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Hometown: Xenia, OH
Member since: Tue Sep 19, 2006, 04:46 PM
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Journal Archives

Krugman: new study shows Americans think income is much more equal here than in Europe. The opposite

is true.

Inequality Delusions

Via the FT, a new study compares perceptions of inequality across advanced nations. The big takeaway here is that Americans are more likely than Europeans to believe that they live in a middle-class society, even though income is really much less equally distributed here than in Europe. I’ve truncated the table to show the comparison between the U.S. and France: the French think they live in a hierarchical pyramid when they are in reality mostly middle-class, Americans are the opposite.

As the paper says, other evidence also says that Americans vastly underestimate inequality in their own society – and when asked to choose an ideal wealth distribution, say that they like Sweden.

Why the difference? American exceptionalism when it comes to income distribution – our unique suspicion of and hostility to social insurance and anti-poverty programs – is, I and many others would argue, very much tied to our racial history. This does not, however, explain in any direct way why we should misperceive real inequality: people could oppose aid to Those People while understanding how rich the rich are. There may, however, be an indirect effect, because the racial divide empowers right-wing groups of all kinds, which in turn issue a lot of propaganda dismissing and minimizing inequality.

Interesting stuff.


At other times, Krugman has said that the US would have to adopt European fiscal, tax, regulatory, labor and social policies in order for us to achieve European levels of income equality. That seems a long way from happening.

It is interesting that Americans say they want a degree of income equality similar to what Sweden actually has, but we are not willing to adopt the taxation, labor and economic policies that Sweden has used to accomplish this.

A Brief History of Wingnuts in America (US vs THEM", “heated exaggeration & conspiratorial fantasy")

American political history has been marked by periodic eruptions of the “heated exaggeration, suspiciousness, and conspiratorial fantasy” that Richard Hofstadter famously characterized as “the paranoid style in American politics.” Wingnuts have masqueraded under different names and causes at different times, but they have always been committed to an “us against them” framing of domestic debates while inflaming group hatred in the name of politics and alleged principle. They prey on fear and ignorance.

Survey Wingnut rhetoric through the ages and the usual suspects keep surfacing: appeals to religious suspicion; ethnic and racial divisions; foreign subversion of sovereignty; and perhaps the oldest conspiracy theory of them all—accusing the president of the United States of being a tyrant and a dictator bent on destroying the Constitution.

In the long journey from frontier expansion to landing on the moon, there are clear common undercurrents to the paranoid politics advanced by the Wingnuts during different eras in America.

There is always the divisive drumbeat of ‘us against them’—the demagogue’s favorite formula. There is always an emotional appeal to an idealized past, targeted to people who feel besieged by cultural change, paired with the promise of a well-deserved return to power after years of resentment. And there is always the sale of special knowledge, pulling the curtain back on a monstrous conspiracy that will prove once and for all that your political opponents are not just misguided, but evil. The result is not only vindication, but also the self-serving sense that only you can save the republic.

Today’s unhinged hyper-partisans are not likely to look any better or wiser in the rearview mirror than the Wingnuts of our past. Instead, they will be at best a stale and bitter punchline of our times and then fade, unloved, into obscurity.


Just when I think the tea party types are a unique 21st century phenomenon, the author details "tea partiers" of old. "US vs THEM" and "the paranoid style in American politics” goes back to the days of Washington. The opposition to Washington, Adams and Jefferson were 'tea partiers' of their day. Then came the "Know Nothings", the KKK, the anti-evolutionists of the Scopes Monkey Trial in the 1920's, Joseph McCarthy and the John Birch Society.

There are probably many others in the book which this is an excerpt from. We all know of these examples of the disease of "US vs THEM" and "conspiratorial fantasy" but it is interesting to see them brought together throughout American history.

Good news to liberals that global inequality is falling. Bad news that domestic inequality is rising

The top 1% has seen its real income rise by more than 60% over those two decades. The largest increases however were registered around the median: 80% real increase at the median itself and some 70% around it. It is there, between the 50th and 60th percentile of the global income distribution that we find some 200 million Chinese, 90 million Indians, and about 30 million people each from Indonesia, Brazil and Egypt. These two groups—the global top 1% and the workers of the emerging market economies— are indeed the main winners of globalization...

But the biggest loser (other than the very poorest 5%), or at least the “non-winner,” of globalization were those between the 75th and 90th percentile of the global income distribution whose real income gains were essentially nil. These people, who may be called a global upper-middle class, include many from former Communist countries and Latin America, as well as those citizens of rich countries whose incomes stagnated.

More than fifty percent of one’s income depends on the average income of the country where a person lives or was born (the two things being, for 97% of world population, the same). This gives the importance of the location element today. There are of course other factors that matter for one’s income, from gender and parental education which are, from an individual point of view externally given circumstances, to factors like own education, effort and luck that are not. They all influence our income level. But the remarkable thing is that a very large chunk of our income will be determined by only one variable, citizenship, that we, generally, acquire at birth. It is almost the same as saying, that if I know nothing about any given individual in the world, I can, with a reasonably good confidence, predict her income just from the knowledge of her citizenship... Around 1870, class explained more than 2/3 of global inequality. And now? The proportions have exactly flipped: more than 2/3 of total inequality is due to location.

OECD study: Income gains to top 1% last 30 years - US worst (by far), Europe best (by far).

Canada is second only to the U.S. in its growing inequality. In the U.S., about 47 per cent of total growth went to the wealthiest one per cent between 1975 and 2007, compared to 37 per cent in Canada, while in Australia and the U.K., about 20 per cent of growth went to the wealthiest.

In Nordic countries and in France, Italy, Portugal and Spain, about 90 per cent of growth went to the 99 per cent of middle and low-income earners in the same period.

Larry Summers, who was secretary of the treasury under Bill Clinton and is now a Harvard professor, has pointed out how the constant push for tax cuts and the erosion of union bargaining rights has led to greater income inequality.

The study calls for higher marginal tax rates and fewer tax deductions and credits aimed at high income earners. It also advocates wealth or inheritance taxes.


Nordic countries support (and the rest of European countries for that matter) support trade with the global poor with tariff-free trade with the poorest countries. They both support global equality and domestic equality at the same time.

Canada Day: How to Be Patriotic About a Country Built on Diversity

In absence of a single narrative, Canadians by and large cling to a celebration of difference. Accommodating a new culture is the national pastime, while intolerance is the national sin. This, of course, gets tricky when a new culture is intolerant. In such cases, Canadians -- or, to be specific, the Canadian justice system -- firmly defaults to its liberal democratic roots. It prioritizes individual rights over the community in question's right to force its values onto one of their own. But such clear stand-offs between specific rights do not themselves reveal a nascent national identity. Canadians are still left with a vague sense of collective self that is largely held together by a spirit of respecting differences.

This spirit as the main ingredient in the national consciousness is a double-edged sword. On the one hand, it promotes a self-reflexive sense of political identity that inhibits the ugliest elements of nationalism. It is difficult to rouse much Us vs. Them fervour when a) there is no clear Us and b) respecting differences is the one value respected by most. On the other hand, it inhibits a feeling of collective pride and care for each other with the capacity to stretch across the entire country.

There is much to be said for such a feeling. A deep sense of national belonging motivates not just the soldier, but the engineer designing bridges, the civil servant writing briefing notes, the small business serving customers, and the politician running for office, to name but a few. Collective identity, curbed before it escalates into ugly nationalism, can fuse civic purpose into all we do in the public sphere. And public actions couched in civic purpose can be the most rewarding societal acknowledgement that Canadians are responsible to, and benefit from, one another.

How can we achieve such a sense of collectiveness in a country so big and diverse? It may be simpler than it appears. We cannot rely on any one cultural marker, because a.) we're too diverse and b.) we know that such markers -- especially ethnic, racial, or religious ones -- as sparkers for national pride can be dangerous. We can, however, invigorate our loyalty to and affection for those Canadian political institutions that keep us accountable to one another; the ones that have stood the test of time even while demonstrating an ability to mould with the ages.


The celebration of difference in Canada is encouraging. A country with an immigration rate over twice that of the US and a multiethnic, multiracial democracy that functions better than ours does. Canada's Charter of Rights and Freedoms declares multiculturalism to be a constitutionally protected value.

Our right loves to rail against multiculturalism. It is small wonder that Canada holds little appeal for them. They base much of their appeal in the US on generating fear in the "us vs. them" paradigm that is much harder to sell in Canada.

It is difficult to rouse much Us vs. Them fervour when a) there is no clear Us ...

Poll: repub base/establishment agree (Obama, gov't role), disagree (immigration, gay rights)


All republicans agree on how bad Obama, the federal government and help for the poor are.

They disagree on immigration, acceptance of gays, the value of Wall Street and US efforts to solve global problems.

None are too surprising but interesting to see them summarized so succinctly in this poll.

How China views the TPP, the WTO and bilateral trade agreements.

China’s FTA Strategy

Beijing takes a strategic approach on free trade agreements, particularly in the face of challenges such as the TPP.

This post explores the motivations of China’s promotion of FTAs, and examines its FTAs to highlight underlying trends and the future strategies Beijing may pursue in the face of the challenges posed by mega-regional trade deals such as the Trans-Pacific Partnership (TPP) and Regional Economic Comprehensive Partnership (RCEP.)

China has one of the busiest FTA programs in Asia. Agreements in place include FTAs with countries such as Chile, Costa Rica, New Zealand, and Switzerland. Meanwhile, FTAs now in the pipeline will boost China’s economic integration with Australia, Japan, the Republic of Korea, Norway, and the Gulf Cooperation Council countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates. China has recently taken a more comprehensive and vigorous approach to FTAs. For example, agreements with Iceland and Switzerland, signed in 2013, provide wider coverage in goods, services, and investments.

Meanwhile, a number of initiatives are underway to liberalize trade and facilitate investment within the region. For instance, RCEP incorporates a range of Asia-Pacific countries, such as ASEAN, Australia, China, India, Japan, and New Zealand. The fourth round of negotiations was held in Nanning, China, from March 31 to April 4, 2014. it is expected to be concluded by 2015.

On the other hand, the U.S.-centered TPP negotiations have put China under considerable pressure. Though it is open to joining TPP negotiations, given its domestic industrial structure China would find it difficult to accept some of the issues under negotiation. Issues such as state-owned enterprises or labor and environmental standards would impose very high costs on China’s domestic industries. Consequently, Beijing has been cautious on joining TPP talks.


China seems to be negotiating many bilateral trade agreements rather than going for multilateral deals. Perhaps this is because they are sensitive to maintaining control of their "domestic industrial structure" (weak unions, lots of pollution). That is easier to do with bilateral deals in which they are the larger, stronger partner rather than multilateral deals where things get more complicated.

There need to be labor and environmental standards in any trade agreement.

If TPP does not have them, and it sure seems like it doesn't, then sticking with WTO trading rules (which do not have labor nor environmental standards that affect labor rights in a place like Vietnam) is better than missing the opportunity that TPP could have represented.

To improve labor and environmental standards globally we will have to negotiate enforceable agreements with the rest of the world. Given what we know about TPP it looks like we will have to wait a long time for that.

One of many countries that actually does what many US politicians profess is impossible:

supporting a strong safety net with high progressive taxation without killing the economy that generates the wealth.

Great Title: “Change They Can’t Believe In: The Tea Party and Reactionary Politics in America”

Another axis of difference between the two is that an establishment conservative will see policy differences or policy preference differences between them and progressives as merely political differences. But these reactionary conservatives see policy differences, or differences of policy preferences, as a contest between good and evil. They have this Manichaean way of looking at politics, this apocalyptic way of looking at politics. Therefore, compromise cannot be . Compromise will not be tolerated whatsoever, because they see it as concession to evil, whereas an establishment conservative knows that compromise is necessary.

The bottom line is that a lot of people assume that the Tea Party people are just crazy … but that’s not the case. I mean, that’s really not the case, and I want to dismiss that misconception as soon as I can … Another misconception that the Tea Party is really just a bunch of racist people and that their movement is about racism — and it’s really not … It’s bigger than racism. People who tend to support the Tea Party, they tend to be sexist, they tend to be homophobic, they tend to be xenophobic; so it’s not just about race. It’s about difference. It’s about anything that violates their phenotypical norm of what it’s supposed to mean to be an American: white, mainly male, middle-class, middle-aged or older, heterosexual, and native born. Anything that falls beyond that description is considered not to be a true American and therefore … these groups are encroaching on what they see as the “real” America, the America that they’ve come to know and love through their lifetime.

It’s not the astroturf movement that a lot of people think it is. I said that in that Brookings piece and I’ve backed that up with some evidence. Now, we saw what happened in Virginia, right? You had this guy, Brat, who got almost zero support from national Tea Party organizations — and look what happened. So I think there’s really valid data showing that the Tea Party movement is not the astroturf movement that people think it is.

People want to say that they’re crazy, and they’re really not. They want to maintain their social position, their social prestige; and as Frederick Douglass once said, “Power concedes nothing without a demand. It never has and it never will.” So it’s rational to want to hold onto your position; it’s completely rational. It’s about the means through which do that — that’s what the problem is.

Great find, xchrom. Thanks for posting it.

Certainly true that agreements (trade, peace or labor) can be "good or crappy" but

the republican accusation was that they were both crappy - "flooding our markets with foreign commodities" - and negotiated secretly - "It secretly has made tariff agreements with our foreign competitors".

Reciprocal Tariff Act of 1934

President Franklin Delano Roosevelt signed the Reciprocal Trade Agreements Act (RTAA) into law in 1934. RTAA gave the president power to negotiate bilateral, reciprocal trade agreements with other countries. This law enabled Roosevelt to liberalize American trade policy around the globe. It is widely credited with ushering in the era of liberal trade policy that persists to this day.

By giving the President the authority to negotiate these deals, the Congress effectively ceded a part of their power (authorized under US Constitution, Article I, Section VIII) to the executive branch.

After the Civil War, Democrats were generally the party of trade liberalization, while Republicans were generally for higher tariffs. This pattern was clear in congressional votes for tariffs from 1860 until 1930. Democrats were the congressional minority in the majority of Congresses between the Civil War and the election of Roosevelt. During their brief stints in the majority, Democrats passed several tariff reduction bills. Examples include the Wilson-Gorman Act of 1894 and the Underwood Tariff Act of 1913. However, subsequent Republican majorities always undid these unilateral tariff reductions.

... the administration decided to take advantage of having a Democratic-controlled Congress and Presidency to push through the RTAA. In 1936 and 1940, the Republican Party ran on a platform of repealing the tariff reductions secured under the RTAA.


FDR's RTAA is what gave us "secret trade deals" and 'fast track' for their approval or rejection by Congress.

The complaints against FDR in 1936 were quite similar to the complaints against Obama today even though times and the nature of the agreements has changed.
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