Economy & Economic Justice
This article originally appeared in The Boston Globe on June 27th, 2017.
In this article, Professor Sachs discusses how a real tax reform would address four problems. First, it would raise total revenues as a share of GDP, in order to cut the chronic budget deficit. Second, it would address the crisis of falling wages and disappearing jobs facing working-class America. Third, it would curb carbon pollution, which is dangerously warming the planet. Fourth, to spur saving and investment, it would shift taxes toward consumption rather than income.Read More
On May 20th, 2017, Professor Jeffrey Sachs addressed the Global Solutions T20 Summit in Berlin. In this speech, Sachs puts our current economic, social and environmental crises into historical context and addresses the importance of new ideas and solutions to the most pressing issues facing the world today, specifically those in the 2030 agenda of Sustainable Development Goals that were unanimously decided upon in September 2015 by a group of world leaders.Read More
In this video, Robert Reich lays out the 7 economic fundamentals that demonstrate the problematic nature of the nation's current wealth distribution.
1. Workers are Consumers
2. Consumer Spending = 70% of Economic Activity
3. Wealthy Spend Smaller Percentage of Income
4. Concentrated Wealth = Not Enough Purchasing Power
5. Sufficient Demand Requires the Middle Class and Poor
6. Policies to Help Working Families
7. Wealthy do Better in a Growing EconomyRead More
In this paper from the Real World Economics Review, Dr. Stephanie Kelton looks at the economic projections for the Trump administration.
Kelton approaches "Trumponomics" (economic policies of the Trump administration) through this question: "can “Trumponomics” extend the recovery?"
She argues that it will not. First she examines the economy as a whole to establish whether there is room to grow, which she believes there is. Then she looks at the policies put forward by President Trump during the 2016 campaign and his stated economic goals since - she determines that President Trump's statements on economics do not conform with a "conventional ideological matrix." However, Kelton does mention a number of policies that are Reagan-esq that severely benefitted the top 1%:
"the benefits of the Reagan expansions went overwhelmingly to those at the top of the income distribution. Tax cuts for the wealthy, attacks on unions, cuts to programs aimed at helping the poor and an obsession with deregulation and “free markets” shifted the balance of power toward owners of capital and ushered in an era of increasing insecurity and growing inequality for the working class."
Kelton then looks at whether "Trumponomics" can extend the recovery. She draws from a number of economic predictions that show less growth under Trumponomics than under current policies. However, she acknowleges that a number of economists are more positive.Read More
This article from Investopedia looks at carried interest and how different people believe that it should be taxed.
It begins by describing what carried interest actually is: ""Carried interest," which is usually around 20 percent of profits accrued above a specified hurdle rate. Often the hurdle rate is about eight percent, and thus any returns the fund achieves above that rate means the fund’s general partners receive a 20 percent commission in addition to any profit on assets the partners have personally invested in the fund."
This carried interest is taxed at the same rate as capital gains - around 20% - compared to ordinary income for high inome earners which is taxed at 39.6%.
Those who argue for a higher tax rate on capital gains argue that: "Taxing carried interest at the ordinary income rate would make it consistent with similar performance-based compensation like bonuses" whereas, those who argue agains it argue: "carried interest compensation is a reward for successfully earning profits while undertaking significant risks"
The article ends by putting carried interest taxation into the context of the increasing inequality in the United States, "Considering that those on the lower end of the income and wealth spectrum tend to have higher marginal propensities to consume than their much wealthier counterparts, taxing carried interest at the ordinary income rate and using it to redistribute wealth is not just about fairness, it is good economic and social policy."Read More
"We make the rules of the economy – and we have the power to change those rules." – Robert Reich
In this award winning documentary, we learn how to approach the problem of widening income inequality from 6 different directions. The trick is to understand how they all fit together while choosing manageable actions that make sense to who you are. We may not be able to do everything at once but think of each action you take as an incremental step towards the structural change our economy needs.
Statement from Robert Reich:
"We’re in the biggest economic slump since the Great Depression, and we can’t seem to get out of it. Why? Because, exactly as in the 1920s, so much of the nation’s income and wealth are going to the top, that the vast middle class doesn’t have the purchasing power to keep the economy going.
Until we can take a step back and understand the big picture, we can’t do anything to get ourselves out of this mess. Our democracy as we know it depends on it. I’m an educator. I love the classroom. But I also write books, appear on television and on the radio, and do everything else I can do to help people understand the economic truth. It’s my life’s work and it’s more important than ever. One of the best ways to help people understand the challenges we face, is with a movie that can grab an audience and move them to action. And this movie will do exactly that."
To learn more or to purchase the full documentary, visit the official website.
In this video, Robert Reich describes why unions are important to the U.S. and how to strengthen them.
50 years ago, unions were "the countervailing power to business." They were successful in raising wages, improving working conditions and supported legal protections like the 40 hour work week and worker safety.
However, the decline in private sector union membership has mirrored the decline in the middle class. Reich points out that "Strong unions means a strong middle class which means a strong economy."
His three steps to strengthening unions are:
- Make it easier to form a union
- Build in real penalties to companies that violate labor laws.
- Overturn state “Right to work” laws
He ends with the statement that, “if we want working Americans to get a fair share of the gains from economic growth they must be able to unionize.”Read More