and pursuing their own causes—a phenomenon that has been called “philanthrocapitalism.”

That is the positive side. It is also worth noting, however, that all of this charitable giving comes at a cost to the taxpayer and, arguably, to the broader democratic process. If Zuckerberg and Chan were to cash in their Facebook stock, rather than setting it aside for charity, they would have to pay capital-gains tax on the proceeds, money that could be used to fund government programs. If they willed their wealth to their descendants, then sizable estate taxes would become due on their deaths. By making charitable donations in the form of stock, they, and their heirs, could escape both of these levies.

The size and timing of the tax benefits to Zuckerberg and Chan are uncertain, but they are likely to be large. In the initial version of this post, based on the open letter Zuckerberg and Chan posted on his Facebook page, and on the opinions of several tax experts, I said that the couple, in donating stock to the new philanthropic organization, would gain immediate tax credits equal to the market value of the stock, some of which could be rolled over into future tax years. Typically, that is what happens when a rich person donates stock to a family foundation or to certain types of L.L.C.s constituted for philanthropic purposes, such as ones owned by family foundations.

On Wednesday, in a follow-up post on Facebook, Zuckerberg provided more details about the couple’s plans. Evidently, the L.L.C. that he and Chan are setting up will not be seeking tax-exempt status. “By using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively,” Zuckerberg wrote. “In fact, if we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an LLC we do not.”

Even if the Chan Zuckerberg Initiative doesn’t obtain tax-exempt status, over time its activities will most likely have a big impact on the taxes its founders pay. The I.R.S. treats ordinary L.L.C.s as “pass-through” structures, and shifting financial assets to such entities doesn’t usually generate any immediate credits or liabilities. But whenever the Chan Zuckerberg Initiative issues grants to nonprofit organizations, it will almost certainly do so by donating some of its Facebook stock, and that will generate tax credits for Zuckerberg and Chan equal to the market value of the stock at that time. As the years go by and the Initiative steps up its charitable activities, these credits seem likely to add up to very large sums.

Unlike a regular family foundation, the L.L.C. may also generate some tax liabilities for Zuckerberg and Chan. If it invested in a commercial enterprise, such as an online-learning company, taxes would be owed on any profits the investment generated. And if, as Zuckerberg also pointed out, the L.L.C. sold some of the Facebook shares that he and Chan have donated to it, they would have to pay capital-gains taxes on the proceeds. But since the couple will control the L.L.C., they will be able to decide how it finances itself, and whether it sells any stock.”

If what Zuckerberg is doing were an isolated example, it wouldn’t matter much for over-all tax revenues. But the practice is spreading at a time when the distribution of wealth is getting ever more lopsided, which means the actions of a small number of very rich people can have a bigger impact. In 2012, according to

By transferring almost all of their fortunes to philanthropic organizations, billionaires like Zuckerberg and Gates are placing some very large chunks of wealth permanently outside the reaches of the Internal Revenue Service. That means the country’s tax base shrinks. As yet, I haven’t seen any estimates of the over-all cost to the Treasury, but it’s an issue that can’t be avoided. And it raises the broader question, which the economists Thomas Piketty and Anthony Atkinson, among others, have raised, of whether we need a more comprehensive tax on wealth.

Arguably, there is another issue at stake, too: democracy.

Although organizations like the Gates Foundation portray themselves as apolitical, nonpartisan entities, they aren’t completely removed from politics. Far from it. The Gates Foundation, for example, has been a big financial supporter of charter schools, standardized testing, and the Common Core. (It has also given some money to public schools.) Zuckerberg, too, has also provided a lot of money to charter schools. They featured prominently in his costly and controversial effort to reform the public-school system in Newark, New Jersey, which Dale Russakoff wrote about in the magazine last year. In the letter posted on Facebook, Zuckerberg signalled that he isn’t done with such efforts. “We must participate in policy and advocacy to shape debates,” the letter said. “Many institutions are unwilling to do this, but progress must be supported by movements to be sustainable.”

My intention, here, isn’t to enter the education debate. It is simply to point out what should be obvious: people like Zuckerberg and Gates, by virtue of their philanthropic efforts, can have a much bigger say in determining policy outcomes than ordinary citizens can. (As Matthew Yglesias pointed out on Vox, one of the advantages of registering the Chan Zuckerberg Initiative as an L.L.C. is that it can spend money on political ads.) The more money billionaires give to their charitable foundations, which in most cases remain under their personal control, the more influence they will accumulate. And relatively speaking, anyway, the less influence everybody else will have.

Some Americans—not all of them disciples of Ayn Rand—might say that this is a good thing. I have already cited some of the Gates Foundation’s good works. Isn’t Michael Bloomberg, with his efforts to reform gun laws, promoting the public interest? Isn’t George Soros, through his donations to civil-rights organizations, lining up on the side of the angels? In these two instances, my own answers would be yes and yes; but the broader point stands. The divide between philanthropy and politics is already fuzzy. As the “philanthrocapitalism” movement gets bigger, this line will be increasingly hard to discern.

So by all means, let us praise Zuckerberg and Chan for their generosity. And let us also salute Gates, who started the trend. But contrary to the old saying, this is one gift horse we should look closely in the mouth."

[via: http://hackeducation.com/2015/12/23/trends-business/ ]
philanthrocapitalism  charitableindustrialcomplex  2015  facebook  markzuckerberg  johncassidy  philanthropy  influence  corruption  democracy  power  charity  capitalism  gatesfoundation  taxes  billgates  thomaspiketty  inequality  anthonyatkinson  dalerussakoff  newjersey  education  michaelbloomberg  georgesoros  priscillachan  warrenbuffett  policy  politics  philanthropicindustrialcomplex  control 
december 2015 by robertogreco
Corbyn reveals big names in new Economic Advisory Committee
The group will be convened by Shadow Chancellor John McDonnell and will report to Jeremy Corbyn. They will meet 4 times a year to discuss ideas to be fed into Labour’s official economic strategy. The committee will be made up of: Prof Mariana Mazzucato, U Sussex; Prof Joseph Stiglitz, Columbia U, 2001 Nobel economics laureate; Prof Thomas Piketty, Paris School of Economics; Prof Anastasia Nesvetailova, City U London; Danny Blanchflower, Bruce V Rauner Professor of Economics, Dartmouth & Stirling, ex-member of the MPC; Ann Pettifor, Director of Policy Research in Macroeconomics (PRIME) and Honorary Research Fellow at Political Economy Research Centre, City U. ¶¶ Corbyn announced the news with a statement saying: “I was elected on a clear mandate to oppose austerity and to set out an economic strategy based on investment in skills, jobs and infrastructure. Our economy must deliver security for all, not just riches for a few.”
from:LabourList  JeremyCorbyn  Labour  economics  ThomasPiketty  JosephStiglitz  MarianaMazzucato  AnastasiaNesvetailova  DannyBlanchflower  AnnPettifor  politics  geo:UnitedKingdom 
september 2015 by owenblacker
Savage capitalism is back – and it will not tame itself | David Graeber | Comment is free | The Guardian
"In other words, what happened in western Europe and North America between roughly 1917 and 1975 – when capitalism did indeed create high growth and lower inequality – was something of a historical anomaly. There is a growing realisation among economic historians that this was indeed the case. There are many theories as to why. Adair Turner, former chairman of the Financial Services Authority, suggests it was the particular nature of mid-century industrial technology that allowed both high growth rates and a mass trade union movement. Piketty himself points to the destruction of capital during the world wars, and the high rates of taxation and regulation that war mobilisation allowed. Others have different explanations.

No doubt many factors were involved, but almost everyone seems to be ignoring the most obvious. The period when capitalism seemed capable of providing broad and spreading prosperity was also, precisely, the period when capitalists felt they were not the only game in town: when they faced a global rival in the Soviet bloc, revolutionary anti-capitalist movements from Uruguay to China, and at least the possibility of workers' uprisings at home. In other words, rather than high rates of growth allowing greater wealth for capitalists to spread around, the fact that capitalists felt the need to buy off at least some portion of the working classes placed more money in ordinary people's hands, creating increasing consumer demand that was itself largely responsible for the remarkable rates of economic growth that marked capitalism's "golden age".

Since the 1970s, as any significant political threat has receded, things have gone back to their normal state: that is, to savage inequalities, with a miserly 1% presiding over a social order marked by increasing social, economic and even technological stagnation. It was precisely the fact that people such as my Russian friend believed capitalism would inevitably civilise itself that guaranteed it no longer had to do so.

Piketty, in contrast, begins his book by denouncing "the lazy rhetoric of anti-capitalism". He has nothing against capitalism itself – or even, for that matter, inequality. He just wishes to provide a check on capitalism's tendency to create a useless class of parasitical rentiers. As a result, he argues that the left should focus on electing governments dedicated to creating international mechanisms to tax and regulate concentrated wealth. Some of his suggestions – an 80% income tax! – may seem radical, but we are still talking about a man who, having demonstrated capitalism is a gigantic vacuum cleaner sucking wealth into the hands of a tiny elite, insists that we do not simply unplug the machine, but try to build a slightly smaller vacuum cleaner sucking in the opposite direction.

What's more, he doesn't seem to understand that it doesn't matter how many books he sells, or summits he holds with financial luminaries or members of the policy elite, the sheer fact that in 2014 a left-leaning French intellectual can safely declare that he does not want to overthrow the capitalist system but only to save it from itself is the reason such reforms will never happen. The 1% are not about to expropriate themselves, even if asked nicely. And they have spent the past 30 years creating a lock on media and politics to ensure no one will do so through electoral means.

Since no one in their right mind would wish to revive anything like the Soviet Union, we are not going to see anything like the mid-century social democracy created to combat it either. If we want an alternative to stagnation, impoverishment and ecological devastation, we're just going to have to figure out a way to unplug the machine and start again."
capitalism  civilization  communism  crisis  davidgraeber  2015  economics  thomaspiketty  greed  imbalance  inequality  competition  growth  poverty  policy 
september 2015 by robertogreco

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