Current economics: Robert C. Lieberman, “Why the Rich Are Getting Richer: American Politics and the Second Gilded Age”

What? You missed this, on February 20, 2011? Well, here it is again. Please pay attention this time.

The U.S. economy appears to be coming apart at the seams. Unemployment remains at nearly ten percent, the highest level in almost 30 years; foreclosures have forced millions of Americans out of their homes; and real incomes have fallen faster and further than at any time since the Great Depression. Many of those laid off fear that the jobs they have lost — the secure, often unionized, industrial jobs that provided wealth, security and opportunity — will never return. They are probably right.

Cover of Winner-Take-All Politics, by Jacob Hacker and Paul Pierson

Cover of Winner-Take-All Politics, by Jacob Hacker and Paul Pierson

And yet a curious thing has happened in the midst of all this misery. The wealthiest Americans, among them presumably the very titans of global finance whose misadventures brought about the financial meltdown, got richer. And not just a little bit richer; a lot richer. In 2009, the average income of the top five percent of earners went up, while on average everyone else’s income went down. This was not an anomaly but rather a continuation of a 40-year trend of ballooning incomes at the very top and stagnant incomes in the middle and at the bottom. The share of total income going to the top one percent has increased from roughly eight percent in the 1960s to more than 20 percent today.

This what the political scientists Jacob Hacker and Paul Pierson call the “winner-take-all economy.” It is not a picture of a healthy society. Such a level of economic inequality, not seen in the United States since the eve of the Great Depression, bespeaks a political economy in which the financial rewards are increasingly concentrated among a tiny elite and whose risks are borne by an increasingly exposed and unprotected middle class. Income inequality in the United States is higher than in any other advanced democracy and by conventional measures comparable to that in countries such as Ghana, Nicaragua, and Turkmenistan.

Robert C. Lieberman, reviewing the book Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class, by Jacob S. Hacker and Paul Pierson, Simon and Schuster, 2010, 368 pages. $27.00.; review appears in Foreign Affairs, January/February 2011, pp. 154-158.


Two years later, even more:

This post is borrowed, with express permission, from Millard Fillmore’s Bathtub.


World’s largest capitalized company, Apple

Apple Inc.  New Headquarters

Apple Inc. New Headquarters (Photo credit: MarkGregory007)

Many students bought stock in Apple as part of the stock market game — probably a good investment for a while even at $600 a share.  In class to day we discussed Apple’s sitting on a pile of cash, about $100 billion.  Apple decided to to a stock buy-back, and pay a quarterly dividend, to get some of that cash back to shareholders.

Apple will still be sitting on a large pile of cash that threatens to keep growing.

It’s interesting reading.

Here’s the story in the New York Times that we used in class to discuss the stock buy-back and dividend payments:  “Flush with cash, Apple plans buy back and dividend.”

Extra reading can greatly aid your understanding of economics, especially with solid examples like Apple lighting your path.

So, I don’t hesitate to recommend to you that you read the excellent biography, Steve Jobs by Walter Isaacson.  I got a copy for our younger son for Christmas, and you don’t deserve any less, students!  (You can get a lot of information in a good review — check out this review of Isaacson’s book by the equally accomplished writer Malcolm Gladwell, in The New Yorker magazine.)

Power of Habit, Charles Duhigg

You may also want to check out this book on business innovation, which features good discussions of Apple’s business practices:  Charles Duhigg, The Power of Habit.  Here’s an excerpt of the book, on how companies can learn your secrets (mainly for marketing).

If you’re not inspired by the stories of Apple, you’re really not breathing, you know?