The following article by Professor Krugman speaks of a book by Piketty. The book in question was released in English only about 10 days ago but practically every review praises it as a classic in the making. The issue that Professor Pikkety is concerned with is that of inequality of income on a global level. This should be enough of a background for the remarks by Mr. Krugman on income distribution in the US
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Working for the Owners
I’ve just finished a draft of a long review of Thomas Piketty’s Capital in the 21st Century,
which argues that we’re on the road back to “patrimonial capitalism”,
dominated by inherited wealth. It’s an amazing book; among other things,
it does an awesome job of integrating economic growth, the factor
distribution of income (between capital and labor), and the individual
distribution of income into a common framework. (It’s all about r-g).
One slight weakness of the book, however, is that Piketty’s grand
framework doesn’t do too good a job of explaining the explosion of
income inequality in the United States, which so far has been driven
mainly by wage income rather than capital. Piketty does take this on;
but it’s kind of a side journey from the central story.
No matter; it’s still a masterwork. But I’ve
been thinking about this quite a bit, and one thing that strikes me is
the remarkable extent to which American conservatism in 2014 seems to be
about defending and promoting patrimonial capitalism even though we
aren’t there yet.
Think back to the Bush administration, whose main economic theme was the “ownership society“:
in effect, the message was that you’re not really a full-fledged
American, no matter how hard you work, unless you have a lot of assets.
Think of Eric Cantor’s famous Labor Day tweet in which he used the
occasion to celebrate business owners. More recently, Mike Konczal has pointed out
that despite claims that the Tea Party somehow represents a rebellion
against business domination of the GOP, the Tea Party agenda corresponds
almost perfectly with Wall Street’s goals.
Oh, and let’s not forget the long crusade against the estate tax.
In short, the GOP is more and more a party
that consistently, indeed reflexively, supports the interests of capital
over those of labor. But why?
Well, one thing you might imagine would be
that the party was responding to a change in society — aren’t more and
more Americans asset owners, for example through their retirement
accounts?
And the answer is no. In fact, the
concentration of income from capital in a few hands has risen sharply.
Tucked deep inside the CBO report on trends in the US distribution of income are data on the concentration of various types of income; here’s the one percent’s share of capital income:
So what we’re seeing is that half the
political spectrum now instinctively accords much more respect to
capital than to labor, at a time when capital income is growing ever
more concentrated in a few hands — and is surely on its way to being
concentrated largely in the hands of people who inherited their wealth.
Curious, isn’t it?
17 comments:
This excerpt makes a point that capital is overpowering labor. What Krugman is trying to say is that our society will turn into a patrimonial capitalism. What this means is that the bosses in our future will be ones who haven't done much to earn their money. Laborers work harder for a lower amount of money and actually know the value of work unlike their bosses who will have earned their money through inherence. Our future businesses will be in the hands of people who probably haven't worked a day in their life, which is indeed a curious thought.
This article is an eye-opener. This article states that our economy is becoming a patrimonial society in which the business owners inherited their wealth and position and did not have to labor to acquire their assets. It is obviously a huge issue today with income distribution and the difference between labor and inheritance. It is definitely unfair that our societies future bosses have not worked a day in their lives.
The income distribution to its employees and bosses is rather interesting. Of course, it is changing as time moves forward, yet it is becoming completely unfair. Society is taking a turn becoming a patrimonial society, where the owners and bosses are the ones collecting all the money, without having to do as much work as everyone else. This is bad for our future, because it will decrease a lot of the income of other families. Therefore, in the future, people will not have that much experience yet make most of the money, which is not as fair as the people who work harder for their money.
According to this excerpt, Krugman makes a valid point. Todays world is changing vastly into a patrimonial capitalism. In other words, this means that people are inheriting their businesses and wealth, rather than working hard for their money and owning a business due to their hard labor. What Krugman is trying to state is that it seems that many owners of businesses are people who really have never worked hard for their money. It seems that these people are given there job from past generations such as their parents or relatives. This shows how society is unfair and many people are just handed things for nothing. Its sad to say but people owning multi million dollar businesses are people that indirectly don't deserve it. People should work their way up and earn what they make through labor, not because of who and what they know.
Having your income being inherited instead of worked for is an aspect that will definitely give you a boost in the american society. It's like powerful family owned businesses. Yes you can go to school, but even if you don't, you still have something that will secure a large enough income for you. I believe though inheritance might be increasing, there was someone before that had to do a form of labor in order to permit any one inherit anything. Your social class determines how you will start in the work field. Lower class people have to go to work and attend college because no one else will provide them with sufficient financial source. Such of these students struggle more in school simply because they're doing a balancing act for 4 years that some times turns into 5, with more debt because of their financial level. This can cause their children to later on not need to struggle as much if their parents become successful. With inheritance, you have more flexibility and less worries, someone has been there and is teaching you how to survive without crawling. Though the inherited might still decide to go to school, that to will go easier because they can concentrate on just school rather than multiple tasks. Though everyone should work because they're many jobs that still need to get completed, if you have the privilege of income being passed along at least incorporate it into society in a way where it can still create a positive effect in the economy.
This excerpt discusses the harsh reality that those that have a great deal of wealth have inherited their money and did not labor. Unfortunately, this is becoming a part of the American culture, acquiring money with little to no labor. This idea contradicts the old common perception of America of working to achieve the "American Dream". The truth of the matter is that captial income is growing more and more concentrated on just a few hands of which inherited their wealth.
In this article, the economists discuss the income distribution. It is not a secret that the wealthy pass on their businesses to their kids which is keeping the rich becoming even more rich and the poor unable to move up in the economy. The rich inherit their wealth without working. This is a very unfair advantage that these citizens get. Although this is unfair, there is nothing that will change this from happening. Family businesses tend to stay within a family and that is how it will always be. But for those who were not given a business, they will just have to work twice as hard to obtain one.
People can say whatever they please on whats effecting the economy. I feel that they need to really focus on whats happening to the United States distribution on income. Some seem to think that patrimonial capitalism is the answer to everything and thats not the case. The problem of income needs to have a huge drastic change because from the looks of it the rich will stay at the top and more and more people will enter the poor and stay there. The United States it better too expensive and not many can survive on the government doing nothing.
Income inequality and the view that the post takes is a really sensible topic, but always worth discussing. More and more, people are giving more respect to capital than to labor; that is, giving more value to the capital income itself than the labor and work behind it. These days, society has been coming back to being dictated by those who have the most capital income and are the smallest part of the whole. The problem the post talks about relies on the fact of "patrimonial capitalism", that is the large second portion of the next generation in society that is going to inherit the wealth. While the Republican Party supports the interests of capital over those of labor, the Tea Party somehow represents a rebellion against business domination of the GOP.
After reading this article, I am definitely left a little shocked; however this whole idea of the income distribution is not that quite surprising. Reality is that the rich inherit their wealth without working. The wealthy pass on their assets to no one else but their children, who end up becoming instantly rich. So the concept of the "birth matters more than effort and talent" still exists in our society. It is upsetting that today we reward capital too much and labor not enough.
After reading this article, I am definitely left a little shocked; however this whole idea of the income distribution is not that quite surprising. Reality is that the rich inherit their wealth without working. The wealthy pass on their assets to no one else but their children, who end up becoming instantly rich. So the concept of the "birth matters more than effort and talent" still exists in our society. It is upsetting that today we reward capital too much and labor not enough.
Whoops, clicked enter too soon.
This article was rather interesting and important as I feel that the income distribution is one of the largest issues that the economy faces today. I think the graph shows an increase in business income, capital income, and capital gains between 1979 and 2007 to show the harsh reality of what our economy has become. Of course things should change as time progresses but perhaps it has not been for the better as shown in the political cartoon above. I thought that the image is a good representation of how the income is so evenly distributed. In a way it is truthful as it shows the top 1% sitting way above the rest.
I can agree/disagree with Thomas Piketty’s idea in his “capital in the 21st century” book, which discusses the idea of “patrimonial capitalism” which is defined as an inheritance passed down from previous ancestors (ex. Businesses, ownership, etc.). This intertwines with the current issue of income distribution and how unfair it has become. The working class (laborers) work harder and is more involved with the organization while establishments such as family businesses ownership is past along. Everyone’s situation is different I as one of those who is involved with family own businesses where owner ship is pass along to me. I am equally involved and or further involved in the business along those with in the workforce.
I think that the article makes a valid point that society is moving more to a patrimonial society. This meaning more of the wealthy have inherited their wealth. I found this concept very interesting and did more research on it. I found out that six of the top ten people wealthiest people in America have inherited their wealth. I came across this opinion on patrimonial society and on this particular economists views. The article I found goes more into detail about the GOP favoring more of the wealthy. You can read the article at http://www.nytimes.com/2014/03/24/opinion/krugman-wealth-over-work.html?_r=0
This article presents an underlying problem that goes unseen by many people in America. The power of capital has taken over the business world all over the U.S. People that have worked so hard and made success for themselves from the bottom of the bunch have now created a problem in todays world. Alost every big time company, business, monopoly, etc. was created at one time by an intelligent, hard working and experienced business man. Throughout the years this success business, monopoly, corporation, etc. is passed down by family generations most of which who have no experience nor the credentials. A lot of the owners in todays world have inherited their position and retain wealth from there past ancestors. Is it fair that labor is paid less than an inherited boss? No, id say probably not but its very hard to change. I actually experience this kind of problem with friends of mine. A girl I know has a travel company called "Delgado Travel" and has millions of dollars in a nice house worth millions and the backyard is on the water with jet skis, yaht, indoor poor/jacuzzi, etc. Her father also purchased the two house side by side to them so that when my friend and her brother get older they live there. She does not do well in school and has not worked a day in her life. Yet, she has not a worry in the world because she will inherit her fathers business and be more successful than most other people will that have worked so hard to be successful.
The income distribution of the employees and bosses is rather interesting. As time moves forward the distribution has become completely unbalanced. It has shown that in our society today the owners of companies and head bosses are receiving all of the major income while the employers who are doing most of the work are receiving a very minimal portion of the money. If this trend continues on in our future like this it will continually decrease the income of these employees therefore putting their families in a bind. The results of this in some cases will show that the people collecting most of the money have less experience than the people doing all the work and that doesn't seem to be fair.
Capitalism is an economic system in which trade, production and industry are controlled by private owners with the goal of making profits. Indeed this is what everyone does for a living – working and doing business to make a profit. All human beings are not the same in terms of financial means. Some people are wealthy through their sweat while others are wealthy through inheritance from family fortunes. Prof. Krugman’s comments are on those who inherit their wealth. He feels that American culture, specifically the GOP is promoting patrimonial capitalism whereby those who have inherited wealth are protected and helped to make more money. I think it will be difficult to stop this culture because these people with money have the voices and power to get stuff done their way. It is unfortunate the laborers continue to struggle. President Obama’s State of the Union address early this year centered on income inequality. He has been trying hard to help those who are disadvantaged through the introduction of Obamacare, increase of minimum wage, better loan terms but he has not been very successful. Education has become very expensive. Most people drop out of school after high school because college tuition is beyond their reach. If so many remain uneducated how can the equality gap be closed? It will get wider.
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