GECON200-Topic#4: Future Jobs and Inequality

In the Wall St. Journal this week there was an opinion article describing the decline of manufacturing in the U.S. over the past several decades. While the WSJ article is an opinion piece, I would like you to consider the facts that the author discusses. Are there productivity gains to be had in fields like education? In another article economist Joseph Stiglitz discusses the roles of inequality in the shaping of the economy over the last few decades. The U.S. economy has become more unequal by many measures such as income and wealth. Does the distribution of the pie matter? Or is it just the size of the pie. You can compare our measure of inequality with those of countries that have recently experienced political upheaval in the Middle East and elsewhere. Caixin, a Chinese business oriented news outlet, recently described the global economic situation and mentions how our rising inequality contributed to our growing need for credit. In the U.S., we have used a “loose monetary policy” of low nominal interest rates in recent years to help stimulate our economy. However, by keeping interest rates low here, we might be helping to contribute to global inflation. Al Jazeera collected a number of quotes from different media outlets discussing the role that inflation played in the recent uprising in Egypt.

Questions to discuss

  • Does the U.S. need to focus more on domestic inequality going forward? How should we focus on inequality here, and what might the direct and indirect impacts be?
  • How can China fight off the role of rising inequality, rising inflation, and slowing growth? Should they or do they need to?
  • Do you believe U.S. monetary policy is responsible for the global rise in food and energy price inflation? What can the U.S. Federal Reserve do about this?

Like always, please don’t try to answer all these questions. Just discuss one of the ideas above in some detail.

31 thoughts on “GECON200-Topic#4: Future Jobs and Inequality”

  1. Looking into the future, many people in the United States are trying to find jobs in the high skill related jobs versus the more labor intensive ones. This is also due to the fact that much of the output that we get from low skill manufacturing, mining, and similar jobs is found cheaper in other countries. Thus Americans do not see a benefit in finding such jobs. As the article states, “more Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined.” (http://online.wsj.com/article/SB10001424052748704050204576219073867182108.html). This is due to the fact that the benefits of working in government jobs are greater than those we get from these jobs. But a down side to this is that “we have moved decisively from a nation of makers to a nation of takers.” This is true in the sense that in future jobs, Americans will not want to do any manual labor because they will depend on others to do it for them. Also, government jobs offer a high level of security for people basically for the rest of their lives. One drawback of this is that college graduates don’t see the need to pursue a risk in their career paths which is a very big problem because the United States will become a nation without innovators and thinkers. “Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles.” So those who will take risks may end up with great rewards and become the elite few of the United States. And the rest will be those who want to “go-with-the-flow” and become part of the robot-like Americans in the future [doing the same thing everyone else is]. As another article states, the ingenuity and drive that the elite few people of the United States had were very successful. (http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk) This article also explains how income gaps have grown even further. “While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.” This explains why many Americans in the upper class continue to carry on their tradition of being wealthy and having good jobs while the many Americans in the lower class continue to take on low paying jobs. I think this is because of the risk involved. The people who have a strong financial background in the United States are able to take the risk of innovating and finding good work whereas the people in the lower class desperately need whatever they can get without any risk. Thus, this widens the income gap even farther because those who are rich will continue to be rich and those who are poor will stay poor. There is also another reason as to why many Americans fear the risks that they may take. This is the fact that “An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul” So those who want to risk finding good work/innovations are hesitant to because of the declining conditions of the economy. An example of this is that “far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.” So in turn, it’s almost like a circle of a downfall to the economy. The less people we have taking risks to lead a healthy economy, the worse we will see it become. In conclusion, I think that the college graduates who have found jobs in a stable field should also try to take some risks for innovations and other things that lead to a better economy while also having a backup (their current job).

  2. After reading through the articles and understanding the domestic inequality, the one percent of the richest people account for a significant amount of money that keeps increasing year to year. Researching statistics from last year in 2010, the one percent accounted for 24 percent of the annual income. Now in 2011, that one percent accounts for 40 percent of the annual income; a 16 percent increase in one year! Living in America, students always hear about other countries and how different their economies are compared to the Unites States. According to Central Intelligence Agency, income distribution is more equal than Nicaragua, Guyana and Venezuela but on par with Uruguay, Argentina, and Ecuador. Also, the united States are more unequal than Germany, France and United Kingdom. Researching the annual income of the richest one percent in America, I found that the top one percent makes 27 million dollars per household and on average the bottom 90 percent makes around only 31 thousand per household. The top ten percent control two-thirds of America’s worth. According to the website motherjones.com, a graph states that households between 91 and 1 percent of the highest incomes actually gain money per year and 90 percent and down incomes have their money taken away from them to give to the highest percentage income of people. The poor are losing money while the rich are gaining more money on top of their high incomes. This inequality is something that is always going to be around because people have better jobs then others and there will always be the different social classes. I think that the Unites states need to keep an eye on this issue due to the steady increase of their annual income but again; there will be inequality due to more education of others and their focus on their careers. The United States will have to manage this inequality because technology and other advances are always going to be invented with time. These new technologies have workers not have the skills to work for the income they need to support families meanwhile the higher skilled Americans will have the skills to continue with their careers.

    references:
    http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk
    http://www.slate.com/id/2266025/entry/2266026
    http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph
    http://finance.yahoo.com/news/How-to-fix-the-nations-income-hftn-3602271346.html?x=0

  3. It is true that inflation is a big factor in determining the inequality we have in the United States. A lot of the time, inflation distributes itself unfairly. It makes sense that the middle class is losing money and income because most of them have insecure jobs that don’t give benefits, and find it harder to increase their wage with growing inflation. This is found also, in the Middle East where it has gotten to a point that there’re riots in the street over how they can keep up with the surging food and energy prices. This is a key factor that points to yes; we need to keep a watch on growing inequality and take “collective action,” which would mean a stronger government, and investment into infrastructure and education. It is a common scenario of the rich getting richer, and the poor getting poorer. Executives of corporations have a strong control over the government, and still worry about it even though they don’t rely on government for Medicare, education, and jobs unlike the middle class who do rely on government a lot of the time. China too, may have a growing problem on their hands. As they are experiencing slowing growth, it may show a need to take early action to avoid increasing inflation and inequality woes. China is comprised of “makers” rather than just “takers.” They export, and have high levels of people in manufacturing and infrastructure that we are losing in the U.S. As they become a more developed nation, and education increases, more people there will chose to take a path towards financial gain and working for the government, a similar situation in the States. This will, in the end cause a growing inequality gap if they don’t take action soon. Since they aren’t already in debt, they should invest more into infrastructure and ensuring that the nation will not be run by corporations. While the top 1% in America have continuously indirectly handed down debt, it is time for government regulation. Taxes must be reformed to change the rich getting free rides from taxes on capital gains, to the regulation of anti-trust laws. The idea of inequality growing so much in the U.S. that we eventually have riots like the middle east is a far thought, but if we don’t take action, and we continue to become a nation of “takers” and not “makers” we could see corruption in the government in the future, and the pain of the low-income families only growing.

    (http://english.caing.com/2011-02-28/100229840.html)
    (http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk)
    (http://www.bloomberg.com/news/2011-04-11/china-march-export-growth-shows-economy-tolerating-interest-rate-increases.html)

  4. With the 1% of Americans controlling 40% of all the wealth in America, a more attention needs to be focused towards the inequality in America. Capitalism has turned into greed, and the corporate leaders do not seem to mind it. Capitalism has created a sink or swim mentality. Economic unfairness throughout the nation has resulted in people feeling that the “American Dream” is unreachable. The size of the pie is growing for few but decreasing for most. The constitution states “We the people,” and I always understood that as being a sign of unity within this nation. Unfortunately, the wealthiest Americans have decided that they need a beach house, summer house, and winter cabin, while most American’s only house get foreclosed on. Economic inequality is at its largest of all time and revolution looms ahead. It is only a matter of time before workers rise up against the large banks and corporations and fight for what they deserve. Collective bargaining rights are being taken from workers in Wisconsin making it more difficult to fight for fairness, but they are doing what we all need to do, which is stand up and fight. The worst part for these wealthiest Americans, who seem to have some political influence, is this- 1 person 1 vote. The direct impact of improving the economic inequality would be the greater distribution of wealth to everyone. We are all under the same roof of America, there just needs to be more seats at the dinner table. The simple fact is that America’s pie can continue to grow while the distribution changes.

    http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk
    http://www.michaelmoore.com/books-films/facts/capitalism-love-story

  5. As we all know, the government seems to be completely captivating the world lately. Everyone wants to work for the government, yet everyone seems totally frustrated with it. We may think people want to work for the government to make changes in regulation, but it seems to be more true that people want to work for the government because “in recent years only government agencies have been hiring, and because the offer of near lifetime security is highly valued in these times of economic turbulence” http://online.wsj.com/article/SB10001424052748704050204576219073867182108.html. The articles main focus is that there has been such a strong decline in manufacturing and a big rise in government, but to me this seems expected and unusual. There are only so many things you can manufacture before you run out of things. Plus technology is such a huge part in today’s society that manual manufacturing seems out of the question. When it comes to inequality there is a bunch of fuss about the “higher” part of the nation receiving such high incomes. This again to me seems realistic… when you think about it, the middle class has jobs mainly in average areas such as construction or education etc… nowadays these jobs are less mandatory again due to all the incredible new technology. Those in the upper class are doing jobs that technology hasn’t quite gotten around to yet, so these jobs are valued higher. There is not much we can do as a country, we demand new technology, but then complain when we lose jobs DUE to the new technology. To me it seems like a lose lose scenario that we will have to live with.

  6. I don’t think the U.S. monetary policy alone is responsible for the global rise in food and energy price inflation. It’s likely true, as Stephen King says, that “while the U.S. inflation heads down, inflation in the emerging world, most obviously in China and India, is heading up.” However, it’s also possible that the entire world is contributing to this rise in price inflation, including recent natural disasters and political instabilities. For example, the NY Times reported that, “prices for many agricultural commodities, including corn, wheat and soybeans, have doubled since last summer because of bad weather around the globe.” Also, the recent political unrest in Egypt, Libya, and other Middle Eastern places, has caused a scare in the oil markets, unsteady supply of oil, and in the end higher prices for energy. There are many ideas being thrown around as to what the Fed can do too, such as Steven King’s proposal of concentrating on “the microeconomic foundations of past economic successes,” rather than short-term mending. Though many of the suggested policies could indeed work, it’s all just speculation. No one is positive at this point which exact plan will work because our economic situation is constantly changing.

    http://english.caing.com/2011-04-02/100244513.html

    http://www.nytimes.com/2011/03/12/us/politics/12obama.html

    http://english.caing.com/2011-02-28/100229840_3.html

  7. “Maybe the Fed will change its mind when the streets of Washington burn like Cairo’s.” This sub headline caught my attention more than the main headline did. America could possibly become the next Egypt; just because we are separated by many miles does not mean that we don’t face the same kinds of economic challenges. Both the U.S. and Egypt are dealing with what feels like unbridled inflation and have a generation of young people who are unable to attain jobs. Right after talks of the QE2 emerged among the Fed, food and energy prices began to soar (Xie, “Hot Money”). Meant to print more money in order to expand the economy, the QE2 also creates inflation, which is hurting our economy, as well as the world’s by raising prices but not wages (www.dallasnews.com). “The Fed is worried about deflation and the psychological effect of our seeing assets such as 401(k)s, houses, and stocks devalue,” and so their solution was to opt for inflation instead (www.dallasnews.com). However, it is having an adverse effect; the world’s poor now have a lower purchasing power and are earning the same amount of money, making them worse off. Furthermore, “About one-fourth of Egyptian workers under 25 are unemployed, a statistic that is often cited as a reason for the revolution there. In the United States, the Bureau of Labor Statistics reported in January an official unemployment rate of 21 percent for workers ages 16 to 24” (www.nytimes.com). All of these problems can accumulate here in the U.S. as they did in Egypt and spark a revolt against the government. The poor and the young unemployed will grow frustrated with the rising cost of living and their inabilities to keep up with such prices because they are unable to get jobs. Egypt’s rapid population growth and the preferential treatment of U.S. citizens toward more prestigious jobs (and not those of blue collar workers) are diminishing the number of jobs available and therefore, we must be innovative and seek to create new ones. If more people are working, the more they can consume, and hopefully, the more prices can fall. Obviously the “loose money” policy isn’t working for the Fed in the long run; if they found a way to tighten it, the amount of currency being circulated would slow and prices would not rise as fast.

  8. Rising inequality, rising inflation and the slowing growth is a very urgent issue in China today and should under no circumstances be ignored. With the yuan climbing to 6.5527 to one U.S. dollar as of April 1, 2011, which is its highest point since Beijing began adjustments in 2005, it is as evident as ever that something must be done to curb the rising threat of inflation. It is unrealistic however to expect any immediate results despite how successful any one plan might be. In this case, it is probably best for China to concentrate their efforts on targeting the exchange rate mechanism to resolve this problem. Through careful consideration the yuan should in time be able to achieve a more flexible and open exchange rate in a few years time. Not only is rising inflation a major issue in China right now, but the slow growth rate the country has been experiencing has become a very pressing issue as well and so far the most widely used means for combating the low growth has been to use the method known as credit rationing. Chinese President Hu Jintao, made it quite obvious during the December 10 to 12 annual economic work meeting that it is at the top of the government agenda next year to attempt to stabilize prices without having to compromise the country’s growth.

    References:

    http://english.caing.com/2011-04-11/100246717.html

    http://english.caing.com/2011-04-08/100246144.html

    http://english.caing.com/2010-12-13/100206952.html

  9. I agree with Taylor somewhat. Technology is taking away some of the jobs. The Kindle, for example, is impacting bookstores and putting tons of people out of work. Borders is filing for bankruptcy due to “Its inability to garner significant online business and its near absence from the growing digital books market” (http://www.huffingtonpost.com/2011/02/16/borders-files-for-bankruptcy_n_823889.html). However, it is only fair that “creative destruction” take place in the economy. The streets would still be filled with horse-drawn carriages if people refused to accept the advent of the automobile, so we must innovate and continue to embrace innovation. In this way, we will keep creating new jobs by hiring new researchers and manufacturers.

  10. I believe one of the US’s top focal points needs to be on domestic inequality. Maybe it’s just the fact that I’m a normal college student who doesn’t have much money, but I believe some of the wealthier people in the country need to bare the burdens of some higher taxes. Cutting of spending within programs that don’t work in the government is also a good idea, but it takes more than that to cut this budget deficit. We also need to raise taxes for some so that we can create a strong middle class America. Joseph Stiglitz made an excellent point talking about the top, wealth 1% of America saying, ”In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.” It’s frustrating to hear everyone talk about the every growing inequality gap in society, so take some responsibility, and help those who might not be as fortunate in times of recession and recovery/expansion. Winston Churchill said it best, “Show me a young Conservative and I’ll show you someone with no heart. Show me an old Liberal and I’ll show you someone with no brains.” As of now, I want everyone to have a good life if they work hard for it, and they will get rewarded with the top 1% of wealthy Americans helping them out with higher taxes. But I know that in my future, after gaining money, earning respect, and working hard, I too will still want to help others, but I will be much more conservative with the spending of my hard earned money.

    http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk

  11. The article, “GOP Completely Fixes Economy By Canceling Funding for NPR,” announces, the “middle class once again has cause to believe in the American dream.” Republicans pulled funding for Car Talk and Planet Money, which ultimately created 4.2 million jobs and generated a $2 trillion budget surplus. As if that still was not enough, they are now turning their attention in cutting the National Park Service, which is aimed to ensure Social Security’s solvency for the next 350 years. http://www.theonion.com/articles/gop-completely-fixes-economy-by-canceling-funding,19897/ This great shock of one percent of Americans taking nearly a quarter of the nation’s income every year was an inequality problem that decreased the opportunities of the majority of Americans. However, now with the newly 4.2 million jobs created and the $2 trillion budget surplus, along with the further abruptions to certain funds, the social classes are heading in a more equalizing direction.

    http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk

    http://www.theonion.com/articles/gop-completely-fixes-economy-by-canceling-funding,19897/

  12. Though the United States is a world economic superpower, there is growing economic inequalities among U.S. citizens. As of July, 2010, the top 1% of income earners in the United States hold approximately 35% of all the nations wealth. Leaving the bottom 80% of income earners with only about 15% of the nation’s wealth. History has shown that too much division of wealth can lead to oppressive poverty, yet too little division of wealth can also lead to extreme poverty. Libya, for example, had their leader Muammar Gaddafi with over 70 billion dollars in wealth, while the average Libyan annual income was only about $7,000. If there is no division of wealth, such as the former Soviet Union, economies are stagnated because the government cannot produce enough for the people and there is no incentive for the people to work for their wealth. I believe that wealth should be more evenly distributed among Americans, but not too the level of any sort of socialism. The wealthy should be allowed to hold their wealth. I think there should be some sort of subsidy or incentive given to the very wealthy for spending their money in lower income areas or in small businesses to help pump money into lower income areas. Direct impacts would be a more a evenly division of wealth among Americans. There could be some indirect social impacts as well in that Americans may feel we’re going in a direction of socialism because of the division of wealth, when really the very wealthy would simply spend money on goods and services they want or need and in part help the lower income people acquire more wealth.

    http://www.nationsencyclopedia.com/Africa/Libya-INCOME.html
    http://www.mint.com/blog/trends/wealth-distribution-07192010/?display=wide

  13. After reading about the issue of domestic inequality in the United States, it is evident to me that it is necessary for the United States to focus on this inequality in order to revive our economy. The Vanity Fair article states that the growing inequality is related to shrinking opportunity, and it is economic opportunity that is required to have a thriving economy. However, most people are not aware of this correlation. According to the website slate.com, in a survey conducted from 1998 to 2001 in 27 nations, 69% of people believed the United States has the highest proportion of people who are rewarded for intelligence and skill, when in fact, this is just “imagined” social mobility. When it comes to “real” social mobility, places like France, Germany, Denmark, Sweden and Spain have less domestic inequality (http://www.slate.com/id/2266025/entry/2266026). The Vanity Fair article points out that preferential treatment for the wealthy have led to inefficiencies in the economy. One of the ways the article suggests to alleviate this problem is by “collective action,” where the government invests in education, technology, and infrastructure. Tax reform is also necessary to eliminate distortions. According to the Congressional Budget Office, since 2001, the share of before-tax and after-tax income of the top 1 percent increased while income for lower-income households declined (http://www.house.gov/apps/list/speech/edlabor_dem/IncomeIneq073108.html). Nell Minow also stated, “these outrageous pay packages juxtaposed with losses in share value and jobs diminish our credibility and increase our cost of capital” in relation to the amount that CEO’s (part of the 1%) make in income. It took the country time to get to this stage, and it will take time to correct it, but beginning it now should begin opening opportunities for lower income people and thereby improving the overall economy.

  14. After reading some of the other posts, I feel like people are a bit hard on the top 1%..I know only a select few control 40% of today’s wealth and about a quarter of today’s income, but does that really mean they’re all horrible and mean people? Maybe, maybe not. I just felt like they deserved some defending first. Maybe it’s just because I’m a naïve freshman in college and honestly don’t really know much about the “real” world. That being said, do I think something needs to be done about this growing inequality and the distribution of wealth? Yes. I agree with those who say we should increase taxes on the wealthy in order to create a strong middle/working class. Honestly, I’m not really sure what else we can do, but I think it’s a little strange that no one’s mentioned the idea of whether or not the wealthy do or need to care about the rest of society, because it was the most interesting part of the article for me. Most people argued that the wealthy don’t care at all about what we as the middle class do; it doesn’t affect them. But the article shows that it clearly does. It affects their society at least. This same type of inequality is what has lead to increasing food prices and youth unemployment in the Middle East. The top 1% literally have the capability of ruining our economy, but in doing this, they ruin their economy as well.. So in a way, I do think it affects them. Whether or not they care, I have no idea; I would hope they do.
    http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk

    This is completely unrelated, but I also disgree with Farhan in that I think we as people are not necessarily to blame for going from a “nation of makers to a nation of takers”. Sure, people aren’t as interested in doing manual labor anymore, but the article also mentions how technological advancements have simply gotten rid of some of these jobs.
    http://online.wsj.com/article/SB10001424052748704050204576219073867182108.html

  15. I believe the U.S. does need to focus more on domestic inequality going forward. Currently, the U.S. is one of the few countries in the world that has allowed inequality to grow. Currently, one percent of Americans control 40% of America’s wealth. As a result, this one percent of Americans has become more distant from the rest of the 99%. For instance, the wealthier Americans do not need to rely on the government as do the rest of us, for things such as medical care. They can afford to buy everything they need themselves and in turn they create a greater distance between themselves (the wealthy) and the rest of society. America needs to focus on this issue because in the long run it will only further injure our economy. The one percent of Americans should be taxed higher so that they can carry their fair share of stimulating our economy.
    At one time America’s response to the one percent was to celebrate their ingenuity and drive that brought them good fortune. As former President John F. Kennedy once remarked, “A rising tide lifts all boats”. Today, as is evident with our current financial dilemma, that response would be misguided. While the top one percent has seen their incomes rise 18 percent over the past decade, those of us considered the middle class have actually seen their incomes fall. All the growth in recent decades has gone to those at the top. If this does not change, the opportunities available to the 99% will continue to diminish.

    http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk

  16. Ok, it is not good that 1% of our nation controls 40% of the wealth. But let’s take a look at our own nation’s history. In 1922, a period viewed now as the “Roaring 20s,” the upper tier controlled 45% of our wealth. In fact, John D. Rockefeller alone had about $1 billion in 1900 dollars, which converts to almost $350 billion in today’s money. Today, the Bill Gates, Steve Jobs, and Mark Zuckerbergs of the world are the ones controlling the wealth. But even these three combined do not equal the amount of wealth Rockefeller acquired over his lifetime. I feel that the misdistribution of wealth today is not as traumatic as it once was back when industry ruled America. When a country is first rising to prominence, the first thing that it must do is become an industrial country. America is well past this point. With our imports greatly exceeding our exports, America clearly has cleared the industrial stage of a country’s building process, so is that really a major issue that college students prefer the job security that is working for the government over local industries that may not last? How important is it for a country that is one of the most powerful in the world to have an equal distribution of wealth? I say no, especially with how comfortably the middle class lives compared to other countries.

    http://www.eia.doe.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm
    http://benmuse.typepad.com/ben_muse/2004/03/changing_income_1.html

  17. The US is currently facing the problem of growing economic inequality, but it is a problem that is an unavoidable reality associated with capitalism. We can take small actions to lessen the gap between the rich and the poor, but we cannot completely solve the problem. The US should take more action in this field by providing more scholarships and providing more funds for schools to give people an equal opportunity for success. This cannot completely solve the problem but it will give the underprivileged an opportunity for success.
    China faces the same issue but to a more severe degree. In order for them to address this issue they would need to take a much different approach by possibly offering financial aid to the poor and other strategies along that line.
    The US is definitely responsible for the increase in inflation due to our consumption levels and our government price decreases on fuel. The only ways to solve this issue would be removing the price decrease and consuming less, but this would be very hard to implement. The US is in need of major change and it needs to start before it is too late.

    http://online.wsj.com/article/SB10001424052748704050204576219073867182108.html
    http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk

  18. I think it is interesting when talking about a “taking” society instead of “making” society is to look at the most popular majors for college students in the United States.

    In 2006 the Princeton Review listed the top five majors as Business Administration and Management, Psychology, Elementary Education, Biology, Nursing and Education.

    While Business Administration and Management is a major that could produce jobs and its own wealth, many of these majors are most likely to take jobs with already existing companies.

    The five following that lead themselves to government jobs. Obviously Elementary Education and Education majors are most likely to work in a public school system and government jobs while Psychology and Biology majors can easily become professors at public universities themselves. The last two majors could also become researchers that would need government funding to get paid. Nursing can also be at a community hospital that would also would receive pay from the government.

    If these are the students that are graduating and these continue to be the most popular majors, government jobs will continue to be in demand while private sector jobs will not see an increase.

    http://most-popular.net/majors-college

  19. Business owners are Scrooges. In a February issue of the Huffinton Post reporter Lila Shaprio reports that even as the productivity of the average worker is increasing, real wages aren’t. Even worse, they’re not increasing relative to growth of the companies (1). This should help put into the context the rich/poor divide that Vanity Fair points out and the disappearance of the middle class as the middle class wages decrease while the upper class profits increase for those in control of these companies (2). While they are on top now, the scary reality is that as real wages decrease, so does buying power. Less buying power leads to less investment into the economy, meaning everyone loses. Businesses sell less products, make less money, and thus fire more workers. This is the vicious cycle that comes as a result of stingy wage payments. This issues with payment, especially in particular fields like manufacturing, has empirically proven to cause issues with buying power needed to reboot the economy, like in technological transition from the 70s to 80s as pointed about by the Nation (3). If we don’t alter our payment policies for the common worker and businesses don’t stop being Scrooges, we all lose.

    (1) Shapiro, Lila. “The The Widening Gap Between Company Productivity And Workers Wages ‘Redolent Of Scrooge’ [CHART]”, http://www.huffingtonpost.com/2011/02/26/the-widening-gap-between-_n_828659.html
    (2) Stiglitz, Joseph. “Of the Of the 1%, by the 1%, for the 1%” http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk
    (3) Reich, Robert. “Unjust Spoils.” http://www.thenation.com/print/article/36893/unjust-spoils

  20. The saying the richer are getting richer and the poor are getting poorer is now a easy to see reality in the United States. Throughout the past decades the richest Americans have had incomes rise by 18 percent while the middle class incomes have fallen. http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk In the Joseph Stiglitz article, he talks about how this inequality is a large problem for Americans to consider. One of the most important things to consider is how those with great power and those getting favored tax treatment is causing the deflation of the efficiency of our economy. He also talks about how our infrastructure will decline as a result of this inefficiency because the rich will not want to spend money on things they feel to be unnecessary. Problems in the Middle East have caused many people of these countries to stand up and revolt. A large reason for these revolutions is the inflation prices, especially the prices of food as in Cairo the food prices rose by 41 percent just in 2010. http://english.caing.com/2011-02-28/100229840.html Inflation is another huge problem in the world as the poor are being stolen from as they usually have no debt yet their money in the bank is being hit by inflation and losing value and these loses are going straight to the rich. Another problem is our loose monetary policy, as the U.S aims for negative real interest rate just to help brush away some of the United States debts. http://english.caing.com/2011-02-28/100229840_3.html With problems like ones we are experiencing all over the world, the United States has to concentrate its energy on closing this inequality gap and lowering the inflation rates, if these both continue problems will surely worsen greatly.

  21. The U.S. monetary policy is not fully responsible for the global rise in food and energy price inflation. According to Ben Bernanke, “emerging markets have all the tools they need to address excess demand in those countries” and it is unfair to blame U.S. monetary policy for these upward inflationary pressures [1]. He also noted that these emerging markets are facing these inflationary problems “because their own economies are growing perhaps even faster than their capacity” [1]. This case can be seen in the recent turmoil in Egypt involving rising food prices and unemployment. For example, Egypt’s population has doubled in the past three decades, one third of the population is under 14 and half the population is under 24. The rate in which the country is growing, Egypt needs to create more jobs than the U.S. which has a population 3.6 times greater than Egypt [2]. This goes back on what Bernanke was saying about an economy growing faster than its capacity. The rise in food prices has been a result of some of the recent weather disasters. A combination of snowstorms, droughts, and flooding has impacted prices and lead to the economical turmoil from Tunisia to Egypt and Jordan. Snowstorms destroyed U.S. grain, wheat, corn, and soybean crops. Flooding lead to decreases in Australia’s cane crop and also record high for palm oil in Malaysia [3]. Unsustainable economic growth and weather are also big factors in the global rising inflation pressures.

    Don’t blame U.S. monetary policy: Bernanke .http://www.reuters.com/article/2011/02/03/us-usa-fed-food-idUSTRE71288420110203 [1]

    Xie, Andy. Hot Money, Fast Riots. http://english.caing.com/2011-02-28/100229840_1.html [2]

    Food costs at record high as U.N. warns of volatile era. http://www.reuters.com/article/2011/02/03/us-food-prices-idUSTRE71223720110203?pageNumber=1 [3]

  22. I think that one of the top priorities in the U.S. should be promoting equality. As Stiglitz says, just the top one percent of our population brings in roughly 25% of our total income. While we want to maintain our capitalist ideology, it is important to encourage equality, as having an unequal population has much more far-reaching repercussions than just socioeconomic status.
    A study by Columbia University showed that several countries, along with the world average, like the United States, China, and Japan are becoming more unequal. The conventional logic would dictate that the United States, a nation founded under the principal that “all men are created equal”, would be leading the charge in increasing the standard of living for all people, but apparently that is not the case.
    According to the Organization for Economic Cooperation and Development, the United States rank just slightly above average in terms of total satisfaction with peoples’ lives. Some countries whose population scored better on this test include Mexico, Ireland, and Belgium. As for those countries whose inequality was on the rise, such as Japan and the United Kingdom, their satisfaction is below average.
    This correlation shows that rising inequality may be directly proportional to levels of satisfaction, indicating that income gaps more than likely have an affect on other elements than just fiscal status. Unfortunately, fixing equality problems poses many problems. For example, the people in power, who are mostly upper class, have very little motive to push any wealth-redistribution reform, which would alienate themselves from their top contributors and be detrimental to themselves. It exists and will likely remain the case in the United States that the people who have the money make the rules, and that they have no desire to change the system.

    Links:
    http://www.oecd.org/dataoecd/46/2/37964668.pdf
    http://iserp.columbia.edu/content/center-wealth-and-inequality

  23. Many people today are trying to work in more government related occupations rather than labor intensive occupations versus through out history there has usually been a pretty even balance of government workers such as teachers in addition to political officials as well as skilled worker that are doing more blue collar jobs such as manufacturing. Today more people are leaning towards government affiliated jobs because if you are going to college and spending all of the money on furthering your education, why would you want to then do a job that you could have done without going to college working with people who are not college educated. I understand that there are many people who do that today, however I do not thing that working where they are right now was their ideal job when they graduated from college. They may be working in the field they are in right now due to the economic hardships our country is facing and they are just doing it until they can then look for a job in the field where they were working before the recession, no one really knows their reasoning. We do know, however, that a majority of college graduates are not looking to work in a labor-intensive field.
    Many people see this fluctuation from manufacturing to government jobs as a problem, however I see it to be rather natural. With the rise in technology that we have today, it seems rather silly to me for there to be as many people working in the manufacturing field rather than in government jobs. Technology has taken the place of many people that used to create tons of jobs in manufacturing that now are just not necessary and frankly, don’t need to be held by people anymore. If there can be more people working in jobs like teachers and other government jobs that can promote the welfare of our country then why do we see this as such a terrible change? Yes, you have to have a higher form of education to hold many of these positions, but with a vast majority of people going to college today anyway, why still have jobs available that virtually no one wants to hold and that many people are over qualified for?

  24. The U.S. has a responsibility to promote the economy as a whole. We need not worry about the income distribution when we still have a fragile economy. In other words, we need to focus on the size of the pie as a whole. And this is true for multiple reasons. For one, it is much easier and more fair to promote the growth of the entire economy, rather than jepordizing growth to help certain groups within society. Also, the rich provide many benefits to the economy, and taxing them more to help lower income groups can hurt the economy more than it would help it. In a WSJ article written last July, they quoted Gallup, saying ‘[S]pending by upper-income consumers fell in June after rising in the previous six months. Surveys show a big reason is the expectation of higher taxes.’ Last year, the rich stopped spending so much because they anticipated the Bush-era tax cuts to expire at the end of the year. That spending is important because it fuels the economy, makes jobs and generates tax revenue. Those Bush-era tax cuts didn’t promote domestic equality, but promoted the economy. There will always be inequality in the U.S. and trying to get around that would hurt the economy as a whole. With that in mind, the Bush-era tax cuts should be made permanent because they promote the growth of the size of the pie as a whole.

  25. Financial inequality will always be an issue in a democratic nation. The fact that 1% of Americans control 40% of the nation’s wealth may be disturbing and seem unequal, but these individuals earned that money. Inequality may be an issue, but it’s up to the common citizens of America to step it up and reduce that financial gap; it’s not for the government to focus on. The biggest problem in my mind is China’s hold on our economy and it’s global effect. When they offer us twice the normal exchange rate – giving us twice as much chinese currency for our U.S. dollar – they purposefully devalue their own currency. Thus, what looks like a large marginal value and assumed large real value on exchange is really diminishing the value of the currency we’re obtaining from them. In other words, it looks as if the U.S. is getting a good deal by receiving “more bang for their buck” in the exchange, however, the true value of the money we are receiving is diminishing the more we exchange. China continues to purchase assets and invest in U.S. property and bonds while the U.S. continues to receive this invaluable currency that only stimulates China’s economy. Though, the Chinese purchase of U.S. bonds does help our economy in the short run, the interest from these bonds combined with current and future inflation only puts us further in debt.

    http://www.eia.doe.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm
    http://benmuse.typepad.com/ben_muse/2004/03/changing_income_1.html

    Most Info:

    http://www.locationusa.com/foreignDirectInvestmentUnitedStates/jul08/outward-foreign-direct-investment-china.shtml

  26. I may be wrong, but I believe inequality must have existed as long as civilization has. There is always going to be someone on top and someone down below. Off the top of my head I can think of the feudal government/economic systems of medieval Europe where a few elite nobles and Lords lived lavishly off the exploited labor of the lower class serfs. Communism, in theory, would eliminate this inequality, but we saw how well that works (Soviet Russia, China, etc.). While the capitalist economic system in America doesn’t do much to help this problem, it doesn’t seem like anyone else has figured out how to solve it yet either. So is it really something we should be alarmed by? I don’t think so. Historically, it’s nothing new. Perhaps I would have a different perspective if I had come from a lower class family and had a terrible education growing up, but it seems to me that just about anyone in this country has the opportunity to go to school, work hard, and get themselves to the exact same position as the “elite top %1” that are supposedly to blame for all of this. And I honestly don’t see why this is such a problem anyway. The highways aren’t falling apart. The trains run on time. Where’s the big crisis?

  27. @Alexandra Heil- I don’t know if you did this on purpose or not, but the article you cited is a joke. The Onion is a satirical parody newspaper. Just letting you know.

  28. Reading through these articles shows how the dilemma of inequality in the United States appears to be a much bigger problem than people may think. While it is easy to simply look at the “1% controls 40% of the wealth” fact as an indicator of the inequality, it is the implications that this statistic holds for the American society that is troubling (http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk). The term “the rich get richer” seems to be applicable to the current situation, as the wealthy hold the political influence which benefits them and leaves the other 99% in the dust. It is not surprising to see why – a good amount of students at top-tier universities and many of the lawmakers in our society, such as the U.S. senators and House representatives, come from extreme wealth. While it is true that a few from lower-income backgrounds have found success in academia and other areas, it seems that they are the exception rather than the norm.
    Chrystia Freeland of Reuters feels that the inequality problem boils down to something she calls the “lottery effect”, which describes how the majority of people fight for the top spots in society with virtually no chance of getting there (http://www.nytimes.com/roomfordebate/2011/03/21/rising-wealth-inequality-should-we-care/the-lottery-mentality). We as a nation have developed a false sense of social mobility, which I cannot see going away under the capitalist system that this country has thrived on. The only way I see the gap closing is to see people from the 90% of having a fair chance at the opportunities the upper-crust of society enjoy. I believe education is the biggest factor in getting there. The school voucher system should get more funding, as well as scholarships and financial aid for those who can utilize it. That way, we can see a new demographic help shape the future of our nation and disrupt the status quo.

  29. Over the last several decades China has evolved into a manufacturing powerhouse through a number of government reforms aimed at bolstering growth within the Chinese economy. The wealth acquired through exports has allowed China to become a major creditor throughout the world while increasing the standard of living for their citizenry. However, this massive economic expansion has created a number of problems for the government which is attempting to maintain a high rate of growth but still keep a firm grip over the economic activities of the country. Rising inequality is one issue they need to address immediately because China’s rapid economic growth has resulted in an increased standard of living mainly for urban Chinese citizens. This has created sharp income inequality between rural and urban Chinese. I feel that the best solution is to increase skill based education for the rural populaces so they can have the opportunity to acquire better jobs and wages in the growing urban centers of China. The countries massive growth has also resulted in rising levels of inflation which gone unchecked could severely impact China’s economy. I think the government should raise interest rates and require the banks to increase their reserve requirements in order to curb the fast pace of inflation. The high growth rate has turned out to be a double-edged sword for the country because it has on the one hand advanced China’s economy but at the same time created many problems including those previously mentioned. I believe that China’s current growth is unsustainable and in many ways negatively affecting the country. History shows us that rapid economic growth tends to result in rapid political transformation which is not in the best interest of the Chinese regime. I believe that the government needs to accept that their countries growth will eventually slow down and they should take steps to stabilize a healthy and normal rate of growth in order to ensure future stability.

    http://citywire.co.uk/money/chinas-booming-economy-and-inflation-grow-faster-than-expected/a486961?ref=citywire-money-Investments-list

    http://understandingsociety.blogspot.com/2008/07/rising-income-inequality-in-china.html

  30. While the nations recovers slowly from the 2007 recession (economic GDP growth 2.8% in 2010, after a real GDP decline of 2.6% in 2009, http://english.caing.com/2011-04-02/100244513.html) it would be naive to blame our latest economic woes entirely on growing economic inequality. However, the growing inequality between the top 1% and the rest of the country is nonetheless an issue which ought to be examined. From a basic political perspective, it seems that those in the top 1% have a disproportional amount of political representation namely through private campaign funds which garner legislative interest, and ultimately, difficulty of increasing taxes on the wealthiest tax branch. In order to stimulate business, government is also more lenient on corporate taxes which also allows the wealthiest sect to maintain their wealth and power. http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk. Thus, as the interests of the wealthy and those in power are alligned, as the vanity fair article argues, an unnatural alliance is formed which circumvents the interests of the greater majority of the population. Thus a critical step in preventing future common good should be at least to enforce a limit on campaign funding and to increase taxes on the top 1 percent to decrease the income gap. this should hopefully reduce government deficit and increase political equality

  31. After researching the current global spike in food prices, I believe some factors must be considered. The main factor responsible must be the United States’ monetary policy, in addition to such factors as the rapid population growth in developing counties and extreme weather conditions. While these other factors are certainly affecting food prices, I disagree with Fed Vice Chairman Janet Yellen, who said the rapid growth in demand by emerging economies such as China and others are responsible for driving up prices. She went on to argue that the Fed should not pull back on its stimulus efforts in order to rein in prices. I believe that the Federal Reserve is driving up food prices by pushing dollars into circulation and devaluing our own currency. I understand the Federal Reserve hopes to stimulate economic growth, but such a goal can only be achieved through an increase in U.S. production and in doing so, the increase in jobs. Printing more money is simply causing inflation to not only the United States, but also the global market. If food prices continue to rise, more revolutions such as Egypt will break out and such unstable nations will begin to hoard their grain and other foods to instill security in their citizens. The Federal Reserve should push for more jobs in agriculture to balance Yellen’s supposed “belief” in the rising demand of emerging countries if the emerging counties are truly the problem. In doing so, hopefully the prices will begin to stabilize. But for my belief for the crisis (the Fed’s infusion of dollars into circulation), only time will show the potentially negative ramifications it could have on the United States and the surrounding world. I think Dan Amoss, from the Business Insider, said it best when he stated, “The Food Crisis is a Dollar Crisis.”

    http://www.businessinsider.com/the-food-crisis-is-a-dollar-crisis-2011-2
    http://finance.yahoo.com/news/Janet-Yellen-says-Fed-not-to-cnnm-1112039793.html?x=0

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