Economics of Inequality

What is Bundling of Services (Cohen and Sabel)

Bundling of services is a strategy used by governments to reduce inequality by providing multiple services in a single package. This can include things such as providing access to health care, education, and other social services in a single package. This can help to reduce inequality by making it easier for people to access the services they need, and by providing a more comprehensive package of services that can help to reduce poverty. People may think its too interventionist.

What do Grusky and Hill say about technical education

Do we need a million more classics majors? Prob not, we need to get more skilled people in multiple ways.

What does James Heckman say about investing in disadvantaged children?

Early intervention is key. Non-cognitive (shapes and colors). These programs are very intense for early development, but they have a high return. Returns at later ages are getting much less return. Graph on ipad camera. ROI swoops down as age increases.

The US/UK replacement ratio is low compared to Denmark. What does flexicurity do about this? (Cohen and Sabel)

Flexicurity is a system of labor market policies that combines flexibility for employers with security for workers. It is designed to increase job security and reduce inequality by providing workers with more job protection and better access to social benefits. In the US and UK, flexicurity policies could help to increase the replacement ratio by providing workers with more job security and better access to social benefits, which would help to reduce inequality. Paid training as well, more opportunities to get jobs.

What problems arise with the snap programs? (holzer)

Fungibility, giving vouchers for fruit and oatmeal when in reality people want coffee. Should be giving money instead.

TANF, what are group specific barriers? (Holzer)

Group-specific barriers are barriers that are specific to certain groups of people, such as racial or ethnic minorities, women, or people with disabilities. These barriers can include things such as discrimination, lack of access to resources, or lack of access to education. For example, TANF recipients who are racial or ethnic minorities may face additional barriers due to racism or discrimination.

What does Ray Dalio think about tax structure?

He says we should tax the rich more and that the money needs to be more spread out. Redistributing and loaning more to the lower classes. Inequality is bad for capitalism.

. - Second Fundamental Law of Capitalism :

Higher savings and lower growth rate = higher β.

Why is immigration good for inequality in the United States?

Immigration is good for inequality in the United States because it helps to create a more diverse and inclusive society. Immigrants bring with them different perspectives, skills, and experiences, which can help to create a more equitable society. Additionally, immigrants often take jobs that are low-paying and that native-born citizens are not willing to take, which can help to reduce inequality by providing more opportunities for those in the lower classes. People are also resources... higher resources = higher ability to produce = higher rate of returns.

Which is more unequal: Income from labor, or income from capital, globally?

Income from capital is more unequal globally. This is because the wealthy are able to reinvest their capital and earn more money from it, while the rest of the population is unable to do so. This leads to a widening gap between the wealthy and the rest of the population.

Which is more unequal: Income from labor in the US, or income from labor in other wealthy countries? Explain briefly.

Income from labor in the US is more unequal than income from labor in other wealthy countries. This is because the US has a higher level of income inequality than other wealthy countries, due to its higher levels of wealth concentration and lower levels of taxation on the wealthy.

How can Late Investments work? (Carol Dweck)

It is expected that the return on investment is lower at later ages. For high school students, it is important to not give up, teach them how to be successful in their environment, not teach them times tables.

What does Ray Dalio think about capitalism? Why does he care?

It's our best system, but its not working for most of us. He cares because if there are a lot of people with nothing, that can't spend money, the economy suffers. During depressions, money is "Clogged", loans only to rich who can pay back. Wh

All income can be divided into payments of...

K and L... 2/3L , 1/3K. Historically, high K share early 1900s, fell 1914-1945. Rose significantly 1980s. Financial globalization/deregulation. Capital share now recovered to 1913 levels.

What is Y

National income- is the sum of all income available to the residents of a given country in a given year, regardless of the legal classification of that income

Nickel and Dimed by Ehrenreich

Nickel and Dimed by Barbara Ehrenreich is a powerful and eye-opening book about the struggles of low-wage workers in America. Ehrenreich, a journalist, goes undercover as a low-wage worker in three different cities in order to experience firsthand the difficulties of making ends meet on a minimum wage salary. Through her experiences, she discovers the harsh realities of poverty and the lack of resources available to those living in poverty. She also discovers the strength and resilience of the people she meets along the way. Nickel and Dimed is an important book that sheds light on the struggles of the working poor and the need for better wages and working conditions.

Chapter 5 Piketty: Is a large K good or bad?

Not inherently bad: (As K/L increases= MPL increases = wages increase)

What is the science of scarcity?

The science of scarcity is the study of how people make decisions when faced with limited resources. It looks at how people prioritize their needs and wants when faced with limited resources, and how this affects their behavior and decision-making. It also looks at how scarcity affects people's ability to access resources, and how this can lead to inequality.

Sustainable Development Goals

This is a collection of 17 interconnected goals established by the UnitedNations General Assembly in 2015. Therefore, each country at the recommendation of the U.N. shouldaid other countries in order to achieve a "shared blueprint for peace". The goals focused on the article are#1 (No Poverty) and #10 (Reduced Inequality).

Is this (r > g) a normal characteristic of a capitalist market system, or does it indicate a problem - that the system is not working as expected? Why is this an important distinction?

This is a normal characteristic of a capitalist market system. It is a natural consequence of the fact that capital can be reinvested and earn more money, while the rest of the population cannot. This is an important distinction because it indicates that the system is working as expected, and that inequality is a natural consequence of the system. It also indicates that inequality is not necessarily a problem, but rather a natural outcome of the system.

r>g (who does this idea come from, what does it represent, implications)

This relationship means that the rate of return on capital (r) is greater than the rate of economic growth (g). This means that the wealthy are able to accumulate more wealth faster than the economy is growing, leading to an increase in inequality. This is because the wealthy are able to reinvest their capital and earn more money from it, while the rest of the population is unable to do so. This leads to a widening gap between the wealthy and the rest of the population.

Scarsity of time (Hans Rosling)

Time to be productive, lower classes have to put time into doing things that higher classes don't have to. Bike leads to be able to go to school (like books out of washing machine). 2 hours to get water.

Does immigration lead to diminishing returns?

Very little data shows that immigration doesn't help. Immigrants emigrate from poor countries to rich countries, further diverging rich from poor.

Why should we care about inequality from a policy perspective?

We should care about these answers from a policy perspective because they indicate that income inequality is a global issue that needs to be addressed. This means that policies should be implemented to reduce income inequality, such as progressive taxation and increased investment in social programs. These policies can help to reduce the gap between the wealthy and the rest of the population, and ensure that everyone has access to the same opportunities.

What do Grusky and Hill say about public colleges

We should give more funding for higher completion rates of poorer students. Make schools more accountable for helping students through college. Access for education must be widened.

capital/income ratio

which is the ratio of the total stock of capital to the annual flow of income (K/Y= β)

Adeleye, Bosede Ngoze et. al, "Comparative investigation of the growth-poverty-inequality trilemma in Sub-Saharan Africa and Latin American and Caribbean Countries," Heliyon 6 (2020) e05631

drew guerin files

What do Grusky and Hill say about STEM

people in U.S. don't focus on stem, but we should push it because there are jobs available.

What is beta (piketty). Better if low or high?

rate of economic growth. you don't want it too low, but as beta grows so does alpha.

What is alpha (piketty)

rate of return on capital

What is beta = to (Piketty)

s/g

What does a 200-year history graph look like.

straight line going up and to the right. Health and wealth on the axis.

Why does a replacement ratio of 0 or 100 not work? (Cohen and Sabel)

0 gives no way of getting food, to live. 100 gives no incentive to go back to work.

If our inequality is based on the race between technology and education, how effective would a flexicurity-type policy be on labor inequality? Explain.

A flexicurity-type policy would be effective in reducing labor inequality, as it would provide more job security and better working conditions for workers. This would help to reduce the wage gap between those with higher levels of education and those with lower levels of education, as well as the wage gap between men and women. Additionally, it would help to reduce the risk of automation and technological displacement, as workers would be more secure in their jobs and would be able to adapt to changing labor markets.

What problems might a rising beta create? (piketty)

A rising beta could create problems if it is not accompanied by a corresponding increase in wages. If wages do not keep up with economic growth, then the gap between the wealthy and the rest of the population will continue to widen, leading to increased inequality. Additionally, a rising beta could lead to inflation if it is not managed properly, which could lead to economic instability.

Why is a rising beta a good thing? (piketty)

A rising beta is a good thing because it indicates that the rate of economic growth is increasing. This means that the economy is growing, which is beneficial for everyone. A growing economy leads to more jobs, higher wages, and increased economic opportunity, which can help to reduce inequality.

Are students from low class families staying in college for the full duration? (holzer)

According to Grusky and Hill, students from low-income families are less likely to stay in college for the full duration than students from higher-income families. This is due to a variety of factors, including the fact that students from low-income families are more likely to have to work while in college in order to support themselves, which can make it difficult to focus on their studies. Additionally, students from low-income families are more likely to have to take out loans in order to pay for college, which can be a burden that makes it difficult to stay in school.

Which estimate of beta is more accurate, 0.24 (long term) or 0.83 (short term), according to Piketty, and why?

According to Piketty, the more accurate estimate of beta is 3.5, because it is based on the long-term growth rate of 2%, which is a more accurate measure of economic growth than the short-term growth rate of 7%.

At the end of 2021, the United States had a personal saving rate of 8.4% and a real growth rate of about 7%. Our longer-term growth rate is projected to be closer to 2%. Assuming the same saving rate, where will our beta be over the long term?

Assuming the same saving rate of 8.4%, our beta over the long term will be 1.2, which is calculated by dividing the long-term growth rate of 2% by the personal saving rate of 8.4%.

What is Piketty's solution to income inequality, and why is this the only solution that works for him? In particular, why would removing racial discrimination not be a solution for him?

Piketty's solution to income inequality is to implement a progressive global tax on capital. This is the only solution that works for him because it is the only way to ensure that the wealthy are not able to accumulate more wealth faster than the economy is growing. Removing racial discrimination would not be a solution for him because it does not address the underlying issue of the rate of return on capital being greater than the rate of economic growth.

Why is raising the minimum wage to $15 a good idea in terms of inequality? (Make work pay, Holzer)

Raising the minimum wage to $15 an hour is a good idea in terms of inequality because it would help to reduce the gap between the wealthy and the poor. By increasing the wages of those in the lower classes, it would help to reduce the amount of income inequality in the country. Additionally, it would help to stimulate the economy by increasing the purchasing power of those in the lower classes, which would lead to increased economic activity. As well as an increased incentive to stay in the job market, increased participation rate.

Who is Ray Dalio?

Ray Dalio is an American billionaire investor, hedge fund manager, and philanthropist. He is the founder of Bridgewater Associates, one of the world's largest and most successful investment firms. Need at least 7.5 Billion to invest with him.

What are the SNAP programs? (Holzer)

SNAP programs are Supplemental Nutrition Assistance Programs, which provide food assistance to low-income individuals and families.

What does Ray Dalio want to do to fight inequality?

Spend! Budget hawking is a bad idea, don't think of budgets, think of returns on investment. New technology is net good in long run.

What is TANF (holzer)

TANF stands for Temporary Assistance for Needy Families. It is a federal program that provides financial assistance to low-income families with children. The program provides cash assistance, as well as other services such as job training and child care.

What is meant by the "Second Conversation"? Why might this conversation be more difficult to have? (author?)

The "Second Conversation" is a term coined by Michelle Jackson to refer to the conversation that needs to take place in order to address the root causes of inequality. This conversation is more difficult to have because it requires people to confront uncomfortable truths about the way our society is structured and the way it perpetuates inequality. It also requires people to be willing to make changes to the way our society is structured in order to create a more equitable society. Little things aren't going to change the system, we need to change it. Lottery program (not final solution), change to free education. So, conversation two needs to involve wider discussion about where poverty comes from and what large-scale changes need to be made.

"The full employment solution" by Mark Paul

The Full Employment Solution is a book by Mark Paul, a professor of economics at the University of California, Santa Cruz. The book examines the history of full employment policies in the United States and argues that a return to full employment policies is necessary to address the current economic crisis. The book also provides a roadmap for how to implement such policies, including a focus on job creation, wage growth, and public investment.

What is the Matthew Effect?

The Matthew Effect is a concept coined by sociologist Robert Merton, which states that "the rich get richer and the poor get poorer." This means that those who are already wealthy or successful are more likely to become even more wealthy or successful, while those who are already poor or disadvantaged are more likely to become even poorer or more disadvantaged. Idea of divergence.

What is the Second Fundamental Law of Capitalism?

The Second Fundamental Law of Capitalism states that the rate of return on capital must be greater than the rate of economic growth in order for capitalism to be sustainable. This means that if the rate of return on capital is lower than the rate of economic growth, then the gap between the wealthy and the poor will continue to widen, leading to increased inequality.

Heckman, rate of return

The additional money gained per year for the amount of earnings (per dollar) put into a child

At the end of 2021, the United States had a personal saving rate of 8.4% and a real growth rate of about 7%. Based on these data, what is our beta? Show work - (and an estimate of the result is sufficient).

The beta can be calculated by dividing the personal saving rate (8.4%) by the real growth rate (7%). Beta =1.2

The reading from The Hitchhiker's Guide to the Galaxy highlighted why even the wealthiest might be concerned with a trajectory of rising inequality. What is that concern?

The concern is that rising inequality could lead to a society that is divided into two classes: the wealthy and the poor. This could lead to a situation where the wealthy have all the power and the poor have none, leading to a lack of social mobility and a lack of opportunity for those in the lower classes. This could lead to a society that is unstable and prone to unrest, which would be detrimental to everyone, including the wealthy.

Heckman major points,

The development of neural pathways and the behavior that stems from those brain connections occurs in childhood and is influenced by the environment. - Early learning allows a greater opportunity for wealth and success, while those who are unable to acquire knowledge and skill in their youth are extremely disadvantaged down the line - Early investment into mental and cognitive abilities is further enhanced by learning in adulthood, and the desire to learn is heightened by early investment

Dalio's solution, as you remember, is to form a public-private partnership. (He, of course, is the billionaire founder of Bridgewater Associates.) What is the economic reasoning that brings a confirmed market-based capitalist to ask for such a partnership?

The economic reasoning behind Dalio's solution is that a public-private partnership would be able to address the underlying causes of inequality, such as access to education, healthcare, and other social services. This would be beneficial for both the public and private sectors, as it would create a more equitable society and a more efficient economy. Additionally, it would allow the private sector to benefit from the public sector's resources and expertise, while the public sector would benefit from the private sector's capital and innovation.

What is the federal job guarantee?

The federal job guarantee is a policy proposal that would guarantee a job to anyone who wants one. This would be funded by the federal government and would provide a living wage to those who are employed. The goal of this policy is to reduce poverty and inequality by providing employment opportunities to those who are unable to find work in the private sector.

To what extent would the federal job guarantee address racial or gender inequalities? (Where would it help, where would it not?)

The federal job guarantee would help to address racial and gender inequalities by providing employment opportunities to those who are unable to find work in the private sector. This would help to reduce the wage gap between men and women, as well as the racial wage gap. However, it would not address the underlying causes of these inequalities, such as discrimination in the workplace or unequal access to education and training.

What is the flexicurity program?

The flexicurity program in Denmark is a labor market policy that combines flexibility for employers with security for employees. It allows employers to hire and fire workers quickly and easily, while also providing workers with generous unemployment benefits and job training. This helps to ensure that workers are not left without income or job opportunities if they are laid off, while also allowing employers to quickly adjust to changing economic conditions. (If you want a job, you can get a job, you can switch jobs easily and get trained for the jobs you want. LEADS TO INCREASED HAPPINESS AND PRODUCTIVITY)... less concerns about health care and education.

James J Heckman, Benefit cost ratio

The proportion of the aggregate program gains over the life of the kid to the costs of the input

Piketty highlights the relationship between alpha and beta, Show this relationship (no explanation here).

The relationship between alpha and beta is that alpha is the rate of return on capital, while beta is the rate of economic growth. This means that if alpha is greater than beta, then the rate of return on capital is greater than the rate of economic growth, leading to an increase in inequality.

What is the replacement ratio?(unemployment) (Cohen and Sabel)

The replacement ratio is the ratio of unemployment benefits to pre-unemployment wages. It is used to measure the adequacy of unemployment benefits, as it indicates how much of a worker's pre-unemployment wages they are able to replace with unemployment benefits. A higher replacement ratio indicates that unemployment benefits are more adequate, while a lower replacement ratio indicates that they are less adequate. From 0-100.

What is K

is the total market value of everything owned by the residents and government of a given country at a given point in time

First Fundamental Law of Capitalism :

α = r x β, where α is the income flow from capital, β is total wealth, and r is the net rate of profit