The former Finance Minister of Greece, Yanis Varoufakis, argues that the global poor are, at present, being squeezed on two fronts.

On the one hand, if they want to advance their socioeconomic positions, they are compelled to take on large amounts of high-interest debt (by "high-interest" I mean any rate that does more than keep pace with inflation) in the form of student loans, mortgages, car loans, and so on. This has the effect of putting those least able to pay--people born into families without many assets--in the position of being responsible for providing income to those who already have plenty (traders on Wall Street, hedge fund managers, underwriters, ratings agencies, the whole finance and investment-banking industry, basically). Given the extreme (and intensifying) weakness of the social safety net, these loans are essentially predatory.

On the other hand, the global poor are denied the means to earn the income necessary to pay those rates of interest, since the corporations that employ them, correctly sensing the overall precarity of the situation, are hoarding cash. In the U.S., for instance, companies are currently sitting on some $5 trillion in liquid assets--idle cash that could be put to productive use, allowing the poor to produce for society and thereby earn the income they need. This pile of money just sitting there, Varoufakis contends, is uniquely shameful--literally a greedy dragon hoarding gold dubloons.

The context for this situation is one of grotesque, escalating, and embarrassing inequality of both wealth and income. The top 10% of Americans own something like 75% of its total $85 trillion in wealth, and they're """""earning""""" virtually all of the money being paid out, with annual incomes for the bottom 50% hovering around a mean of $20k, while the next 45% make a mean of $80k, and the top 5% earn around $600k.

How can any sane person--one without ideological commitments to absurd, morally bankrupt ideals of private property--deny that this situation is a catastrophe? Or fail to see that it is especially a catastrophe for the most vulnerable members of society? Racial, ethnic, and religious minorities; migrants; women; etc. The 1% are overwhelmingly a bunch of old white Judeo-christian males.

Doesn't this point to the overwhelming failure of the so-called "Third Way," the disastrous hybrid of neoliberal economics, social progressivism, and neoconservative war-mongering that has defined our political era? While we're treated to ideological victories for a free society like same-sex marriage--i.e., victories that have no meaningful economic consequences--social reforms that would have really changed things--the Bernie tax plan, the Equal Rights Amendment--are constantly defeated either (1) by right-wing moralizing or; (2) by left-wing invocations "pragmatism," which is always an apology for the status quo, since it always means "pragmatic" compromise with the right.

I know, I know: WAAF. But what, if anything, can be done about it? Is there any hope of changing the culture that surrounds these geopolitical structures, for instance?

Yes, what you are describing is a very real and very serious problem. There are things we can do about it, however the problem is that even the things that are possible are only incremental "fingers in the dam" so to speak. Bigger, broader moves that would actually solve this problem in the long run are not even close to politically feasible.

Here are some things that would help. States could fund their public universities at a decent level again, and tuition could be much lower for those universities (eventually free). We could offer universal college education to anyone who can earn the grades required (3.0 GPA). We could raise the minimum wage and offer universal health care to all American citizens.

The problem? Not a single one of these things is feasible as long as Republicans control even one branch of government. So things are going to get worse for the next four years, before there's really any opportunity to even stop the bleeding.

You started off talking about the "global poor" but then you went off into a bunch of tangents about people who have access to consumer credit, are employed by large corporations, and have per capita earnings of $20,000 on average, and I got confused. Did you mean to refer to "the relatively poor in extremely affluent societies"? The actual global poor have done quite well under the nightmarish neoliberal regime.

This is a point I wanted to put into contention. I think all these people should count as being among the global poor. I'm basically arguing that, even as the floor conditions improve, there's still an egregious problem of how the returns to growth are distributed society-wide. That someone isn't living in the most dire poverty doesn't mean that, relatively speaking, he or she is wealthy. The set of people who count as "winners" in the global economy is extremely narrow.

The position that any interest rate above the rate of inflation is high and that this is one of the primary causes of inequality is so ludicrous that i can't comment on the rest of your post until this is addressed first.

Interest rates are at historic lows and inequality is much greater than times in which there was 2 to 3x current interest rates even adjusted for past inflation vs current inflation.

afaik, there are some examples in history, where inequality of the magnitude we're seeing now exists and the rich absolutely refuse to give up any of their wealth, that end poorly for everyone including the rich. Does anyone know of any spots where this sort of inequality gets reduced without large-scale tragedies occurring?

There's an interesting argument to be made that the very poorest people in Western society are as badly off as people living in serious poverty in Asia or Africa. I don't see how it's at all tenable to call someone in, say, the 20th percentile of the income distribution in the U.S. a member of the global poor.

Coming at it from the other angle, it's kind of hard to see why intra-society inequality is a morally relevant measure at all. I understand why it matters for purposes of domestic politics and perhaps for cross-country comparisons of particular policies, but from a moral perspective, surely it's clear that world inequality (dropping sharply) is the only meaningful measure, right?

World inequality still seems scandalously extreme even if it's improving considerably.

Could you elaborate on the social safety net for the world poors, who funds it, who distributes it, how it is distributed? Didn't realize the world poors had all that much access to credit.

71% of the World's Population Lives on Less Than $10 a Day

I might be wrong but pretty sure the vast majority of the world poors aren't being exploited by predatory lending practices.

Thanks.

People are moving from crushing rural agrarian poverty to crushing sweatshop capitalism poverty in large numbers. It's an improvement, but yeah.

It is morally relevant because there has been a massive redistribution of wealth from poor to rich in the last decade especially.

There are something like half a million people in the United States living on the streets and eating out of garbage cans so there are some poor people by any standards.

Are you presuming that the same forces which cause inequality in the US are causing equality world wide?

When the top marginal tax rates in the US were much much much higher were not rapid improvements in the world standard of living being made simultaneously?

Extreme poverty rates in the world have been dropping forever, but started rapidly dropping right after WWII.



The forces that have driven inequality in the US like deregulating finance, crushing unions and dramatically lowering taxes on the wealthy were just something else that happened while the world was continuing the trend of reducing extreme poverty. The global poor were improving quite handily when we had Glass-Steagal, one third of wage employees in unions, and a 90% top marginal tax rate.

Micro-finance (aka the allegedly predatory loans) has been very successful in most areas, especially when working in concert with Syngenta/Monsanto (they are involved to help farmers finance their seeds and sometimes tools) and/or effective local government regulations.

There is, or at least was, quite a bit of distaste of the whole microfinance idea smelling like predatory lending (and it often is) but the broader consensus is micro-loans and micro-insurance have done a lot more good than harm in most communities.

In rich countries, low interest rates are quite accessible even to lower income brackets.

There seems to be a growing consensus among the rich that promotes the idea that you can't be poor in a rich country. So they increase state expenditure on foreign aid and reduce welfare.

I suspect the 1% have worked out that by highlighting foreign poverty they can marginalize the suffering of their own people. "Don't have a job? Quit whining, you could be dying of malnutrituion!".

I think the problem is that people have a very hard time separating the concept of earnings from wealth.
Many people believe that the people worked at the top "work harder" in which case the inequality to describe is fair. It is similar to the "divine right of kings" ie I'm in charge so I must deserve to be in charge (even if I'm genetically inbred).

Now, as you well know that isn't the case, but there are enough really stupid poor and middle-class people who believe that to keep worsening inequality.

A lot of your numbers are wrong and they need to be corrected. You have a lot of half-truths, that some may believe are "alternative facts", which have no place in 2+2's politics alpha.

So let's begin.

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Not true. Currently undergraduate Stafford student loans are 3.76%. Mortgage interest rates are at historical lows of ~4.00%. Car companies are giving out 0 or 0.99 or 1.99% car loans. Furthermore, if you want to argue that any loan that more than keeps place with inflation is high-interest that abjectly ridiculous. Every loan has a default risk which is priced into the rate. Every loan must make a profit so the bank can pay it's employees. None of the loans you quoted are usurious at current interest rates.

This money is currently sitting overseas because those companies do not want to pay the high US corporate income tax rates required to repatriate the money into the US. Congress is considering the idea of a repatriation tax holiday to get this money back into the country. Interesting that you may agree with that idea since it is being pushed by the GOP.

Your numbers are wrong, data from the Census Bureau
http://www.investopedia.com/news/how...ou-top-1-5-10/
https://en.wikipedia.org/wiki/Househ..._United_States

Top 5% income is: $214,462.
Median Household income is: $56,516.

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Some of your points are well taken, in regards to wealth accumulation. However, the "elite" always must worry overreaching because if they do the population can always throw them out and instill Bernie and Bernie Bros to take it all away.

Nevertheless, there is a reason that Bernie isn't President. It's because the majority of voters do not want that type of European style economics.

Dr. Awval,

Americans in general didn't get the chance to vote on the most popular politician in the country.

In the general, most Americans did not vote for your candidate, but those who did were voting for jingoism, authoritarianism, and racism, not economics.

Rates on a lot of those items are at historically low numbers, 3% and lower in many developed countries. Calling this high interest debt is just plain wrong from any standpoint, even if inflation is 0%.

Nobody paid those actual rates. The effective rates were much much lower.
The US growth rate was also double that of today, averaging 4% during those times.

France tried something similar a few years ago, it didn't work and they cancelled it:
https://www.theguardian.com/world/20...rcent-supertax


Healthcare and education in the US is broken, raising more tax dollars to throw at it is not the solution. The problem is healthcare and education are price inelastic and market participants are allowed to make unregulated profits off such a social product.

I took all my numbers from Wikipedia.

There are definitely some moral assumptions--lending for profit is inherently predatory--embedded in my post. But I don't think they change the basic reality of stark inequality.

Are savings account predatory?

I am not sure what you are referring to when you state "the basic reality of stark inequality". If you mean that stark inequality exists today, then no arguments from me. If you mean that stark inequality exists due to high interest rates then i would argue that the opposite is actually more likely the case, that inequality is exacerbated by low interest rates.

Why not? I think many Americans who aren't eating out of trash cans are among "the poor." But it's really not the rhetoric I'm interested in, but rather the distribution of assets and incomes.

It's a politically relevant measure. And while the world's GINI coefficient may be trending toward less inequality by lifting the floor, that doesn't mean the resulting distribution is fair. Presumably fairness is a relevant criterion in most moral systems, no?

Yes. This.

Could you elaborate on this point? What have been the mechanisms by which these transfers have occurred?

Theoretically a savings account could meet my criteria if it bore a high enough interest rate.

I meant the former and see what you mean by the latter.

Its not a well defined question but generally speaking, what percentage of Americans would benefit if the wealth and earning potential of the world's people were redistributed approximately equally?