dunnettreader + 1-percent   29

Emmanuel Saez - Taxing the Rich More: Preliminary Evidence from the 2013 Tax Increase (Nov 2016) | NBER Working Papers
Taxing the Rich More: Preliminary Evidence from the 2013 Tax Increase
Emmanuel Saez
NBER Working Paper No. 22798 - Issued in November 2016
This paper provides preliminary evidence on behavioral responses to taxation around the 2013 tax increase that raised top marginal tax rates on capital income by about 9.5 points and on labor income by about 6.5 points. Using published tabulated tax statistics from the Statistics of Income division of the IRS, we find that reported top 1% incomes were significantly higher in 2012 than in 2013, implying a large short-run elasticity of reported income with respect to the net-of-tax rate in excess of one. This large short-run elasticity is due to income retiming for tax avoidance purposes and is particularly high for realized capital gains and dividends, and highest at the very top of the income distribution. However, comparing 2011 and 2015 top incomes uncovers only a small medium-term response to the tax increase as top income shares resumed their upward trend after 2013. Overall, we estimate that at most 20% of the projected tax revenue increase from the 2013 tax reform is lost through behavioral responses. This implies that the 2013 tax increase was an efficient way to raise revenue.
paywall  capital_gains  fiscal_policy  tax_collection  behavioral_economics  tax_increases  US_government  Obama_administration  1-percent  top-marginal_tax_rates  NBER  tax_policy  paper  tax_avoidance 
december 2016 by dunnettreader
Maximillian Kasy - Empirical Research on Economic Inequality -- AN OPEN ONLINE TEXTBOOK
AN OPEN ONLINE TEXTBOOK BY MAXIMILIAN KASY -- Welcome to
Empirical Research on Economic Inequality -- This textbook developed out of a class I taught at Harvard, and subsequently at IHS Wien and at the University of Zurich. The purpose of this textbook is twofold. First, to teach you about economic inequality, some of its causes, and how it is affected by policy. Second, to teach you econometric methods that have been used in the literature on economic inequality, so as to help you conduct your own research on these topics.
website  etexts  inequality  inequality-wealth  inequality-opportunity  inequality-global  econometrics  economic_sociology  justice  discrimination  distribution-income  distribution-wealth  gender  racism  1-percent  labor  unions  diversity 
july 2016 by dunnettreader
Piketty Interview - Potemkin Review - 2015
(Deutsch ) Photo: Potemkin Review Potemkin Review met with Thomas Piketty at his Paris office and talked to him about his book Capital in the 21st Century ,… The more interesting sections deal with critique from the left, and his use of wealth in lieu of classic definitions of capital -- most critiques are answered with "I don't believe in the neoclassical framework that I used to illustrate the problem, but it's the only way that most trained economists can be communicated with -- I see myself as more of an historian and sociologist"
economic_theory  macroeconomics  economic_sociology  social_theory  economic_history  inequality  capital  capitalism  1-percent  Piketty  Instapaper  from instapaper
may 2015 by dunnettreader
Eva Botella-Ordinas - La démocratie directe de la Puerta del Sol | La Vie des idées - May 2011
This article written within a week of the events in Spain, with a focus on the debates on the left in Spain re what a "republicanism" entails. Another article at the same time focused more on the history of democracy and various forms of political participation in Spain from the Early Modern era onwards. The follow up in the Fall of 2011 was a series of articles covering political philosophy, political sociology of social movements and more discussion of the history of democracy in Spain, including a response to this analysis of flavors of republicanism by José Luis Martí and Félix Ovejero (mentioned in this article) and another article by Botella-Ordinas with 2 other historians. -- Pourquoi les Espagnols se mobilisent-ils en occupant les places des grandes villes ? Dans ce texte écrit sur le vif, une historienne de la pensée politique ouvre le débat. Elle montre que le mouvement du 15M s’appuie sur l’expérience de pratiques démocratiques autonomes mises en place par les centres sociaux autogérés. Elle signale aussi le fossé grandissant, au sein de la gauche espagnole, entre deux visions du républicanisme et de la participation démocratique. -- Ce texte est précédé d’une chronique écrite par un autre historien de l’Université Autonome de Madrid, Juan Luis Simal, qui permet de replacer les événements de la semaine dernière dans leur contexte. -- downloaded pdf to Note
article  political_philosophy  republicanism  Spain  21stC  socialism  parties  social_movements  democracy  democracy_deficit  political_participation  Pettit  Great_Recession  austerity  1-percent  Eurozone  international_finance  political  economy  institutions  downloaded  EF-add 
january 2015 by dunnettreader
Chuck Marr and Chye-Ching Huang - Obama’s Capital Gains Tax Proposals Would Make Tax Code More Efficient and Fair | Center on Budget and Policy Priorities -Jan 2015
The tax code strongly favors income from capital gains — increases in the value of assets, such as stocks — over income from wages and salaries. These preferences are economically inefficient: they promote tax schemes that convert ordinary income into capital gains and encourage people to hold assets just to escape tax, even if they have better investment opportunities. They are also highly regressive, since capital gains are heavily concentrated at the top of the income scale. The President has proposed to make the tax code more efficient and equitable by reducing one of the biggest subsidies for capital gains (a preferential rate compared to wage and salary income) and largely eliminating another (the ability to avoid capital gains tax completely by holding on to an asset until death). These changes would allow investments to flow to where they are most productive and reduce investment in creating tax avoidance schemes instead of in real economic activity, among other economic benefits. And, because the benefits of the current preferences for capital gains flow overwhelmingly to the top, fully 99 percent of the revenue from the President’s capital gains proposals would come from the top 1 percent of filers, the Treasury Department estimates. -- 7 page report downloaded as pdf to Note
US_economy  US_politics  Obama_administration  taxes  tax_policy  tax_reform  capital  investment  1-percent  inheritance  tax_collection  public_finance  public_policy  trickle-down  incentives  incentives-distortions  distribution-wealth  distribution-income  downloaded  EF-add 
january 2015 by dunnettreader
Mike Konczal - The 2003 Dividend Tax Cut Did Nothing to Help the Real Economy | Next New Deal January 2015
Pre Obama proposal to reverse part of Bush tax cuts - Berkeley economist Danny Yagan’s fantastic new paper, “Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut” -- He uses a large amount of IRS data on corporate tax returns to compare S-corporations with C-corporations. C-corps are publicly-traded, S-corps are closely held without institutional investors. But they are largely comparable in the range Yagan looks at (between $1 million and $1 billion dollars in size), as they are competing in the same industries and locations. -- S-corps don’t pay a dividend tax and thus didn’t benefit from the big 2003 dividend tax cut, while C-corps do pay them and did benefit. So that allows Yagan to set up S-corps as a control group and see what the effect of the massive dividend tax cut on C-corporations has been. -- [Yagan finds no difference in things we want to encourage] -- The one thing that does increase for C-corps of course, is the disgorgement of cash to shareholders -- an increase in dividends and share buybacks. This shows that these corps are responding to the tax cut; they just happen to be decisions that benefit, well, probably not you. If right now you are worried that too much cash is leaving firms to benefit a handful of investors while the real economy stagnates, suddenly Clinton-era levels of dividend taxation don’t look so bad. -- downloaded pdf to Note
paper  US_economy  US_politics  21stC  taxes  corporate_finance  corporate_tax  capital  dividends  investment  shareholders  investors  GOP  shareholder_value  tax_policy  tax_reform  supply-side  trickle-down  Obama_administration  Bush_administration  distribution-income  distribution-wealth  1-percent  downloaded  EF-add 
january 2015 by dunnettreader
Andrew Sprung - Reagan Revolution rollback | xpostfactoid - Jan 2015
Thanks largely to Piketty it's become increasingly clear that in the Reagan Revolution, middle class America sold its birthright for a mess of supply-side pottage. Dems willingness to credit GOP dogma -- raising taxes on high incomes and investment gains inhibits growth, deregulation spurs it -- are melting away. Post midterm losses, Dems are beginning to heighten rather than soft-pedal the policy contrasts between the parties. Wounded politically by perceptions that the ACA helps the poor at the expense of working people, they are looking for proposals attractive to the middle class. Emboldened by accelerating growth and employment gains, they are perhaps shedding inhibitions about leveling the playing field between workers and management. (..)To mess up my timeline a bit, Obama delivered a Pikettian narrative in Dec 2013 ..should have been a landmark speech on inequality (..) if he (and Dems) hadn't (tried to) protect their Senate majority. [In the Dec 2013 soeech] Obama zeroed in on policy choices. "As values of community broke down and competitive pressure increased, businesses lobbied Washington to weaken unions and the value of the minimum wage. As the trickle-down ideology became more prominent, taxes were slashes for the wealthiest while investments in things that make us all richer, like schools and infrastructure, were allowed to wither. And for a certain period of time we could ignore this weakening economic foundation (..) But when the music stopped and the crisis hit, millions of families were stripped of whatever cushion they had left. And the result is an economy that’s become profoundly unequal and families that are more insecure. -- terrific links roundup
US_economy  US_politics  Obama  Obama_administration  Reagan  supply-side  trickle-down  neoliberalism  inequality  middle_class  wages  wages-minimum  labor  labor_law  labor_share  labor_standards  Labor_markets  investment  executive_compensation  1-percent  infrastructure  education  education-higher  civic_virtue  common_good  Piketty  economic_growth  economic_culture  distribution-income  distribution-wealth  unemployment  health_care  public_goods  public_opinion  public_policy  elections  political_culture  political_economy  political_discourse  political_participation  Pocket 
january 2015 by dunnettreader
"No, the Internet Is Not Killing Culture" - Evan Kindley on Scott Timberg's Culture Crash: The Killing of the Creative Class | Slate Jan 2015
Scott Timberg’s Culture Crash begins with a harrowing and by now familiar personal narrative of the Great Recession. In 2008, Timberg, an arts reporter for the Los Angeles Times, was laid off, a casualty of the infamous Sam Zell regime; soon after, the bank foreclosed on his family’s house. These back-to-back misfortunes made Timberg worry about more than making ends meet: They shook his faith in the entire enterprise of American creativity. “I saw myself in the third generation of people who had worked in culture without either striking it rich or going broke,” he writes, but such a career path no longer seemed available in the 21st century, and he wanted to understand why. Though there was a temptation to blame the awesome leveling power of the Internet, he concluded that “this was about more than just technology. … Some of the causes were as new as file sharing; others were older than the nation. Some were cyclical, and would pass in a few years; others were structural and would get worse with time.” -- Kindley points out that precarious living of creative workers is the historical norm, and the few decades in the 2nd half of the 20thC during which a reasonably talented, reasonably hard-working writer, artist etc might be able to have a reasonably secure middle class life was the extreme exception. He also shows how Timberg is mostly writing about the bubble he lives in, so doesn't "get" the experiences of even his contemporaries who weren't middle class white males.
Instapaper  books  reviews  cultural_history  cultural_critique  literary_history  art_history  journalism  lit_crit  middle_class  post-WWII  Internet  media  competition  patrons  1-percent  patronage-artistic  creativity  creative_economy  from instapaper
january 2015 by dunnettreader
Kobi Kastiel - Executive Compensation in Controlled Companies — The Harvard Law School Forum on Corporate Governance and Financial Regulation - November 13, 2014
Co-editor, HLS Forum on Corporate Governance and Financial Regulation -- Conventional wisdom among corporate law theorists has long suggested that the presence of a controlling shareholder should alleviate the problem of managerial opportunism because such a controller has both the power and incentives to curb excessive executive pay. My Article (..) forthcoming (,..) proposes a different view that is based on an agency problem paradigm, and presents a comprehensive framework for understanding the relationship between concentrated ownership and executive pay. On the theoretical level, the Article shows that controlling shareholders often have incentives to overpay professional managers instead of having an arm’s-length contract with them, and therefore it suggests that compensation practices in a large number of controlled companies may have their own pathologies. (..) controllers may wish to overpay managers in order to maximize their consumption of private benefits, while providing professional managers with a premium for their “loyalty” and for colluding with tunneling activities. (..) aggravated by the use of control-enhancing mechanisms, such as dual-class share structures, which distort controllers’ monitoring incentives due to the wedge it creates between controllers’ cash flow rights and control rights. (..) certain controllers, (..) could be “weak” due to their lack of experience, motivation or talent, and thus are more easily captured by professional CEOs.(..) biased due to their longstanding professional and social relationship with professional managers, (..) help explain recent puzzling phenomena such as the overly generous pay patterns in Viacom or other controlled companies, as well as the rise in say-on-pay rules in countries with concentrated ownership (as observed in a recent study by Thomas & Van der Elst). -- links to article
article  SSRN  corporate_governance  corporate_ownership  corporate_control  principal-agent  asset_stripping  tunneling  conflict_of_interest  executive_compensation  1-percent  investors  shareholders  shareholder_voting  institutional_investors 
november 2014 by dunnettreader
Bichler, Shimshon and Nitzan, Jonathan - The Asymptotes of Power - Real-World Economics Review. No. 60. June 2012. pp. 18-53 | bnarchives
Article workup of earlier conference paper -- This is the latest in a series of articles we have been writing on the current crisis. The purpose of our previous papers was to characterize the crisis. We claimed that it was a 'systemic crisis', and that capitalists were gripped by 'systemic fear'. In this article, we seek to explain why. The problem that capitalists face today, we argue, is not that their power has withered, but, on the contrary, that their power has increased. Indeed, not only has their power increased, it has increased by so much that it might be approaching its asymptote. And since capitalists look not backward to the past but forward to the future, they have good reason to fear that, from now on, the most likely trajectory of this power will be not up, but down. The paper begins by setting up our general framework and key concepts. It continues with a step-by-step deconstruction of key power processes in the United States, attempting to assess how close these processes are to their asymptotes. And it concludes with brief observations about what may lie ahead. -- Keywords: capitalization distribution power, systemic crisis -- Subjects: BN Money & Finance, BN Conflict & Violence, BN Distribution, BN Resistance, BN Power, BN Region - North America, BN Business Enterprise, BN Capital & Accumulation, BN Value & Price, BN Class, BN Crisis -- downloaded pdf to Note, also Excel data sheet
article  international_political_economy  capital_as_power  financial_system  international_finance  global_economy  global_system  ruling_class  transnational_elites  elite_culture  elites-self-destructive  globalization  power-asymmetric  Great_Recession  financial_crisis  finance_capital  financialization  distribution-income  distribution-wealth  profit  labor_share  risk-systemic  inequality  plutocracy  1-percent  conflict  violence  class_conflict  neoliberalism  corporate_citizenship  systems-complex_adaptive  systems_theory  grassroots  opposition  democracy  democracy_deficit  accumulation  capitalization  US_politics  US_economy  political_economy  political_culture  economic_culture  elites  rebellion  failed_states  property_rights  business-and-politics  business-norms  economic_growth  fear  data  capitalism-systemic_crisis  downloaded  EF-add 
october 2014 by dunnettreader
Dave Johnson - The Cost To Our Economy From Republican Obstruction And Sabotage | Campaign for America's Future - September 2014
After listing key filibusters -- What would it have meant for the economy and jobs to launch a post-stimulus effort to maintain and modernize our infrastructure? How about reversing the tax structure that pays companies to move jobs out of the country? How about equal pay for women? How about a minimum wage increase? How about hundreds of thousands of teachers and first responders going back to work? How about being able to organize into unions to fight for wages, benefits and safer working conditions? How about relief from crushing student loan debt? -- In the House GOP leadership has been following the “Hastert Rule” to obstruct bills that would win with a majority vote. -- So instead of looking at what has been blocked in the House, we should look at what has passed. What has passed is a record of economic sabotage. Noteworthy is the GOP “Path to Prosperity Budget” (“Ryan budget”), described as “Cuts spending & implements pro-growth reforms that boost job creation.” It dramatically cuts taxes on the rich. It privatizes Medicare. It cuts spending on infrastructure, health care for the poor, education, research, public-safety, and low-income programs. It turns Medicaid, food stamps, and other poverty programs into state block grants. And lo and behold, this GOP budget that passed the House cuts taxes and cuts funding for even maintaining – never mind modernizing – our vital infrastructure needs. This is a budget of economic sabotage. Other GOP House “jobs” bills, listed at Boehner’s “jobs” page include: -- horrifyingly awful policies with Orwellian titles or red meat specials -- special attention to keeping oil & gas subsidies flowing and eviserating regulation, especially EPA -- Johnson stresses, the voters are unaware of all this thanks in part to the MSM which is ballanced re political parties, pro business & anti labor, and guilty of mindlessly peddling what Wren-Lewis calls mediamacro. Good links
US_economy  US_politics  Congress  Great_Recession  GOP  unemployment  public_finance  public_goods  state_government  welfare  social_insurance  poverty  infrastructure  Obama_administration  health_care  women-rights  women-work  wages  fiscal_policy  fiscal_drag  taxes  1-percent  energy  climate  regulation-environment  R&D  Senate  House_of_Representatives  polarization  student_debt  education-finance  education-privatization  corporate_tax  labor_law  unions  trickle-down 
october 2014 by dunnettreader
theAIRnet.org - Home
The Academic-Industry Research Network – theAIRnet – is a private, 501(c)(3) not-for-profit research organization devoted to the proposition that a sound understanding of the dynamics of industrial development requires collaboration between academic scholars and industry experts. We engage in up-to-date, in-depth, and incisive research and commentary on issues related to industrial innovation and economic development. Our goal is to understand the ways in which, through innovation, businesses and governments can contribute to equitable and stable economic growth – or what we call “sustainable prosperity”.
website  economic_growth  industry  technology  Innovation  green_economy  development  business  business-and-politics  capitalism  global_economy  public-private_partnerships  public_policy  public_health  public_goods  urban_development  health_care  IP  Labor_markets  wages  unemployment  education-training  sustainability  financial_system  corporate_citizenship  corporate_governance  corporate_finance  CSR  firms-theory  management  plutocracy  MNCs  international_political_economy  human_capital  OECD_economies  emerging_markets  supply_chains  R&D  common_good  1-percent  inequality  working_class  work-life_balance  workforce  regulation  regulation-harmonization  incentives  stagnation 
september 2014 by dunnettreader
Chart of the day | occasional links & commentary -September 2014
Standard & Poor’s [pdf] finds a strong correlation between growing income inequality and the fiscal crisis of the states. The argument is pretty straightforward: rising income inequality since the late 1970s has been accompanied by two trends in the tax revenues received by the various states: a slowing in the rate of growth of tax revenues (from 1980 to 2011, average annual state tax revenue growth fell to 5 percent from 10 percent) and by a growing volatility in state tax revenues (from a standard deviation of 3.55 during 1950-1979 and 1.04 during 1990-1999 to 5.78 from 2000 to 2009). And the explanation for this relationship? - " the higher savings rates of those with high incomes causes aggregate consumer spending to suffer. And since one person’s spending is another person’s income, the result is slower overall personal income growth despite continued strong income gains at the top." On top of that, "Those at the top obtain more of their income from capital gains, which on the whole, fluctuate much more than income from wages. Tax revenues reflect this — both as a consequence of higher top-end tax rates and because the top end is where the income growth has occurred –- and are, therefore, more volatile." Thus, we should understand the following: when Standard & Poor’s downgrades the credit rating of one or another state, it’s actually downgrading the rise of income inequality within and across the states.
US_economy  US_government  state_government  taxes  tax_collection  fiscal_policy  public_finance  rating_agencies  inequality  1-percent  capital_gains  economic_growth  wages  savings 
september 2014 by dunnettreader
Raphaele Chappe - Policy Debates In A Post-Piketty World | Schwartz Center for Economic Policy Research - New School
As the ratio of capital to income (which Piketty terms "beta") increases, Piketty argues there is no natural mechanism that would lead r (the rate of return on capital) to adjust downwards so as to perfectly compensate the impact on the distribution, placing emphasis on policies that might reduce r. Taxation is one way to reduce r and Piketty's proposal is a progressive world-wide tax on wealth although many agree that this may prove politically unfeasible, especially in the absence of international legal cooperation. Other tax possibilities for fighting inequality include increasing tax rates on capital gains and dividends (which have been getting favorable treatment in the tax code as compared with labor income), or simply combating tax evasion for the wealthy (see The Price of Offshore Revisited). [Downloaded] In my own research, I plan to run simulations to test the effectiveness of such tax proposals, and their impact on the wealth distribution. -- According to a study written for the Tax Justice Network by a former chief economist at the consultancy firm McKinsey, a global super-rich elite has accumulated an astronomical amount of financial investments hidden in tax havens, at least $21 trillion and as much as $32 trillion of private offshore wealth (as of the end of 2010).
economic_theory  economic_growth  Piketty  inequality  wealth  taxes  tax_havens  1-percent  labor  wages  profit 
september 2014 by dunnettreader
Squarely Rooted - I Wrote Way Too Much About “Capital in the Twenty-First Century” — Medium - July 2014
Very thought provoking re changes in the composition and returns to capital -- Depreciation is the great systemic regulator — absent productivity/technology growth, depreciation is an absolute limit on our ability to accumulate capital ad infinitum. Or is it? Depreciation is a law of the physical world, and therefore a limit on the accumulation of physical capital, which many people intensely associate with “capital” in their minds. But it is extremely important not to do so in this context, as Piketty uses capital synonymously with all wealth. And the nature of capital itself is changing What does this mean? It means that the focus on capital as stuff is fundamentally off-base — capital, at least as defined by Piketty, is at least to some degree detached from stuff. This makes more sense when you look at the Q-ratio of many of today’s most valuable firms [Apple et al]. These are all vastly above not just the current national average but the highest the national average has ever been, and by an astonishing amount. But investors believe that these tech companies, which have rapidly become a vast part of the economy, are worth way, way more than the sum of their parts. -- ... all these claims [against assets] are, on a fundamental level, determined by legal and political systems that are mutable by humans. They are not laws of nature. This is most clear in Piketty’s discussion of “Rhenish capitalism,” specifically in the curious phenomenon of the relatively-low levels of German capital relative to income - which vanishes when you compare book value instead of market value of capital - overwhelmingly a Tobin’s Q issue. -- Land, in fact, may be the key to explaining why the returns to capital decline much more slowly than models with traditional assumptions would predict. If you confuse “capital” as Piketty defines it with “machines,” even subconsciously, this would make much less sense. -- Oh, and one last thing — land doesn’t depreciate.
books  reviews  Piketty  economic_history  economic_theory  economic_models  economic_growth  investment  profit  capitalism  inequality  rentiers  landowners  capital  wealth  sovereign_wealth_funds  plutocracy  1-percent  capital_markets  investors  manufacturing  technology  EF-add 
september 2014 by dunnettreader
Steve Denning - The Copernican Revolution In Management - Forbes - July 2013
Today’s hierarchical bureaucracies are so out-of-step with the current marketplace in which power has shifted from seller to buyer that we cannot wait for the results of definitive long-term scientific studies. As Don Tapscott said in this column last week, “The fundamental problem facing all our institutions today, including government, is not related to conjunctural economic changes. It’s not a business cycle that we are going through. It’s not a cyclical change. It’s a secular change. We are at a punctuation point in human history where the industrial age and institutions have finally come to their logical conclusion. They have essentially run out of gas.” The shareholder value theory is thus only a small part of the problem. It is part of a web of obsolete management ideas that no longer fit the 21st Century marketplace. As noted below, other once-sacred truths in management are part of the same failing paradigm. Absorbing even a couple of these fundamental shifts will take time. Absorbing them all, and acquiring the skills and attitudes necessary to implement them, will not be easy or quick. -- large number of links to recent articles, papers etc
globalization  global_economy  business  management  corporate_governance  technology  networks-business  hierarchy  shareholder_value  capital_markets  investors  financialization  Labor_markets  Innovation  capitalism  executive_compensation  1-percent  inequality  links 
august 2014 by dunnettreader
Steve Denning - HBR Blows The Lid Off C-Suite Over-Compensation - Forbes - Feb 2012
At the heart of the disaster, according to Desai, is market-based compensation—the idea that the C-Suite and financial managers should be compensated by the issuance of stock. The idea was intended to align managers’ interests with those of shareholders, but the result has been the opposite. According to Desai, the idea is “intellectually flawed” and “a foundational myth.” That’s because in implementing market-based compensation, there is a failure to distinguish results due to sheer luck (beta) from the results due to skill (alpha). Moreover those who should be monitoring compensation—pension funds, mutual funds and foundations—have not only been asleep at the wheel: they have been actively complicit in the debacle. They have “readily outsourced performance evaluation and compensation in order to avoid their obligation to make tough decisions and bring pay into line with performance.” “The combination of a foundational myth and absent monitors over the past 2 decades gave rise to harmful incentives, asymmetrical payoffs and windfall compensation levels… The result has been the creation of perhaps the largest and most pernicious bubble of all: a giant financial incentive bubble.” This in turn results in “the twin crises of American capitalism: repeated governance failures, which lead many to question the stewardship abilities of American managers and investors and rising income inequality.” Even worse, the skewed incentives and huge unearned windfalls have given rise to righteous but unwarranted belief in entitlement: the individuals “now consider themselves entitled to such rewards. Until the financial incentives bubble is popped, we can expect mis-allocations of financial, real and human capital to continue.” -- Desai is pessimistic re reforms - Denning continues with things Desai left out
capitalism  management  executive_compensation  financialization  corporate_governance  capital_markets  shareholders  shareholder_value  investors  norms-business  1-percent  inequality 
august 2014 by dunnettreader
Steve Denning - From CEO 'Takers' To CEO 'Makers': The Great Transformation - Forbes - August 2014
CEOs, through the pervasive use of share buybacks, have become takers, not makers. Instead of creating value for their organizations and society, they are extracting value. Pervasive share buybacks are an economic, social and moral disaster: they contribute to loss of shareholder value, crippled capacity to innovate, runaway executive compensation, destruction of jobs, rapidly increasing inequality and sustained economic stagnation. Yet share buybacks have become “an unhealthy corporate obsession,” even “an addiction.” The situation is one of fundamental institutional failure. CEOs are extracting value from their firms. Business schools are teaching them how to do it. Institutional shareholders are complicit in what the CEOs are doing. Regulators pursue individuals but remain indifferent to systemic failure. Rating agencies reward malfeasance. Analysts applaud short-term gains and ignore obvious long-term rot. Politicians stand by and watch. In a great betrayal, the very leaders who should be fixing the system are complicit in its continuance. Unless our society reverses course, it is heading for a cataclysm. The solution to fundamental institutional failure goes beyond passing a few regulations or changing the behavior of a few CEOs. It involves changes in behavior in a whole set of institutions and actors: -- Change won’t happen merely by pointing out that shareholder primacy is a bad idea. Bad ideas don’t die just because they are bad. They hang around until a consensus forms around another idea that is better. Fortunately, a consensus is emerging around a better idea. The idea isn’t new. It’s Peter Drucker’s foundational insight of 1973: the only valid purpose of a firm is to create a customer. It’s through providing value to customers that firms justify their existence. Profits and share price increases are the result, not the goal of a firm’s activities
business  busisness-ethics  norms-business  corporate_governance  corporate_finance  investment  investors  management  financialization  finance_capital  capital_markets  inequality  1-percent  Drucker_Peter  Friedman_Milton  shareholder_value  profit 
august 2014 by dunnettreader
Branko Milanovic - The Tale Of Two Middle Classes | Yale Global -July 2014
Far Right in Europe starting to agitate re middle class incomes in Asia growing vs stagnating or declining in West -- The rich have benefited immensely from globalization and they have keen interest in its continuation. But while their use of political power has enabled the continuation of globalization, it has also hollowed out national democracies and moved many countries closer to becoming plutocracies. Thus, the choice would seem either plutocracy and globalization – or populism and a halt to globalization. Another solution, one that involves neither populism nor plutocracy, would imply more substantial redistribution policies in the rich world. Some of the gains of the top 5 percent could go toward alleviating the anger of the lower- and middle-class rich world’s “losers.” These need not nor should be mere transfers of money from one group to another. Instead, money should come in the form of investments in public education, local infrastructure, housing and preventive health care. But the history of the last quarter century during which the top classes in the rich world have continually piled up larger and larger gains, all the while socially and mentally separating themselves from fellow citizens, does not bode well for that alternative.
international_political_economy  globalization  plutocracy  populism  right-wing  democracy  1-percent  public_goods  infrastructure  finance_capital  politics-and-money  OECD_economies  economic_growth  protectionism  trade-policy 
august 2014 by dunnettreader
Brad DeLong - The Four Big Valid Issues People Have with Thomas Piketty's Grand Argument: Friday Focus for June 27, 2014 (Brad DeLong's Grasping Reality...)
I think there are four big valid issues with Thomas Piketty's grand argument: [they're all pretty feeble or wishful thinking unfortunately - DeLong puts too heavy a weight on several of them, producing a guesstimate of 50:50 we will have Piketty world if things left on autopilot] -- see comments, especially Dan Kervick who once again challenges Piketty critics for not reading the last chapters (which don't readily translate into mainstream macro models, so their criticism is generally nonresponsive to Piketty’s historical data and explanations)
Piketty  economic_history  economic_theory  economic_models  capital  wealth  profit  savings  charity  1-percent  economic_culture  status  elite_culture  inequality  political_culture  political_economy  moral_economy  capitalism 
june 2014 by dunnettreader
Seth Ackerman - Piketty’s Fair-Weather Friends | Jacobin May 2014
Re Piketty not fitting in MIT-liberal economics -- Piketty “misreads the literature by conflating gross and net returns to capital,” Summers wrote. “I know of no study suggesting that measuring output in net terms, the elasticity of substitution is greater than 1, and I know of quite a few suggesting the contrary.” A reader at this point could be forgiven for feeling confused. Didn’t Piketty gather his own data? He did, of course. --As Piketty makes clear, those data — which he’s made freely available on the internet for anyone to check — are indeed “explained” by a net elasticity of 1.3-1.6, which would indicate an extremely weak force of diminishing returns to capital. Yet it’s also true that this figure is far higher than any found in the existing literature — probably more than twice as high as the highest typical estimates. -- Piketty’s estimate of the elasticity of substitution can’t really be compared with those in the literature. His is based on economy-wide data covering decades and centuries while estimates in the literature typically cover only a few years, and often just a few industries. Moreover, his pertain to all private wealth, while the literature focuses narrowly on production capital. -- But most importantly, given the flawed marginalist theory behind it, and its even more flawed basis of measurement... the elasticity of substitution simply cannot be regarded as a meaningful measure of an economy’s technology (or anything else), or as providing any clue to its future. What’s essential, rather, is Piketty’s empirical demonstration that the rate of return on wealth has been remarkably stable over centuries — and, contra Summers, with no visible tendency to vary in any consistent way against the “supply of capital.”
books  reviews  Piketty  economic_history  economic_theory  economic_models  macroeconomics  heterodox_economics  productivity  capital  labor  profit  wages  technology  economic_growth  savings  inheritance  1-percent  inequality  meritocracy  wealth  supermanagers  corporate_governance  corporate_finance  political_economy  economic_culture  economic_sociology  EF-add 
june 2014 by dunnettreader
Suresh Naidu - Capital Eats the World | Jacobin May 2014
A first step could be a multisector model with both a productive sector and an extractive, rent-seeking outlet for investment, so that the rate of return on capital has the potential to be unanchored from the growth of the economy. This model could potentially do a better job of explaining r > g in a world where capital has highly profitable opportunities in rent-seeking ....More fundamentally, a model that started with the financial and firm-level institutions underneath the supply and demand curves for capital, rather than blackboxing them in production and utility functions, could illuminate complementarities among the host of other political demands that would claw back the share taken by capital and lower the amount paid out as profits before the fiscal system gets its take. This is putting meat on what Brad Delong calls the “wedge” between the actual and warranted rate of profit. -- We need even more and even better economics to figure out which of these may get undone via market responses and which won’t, and to think about them jointly with the politics that make each feasible or not. While Piketty’s book diagnoses the problem of capital’s voracious appetite, it would require a different kind of model to take our focus off the nominal quantities registered by state fiscal systems, and instead onto the broader distribution of political power in the world economy.
books  reviews  kindle-available  Piketty  political_economy  economic_theory  heterodox_economics  neoclassical_economics  economic_models  economic_growth  wealth  capital  finance_capital  capitalism  labor  Labor_markets  unemployment  markets_in_everything  tax_havens  investment  investors  savings  inheritance  profit  corporate_governance  corporate_citizenship  inequality  technology  1-percent  rent-seeking  rentiers  class_conflict  oligarchy  taxes  productivity  corporate_finance  property  property_rights  neoliberalism 
june 2014 by dunnettreader
Chris Dillow - Stumbling and Mumbling: Housing vs financial wealth - May 2014
Chris Giles deserves great credit for his careful scrutiny of Thomas Piketty's data, and Piketty also deserves credit for the openness of that data and for his generous response to Chris. Like Justin Wolfers and Paul Krugman, though, I wonder just how damaging Chris's critique is of Piketty's central thesis. Chris says that, in the UK, "there seems to be little consistent evidence of any upward trend in wealth inequality of the top 1 percent." He points to ONS data showing that the top 1% owned 12.5% of all wealth in 2010-12. However, this proportion is depressed because house prices are high. These mean that the owner of quite a modest home has substantial wealth which naturally depresses the proportion of wealth held by the really well-off. If we look only at financial wealth, we see a different picture. The top 1% owns 36.4% of all financial wealth, and the top 10% owns 75.9% (table 2.6b of this Excel file). As the ONS points out, the Lorenz curve for financial wealth is much steeper than that for property wealth. If you believe the ONS is under-counting offshore wealth, inequality is even greater. This poses the question: should we conflate housing and financial wealth as Chris and Thomas both do? Perhaps not, because housing wealth might not have as much "wealthiness" as financial wealth, in four senses: [interesting discussion and links]
economic_history  economic_theory  political_economy  Piketty  inequality  UK_economy  wealth  housing  1-percent  capitalism  power  plutocracy  links  EF-add 
may 2014 by dunnettreader
G. William Domhoff - Interlocking Directorates in the Corporate Community (updated October 2013) | Who Rules America
Describes concepts and research methods for identifying interlocking governance and ownership relations in the corporate community -- used in the new study (separate bookmark) - Interlocks and Interactions Among the Power Elite: The Corporate Community, Think Tanks, Policy-Discussion Groups, and Government by G. William Domhoff, Clifford Staples, & Adam Schneider - August 2013
US_economy  global_economy  business  corporate_governance  power  elites  public_policy  networks  1-percent  NGOs  nonprofit  databases  methodology  social_capital  EF-add 
november 2013 by dunnettreader
G. William Domhoff, Clifford Staples, & Adam Schneider: Interlocks and Interactions Among the Power Elite | Who Rules America August 2013
Interlocks and Interactions Among the Power Elite: The Corporate Community, Think Tanks, Policy-Discussion Groups, and Government
by G. William Domhoff, Clifford Staples, & Adam Schneider

This document presents new findings about the American power structure based on the connections among 2,563 corporations, 6 business leadership and policy-discussion groups, 33 prominent think tanks, 82 major foundations, 47 private universities with large endowments, and 19 White House advisory committees for the years 2011-2012. In all, the database used for our study contains 2,750 separate organizations and 9,121 individuals.

It may be the largest and most extensive data set ever assembled for the United States that includes for-profit, nonprofit, and governmental organizations. 35.2% of the individuals in our database have connections to at least two of the organizations in the database.
US_politics  US_economy  US_government  power  elites  political_culture  public_policy  NGOs  university  nonprofit  business  lobbying  corporate_governance  capitalism  classes  networks  inequality  1-percent  databases  EF-add 
november 2013 by dunnettreader
Who Rules America: An Investment Manager's View on the Top 1% | G. William Domhoff - Who Rules America
Letter from an investment adviser re breakdown of top 1% - it's the upper reaches that depend on the financial sector and capital gains for the outsized wealth, and the political system (structure of financial system, tax policy etc) caters to their sources of income and wealth
US_economy  US_politics  inequality  1-percent  taxes  financial_system  elites  pensions  investment  EF-add 
november 2013 by dunnettreader
Why the 1% should pay tax at 80% | Emmanuel Saez and Thomas Piketty - The Guardian - Oct 24 2013
The Reagan-Thatcher revolution changed society's beliefs about taxes. If we want economic growth shared fairly, we must rethink

In the end, the future of top tax rates depends on what the public believes about whether top pay fairly reflects productivity or whether top pay, rather unfairly, arises from rent-seeking. With higher income concentration, top earners have more economic resources to influence both social beliefs (through thinktanks and media) and policies (through lobbying), thereby creating some "reverse causality" between income inequality, perceptions, and policies.

The job of economists should be to make a top rate tax level of 80% at least "thinkable" again.

• This is an updated version of an article originally published by VoxEU
20thC  21stC  economic_history  economic_growth  neoliberalism  taxes  1-percent  inequality  US_politics  US_economy  UK_economy  UK_politics  EF-add 
october 2013 by dunnettreader
Josh Barro: The Final Word on Mitt Romney’s Tax Plan - Bloomberg
hopefully after future debates the "fact-checkers" can take Barro's word that Romney-Ryan merit 11 pinnochios
US_politics  fiscal_policy  elections-2012  1-percent  post-truth  political_press  political_economy  political_culture 
october 2012 by dunnettreader

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