Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

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Thursday, November 3, 2011

Inequality Trends in One Picture

Via Krugman, from the CBO Report.

I've seen other graphs that tell this story, but this is the most succinct.

Just about all of the redistribution has taken place from the bottom 80 to the top 1 (and we know that most of that has actually gone to the top 0.1).

It’s a tiny minority, not a broad class of well-educated Americans, who have been winning here.

That's how can tell that this is not capitalism:  capitalist competition would prevent this top-heavy aggregation.  What we have is crony (pseudo) capitalism, corporatism, and near-monopolies.  Every one of these business practices is anti-competitive, and therefore anti-capitalist.


BadTux said...

Indeed, our ruling oligarch class is about as capitalist as Josef Stalin, just less honest about their desire to concentrate all power both political and economic into their own greedy little hands.

Critics of the current situation are fundamentally conservative, wanting America to return to a better time when things were getting better for all Americans, not just the top 1%. Wanting a return to the "good old days" of 1945-1981 when we had the New Deal regulatory and taxation scheme isn't "radical", pining for "the good old days" is about as conservative as it comes, that's pretty much the *definition* of conservatism. The anarcho-capitalist tools of the oligarchs are the bomb-throwing radicals here -- they destroyed something that worked, and now are wanting to detonate a few nukes in the rubble to bounce it a bit. What the f*** is conservative about that?!

- Badtux the Conservative Penguin

Steve Roth said...

"capitalist competition would prevent this top-heavy aggregation"

Explain this! Where's the arbitrage opportunity?

I'm not challenging. Wanna know.

Jazzbumpa said...

Steve -

Actually, I thought I did.

From Wikipedia: "There is general agreement that elements of capitalism include private ownership of the means of production, creation of goods or services for profit, competitive markets, and wage labor."

The top heavy aggregation happens in 1) the absence of meaningful competition among the capitalists, and 2)the occurrence of lots of competition for jobs on the labor side.

Further, political influence leads to favoritism that directs contracts to selected companies.

Businessmen love competitive advantage, and hate competition. I believe the real incentive for mergers and acquisitions is to remove competition, increase market share, and move closer to a monopoly position.

I believe corporatism is quite different from capitalism, largely because of the asymmetries resulting from corporate power and controlling market share positions.

But -- I also believe that the transition from capitalism to corporatism is a natural evolution that will take place in the absence of counterbalancing forces from robust regulation and powerful labor unions.

I'm not sure that this answers your question. I'm also not sure what an arbitrage opportunity has to do with it. Could you explain?


Jazzbumpa said...

Or, as I put it in another context:

One of the things that can make conditions not right for serfdom is regulated entrepreneurial capitalism - inventiveness, innovation, industry, and real competition. Capitalism generates wealth, increases wages, opportunities and the standard of living, and reinforces concepts of freedom, liberty, and fair practices. Effective regulation assures that fair practices are maintained, keeps the playing field even, and increases the likelihood that reward is in some way proportional to a combination of skill and effort. Capitalism is expansionist by nature, serfdom is static.

Unfortunately, over time, capitalism transmogrified into Corporatism.

Corporatism, for all its acquisitiveness, is a very different phenomenon. Ownership is remote. Assets are used in large part for executive bonuses, dividends, and mergers and acquisitions. Though the track record of M&A in meeting stated goals is dismal, the real net effect is monopolization - corporatists hate competition. Corporatism seeks always and everywhere to decrease wages, and is utterly indifferent to the living standards, freedom, and opportunities of anyone outside the elite. Ethics and fairness are non-existent. Rewards are in proportion to rapacity. In other words, Corporatism is the new feudalism.