This week we are discussing trends in top incomes shares and what makes the rich rich.
Our discussion is based on this week’s readings:
- Medeiros, Marcelo., & de Souza, Pedro. H. F. 2015. The rich, the affluent and the top incomes. Current Sociology, 63(6), 869–895.
- Piketty, Thomas. 2014 Capital in the Twenty-First Century. [Introduction]
I recommend you finish the readings before carefully going over my PowerPoint presentation with voiceover where I explain important ideas and concepts covered in the readings. I also present data from other papers that you might find interesting.
Watch this 6 minute video where Emmanuel Saez talks about the rising income inequality:
Before watching Piketty’s Ted Talk, have a look at this brief 3 minute summary of his book:
Watch Piketty’s Ted Talk, where he explains his main hypothesis:
Lecture Posts Questions:
On the comments section below, address the following questions (answers should be at least 100 words in length and posted by Sunday – This is how participation points are assessed. Please save your comments in a safe document before attempting to post it.
- From my PowerPoint presentation, what isn’t clear? Any thoughts or comments you would like to share?
- From the Medeiros and Souza (2015) reading, what isn’t clear? What would you like to ask the authors? Any thoughts you would like to share?
- From the introduction to Piketty’s book what isn’t clear? Any thoughts you would like to share?
- After watching Saez’s video, what are the main takeaways?
- What are the main takeaways from Piketty’s Ted Talk? Why do you think this book was of so much interest to so many people?
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Question #1:
From my PowerPoint presentation, what isn’t clear? Any thoughts or comments you would like to share?
This Presentation strengthened my knowledge about the relationship between wealth and income, as well as some clarifications I had on Piketty’s book. The equation where the rate of return on capital being greater than the economy’s growth rate is understandable since this overrun clearly cannot retain any positive results. Even with this equation, the criticisms he received for his theory were agreeable due to the lack in involvement of certain historical events. I would also like to add how Piketty’s theories on how to control income distribution by increasing worker ownership is a bit impractical. This doesn’t seem like a doable or easy form to indulge in as Capitalism won’t allow this to happen. In other words, because of the leaders under Capitalism holding immense value, the proposals regarding labour seems a bit more unrealistic since it’s these very people (capitalists) ruling the decisions and trying to generate huge profits. Thus, it’s with the Capitalists choices that can hurt or benefit the labourers. I also appreciated how concise the slides tended to be as the main ideas of constituting wealth was well presented. The graphs of the U.S in their Top 1% Income Shares between other countries, was a visual that also proved furthermore how rich the U.S is as their data dominates through both charts. The same finding holds true for the Tax Rates since the U.S is the richest country, it’s only right that more taxes are paid. Thus, it was with this powerpoint and readings that alerted my focus on how solutions must be imposed on the rich to diminish global inequality.
Question #2:
From the Medeiros and Souza (2015) reading, what isn’t clear? What would you like to ask the authors? Any thoughts you would like to share?
“The rich, the affluent and the top incomes”, by Medeiros and Souza was a reading that captivated my attention on the study of people’s accumulated wealth, and how it’s these individuals that shape our economy. It’s understood that those who are opulent come to be this way from working hard, savings/investments, being born into it (inheritance through kinship), or one that took me by surprise was classified as “predatory behaviors” (Medeiros and Souza, 872). I was a bit confused on what this was referring to exactly, yet I figured it meant someone who had strong intentions of amassing great riches. While there are various ways one can obtain large fortunes, this piece gives emphasis on the power of labor. It is because of thousands who work, that Capitalists are by far the major breadwinners in the race between other successful figures. I would ask Medeiros and Souza why the implementation of some statistics within the wealthy are missing, as I feel this could make for a better representation of this class. While I do wish that both authors addressed these other factors in their study, like the consequences of being wealthy, they addressed far more important key information on the effects of the global elite.
Question #3:
From the introduction to Piketty’s book what isn’t clear? Any thoughts you would like to share?
In Piketty’s book, “Capital in the twenty-first century”, while I understand the differences in Marx’s belief from Ricardo’s, I didn’t quite understand Ricardo’s whole philosophy. What I took away from his arguments is that because of land prices now, in the near future it may be expected that the distribution of wealth may continue to be unbalanced if the chain of supply and demand are not equalized. Nevertheless, Ricardo’s impression on this supply and demand idea made me think about how our economy handles the balance between the two, without driving the economy down. Marx’s famous Capitalist ideologies were that the proletariat’s wages were very low and while their labor continued to be unfair as they endured long hours of work, it wasn’t until events such as the Industrial Revolution that we witnessed large changes. Wages increased due to labor being so scarce. Yet, an important period during this time was the distribution of wealth which made inequality levels skyrocket. By having the concentration of wealth rise, inequality featured great rises due to the rich acquiring higher assets in income. The rest of Piketty’s introduction was clear and set me up in understanding what the rest of the book will cover.
Question #4:
After watching Saez’s video, what are the main takeaways?
The main takeaways of Saez’s video were how income inequality is relevant in everyone’s lives and so it’s with how each person lives that helps contribute to this notion. The Gilded Age, also known as the Industrial Revolution, produced a lot of inequality as wealthy people had large incomes. What we see happening afterward, is the reduction of inequality. This is because of the Great Depression and World War II. Due to the amount of unemployed peoples during that era, the economy was fairly poor and the fortunes of the rich went towards funding WW1 along with other matters. Another event that lowered inequality even more is with the introduction of The New Deal. With these set of laws that had financial limitations, it made the rich harder to inherit more money. The Great Recession (2007-2009) also led to hard declines of the global market which of course negatively impacted those in the decile of the top 1% and top 10%. This soon changed as after the passing of these influential events, throughout the years the affluent derive higher and higher income. The video revealed that the top 1% had received a 30% income growth from 2009-2012 which showed how strong they “healed” from the Great Recession.
Question #5:
What are the main takeaways from Piketty’s Ted Talk? Why do you think this book was of so much interest to so many people?
After watching Piketty’s Ted Talk, the main takeaways were his theory of the rate of return on capital, exceeding the growth rate of the economy, and the reasons behind inequality. The U.S currently holds a large percentage of global inequality, yet Europe had once exceeded the U.S in this. This was due to factors such as: the change in supply and demand, less access to materials like education (race of technology and education) and globalization. What’s interesting is progressive taxation and how because of not knowing what will advance in the future, doesn’t mean it won’t happen. We see that with progressive and regressive taxation and how this can help a lot in the debate of wealth distribution. If we saw a higher rate of wealth taxation, then this can not only reduce inequality but transform our economy so that one’s income is not so high as to say it’s the combination of 50% of those under the top 1%. I feel that the reason why Piketty’s book was such a bestseller was certainly because of the different angles he purports when focusing on the concentration of wealth. It’s a controversial topic indeed and it’s also something that we must act upon immediately, and his book addresses important ways for this to happen. All in all, this video and the introduction to his book in turn made me excited to explore and read the rest of his brilliant piece.
>> or one that took me by surprise was classified as “predatory behaviors” (Medeiros and Souza, 872). I was a bit confused on what this was referring to exactly, yet I figured it meant someone who had strong intentions of amassing great riches.
There is no precise definition of predatory behavior (as there isn’t one for parasitic behavior), but in the sense we use it here it means people who are not interested on producing things but on appropriating what others produce, even if this has a high cost for those who produce.
>> I would ask Medeiros and Souza why the implementation of some statistics within the wealthy are missing
While it is relatively easy to collect data on wages (they are regularly paid every month or so), it is very hard to collect data on some other sources of income. For example, when someone closes a deal, this event may represent a large sum of money, but does not repeat regularly; a large part of the incomes of those at the very top of the distribution are not regular incomes. Moreover, some incomes are hard to measure. How much money someone made last month on, say, the stock market? On the valuation of property that has not been realized (sold) yet? That is why for top incomes we tend to prefer tax data.
>> I would ask Medeiros and Souza why the implementation of some statistics within the wealthy are missing, as I feel this could make for a better representation of this class.
For the last five decades, sample surveys have been the main source of data to study inequality. Surveys capture labor incomes well, because they are regular incomes (received every month, etc). They do not capture eventual incomes (most of them don’t even ask these questions — a deal closed, a property sold, a fluctuation in the stock market, etc. Moreover, the samples of these surveys are not sufficiently refined to select those few who are very rich. Tax data tends to measure top incomes better.
1.PowerPoint lecture was clear. Tremendously helpful, and highly organized. Helped me understand the reading better.
2. The reading was informative and raised many questions. I honestly always thought that taxation was connected to poverty lines within different nations, but the reading mentioned something different. I never put a deep thought into how tax laws are determined. I always heard about international commerce and the ambiguous techniques used to escape high taxes, or avoiding tax regulations, and the reading brought the issue up. While reading the tax section, I reflected on The American Revolution, when the colonist rebelled due to “taxation without representation”.
(Question 1) “Progressivity in taxation is a political decision. Yet,not much is known about the political processes that establish lower and higher tax rates around the world” (Medeiros, Souza 2015: 879). Why is this? Are governments taking advantage of tax policies? Is there a way to get to the root of this? I found this alarming and “made me feel a certain type of way”.
(Question 2) The reading mentions that research indicates that wealth accumulation by the rich is driven by non- home wealth, and investments. “Increase in income inequality between 1989 and 2000 in the USA was driven by the growth in the share of income from non-home wealth” (Medeiros, Souza 2015: 873). My question is, if those individuals (theoretically all 99%) with non-home wealth, miraculously were given an opportunity to invest in various assets and have their own presence in business, will this increase or even balance out income inequality? “the top wealth holders have a much more diversified portfolio, with a strong presence of business and investment assets” (Medeiros, Souza 2015: 873).
(Question 3) “The rich were more likely to invest in stocks and other financial assets” (Medeiros, Souza 2015:873) (Katona, Lansing 1964; Lampman 1959).Hypothetically, if different governments put a cap and limit the amount of investments an individual can make, can this eliminate or decrease the top earners at the top decile?
(Question 4) If pensions are regulated in high inequality countries, being that pensions are at times secondary sources of income, can that method reduce inequality within a society? would it make an impact at all? Or would it not make a dent in inequality?
(Question 5) Can there be a solution for the near future to obtain data regarding direct and indirect income flows, and government transfers? why or why not?
3. Capital in the Twenty-First century by Thomas Piketty is a great tool to understand the evolution of inequality. The reading was clear, it discussed topics and theories we already learned throughout the semester. He explains the history that led to his studies, and why he chose to do so. He also mentions that the solutions are imperfect and incomplete, but the data is better and stronger than data obtained in the past. (when there was little to no data at all). I found the section A Debate without Data very intriguing. In the section Piketty explains that the debate on distribution of wealth has been discussed with a prejudice perspective and with little facts. I agree with Piketty when he says that the distribution of wealth should be an issue to worry all fields, economists, sociologist, historians, and philosophers.
4.Emmanuel Saez discusses the importance of taxes and how taxes influence economic inequality. He explains the shape of income concentration for the US, and it is a big U shape that occurred over a century. Saez explains the top fortunes which are the top 10% and the top 1%. HE explains the economic disparity in a timeline sequence. He discusses the Gilded age and the two large shocks. The shocks were the Great Depression and WW II. The two shocks reduced top fortunes. Saez talks about the New deal, and how taxes regulated inequality. During the New Deal taxes prevented those top fortunes and they were not able to recover from financial crisis. He then discusses the Reagan administration from the 1881-1989, and how the administration impacted inequality. The administration reversed the New Deal, and it caused a deregulation on taxes. It drastically lowered taxes on the top incomes by 28%. Overall, the top % started to rise and continued to increase. He then talks about the great recession which happened over the course of 2007- 2009. The top 10% recovered and experienced economic growth by 30%. (99% saw no increase). Finally summing up how the relation between income concentration and the shape of the top tax rate. Saez explains that taxing top incomes more does not reduce economic growth, and how it might in fact be beneficial to the 99%. Explaining that there are programs funded and it all relates to trickledown economics.
5Thomas Piketty Explains what he discusses in his book. He explains income and wealth distribution. His equation of R>G. (Rate of capital return to exceed the economy’s growth rate). If the rate of capital return exceeds the economy’s growth, it will lead to a high concentration of wealth. Piketty emphasizes that there are many key forces that play important roles long run dynamics of income and wealth distribution. He also discusses that we still need to gather more data. Piketty explains facts that contribute to income and wealth inequality. The 1st fact was that a big reversal occurred between Europe and the US. Income inequality was higher in Europe in the past and in present day, income inequality is higher in the US. This occurred due to changing supply and demand for skills, race between education and technology, globalization, Unequal access to skills in the US, and unprecedented rise of top managerial compensation in the US. The second fact was that wealth inequality is always a lot higher than income inequality. The third fact is that wealth inequality is less extreme today than a century ago. Piketty mentions scale effects like portfolio management, financial complexity, and higher rates of return for large portfolios. To end his lecture, Thomas Piketty suggest what can be done. Financial transparency, international transmission of bank information, global registry of financial assets, global coordination on wealth taxation, progressive wealth tax rates based on reliable wealth statistics. What I found interesting is that at the end of the interview he claims to have more information now that he would have added in his book if he could rewrite today. Also claiming that in the United States wealth concentration has risen. I think his book was an interest for many because it explains inequality on a scale level that those who never took an economic or political course can understand and follow what he is explaining. The book captivated the public because it exposes the reality of our situation in present day and may help us understand future outcomes.
>> (Question 1) “Progressivity in taxation is a political decision. Yet,not much is known about the political processes that establish lower and higher tax rates around the world” (Medeiros, Souza 2015: 879). Why is this? Are governments taking advantage of tax policies? Is there a way to get to the root of this?
Governments are, to some extent, an expression of distributive conflicts. They represent different interests. It is not that they take advantage of tax policies — they may, of course — but that they act in a way that defend the interests of those capable of affecting government decisions. In other words, politics express distributive conflicts, disputes between citizens.
>> (Question 2) The reading mentions that research indicates that wealth accumulation by the rich is driven by non- home wealth, and investments. “Increase in income inequality between 1989 and 2000 in the USA was driven by the growth in the share of income from non-home wealth” (Medeiros, Souza 2015: 873). My question is, if those individuals (theoretically all 99%) with non-home wealth, miraculously were given an opportunity to invest in various assets and have their own presence in business, will this increase or even balance out income inequality? “the top wealth holders have a much more diversified portfolio, with a strong presence of business and investment assets” (Medeiros, Souza 2015: 873).
Potentially, no, because what matters to inequality is not only the composition of investments but their amount. Diversified investments of small amount (eg pension funds) have limited impact on inequality.
>> (Question 3) “The rich were more likely to invest in stocks and other financial assets” (Medeiros, Souza 2015:873) (Katona, Lansing 1964; Lampman 1959). Hypothetically, if different governments put a cap and limit the amount of investments an individual can make, can this eliminate or decrease the top earners at the top decile?
It depends on what would be done with the money above the cap. If all individual investments were capped, the money would have to go to consumption, therefore reducing capital incomes. Reducing capital incomes reduces inequality.
>> Hypothetically, if different governments put a cap and limit the amount of investments an individual can make, can this eliminate or decrease the top earners at the top decile?
If investments are capped, capital incomes are limited. Capital income is an important component of the income of those at the very top (rich). Therefore, limiting investment tends to reduce inequality. Yet, it may not be desirable to adopt such capping policy (= 100% tax on wealth above a certain level). Other alternatives, such as taxing incomes, seem to be more productive.
1. From my PowerPoint presentation, what isn’t clear? Any thoughts or comments you would like to share?
The PowerPoint is interesting as it breaks down some of the characteristics that make someone rich. What is interesting is that in Biden’s speech he talks about the rich and taxation. He mentioned that the big cooperation and anyone making above four hundred thousand should pay their fair share of tax and that the middle class such as nurses should not be paying more tax than the rich and the big cooperation. This shows the correlation as to how the distribution of wealth and higher taxation of the middle and lower class widens the gap of social inequality. Also, this reflects on how money can influence political and cultural power and favor the rich due to their high-level rank in society.
2. From the Medeiros and Souza (2015) reading, what isn’t clear? What would you like to ask the authors? Any thoughts you would like to share?
The reading was clear and understanding. What I find interesting is that firms and industries plays a vital role in generating wealth in field such as real estate and finance. Also, the rich are the ones that have control over the distribution of the economic products, and this is the reason why the policies and laws that are being enforced are in the favor of the rich. And political institutions are one factor that is a major issue because it has an influence on determining the income and wealth of the rich and the reason as to why the rich get richer and the poor get poor.
3. From the introduction to Piketty’s book what isn’t clear? Any thoughts you would like to share?
The reading is clear so far and it covers some of the things we discussed in class. Like Simon Kuznets and how the industrial revolution affects the distribution of wealth in society and how wealth and income evolved overtime in the different era. It is interesting to know that when the capital rate exceeds income growth what will happen and that was cover in Piketty’s Ted Talk. Also, Piketty’s mentioned that it is vital we understand the scarcity principle to understand the global distribution of wealth in the twenty-first century. The scarcity principle is the problem of the pricing system that placed a high value on items that are scarce and how this contributes to inequality.
4. After watching Saez’s video, what are the main takeaways?
The main takeaway is that income distribution is important because it helps understand the income disparity among members of society. Due to industrialization people were getting large capital and were generating wealth. After the great depression the country started to tax heavly and the rich struggle with recovery. However, policies and laws influence the increasing in income inequality because the lower of the top income tax rate down and pre-tax income going to the 10% and the increase in the tax 10% is a surge in the income of the 1%. Also, globalization and industrialization will favor the top talents and high educational attainment individuals because of how the social structure is set up. There is a direct link to income concentration and the shape of top tax rate. The bottom 99% income can grow very fast in the era where the taxation rate was very high because high tax contributes to social benefits such as healthcare and programs that help the growth of individual to have a better life standard.
5. What are the main takeaways from Piketty’s Ted Talk? Why do you think this book was of so much interest to so many people?
The main takeaway from Pkiketty’s is that capital is anything that a person owns that can accumulate wealth. The value of capital grows rapidly in the 18th and 19th century because the rich own majority of the capital which create a large gap between the rich and other people. Also, in the 20th-century war and decolonization did not help the rich because capital start to grow slowly because of heavy tax so owning capital did not help the 1%. Also, if capital keeps increasing faster than the growth of the economy the rich will keep getting richer and this will result in a large cleavage gap in inequality because the rich will pass on their wealth to their children’s and it will become a cycle. I think this book is important to so many people because it highlights the distribution of wealth and why inequality is increasing. It tells the story of how the rich pass their privilege to the next generation.
>> political institutions are one factor that is a major issue because it has an influence on determining the income and wealth of the rich and the reason as to why the rich get richer and the poor get poor.
I agree. The capture of the State is one important strategy to become very rich.
1. I think defining the rich is interesting to think about. Because I believe that depending on who you approach with this question will have a different response. If you ask someone living in the US within the bottom 1% income share, they might say that those who make $20,000 a year are rich. While someone who is around 50% of the income distribution will say that someone who makes $100,000 a year is rich. So, then who do we leave this decision up to? Economists?
2. In the Medeiros and Souza reading, I found it interesting to read about the relationship between pensions and inequality. The reading explained that as earnings become more concentrated, workers save part of these earnings, which leads to an increase in pensions. These pensions then become a significant contribution to inequality in the long run. It seems as though public funded pensions are directed to the top of the income distribution in high-inequality countries. I would think that this would be the opposite. Pensions should be given to those in the lower spectrum of the income distribution to help those in need of a secondary income.
3. David Ricardo’s theory regarding establishing “steadily increasing tax on land rents” will help the social equilibrium, as the price of lands increase and the share of landlords’ income increases, was indeed a logical one. Like Karl Marx, Ricardo did not anticipate the changes that would come along as the Industrial Revolution begun. Instead, the land prices and rents would decrease because the value of farm land also decreased, with the growth of industries and factories that was to come.
4. One of the main takeaways from the Saez video, is the overall U-shape of income concentration in the in the United States between 1917 and 2012. During Industrialization, the top 10% in the US obtained about 50% of the entire income share in the United States. After the GD and WWII, the income shares significantly decreased and political changes like The New Deal instates financial regulations and taxation laws that prevented the top 10% from recovering from the impacts depression and war. This makes me think how certain political changes in today’s world could have a significant impact on how money is redistributed, and potentially help to lower the level of inequality. I know that The New Deal came after The Great Depression and WWII, but like Milanovic stated in previous readings, decreases in inequality should not only have to come after wars or depressions.
5. Piketty’s Ted Talk discusses about the fact that wealth inequality is always higher than income inequality. The data shows that income inequality in the top 10% ranges between 30 and 50 percent while wealth inequality, the share expands between 60 and 90 percent. Therefore, the wealth concentration is higher than that of income inequality. Piketty explains that this is so because wealth concentration signifies that people are acquiring wealth with the means to save, not just live a life of consumption. If income inequality concentration was higher than that would tell us that people are working merely just for consumption and survival, but that is not the case.
>> It seems as though public funded pensions are directed to the top of the income distribution in high-inequality countries. I would think that this would be the opposite. Pensions should be given to those in the lower spectrum of the income distribution to help those in need of a secondary income.
It happens only when pensions reflect previous contributions. Contribution-based pensions replicate inequality over time. For example, women, who were discriminated in the labor market will contribute with less and therefore receive less. Non-contributory pensions (eg a minimum pension) tend to have the opposite effect.
>> Pensions should be given to those in the lower spectrum of the income distribution to help those in need of a secondary income.
Contribution-based pensions replicate inequality. For example, women, who are discriminated in the labor market, contribute less and therefore will receive less. Non-contributory pensions (eg a basic public pension, regardless of previous contributions, or a subsidized pension) may act differently, if they are designed to reach all or at least those with lower incomes.
Q.1- From my PowerPoint presentation, what isn’t clear? Any thoughts or comments you would like to share?
A.1.- Based on watching over and listening to the power point presentation, I pretty much understood everything that was being explained. Things such as the reasons why people are rich and what makes them rich seemed to come very clear to me. Most of it was pretty obvious based on prior knowledge I already have on the real world. I also agreed with the theory that the inequality between wealth will increase indefinitely overtime. I can most definitely see this happening since in this day and age income can be so drastic in some countries and completely low in some others.
Q.2- From the Medeiros and Souza (2015) reading, what isn’t clear? What would you like to ask the authors? Any thoughts you would like to share?
2.- As I read the Medeiros and Souza reading, one thing that I very much do agree with them on is how the rich have not been studied for a long time, thus resulting in an increasing income gap due to people turning a blind-eye. Of course it is known that a lot of those that are that wealthy were brought upon that situation due to inheritance, investments and hard work so it wasn’t as if anyone cheated their way through from what some of us may think we know. One thing I would ask Medeiros and Souza would be what they think a possible solution would be to better decrease the inequality in income.
Q.3- From the introduction to Piketty’s book what isn’t clear? Any thoughts you would like to share?
3.- From reading the introduction to Thomas Piketty’s book, it served as a great resource into the explanation of the development of inequality throughout the years. The topics he discussed came off very clear to me since previous readings have already prepared me to understand all perspectives of the topic on inequality. One major statement that stood out to me that I actually saw within the video instead was that at some point the world could possibly enter a Victorian age where “the rich will be rich because of who their parents are”. This opened my eyes to the fact that the rich are only getting richer and at some point their wealth will be forever inherited.
Q.4- After watching Saez’s video, what are the main takeaways?
4.- As I watched Saez’s video, the main takeaways I understood was how inequality is important to all those that live in the country. He explains how taxes have had influence over the economy throughout the years. He even brings up the Gilded Age being the cause of why income concentration was so large before the Great Depression. In addition to this he brings up the two shocks that decreased top fortunes which was “The Great Depression” and “WW2”. He even talks about how taxes were decreased on those at the top which then only resulted in the rich getting richer.
Q.5- What are the main takeaways from Piketty’s Ted Talk? Why do you think this book was of so much interest to so many people?
5.- While watching Thomas Piketty’s ted talk, the main takeaway I can infer was based on his theory of the rate of return on capital, exceeds the growth rate of the economy. Piketty even goes deeper to explain how Europe once had a higher inequality rate than the U.S from 1900 to 1910 unlike now where the U.S is a lot higher. One of the facts that I didn’t quite understand in his ted talk was his statement of how wealth inequality is always a lot higher than income inequality. I had always thought that they were closely connected always resulting in each other’s increases. I believe that his book was so much of an interest to people because of how well he explains the topic of inequality and wealth by referring back to its history and it has influenced the modern era and will continue to affect the future.
>> One thing I would ask Medeiros and Souza would be what they think a possible solution would be to better decrease the inequality in income.
I believe there is no silver bullet to such a complex problem. There are many factors producing inequality, many policies will be required to revert it. From education to taxation, every policy must take inequality into account.
>> One thing I would ask Medeiros and Souza would be what they think a possible solution would be to better decrease the inequality in income.
Inequality has many determinants and it is unlikely that a simple solution will be capable of solving such a complex problem. What is clear is that no single measure will be sufficient. All policies, including monetary and industrial policies, affect inequality. The question is how to design these policies in a way that they result in less inequality.
1. From my PowerPoint presentation, what isn’t clear? Any thoughts or comments you would like to share?
I was surprised with the Medeiros and Souza (2015) reading about how the rich are wealthy because of means that are not related to productivity. Makes me realize what people mean about the problem with how merit does not always relate to success. I was confused when I read about labor and capital income, but the PowerPoint helped me understand it better. The difference between labor and income was interesting for me because I thought that those at the top 1% would have the same amount of both. I was surprised to see how low the tax rates were on the top marginal incomes were for the US because they should be taxed the most. I am glad that you included the critics of Piketty’s book because I did not realize that he did not mention how things such as sex, gender, and other factors will play a role in the income distribution. I also understood why education won’t make you rich enough to be part of the top 1%, but you can still manage to make a significant amount in your life.
2. From the Medeiros and Souza (2015) reading, what isn’t clear? What would you like to ask the authors? Any thoughts you would like to share?
I really like that the introduction mentions how certain things that were not mentioned were actually very important. Also, how affluence will vary among different studies and it will affect the definition of what it means to be rich. I am a little confused about what capital income means. Is this the income earned from owning property? What is non-home wealth? Is an individual that inherited their wealth more likely to stay rich compared to those who became wealthy in their efforts? I was very shocked to read that education is not guaranteed to make someone rich because I feel like I have been told all my life how it is so important to get a good education to live comfortably.
3. From the introduction to Piketty’s book what isn’t clear? Any thoughts you would like to share?
I thought the principle of infinite accumulation was interesting because it made me think about how dangerous it is to have such a small group of people to hold a massive amount of wealth. There needs to be more support for the populations or countries living in severe poverty and it would be great if some of that wealth could be distributed for the common good of others. I also like that the text mentions how inequalities in wealth and income are related to the political setting of the time. I also agree that the economic, social, and political actors are also key factors of inequality because their views will have an influence on the country’s population. The public will know as much as what is being fed to them and what is being concealed will be invisible to them. There will be people who have bigger voices than others and it will be very difficult for minority groups to have an impact on what kinds of policies are put in place.
4. After watching Saez’s video, what are the main takeaways?
During the beginning of industrialization, the top 10% in the US was earning near 50% of the country’s wealth called the Gilded Age. The Great Depression and World War II decreased the fortunes of the rich significantly. The New Deal was structured in such a way that prevented these rich individuals from returning back to their wealth prior to the Great Depression. Reagan Administration decreased the income tax rate and then the rich started to become richer. The top 1% are the ones making the greatest increase in income shares compared to the rest of the top 10%. This was seen as well after the great recession where the top 1% recovered the quickest. This type of increase is seen in the US and the UK because they have the biggest cut in income tax rates. However, the rest of the 99% of the country can still do well during the times that income tax rates were high.
5. What are the main takeaways from Piketty’s Ted Talk? Why do you think this book was of so much interest to so many people?
Piketty says that the pattern he has noticed is that there is a higher rate of return of capital than the economy’s growth rate. Wealth inequality is still too large to bring income inequality to levels of the US and UK to levels it was in 1910. Wealth is passed down from generations. There is a story behind the wealth inequality. The agricultural era had stagnant economic growth with the return of capital being slightly higher. The industrialization era had a rise in the return on capital and economic growth. The 20th century had a very low return of capital and very high economic growth. Piketty believes there should be more information on global financial information and that there should be global taxes on the wealthy. I believe the book was of so much interest because people are interested in how to make more money and social mobility. If there is a limit on how rich people can get there will be a smaller gap between those with less income.
>> I was very shocked to read that education is not guaranteed to make someone rich because I feel like I have been told all my life how it is so important to get a good education to live comfortably.
Education is a long term investment, it takes about 50 years to educate the entire labor force, therefore one should not count on education as a real solution within a reasonable time frame of, say, 2 or 3 decades. In addition, education affects wages, not capital incomes (directly). Moreover, if all workers become educated, education will loose value (as it has been loosing in Latin America) and therefore its power to reduce inequality.
Please take a look here if you want more detailed calculations: http://dx.doi.org/10.2139/ssrn.3189211
1. The powerpoint was organized and clear and it also helped clear up some of the content in the readings as well as helped me understand the main points.
2. I thought it was interesting that some of the sectors/ industries that are important and hold most value to the rich. These allow them to control the market and structure which ultimately puts them in a position of power where they have control of economic production. Being in control lets them also build wealth and secure financial success as well as power over information and media which can be used to their own benefit.
3. From the introduction of this reading I thought it was important that it pointed to how historic data is essential to understanding changes in trends in inequality in the present and past, as events do repeat themselves throughout the course of history.
4. After watching the video, I think that the main takeaways were to highlight the concept of income stagnation and redistribution. In doing this, he gives examples from various time periods where the most shares in income were going to the top 1% and 10% as well as its relevance to current times in different countries in the world. In the video he mentions how increasing tax rates on the top income shares, it would help grow the bottom’s economic income shares as well as help their communities with opportunities and services.
5. The main takeaway from the Ted Talk was the distinction between income inequality and wealth inequality. On this, he mentions the different contributions to the change in data of wealth collection, such as weather it be the amount of children it is distributed between or Another would be ways that wealth concentration could be redistributed through strategies that would lower inequality and increase mobility, like policies, global progressive taxing and financial transparency amongst others.
1. From my PowerPoint presentation, what isn’t clear? Any thoughts or comments you would like to share?
The power point was very clear.
2. From the Medeiros and Souza (2015) reading, what isn’t clear? What would you like to ask the
authors? Any thoughts you would like to share?
I don’t really have any questions at the moment and so far, everything about the reading was clear
From the introduction to Piketty’s book what isn’t clear? Any thoughts you would like to share?
Everything in the video was clear
3. After watching Saez’s video, what are the main takeaways?
The main takeaways from saez video is if the top 1% get taxed more then in could benefit the bottom be beneficial for the bottom 99%.
4. What are the main takeaways from Piketty’s Ted Talk? Why do you think this book was of so much interest to so many people?
The main takeaway from the video was the difference between wealth inequality and income inequality which really intrigued me and also that the wealth inequality in the US is high and is still rising and the only way to help that issue is by taxation.
1.I found the PowerPoint clear to understand, especially the research’s central theme, the r greater than g. The slide helps me to understand more what his theory is in the book. Inequality will increase over time, since the investment is more rapid than the rate of economic growth. On slide 14, when politics are mention influences the disparity in the world. I thought it was interesting that money even controls our government. The top 1 percent control most of the world if that is true, which makes me think this is why Piketty mentions in his ted talk people should be transparent on the world’s finance.
2. The reading was clear to understand; the book goes over the primary income source for wealthy people in many countries. In the reading, which I did not know existed were pensions for the rich. It was not clear why rich people need pensions because they already have so much money than the average person to survive. The reading also describes inequality is high because most of the passive income is owned by the rich. They are the ones who own the most stocks, land, and shares even though the ratio of who owns these assets has shifted to the middle-class people also to hold the same.
3. The introduction of Piketty’s book was clear. The opening of the book went over the infinite accumulation principle I found was the most interesting topic. The concept that there is no limit to the amount of money wealthy people can earn. The book brings a good point of whether there should be a limit on the amount of money people can make. The solution is to have more taxes on their earning. Taxing the rich is heavily recommended by Piketty since the rich will still earn more money than the working class of the world. Another topic brought up was high making because of people skills. People should be rewarded for their talent and skills, but the pay should not go to an extreme for people who work the same amount of hours with a low skill do not earn as much.
4. The main take away from this video was the United States had rich people who would have a large wealth before the great depression. After the great depression and the world war I taxing kept the wealth of those rich to increase or recover. The new deal changes the outlook on inequality because taxes went down, and the top percent began earning rapidly. Emmanuel Saez looks at the different classes and how the rich have recovered from the great depression. The united states reduced the tax on the rich, not as countries like Japan and New Zealand. The video talks explain taxing the rich more, as some of the nations worldwide can be beneficial for redistribution, which will not stop economic growth.
5. The main take away from the ted talk is wealth inequality is less than it was one century ago; however, income inequality between countries is different. During the 1990s, Europe had a higher income inequality than the U.S. Now the U.S. has higher income inequality than Europe. Massive inequality can happen between counties because the top one percent can only reinvest a small portion of their wealth to continue to grow their wealth. Taxation return has indeed helped with the wealth distribution over the years. Thomas Piketty suggests people should know more about the world’s economy since they are affected every day. His book was so interesting to people because he explained why the would is equal, the difference history, he presents about inequality, and how inequality can decrease.
From my PowerPoint presentation, what isn’t clear? Any thoughts or comments you would like to share?
The PowerPoint presentation was interesting this week; everything was clear in PowerPoint. The different graphs and flowcharts made it easy to understand the PowerPoint.
From the Medeiros and Souza (2015) reading, what isn’t clear? What would you like to ask the authors? Any thoughts you would like to share?
The reading was interesting. It was easy to understand.
From the introduction to Piketty’s book what isn’t clear? Any thoughts you would like to share?
The introduction to Piketty’s book was clear. The video helped explain Piketty’s meaning of capital.
After watching Saez’s video, what are the main takeaways?
The main takeaways from Saez’s video is different income inequality. He talks about income concentration before world war 2 where individuals that are in the top 10% are getting half of the total income. Many individuals’ incomes fluctuated during and after the war. Many people who are on the lower income spectrum don’t have the same benefits as the individuals who are on the top.
What are the main takeaways from Piketty’s Ted Talk? Why do you think this book was of so much interest to so many people?
In the video Piketty gave a lot of information on incomes and wealth distribution. The main takeaways from Piketty’s Ted Talk is that he talks about r>g which is the rate of return of capital to exceed the economy’s growth rate. He talks about the difference in wealth and income inequality. Many countries are affected by the different levels of income and wealth inequality.
1. From my PowerPoint presentation, what isn’t clear? Any thoughts or comments you would like to share?
From this week’s powerpoint I understood the main points of week10. When you had explained the powerpoint that discussed what makes someone rich I was wondering if this applies to all countries and nations or just the western ones? The three characteristics that make someone rich are their individual characteristics, tehstate, and the structure of production. But what if there is a country that is not based on this system and has a better quality of living, is there?
2. From the Medeiros and Souza (2015) reading, what isn’t clear? What would you like to ask the authors? Any thoughts you would like to share?
From the Medeiros and Souza (2015) reading, everything was pretty clear. I understood the United States economy a little more when taking the knowledge I learned from the reading and applying it to our current state. Currently companies like Amazon and Facebook are controlling the wealth of our country’s distribution, and combining politics with corporations. This inturn could lead to a society that is corporation owned and run leading all ethics to be thrown out the window.
3. From the introduction to Piketty’s book what isn’t clear? Any thoughts you would like to share?
From the introduction to Piketty’s book the reading is clear and concise. I am intrigued to find out if Piketty’s conclusion is leaning towards Marx or Kuznet. While in the 19th century Marx believed that private capital accumulation would lead to fewer individuals having wealth, In the 20th century Kuznet believed that the balancing forces of growth, composition, and technological progress would reduce inequality and promote harmony among the classes.
Piketty stresses the importance of social scientific research when trying to explain how to accumulate data in order to examine the many structures that give us world inequality. He noted that data found will always be imperfect and focuses attention on the right questions to ask inorder to solve economic questions that will lead to lower inequality levels.
4. After watching Saez’s video, what are the main takeaways?
The main takeaways of Saezs video is that during the 1998-2013 the top 1% increased in how much they were being taxed and because of this the bottom 99% of individuals in the United States had their incomes rise as well. Taxing top incomes more does not reduce economic gross and could actually be beneficial for the bottom 99% because rich countries today tax very substantially to fund a number of programs like education, medical, etc. this would produce a trickle down system where the income will flow and inequality would reduce.
5. What are the main takeaways from Piketty’s Ted Talk? Why do you think this book was of so much interest to so many people?
The main takeaways from Piketty’s Ted Talk are that back in the 18th and 19th century the value of capital grew faster than the economy. So by the 1900s the amount of wealth had grown 7 times the national output of the economy. In the 20th century due to war between 1910 and 1950 the world wars destroyed the European rich. After the war the recovery of the capital stock grew slowly back up and it was more heavily taxed. This allowed the rest of the population to catch up to the top 1% (ones whose capital is slowly rising). Since 1980 things have reverted back to capital growing higher than the economy. Since the rich own more stuff that drives up inequality. I think this book interests many people because it explains why our economy has shifted and turned the way it has throughout the years. It graphs the patterns and the effects that cause these patterns which allows room for expansion on the idea. Piketty proposed solution would be to have a global wealth tax, a policy that is unlikely to happen but should be closely looked at as it would benefit the greater good of society.
1. The PowerPoint was very helpful and helped clarified a lot of the points made in both readings. I just found it very interesting that Thomas Piketty helped to write Elizabeth Warren’s wealth tax plan, which now makes me wonder who are the people coming up with the tax plans the Republicans like and what are their credentials.
2. It was pretty interesting to read where the majority of the income of the rich actually comes from and how that differs from what is told in media about the way they make money. I am a confused about what capital income is exactly and would like more clarification on that. The intergenerational transmission section is very interesting, and learning that inheritances account for as much as 43% of the fortunes of some of the richest people in the US certainly put into is really interesting (although not surprising), and I wonder if that holds true for the Forbes 400 in the US. This also made me think about a reading for another class, “Privilege: The Making of an Adolescent Elite at St. Paul’s School,” by Dr. Shamus Khan. It basically explains how the upper middle class passes down opportunities to next generation such as admittance to elite schools, internships, tutors, ivy league schools (legacy admission), etc. It makes me wonder then if there is a big difference between the upper middle class and the top 1% in terms of the opportunities hoard for their children.
3. The introduction of the Piketty reading was pretty clear, especially cause a lot of it included stuff that we have learned and talked about. I really liked his point on the danger of economic determinism and how the current resurgence in inequality is due to policies and political shifts, since I feel that a lot of the people who are against redistribution policies have this idea that current inequality is just how the economy is supposed to work and if they work hard enough that they too can become rich, but as we’ve learned that is simply not true.
4. The main takeaway of Saez’s video is how inequality has changed in the US and its relation to the top marginal tax rate. Saez goes over the trends inequality, which show a sharp decline after 1929, but an increase again starting in the late 1970s. As Saez explains, this increase cannot solely be explained by globalization and the technological revolution, since the same levels of inequality are not being seen in other countries that have also undergone a technological revolution and been part of globalization. He explains that the top marginal tax rate can help explain this, and how during times of low inequality there was a high marginal tax rate and during times of high inequality like the one we are experiencing right now, there is a low marginal tax rate. This top marginal tax rate also correlates with the ability of the top 1% vs that of the bottom 99% to recover from different recessions. The top 1% has been able to successfully recover from 2008 recession, while the same cannot be said for the bottom 99%, who have experienced no real economic growth
5. The main takeaway from Piketty’s Ted Talk is his equation of r>g. Piketty explains that if the rate of capital return is greater than the rate of economy growth that it would lead to higher inequality. He explains that wealth inequality is much higher than income inequality, although less extreme than a century ago. He also talks about how throughout most of human history, r has been greater than g and how the shift from an agricultural society to an industrial one has not changed that
>> It makes me wonder then if there is a big difference between the upper middle class and the top 1% in terms of the opportunities hoard for their children.
In terms of educational opportunities, probably not. In terms of wealth inheritance, social networks, etc, the difference is probably large.
1) From my PowerPoint presentation, what isn’t clear? Any thoughts or comments you would like to share?
No one has been able to give me a clear answer on what did trickle-down economics actually do? Did it increase income or decrease? From a historical perspective, how did the people of the time view it?
2) From the Medeiros and Souza (2015) reading, what isn’t clear? What would you like to ask the authors? Any thoughts you would like to share?
Is there a way where we can outlaw super PACs- and PACs, it seems to allow unfair advantage in our government? Allowing the rich to have more say in policies that affect the whole of us.
I would like to ask the authors what would happen if the rich were to lose 50% of their wealth? What would eventually happen, to their companies and lands? And what would happen to the 99%?
3) From the introduction to Piketty’s book what isn’t clear? Any thoughts you would like to share?
– What is not clear is the projection. What can we expect the united states or the world to look like if capital increases, much faster and the 99% cannot catch up? Will inequality go up or go down?
Personally, I liked Piketty’s perspective. I listened to audiobooks, as I read as it helped reinforce some of the ideas. What I find interesting and what I see from the class source material is more modern economists like Milanovic, rejecting the idea of Kuznets, by either creating their own or adding onto it. Proving that the Kuznets curve itself is incomplete and unable to help predict the future of contempered society. There was no way Kuznets or Marx could have known about the 2020 pandemic, and most billionaires being on track to become trillionaires. Their ideas are the base for understanding contempered economics.
4) After watching Saez’s video, what are the main takeaways?
The main takeaways from what I was able to understand was taxing the 1% does not reduce economic growth. It can be beneficial to the bottom 99% and be a trickle-down phenomenon. There is an argument even within our own state of New York, whether we should tax the wealthy more. Our Governor Andrew Cuomo, said no, taxing the wealthy will not save us. The top one percent has-recovered from the great recession and has seen a 30% income growth. The 99% has seen no real economic growth. The wealth over the past decade has not been evenly distributed and with the weight of the pandemic, although too soon to tell, there might be increases in inequality, stretching the gap further. Allow for capital to run further ahead before the economy has time to catch up.
5) What are the main takeaways from Piketty’s Ted Talk? Why do you think this book was of so much interest to so many people?
The main takeaway is the rate of return of capital is bigger than the growth rate of the economy. He explains we are going on a course where wealth is going to increase, creating a bigger gap for inequality. He uses various points from history to justify this theory. I think this book was of interest to so many people because it gives new ideas and explanations for the way the economy is going. His solutions are achievable, they are not impossible, but the politicians of the world would never allow it. I am stumped to figure out why. Do our leaders not want to make the world a better place? To ensure comfortability to our citizens of the world? Is it that hard to achieve? Do we care about 1% more than the 99%? Our laborers? The ones who fill the land and work or companies for a non-livable wage? Are this season’s Grammatist Valli, much more important?
>> I would like to ask the authors what would happen if the rich were to lose 50% of their wealth? What would eventually happen, to their companies and lands? And what would happen to the 99%?
You raise an important point. Morally, one cannot judge variations in inequality without taking other factors into consideration. Not all reductions in inequality can be valued as positive. For instance, in a war, when a city is destroyed, inequality declines, but no one gains with that. Redistribution from the rich to the poor, on the other hand, necessarily increases the level of welfare (well-being) of a society. So, the answer is “it depends on what will be done with the 50% of the wealth of the rich”.