All posts filed under: Economics

The End of Aspiration

Since the end of the Second World War,  middle- and working-class people across the Western world have sought out—and, more often than not, achieved—their aspirations. These usually included a stable income, a home, a family, and the prospect of a comfortable retirement. However, from Sydney to San Francisco, this aspiration is rapidly fading as a result of a changing economy, soaring land costs, and a regulatory regime, all of which combine to make it increasingly difficult for the new generation to achieve a lifestyle like that enjoyed by their parents. This generational gap between aspiration and disappointment could define our demographic, political, and social future. In the United States, about 90 percent of children born in 1940 grew up to experience higher incomes than their parents, according to researchers at the Equality of Opportunity Project. That figure dropped to only 50 percent of those born in the 1980s. The US Census bureau estimates that, even when working full-time, people in their late twenties and early thirties earn $2000 less in real dollars than the same age …

Socialism’s Endless Refrain: This Time, Things Will Be Different

Germany’s socialist left is currently embroiled in a row over the correct stance on Venezuela. The conflict came to the fore at the February conference of Die Linke, the country’s main socialist party, when a group of Nicolás Maduro fans stormed the stage, chanting slogans and waving banners with pro-Venezuela messages. Nicolás Maduro is the successor to Hugo Chávez, and has served as Venezuelan President since 2013. The legitimacy of his presidency has been in free fall in recent years, and many now call him a dictator. As Maduro’s popularity has waned, his tactics have become increasingly brutal. In 2018, a panel of legal experts convened by the Organization of American States recommended that the regime be referred to the International Criminal Court for crimes against humanity. Many members of the Die Linke party establishment, however, still side with Maduro, whom they see as a comrade under siege. Others, especially in the party’s youth organisation, take the opposite view—which is why the February conference was contentious. One young member describes the party’s in-house Chavistas as …

The Economic Illiteracy of Alexandria Ocasio-Cortez

In a recent interview with Rolling Stone, newly elected Congresswoman Alexandria Ocasio-Cortez was compared to Donald Trump in her “ability to galvanize [her] supporters through social media.” To this she replied: “In order to resonate with people, you have to tell them what you mean, you have to be willing to make mistakes, you have to be willing to be vulnerable and learn as you go.” Ocasio-Cortez has indeed garnered a lot of attention since upsetting Joe Crowley in the race to represent New York’s 14th district in the U.S. House of Representatives last year. With over 3.5 million followers on Twitter, an initialism (AOC) that has caught on with cable news, and an audacious personality, she has become a vociferous presence in the contemporary social discourse—particularly on issues like race, taxes, health care, Amazon, economic inequality, and climate change. In the latest example, AOC sparked controversy when she took former U.S. President Ronald Reagan to task, as related by Huffington Post, by bringing up “one of [his] favorite anecdotes from his 1976 presidential primary …

What If Ayn Rand Was Right About Entrepreneurs and Inequality?

Few public figures have managed to consistently attract both sheer adoration and abject disgust quite like Russian-American author Ayn Rand. Fewer still have created an intellectual legacy with as much endurance as her radically individualistic philosophy of Objectivism. Atlas Shrugged remains a cherished favorite of venture capitalists and libertarian-leaning politicians all over the planet, with a notable stronghold in Washington D.C., perhaps even within the Oval Office itself. Rand’s literary influence is often derided as a mere reflection of the tractability and moral certitude afforded by her novels, her economic principles disregarded as patently ridiculous. Galt’s Gulch has attracted so much scorn as to become something of a joke, a way to easily scoff at the naive utopianism of laissez-faire capitalism. Rand and her largely philosophical economic views have been consigned to history as an interesting relic of sorts—a compelling, well-articulated fantasy that has no basis in reality. How then should we interpret new research from the Nation Bureau of Economic Research (NBER) that suggests her controversial description of the income inequality dynamic might have …

Attraction Inequality and the Dating Economy

Jesus said that the poor would always be with us. Despite the best efforts of philanthropists and redistributionists over the last two millennia, he has been right so far. Every nation in the world has poor and rich, separated by birth and luck and choice. The inequality between rich and poor, and its causes and remedies, are discussed ad nauseam in public policy debates, campaign platforms, and social media screeds. However, the relentless focus on inequality among politicians is usually quite narrow: they tend to consider inequality only in monetary terms, and to treat “inequality” as basically synonymous with “income inequality.” There are so many other types of inequality that get air time less often or not at all: inequality of talent, height, number of friends, longevity, inner peace, health, charm, gumption, intelligence, and fortitude. And finally, there is a type of inequality that everyone thinks about occasionally and that young single people obsess over almost constantly: inequality of sexual attractiveness. The economist Robin Hanson has written some fascinating articles that use the cold and …

The Clear Case for Capitalism

At dinner not long ago my daughter and I had a standoff. She refused to eat something—a calzone in this case—because it looked “gross.” I failed to convince her what was actually in the calzone until finally I cut it in half and into a triangle so it looked just like pizza. Once she learned what was in it she loved it. I recalled this calzone a few weeks later when I got into a heated discussion with a friend. He is convinced that capitalism is the source of all of America’s problems. As the discussion progressed, it became clear to me that the source of our disagreement was definitional: we didn’t have an agreed-upon understanding of what capitalism is—or, in other words, what’s “in it.” Perhaps this kind of disagreement isn’t surprising given that only 22 states require high school students to take a class in economics to graduate, less than 50 percent of high school students have any exposure to economics, and only three percent of colleges require an economics class (!). So …

In Defense of Andrew Yang’s Freedom Dividend

We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need…A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely. ~Milton Friedman I get emotional about facts. ~Andrew Yang Although we are still a long way from the 2020 presidential campaigns, whispers of who the Democratic candidates will be and what policy platforms will be adopted is steadily droning into an orchestra. We can already predict some of the names that are likely to appear on the ballot sheet and the talking points that will be heard on the campaign trail, and it would not be imprudent to suspect the upcoming election will be even uglier and more contentious than the last. While the overwhelming majority of political pundits seem to be pouring their energies into slamming the current president—criticizing old models …

We Can Put an End to State Bidding Wars

In a crashing finale to its corporate headquarters search saga, Amazon announced that it is withdrawing from its commitment to New York. Politicians have responded with mixed reactions, with some hailing the decision as a victory for the middle-class locals who came out in droves against the deal proposed by Mayor Bill de Blasio and Governor Andrew Cuomo. The deal, which was comprised of more than $3 billion in tax incentives for the company, reignited the debate over whether immediate incentives for large corporates were justified by projected taxes down the road. Amazon promised to bring over 25,000 news jobs to the city, as well as additional investment in local infrastructure and school programs. However, the agreement quickly became a political hot-button issue. Many on the left saw it as a giveaway to a multi-billion-dollar corporation when subways lines break down on what feels like a daily basis. Those on the right chided the government for falling prey to crony capitalism. It seemed to be one of the few times that both sides could agree …

What’s Happening to Technological Progress?

Barely a day goes by that we are not confronted with another warning of impending catastrophe. If it’s not another global financial crisis, a nuclear war or Global Warming, the next pandemic is surely going to get us and destroy all we know and hold dear. Until recently, one standard response to such fears was to express belief in the ever-increasing power of technology to get us out of any number of tight spots. Will technological progress keep us going, helping us cope with the challenges that our over-complex societies seem to generate as a side effect? I’m not so sure anymore. Some of those ageing science fiction fans of the baby boomer generation are getting antsy: We were promised robots, as Shorvon Bhattacharya wrote a few years back. Where are those robots now? We’re blinded by incremental progress in electronic gadgets of marginal utility—new smartphones, larger monitors, and more powerful computers. Yet we drive vehicles with internal combustion engines, our electricity is mostly generated in thermal power plants fueled by coal, we are far …

Gillette’s Progressive Politics: ‘Corinthian Leather’ for the Progressive Soul

My father was never a big fan of television—in part because his attention span always has been shorter than your average late-20th-century commercial break. He also would become exasperated by the nonsense claims made by advertisers. We now live in separate cities, so we don’t watch television together. But I can only imagine what his reaction would be to Gillette’s new commercial calling out toxic masculinity. Being a metallurgical engineer (as I, too, would later become), my father was especially irritated by ads for razors. In one well-known spot for the Vintage Stainless Steel Doubled-Edged Blade (this was before my time, but he often talked about it), an actor would be asked to compare a “Personna Stainless, seven shaves old” with another “well-known blade, brand new”—shaving half his face with each. The actor, of course, identifies the Personna as being the more comfortable of the pair. The announcer then hammers home the fact that the Personna prevailed despite being seven shaves old. But that fact was meaningless, my father would tell me (and others), because …