ROOT CAUSES OF INEQUALITY
ETHICS
-Individual relationships vs Societal Responsibility
ECONOMIC THEORIES
– Individual Gain vs Common Good of Society. EDUCATIONAL REQUIREMENTS
-Most of the increase in productivity and wealth is due to advances in digital computer technology.
- Bill Gates of Microsoft and Jeff Bezos of Amazon are now wealthiest.
- Digital computer technology requires a college-equivalent math-based education
TAX STRUCTURE
-Income inequality started in 1980 with reduced income taxes on the rich. “Trickle-Down” economics not as good as "Trickle-Up"
-More inequality in US than Europe.
Economic Inequality: A Relational Ethical Challenge
1. For Happiness What Maters? Relationships, Energy, Matter
ECONOMIC INEQUALITY: A RELATIONAL-ETHICAL CHALLENGE
Paul H. Carr, PhD
• Income inequality increased
dramatically in the 1980s
• Root causes of inequality.
• “Trickle-Down Economics vs.
“Tickle-Up.
• 20% of 65+ old seniors
cannot afford to retire,
doubled since 1985.
4. NICKEL and DIMED:
On (Not) Getting By in
America
Experiencing living on minimum
wage jobs (2011).
Author Ehrenreich worked as a
Walmart clerk, house cleaner,
home health-aid, and hotel maid.
In order avoid living on the street,
she needed two minimum wage
jobs.
5. "There are a thousand hacking at the
branches of evil (symptoms) to one who is
striking at the root (cause).” Thoreau.
6. • EDUCATIONAL REQUIREMENTS
-Most of the increase in productivity and wealth GDP is due to
advances in digital computer technology.
- Bill Gates of Microsoft and Jeff Bezos of Amazon are now
wealthiest.
- Digital computer technology requires a college-equivalent
math-based education
• TAX STRUCTURE
-Income inequality started in 1980 with reduced income
taxes on the rich. “Trickle-Down” economics
-More inequality in US than Europe.
ROOT CAUSES OF INEQUALITY
• ETHICS
-Individual relationships vs Societal Responsibility
• ECONOMIC THEORIES
– Individual Gain vs Common Good of Society
7. 10/9/15
I ask you to ensure that humanity is served
by wealth and not ruled by it.
Pope Francis. Message to the World Economic
Forum 2014.
“This imbalance (between the
rich minority and the rest) is the
result of ideologies that defend
the absolute autonomy of the
marketplace and financial
speculation… behind this
attitude lurks a rejection of
ethics and a rejection of God.
Pope Francis “Evangelii Gaudium, pars 56,57.
8. ETHICS GOLDEN RULE:
Do unto others as you would have
them do unto you.
ECONOMICS GOLDEN RULE:
Whoever has the gold makes the
rules.
10. ECONOMIC IMBALNCE
• Belief in:
• “Invisible Hand,” Adam Smith (1776), which
guided the pursuit of individual gain towards the
public interest.
“The self-correcting power of the free market.”
( Alan Greenspan’s Laissez Faire Economics )
Ignoring:
• “Tragedy of the Commons,” William Forster
Lloyd (1833), in which the pursuit of individual
gain leads to negation of the common good.
11. Tragedy of the Commons
William Forster Lloyd (1833), Garrett Hardin (1968)
The pursuit of individual gain leads to negation of the
common good.
Lloyd was familiar with herdsmen who all grazed their cattle on a common for free.
Each individual gained by adding more cows to his own herd. As each pursued his
individual gain, the commons became overgrazed, resulting in the tragedy
malnourished cows.
12. TRADEGY OF THE
COMMONS
Individual
desire to go
everywhere
gets you
nowhere,
while
polluting.
SOLUTIONS:
-Freeways
aren’t free.
-$8/ gal in
Europe
-Public
Transportation
13. EDUCATIONAL REQUIREMENTS
-Most of the increase in productivity and wealth (GDP) is due
to increases in digital computer technology.
- Bill Gates of Microsoft and Jeff Bezos of Amazon are now
wealthiest.
- Digital computer technology requires a college-equivalent
education.
TAX STRUCTURE
-Income inequality started in 1980 with reduced income
taxes on the rich.
-More inequality in US than Europe.
ROOT CAUSES OF INEQUALITY
ETHICS
-Individual relationships vs Societal Responsibility
ECONOMIC THEORIES
– Individual Gain vs Common Good of Society
14. • Wages of those with education
beyond a bachelor’s degree
has doubled since 1964.
High school dropouts are earning
less now than in 1962
Average US Income in
2012 dollars.
Top 10% $254,449
Bottom 90% $ 30,439
16. GROSS DOMESTIC PRODUCT (GDP)
Gross Domestic Product (GDP) is the total
monetary or market value of all the
finished goods and services produced
within a country's borders in a specific time
period.
As a broad measure of overall domestic
production, it functions as a
comprehensive scorecard of the country’s
economic health.
17. 20 30 40 50 60 70 80 90
0
5
10
15
20
25
30
35
40
45
50
GDP/Capita vs. Economic Freedom
Index of Economic Freedom
GDP/Capita($K)
LAW……………………………………………….…LIBERTY………ANARCHY
Optimum Balance
US
Canada
C
o
n
g
o
N
i
g
e
r
UKFrance
Germany, Japan
S. Korea
Cuba
China
Russia
18. HERITAGE FOUNDATION
INDEX OF ECONOMIC FREEDOM (2009)
Ten Economic Freedoms for United States
91.9 Business Freedom
80.0 Investment Freedom
86.8 Trade Freedom
80.0 Financial Freedom
67.5 Fiscal Freedom
90.0 Property Rights
59.6 Government Size
72.0 Freedom from Corruption
84.0 Monetary Freedom
95.1 Labor Freedom
80.7 AVERAGE
20. GINI INDEX IS A MEASURE OF ECONOMIC EQUALITY
GINI = 00 Income completely equal
GINI = 100 One person owns everything = INJUSTICE
Canada, Germany, Scandinavia, Japan, etc. have more income equality than the US.
21. EDUCATIONAL REQUIREMENTS
Most of the increase in productivity and wealth is due to
increases in digital computer technology.
- Bill Gates of Microsoft and Jeff Bezos of Amazon are now
wealthiest.
- Digital computer technology requires a college-equivalent
education.
TAX STRUCTURE
-Income inequality started in 1980 with reduced income
taxes on the rich.
-More inequality in US than Europe.
ROOT CAUSES OF INEQUALITY
ETHICS
-Individual relationships vs Societal Responsibility
ECONOMIC THEORIES
– Individual Gain vs Common Good of Society
23. Title of the
presentationInequality of capital
Thomas Piketty, Professor of Economics,
Paris School of Economics
19 December 2014
www.slideshare.net
You will soon see data from this source.
24. 24
Data from
Capital in the 21st century
(Harvard University Press, March 2014)
This book studies the global dynamics of income and wealth distribution since 18c in 20+ countries; I
use historical data collected over the past 15 years with Atkinson, Saez, Postel-Vinay, Rosenthal,
Alvaredo, Zucman, and 30+ others; I try to shift attention from rising income inequality to rising wealth
inequality
•The book includes four parts:
Part 1. Income and capital
Part 2. The dynamics of the capital/income ratio
Part 3. The structure of inequalities
Part 4. Regulating capital in the 21st century
•In this presentation I will present some results from Parts 2 & 3, focusing upon the long-run evolution of
capital/income ratios and wealth concentration (all graphs and series are available on line: see
http://piketty.pse.ens.fr/capital21c)
27. Sweden has the highest tax revenue per GDP, US the lowest.
Sweden
US
28. The US has the highest income inequality 48%
Sweden has the lowest inequality 28%
Sweden has the highest tax revenue 54%
The US has the lowest taxes 30%
Higher taxes contribute to higher income equality.
29. Higher taxes in European counties buy:
• Greater economic equality than the US,
• Free medical insurance,
- Per patient medial cost one-half that of US.
• Free college and vocational education.
- No student loan debts
EUROPEAN TAX STRUCTURE
WWII destroyed European capital.
Their tax structure encourages capital growth. Corporate taxes now
comparable to US.
European taxes do not take from the rich and give to the poor.
Free medical care takes from the young and gives to the old.
Free college gives to the educated at the expense of others.
Everyone pays high taxes because they get a lot in return.
30. Higher taxes in European counties buy:
• Free college and vocational education.
- No student loan debts.
• College and vocational education in
the US increases wages
• Problem with increased student
debt
• Teacher salaries should be higher
Higher taxes in European counties buy:
• Free college and vocational education.
- No student loan debts.
• College and vocational education in
the US increases wages
• Problem with increased student
debt
• Teacher salaries should be higher
31. ECONOMIC INEQUALITY: THE RELATIONAL-ETHICAL CHALLENGE
US TAX STRUCTURE
-Higher taxes in Europe contribute to better income equality than US
- US Tax Cuts have increased Income Inequality
20% of 65+ cannot afford to retire, doubled since 1985.
- “Trickle-Down” economics has increased our US debt.
- ”Trickle-Up” is better. It will eventually “Trickle Up”
34. The December 2017 law was not as drastic as the “trickle-
down” tax cut from 1980 – 1089.
Corporate rate of
48% decreased to
35%
Top individual tax
rate of 70%
decreased to
28%
21%
1980. 1990
Clinton
Tax
Increase,
US
Budget
Surplus
90% Tax rate
starting in 1942
1940 1970
2017
Decrease
For
Corporations
35. “Trickle up”
capital, for the
needy at the
bottom, will
eventually be
available to
the rich.
Does capital
“trickle
down”?
36. A RISING TIDE FLOATS ALL BOATS ?
TRICKLE-DOWN ECONOMICS
The objective of the top tax cuts from
70% in 1980 to 28% in 1988 was to
stimulate the economy, ie increase GDP.
It was expected to result in an increase in
the tax revenue to the government.
1. No GDP increase.
2. Increased income inequality.
3. Increased our national debt.
39. From 1980-1987, growth decreased from 3.5% to 3.0% as per the trend.
Reagan tax cuts did not increase GDP growth downward trend.
Dot Com
boom
increased
GDP above
trend line
41. The Dot-Com boom, plus tax increases, and lower
government spending fueled the 2000 budget surplus.
1998-
2001
Surplu
s
1998-
2001
Surplus
42. Reagan Tax Cuts
70% to 28%
OUR NATIONAL DEBT INCREASED IN 1980
WWII Ends
Won Cold War
Recession from
deregulation of Banks
43. US National Debt is increasing at $ 1Trillion per year.
According to Keynesian Economics, we should now be paying
down our debt from the 2008 recession.
Reagan
Tax Cuts
70% to
28%
44.
45. WWII POSTER
How we defeated
Hitler Germany and
Japan’s Rising Sun
(1945).
Paid off WWII, Korean
and Vietnam Wars
debt (1980), Landed
Man on the Moon (‘69)
Patriotism against
enemies is the
Social Capital
that bound us
together.
46. "The Moral Equivalent of War (MEOW)"
“One of the classic problems of politics: how to
sustain political unity and civic virtue in the absence
of war or a credible threat...and ...sound a rallying
cry for service in the interests of the individual and
the nation." American psychologist and philosopher William James,
1906,
SPACE & EARTH RACES
• We had a “Space Race” to land a man on the moon in
1969, because the Russians were adhead of us in
space.
• We now need a “Earth Race” to beat the Chinese in
green energy technologies to save our Planet.
51. 51
Conclusions
• The history of income and wealth inequality is always political, chaotic and unpredictable;
it involves national identities and sharp reversals; nobody can predict the reversals of the
future
• The ideal solution: progressive wealth tax at the
global scale, based upon automatic exchange of
bank information
• Other solutions involve authoritarian political &
capital controls (China, Russia..), or perpetual
population growth (US), or inflation, or some
mixture of all.
52. “Bernie Sanders and Elizabeth
Warren are not socialists, but
capitalists with a heart." Kotler
PHILIP KOTLERhilip Kotler is the S.
C. Distinguished Professor of
International Marketing at the Kellogg
School of Management. He has been
honored as one of the world's leading
marketing thinkers. He received his M.A.
degree in economics (1953) from the
University of Chicago and his Ph.D.
degree in economics (1956) from the
Massachusetts Institute of
Technology (M.I.T.), and has received
honorary degrees from twenty-one
foreign universities. He is the author of
over 57 books and over one hundred
and fifty articles.
• He has been a consultant to IBM,
General Electric, Sony, AT&T, Bank of
America, Merck, Motorola, Ford, and
others.
• The Financial Times included him in
its list of the top 10 business thinkers.
54. • EDUCATIONAL REQUIREMENTS
-Most of the increase in productivity and wealth is due to
advances in digital computer technology.
- Bill Gates of Microsoft and Jeff Bezos of Amazon are now
wealthiest.
- Digital computer technology requires a college-equivalent
math-based education
• TAX STRUCTURE
-Income inequality started in 1980 with reduced income
taxes on the rich. “Trickled-Down” economics
-More inequality in US than Europe.
ROOT CAUSES OF INEQUALITY
• ETHICS
-Individual relationships vs Societal Responsibility
• ECONOMIC THEORIES
– Individual Gain vs Common Good of Society
55. ECONOMIC INEQUALITY: THE RELATIONAL-ETHICAL CHALLENGE
ETHICS “Humanity should be served by wealth and not ruled by it.”
Pope Francis
-Imbalance of Individual Profit over The Common Good of Society
-Higher taxes in Europe contribute to better income equality than US
- US Tax Cuts have increased Income Inequality.
20% of 65+ cannot afford to retire, doubled since 1985.
- “Trickle-Down” economics has increased our US debt.
- ”Trickle-Up” helping the people at the bottom is better.
Money will eventually “Trickle Up” (Will Rogers)
56. FOR HAPPINESS, WHAT MATTERS? RELATIONSHIPS, ENERGY, MATTER.
Nov 8. FOM HUMAN RELATIONSIIPS TO CIVILIZATION VIA ETHICS
- Big bang energy first then matter. Spirit is analogous to energy. We can’t see either, but we
can observe their interactions and affects.
-Human cooperative relationships, guided by morals and ethics, enabled civilization.
-How did the forbidden apple, giving Adam and Eve “knowledge of good and evil,” evolve
into the moral and ethical laws that enabled civilization?
-God allows freedom and lures His creation towards His creative aim of greater beauty.
Nov 15. THE RELATIONAL-ETHICAL CHALLENGE OF ECONOMIC INEQUALITY
“Humanity should be served by wealth and not ruled by it.” Pope Francis
- Constraining economics with ethics
-Pursuit of Individual Profit vs. The Common Good in Society
-How can we maximize Economic Growth and overcome Income Inequality?
Nov 22. GLOBAL RELATIONS: CLIMATE CHANGE, WILL HUNGRY PEOPLE BE HAPPY?.
“Climate Change Threatens the World’s Food Supply,” United Nations Report
How can we stop burning the fossil fuels whose CO2 emissions warm our planet?
Will there be enough food for those who can pay?