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Mon Feb 17, 2014, 05:04 AM

Larry Summers: The US is becoming a 'Downton Abbey' economy

The following is quoted from an editorial by Summers appearing in today's "Financial Times."


Inequality has emerged as a major issue in the US and beyond. A generation ago it could reasonably have been asserted that the overall growth rate of the economy was the main influence on the growth in middle-class incomes and progress in reducing poverty. This is no longer a plausible claim.

The share of income going to the top 1 per cent of earners has increased sharply. A rising share of output is going to profits. Real wages are stagnant. Family incomes have not risen as fast as productivity. The cumulative effect of all these developments is that the US may well be on the way to becoming a Downton Abbey economy. It is very likely that these issues will be with us long after the cyclical conditions have normalised and budget deficits have at last been addressed.

.......

It is not enough to identify policies that reduce inequality. To be effective they must also raise the incomes of the middle class and the poor. Tax reform has a major role to play. The current tax code is so badly designed that it is very likely to be having the effect of reducing economic growth. It also allows the rich to shield a far greater proportion of their income from taxation than the poor. For example, last year’s increase in the stock market represented an increase in wealth of about $6tn, of which the lion’s share went to the very wealthy.

It is unlikely that the government will collect as much as 10 per cent of this figure. That is because of a host of policies that favour the rich, such as the capital gains exemption, the ability to defer tax on unrealised capital gains, and the fact that gains on assets passed on at death are not taxed at all. Similarly, the corporate tax system allows value to flow through it like a sieve. The ratio of corporate tax collections to the market value of US corporations is near a record low. The estate tax can be more or less avoided with sophisticated planning.

http://m.ft.com/cms/s/2/875155ce-8f25-11e3-be85-00144feab7de.html

58 replies, 5466 views

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Reply Larry Summers: The US is becoming a 'Downton Abbey' economy (Original post)
Redfairen Feb 2014 OP
Turbineguy Feb 2014 #1
Enthusiast Feb 2014 #3
2banon Feb 2014 #23
JDPriestly Feb 2014 #41
Progressive dog Feb 2014 #6
Squinch Feb 2014 #30
Octafish Feb 2014 #11
Auntie Bush Feb 2014 #18
shenmue Feb 2014 #27
Enthusiast Feb 2014 #2
LineLineReply +
swilton Feb 2014 #17
2banon Feb 2014 #24
valerief Feb 2014 #25
FreakinDJ Feb 2014 #32
adirondacker Feb 2014 #33
MannyGoldstein Feb 2014 #4
KG Feb 2014 #5
Demeter Feb 2014 #7
Squinch Feb 2014 #31
Volaris Feb 2014 #43
hatrack Feb 2014 #8
L0oniX Feb 2014 #9
treestar Feb 2014 #10
maddiemom Feb 2014 #49
QC Feb 2014 #12
4_TN_TITANS Feb 2014 #13
closeupready Feb 2014 #14
magical thyme Feb 2014 #15
Oilwellian Feb 2014 #16
Locrian Feb 2014 #19
pa28 Feb 2014 #20
jsr Feb 2014 #21
progressoid Feb 2014 #22
Octafish Feb 2014 #26
The Velveteen Ocelot Feb 2014 #28
Guy Whitey Corngood Feb 2014 #29
LittleBlue Feb 2014 #34
MisterP Feb 2014 #35
Armstead Feb 2014 #36
merrily Feb 2014 #54
colsohlibgal Feb 2014 #37
jtuck004 Feb 2014 #38
TomClash Feb 2014 #39
JDPriestly Feb 2014 #40
Skittles Feb 2014 #52
IDemo Feb 2014 #42
jsr Feb 2014 #44
Roland99 Feb 2014 #45
Demeter Feb 2014 #46
Roland99 Feb 2014 #50
Demeter Feb 2014 #51
defacto7 Feb 2014 #47
alp227 Feb 2014 #48
merrily Feb 2014 #53
DiverDave Feb 2014 #55
Autumn Feb 2014 #56
markpkessinger Feb 2014 #57
bread_and_roses Feb 2014 #58

Response to Redfairen (Original post)

Mon Feb 17, 2014, 06:08 AM

1. It could be that the 1 percent

used to be industrialists, people who created wealth and employed large numbers of people. Now the 1 percent are financial types who rig the system and loot wealth.

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Response to Turbineguy (Reply #1)

Mon Feb 17, 2014, 06:18 AM

3. You have accurately diagnosed the problem.

Loot wealth.

And that Gramm-Leach-Bliley that Summers was a cheerleader for is the foundation for the mechanism used by the 1% to do the looting. Bring back Glass Steagal!

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Response to Enthusiast (Reply #3)

Mon Feb 17, 2014, 12:46 PM

23. Hear, Here!

 

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Response to Enthusiast (Reply #3)

Mon Feb 17, 2014, 06:58 PM

41. +10000

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Response to Turbineguy (Reply #1)

Mon Feb 17, 2014, 08:29 AM

6. Nah, the 1% were robber barons who

forced competitors out of business. They employed armed thugs to break strikes.
Many of them were not industrialists, they provided the money and expertise to organize the various trusts.

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Response to Progressive dog (Reply #6)

Mon Feb 17, 2014, 01:45 PM

30. Uhhh.....

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Response to Turbineguy (Reply #1)

Mon Feb 17, 2014, 10:28 AM

11. +2

It's easier to make a buck when you have a pile of money than it is to turn a pile of stuff into money.

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Response to Turbineguy (Reply #1)

Mon Feb 17, 2014, 11:44 AM

18. And hide all their money in the Cayman Islands.

That doesn't produce jobs...except maybe more Island Cayman bankers.

I personally think all money in the Islands should be accounted for and taxed as income. It isn't fair that the rich can hide so much money and workers get taxed on all their income. The rich should too.

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Response to Turbineguy (Reply #1)

Mon Feb 17, 2014, 01:18 PM

27. This is exactly true

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 06:15 AM

2. Well, Larry, I guess you shouldn't have been such a cheerleader for Gramm-Leach-Bliley

which put tax payers on the hook for fraudulent behavior by your good buddies.

Asshole!

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Response to Enthusiast (Reply #2)

Mon Feb 17, 2014, 11:34 AM

17. +

 

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Response to Enthusiast (Reply #2)

Mon Feb 17, 2014, 12:48 PM

24. took the words right out of my mouth! n/t

 

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Response to Enthusiast (Reply #2)

Mon Feb 17, 2014, 01:14 PM

25. ^^^THIS^^^

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Response to Enthusiast (Reply #2)

Mon Feb 17, 2014, 02:05 PM

32. Winner

 

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Response to Enthusiast (Reply #2)

Mon Feb 17, 2014, 03:11 PM

33. +! nt

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 06:25 AM

4. And, like OJ, Larry won't rest until

 

he finds the *real* killer.

I love Larry.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 06:26 AM

5. Larry Summers LOL

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 08:53 AM

7. Stop Bragging About YOUR Success, Larry

 

You are the chief tool in the Robert Rubin drawer. If you want someone to blame, go look in a mirror.

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Response to Demeter (Reply #7)

Mon Feb 17, 2014, 01:46 PM

31. ^^^^This. Nice of Summers to notice. After he put it in place.

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Response to Squinch (Reply #31)

Mon Feb 17, 2014, 07:29 PM

43. think maybe he sees the writing on the wall,

And decided he would rather not be hanged for his particular brand of treason?

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 09:15 AM

8. . . . said Larry "Grantham" Summers

Bite me, you pretentious bag of shit.

Oh, and how'd that "free-market miracle" known as Gramm-Leah-Bliley work out for you?

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 09:50 AM

9. Much thanks to you and yer buddies ...fucking rich ass greedy pig!

 

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 09:56 AM

10. He doesn't watch Downton Abbey

The rich there are having to adjust to a new economy. They are going to lose their estate if they don't get more business savvy.

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Response to treestar (Reply #10)

Tue Feb 18, 2014, 10:49 AM

49. Yes! Exactly what I was thinking. If Summers were watching and paying attention to "Downton

Abbey," he'd be drawing a different lesson.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 10:29 AM

12. Inspector Renault is shocked--shocked!--

to learn that there is gambling at Rick's.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 10:44 AM

13. In other news: Cancer now self-diagnosing!

Is it denial, or does this guy really not know how much of the problem he has been over his career?

What he describes is the end-game of everything he has advocated. Sheesh.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 11:05 AM

14. I can't stand him, but overall, he nails the problem. BUT,

 

our corrupt "money is speech!" political status quo prevents us getting a responsive Congress to improve our way of life.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 11:14 AM

15. oh, isn't he just so cute...

 

So 'everyday people' he watches Downton Abby just like the rest of us ordinary schmoes.

And then there's this gem:
Presidents from Franklin Roosevelt to Harry Truman railed against the excesses of a privileged few in finance and business. Some have gone beyond rhetoric. Confronted with rising steel prices, John Kennedy sent the FBI storming into corporate offices and is widely thought to have ordered the authorities to audit executives’ personal tax returns. Richard Nixon used the same weapon in 1973, announcing tax investigations “of the books of companies which raised their prices more than 1.5 per cent above the January ceiling”.

http://www.ft.com/cms/s/2/875155ce-8f25-11e3-be85-00144feab7de.html#ixzz2tb25G1h3

Nice to imply that Roosevelt didn't get beyond rhetoric because, like, Glass-Steaghall had nothing to do with his success. And its repeal, tyvm Larry, didn't contribute greatly to our current nightmare scenario.

All leading us to his brilliant, and some how not terribly surprising, conclusion:

"Sooner or later inequality will have to be addressed. Much better that it be done by letting free markets operate and then working to improve the result."

Yup, just let those "free markets" continue the updraft until the 0.01% have it all.


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Response to Redfairen (Original post)

Mon Feb 17, 2014, 11:34 AM

16. What a schmuck

Summers is the definition of sleaze.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 12:07 PM

19. wait.... wait...

Larry *fuc**ing** Summers? Are you kidding me? The free market leg humper is now surprised that this is happening? The Same Larry *fuc***ing** Summers that drove a lot of these policies?

Oh, wait.... I read it assuming he thinks this is a BAD thing. I get it, jokes on me :p

And *obviously* the best solution will be less regulation and more 'freedom' of the markets.



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Response to Redfairen (Original post)

Mon Feb 17, 2014, 12:07 PM

20. So Larry "what would Goldman think" Summers solution is tax reform?

Tax reform that actually ends up lowering rates?

Nothing about reigning in monopoly banks or restoring a healthy labor market because "what would Goldman think".

Seriously I can't fathom why anybody at all listens to this person still. He's been part of the problem for over 20 years now.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 12:36 PM

21. Damnit, pay them enough so they look presentable when they bring me dinner

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 12:39 PM

22. Really Larry?

Um...fuck you.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 01:18 PM

26. Oh. Look. The guy who helped cause it noticed.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 01:30 PM

28. Really, Larry? And how do you suppose that happened?

Sounds like a guy who murders his parents and then bemoans the fact that he's an orphan.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 01:37 PM

29. And the Biggest Balls Award goes to......... nt

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 03:14 PM

34. Larry Summer talking about income inequality...

 



Yeah no

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 04:41 PM

35. that's why the show's so popular: we're preparing ourselves!

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 04:46 PM

36. The arsonist is yelling fire?

 

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Response to Armstead (Reply #36)

Wed Feb 19, 2014, 05:16 AM

54. I imagine that many do, to divert suspicion.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 05:15 PM

37. I Had To Do A Double Take

Talk about tone deaf. Larry you're a huge reason for the burgeoning inequality and you got rich screwing all of us. You should be in the Big House.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 06:33 PM

38. Larry Summers giving us financial advice makes me feel like we children being groomed

 

by a pedophile.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 06:40 PM

39. Oh the irony

Bank bailouts, free trade and tax cuts for the wealthy all were approved by Lord Summers.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 06:57 PM

40. Larry Summers is finally catching on. This happened on his watch. But he doesn't mention that

fact.

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Response to JDPriestly (Reply #40)

Tue Feb 18, 2014, 11:00 PM

52. no, he is not "catching on"

it's just that the results of his kind of policies are now too obvious for even him to keep pretending otherwise

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 07:19 PM

42. Next: Dick Cheney calls American military adventurism destructive, costly

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Response to IDemo (Reply #42)

Mon Feb 17, 2014, 07:32 PM

44. Without attaching blame to himself

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 08:11 PM

45. Holding my breath until Larry takes on his own share of the blame...


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Response to Roland99 (Reply #45)

Mon Feb 17, 2014, 09:26 PM

46. Hey there Roland

 

how's life treating you?

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Response to Demeter (Reply #46)

Tue Feb 18, 2014, 10:23 PM

50. Hiya back!

To quote the evil magician from Frosty the Snowman, "Busy! Busy! Busy!"

Commuting (via Delta) to RIC from MCO every week (since the first of the year). A few more months of this.

fun stuff.

I still lurk in SMW a bit but haven't really had time to post any market news.

Hope all is well!

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Response to Roland99 (Reply #50)

Tue Feb 18, 2014, 10:55 PM

51. As well as can be, I suppose

 

Happy landings, every single one!

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 11:23 PM

47. The OP's sentiment is good concerning economics

but Larry Summers can't possibly have seen Downton Abbey or he would never have used it for his argument. It's a pretty bad analogy considering it's about a failing aristocratic system and how they cope with it. The 1% have absolutely nothing to do with their failing system. A better analogy would be about the rise of the Rockefellers, Vanderbilts or J.P. Morgan, or maybe the rise of Genghis Khan for that matter.

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Response to Redfairen (Original post)

Mon Feb 17, 2014, 11:50 PM

48. Coming from the sexist neolib elitist? Take a look in the mirror. nt

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Response to Redfairen (Original post)

Wed Feb 19, 2014, 05:16 AM

53. Yes, Larry. So, where's your humble apology?

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Response to Redfairen (Original post)

Wed Feb 19, 2014, 08:42 AM

55. Oh, and HE did it

liar, criminal

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Response to Redfairen (Original post)

Wed Feb 19, 2014, 08:52 AM

56. Larry Fucking Summers? How precious is that.

Fuck him.

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Response to Redfairen (Original post)

Wed Feb 19, 2014, 08:55 AM

57. Now that IS rich coming from Summers! n/t

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Response to Redfairen (Original post)

Wed Feb 19, 2014, 09:51 AM

58. I really hope Larry Summers reads this thread (n/t)

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