From David Ruccio
As federal deficits and debt grow, they end up receiving, not paying for, a larger and larger share of federal expenditures.
Tax cuts and spending increases enacted by Republicans over the past four months will lead to wider than previously expected budget deficits, according to the Congressional Budget Office. The federal budget deficit would total $804 billion this year, 43 percent higher than it had projected last summer, and exceed $1 trillion a year starting in 2020.
Larger deficits will, of course, add to the national debt: debt held by the public will hit $28.7 trillion at the end of fiscal 2028, or 96.2 percent of gross domestic product, up from 78 percent of GDP in 2018.
Those estimates assume current law will remain in effect, meaning Congress would allow

From David Ruccio     
“. . . ten years on, U.S. capitalism has created the conditions for renewed instability and another, dramatic crash.”
The economic crises that came to a head in 2008 and the massive response—by the U.S. government and corporations themselves—reshaped the world we live in.* Although sectors of the U.S. economy are still in one of their longest expansions, most people recognize that the recovery has been profoundly uneven and the economic gains have not been fairly distributed.
The question is, what has changed—and, equally significant, what hasn’t—during the past decade?

Let’s start with U.S. stock markets, which over the course of less than 18 months, from October 2007 to March 2009, dropped by more than half. And since then? As is clear from the chart above,

From David Ruccio

50 years ago, Martin Luther King Jr. was assassinated, just days after joining a march of thousands of African-American protestors down Beale Street, one of the major commercial thoroughfares in Memphis, Tennessee. King and the other marchers were demonstrating their support for 1300 striking sanitation workers, many of whom held placards that proclaimed, “Union Justice Now!” and “I Am a Man.” 
The night before his assassination, King told the striking sanitation workers and those who supported them: “We’ve got to give ourselves to this struggle until the end.  Nothing would be more tragic than to stop at this point in Memphis. We’ve got to see it through.” He believed the struggle in Memphis exposed the need for economic equality, social justice, and human dignity

From David Ruccio

For the first time in American history, students in more than half of all U.S. states are paying more in tuition to attend public colleges or universities than the government contributes.
The privatization of public education has been under way for decades but this inflection point was hastened by deep cuts states made to their higher-education appropriations in the midst of the Second Great Depression.

For the United States as a whole, according to a new report from the State Higher Education Executive Officers Association, students and their families were forced to come up with almost half (46.2 percent) of total educational revenue for public colleges and universities in 2017. They had to pay only 28.8 percent of the total in 1992, a share that had risen to 36.2

From David Ruccio

Millennials may be the largest, best educated, and most diverse generation in U.S. history. But they’re also generation screwed. As a result, they’re more likely than their elders to think of themselves as working-class and less likely to identify as middle-class.  
The large downshift in class identity among young adults is explained by the fact that they are being left behind—with lower earnings, fewer jobs, more part-time employment, and a higher unemployment rate than any other generation in the postwar period.

And while it is true that recent college graduates make more than young workers with a high-school diploma, the annual real wages of both groups have declined since 2009.
So, it should come as no shock that most Millennials have nothing saved for

From David Ruccio
It was Paul Samuelson who, in 1997, declared with morbid optimism that “Funeral by funeral, economics does make progress.”*
What Samuelson presumed is that, over time, wrong ideas would be killed and laid to rest and better ideas would flourish, thus creating the foundation for progress in economic thought.
That’s what I consider to be the epistemological utopianism of mainstream economic thought: using the correct scientific methods, the work that economists do gets closer and closer to the Truth—the singular, incontestable, capital-t truth. It used to be the case (for Samuelson and many others, such as fellow Nobel laureates Kenneth Arrow, Gerard Debreu, and Paul Krugman) that mathematical models represented the best way of making progress (inspired by a particular

From David Ruccio

I have been arguing, since 2016 (e.g., here, here, and here), that one of the likely outcomes of the kind of corporate tax cuts Donald Trump and his fellow Republicans have supported—and, as we saw, eventually rammed through—would be an increase in inequality. That’s because corporations would likely use a portion of their higher profits to engage in stock buybacks, leading to an increase in stock prices. And stock ownership in the United States is already grotesquely unequal. Therefore, the rise in equity prices would disproportionately benefit the small group at the top of the wealth pyramid. 
And that’s exactly what is happening. As CNN Money reports, U.S. corporations have showered Wall Street with $214 billion of stock buyback announcements so far this year.

From David Ruccio
The dystopia of the American healthcare system certainly invites a utopian response—a ruthless criticism as well as a vision of an alternative.
As I showed last week, the left-wing response involves a critique of the conditions and consequences of the capitalist organization of U.S. healthcare and the fashioning of a radical alternative. Single-payer, which uses tax revenues to finance the purchase of adequate healthcare services for everyone, is one possibility. On top of that, it is necessary to expand the diversity of healthcare providers, which would include more democratic, cooperative or worker-owned healthcare enterprises.
That’s how activists, educators, and policymakers informed by heterodox economics can begin to rethink the U.S. healthcare system. What

From David Ruccio

Economic journalists, like Neil Irwin, are falling all over themselves celebrating the strength of the current economic recovery. 
According to the latest data from the Bureau of Labor Statistics, 313 thousand new jobs were added in February. The official unemployment rate remained at a relatively low 4.1 percent. Hourly wages grew at an annual rate of 2.6 percent. And so on.
Here’s Irwin:
This is not the kind of data you expect in an expansion that is nine years old, or out of a labor market that is already at full employment. . .
the February numbers are a delicious sweet spot for the economy. Many more people are working, including people who hadn’t even been in the labor force. If that trend continues — and it’s worth adding the usual caveat that each month’s

From David Ruccio
This is the first in a series of blog posts on the utopian dimensions of healthcare.
I’ve written quite a bit about the U.S. healthcare dystopia over the years—including a seven-part series back in 2016.* But I haven’t yet addressed the utopian dimensions of healthcare reform.
The appearance of the new issue of Jacobin Magazine, titled “The Health of Nations,”  is a good occasion to start that discussion. Adam Gaffney starts with much the same question that provoked my own series of blog posts: “if American health care used to be so much worse, why is it in crisis now?”
In part because, despite such wide-ranging reform, the system’s injustices remain unresolved, pervasive, and deadly.
The figures tell the story. Even without Republican rollbacks, twenty-eight million

From David Ruccio

Chris Rock may be right. Still, Americans are well aware that economic inequality in their country is obscene, even though they often underestimate the growing gap between the poor and the rich. 
But it’s Frank Rich, who conducted the interview with the American comedian, who made the more perceptive observation:
For all the current conversation about income inequality, class is still sort of the elephant in the room.
All the experts agree—from Thomas Piketty and the other members of the World Inequality Lab team to John C. Weicherof the conservative Hudson Institute—that inequality in the United States, especially the unequal distribution of wealth, has been worsening for decades now. Both before and after the crash of 2007-08. And there’s no sign that things are

From David Ruccio
Donald Trump’s decision to impose import tariffs—on solar panels and washing machines now, and perhaps on steel and aluminum down the line—has once again opened up the war concerning international trade.
It’s not a trade war per se (although Trump’s free-trade opponents have invoked that specter, that the governments of other countries may retaliate with their import duties against U.S.-made products), but a battle over theories of international trade. And those different theories are related to—as they inform and are informed by—different utopian visions.
In one sense, Trump and his supporters are right. Capitalist free trade has destroyed cities, regions, livelihoods, and industries. The international trade deals the United States has signed in recent

From David Ruccio

U.S. capitalism has a real problem: there don’t seem to be enough workers to keep the economy growing.
And it has another problem: capitalists themselves are to blame for the missing workers.
As is clear from the chart above, the employment-population ratio (the blue line) has collapsed from a high of 64.4 in 2000 to 59 in 2014 (and had risen to only 60.1 by the end of 2017).* During the same period, the average real incomes of the bottom 90 percent of Americans have stagnated—barely increasing from $37,541 to $37,886.

That should be indicator that the problem is on the demand side, that employers’ demand for workers’ labor power has decreased, and not the supply side, that workers are choosing to drop out of the labor force.
But, as I explained back in 2015, that

From David Ruccio

Economic inequality is arguably the crucial issue facing contemporary capitalism—especially in the United States but also across the entire world economy.  
Over the course of the last four decades, income inequality has soared in the United States, as the share of pre-tax national income captured by the top 1 percent (the red line in the chart above) has risen from 10.4 percent in 1976 to 20.2 percent in 2014. For the world economy as a whole, the top 1-percent share (the green line), which was already 15.6 percent in 1982, has continued to rise, reaching 20.4 percent in 2016. Even in countries with less inequality—such as France, Germany, China, and the United Kingdom—the top 1-percent share has been rising in recent decades.
Clearly, many people are worried about

David Ruccio

Ed Wolff is right:
For the vast majority of Americans, fluctuations in the stock market have relatively little effect on their wealth, or well-being, for that matter.

That’s because, as his research shows (and as I illustrate in the chart above), the bottom 90 percent of Americans own (either directly or indirectly) a tiny share—16 percent—of total stock value in the United States.* The rest is owned by the top 10 percent: 40.3 percent by just the top one percent (with a net worth in 2016 of $10,257,000 or more) and 43.6 percent by the next nine percent (who have a net worth between $1,143,200 and $10,257,000).
The fact is, the only real wealth owned by the vast majority of Americans is their principal residence. Otherwise, they’re forced to have the freedom to get by on

From David Ruccio

According to the Tax Justice Network, the United States ranks second in the 2018 Financial Secrecy Index. This is based on a secrecy score of 59.8, which is practically unchanged from 2015. The only country ahead of the United States is Switzerland, with a secrecy score of 76. The rise of the United States continues a long-term trend, as the country was one of the few to increase their secrecy score in the 2015 index.  

The continued rise of the United States in the 2018 index comes on the back of a significant change in the U.S. share of the global market for offshore financial services. Between 2015 and 2018, the United States increased its market share by 14 percent. In total, the United States accounts for 22.3 percent of the global market in offshore financial

From David Ruccio
I have often argued—in lectures, talks, and publications—that every economic theory has a utopian dimension. Economists don’t explicitly talk about utopia but, my argument goes, they can’t do what they do without some utopian horizon.
The issue of utopia is there, at least in the background, in every area of economics—perhaps especially on the topic of control.
Consider, for example, the theory of the firm (which I have written about many times over the years), which is the focus of University of Chicago finance professor Luigi Zingales’s lecture honoring Oliver Hart, winner of the 2016 Nobel Prize for economics, at this year’s Allied Social Science Association meeting.
One of the many merits of Oliver’s contribution is to have brought back the concept of power inside

From David Ruccio
Must come down. . .
I’m not referring to karma or the application of Newton’s law of universal gravitation. No, it’s just the way capitalism works.

Take the stock market, for example. Last Friday, the Dow Jones Industrial Average closed down 666 points, or 2.5 percent, its biggest percentage decline since the Brexit turmoil in June 2016 and the steepest point decline since the 2008 financial crisis. 
The large decline is really no surprise, since the U.S. stock market—a thoroughly speculative institution within contemporary capitalism—has been on the rise, based on soaring corporate profits, since 2009.
Rising stock values are related to corporate profits in two ways: First, they are bets on corporate profits, in the sense that stock speculators expect future prices

From David Ruccio
Much has been made of the rise of populism in recent years and the threat it poses to liberal democracy.
My view is that liberal critics of populism, standing on their heads, get it wrong. If made to stand on their feet, they’d have to admit that populism actually represents the failure of liberal democracy.
Populism has experienced a resurgence of late—in Hungary, Britain, France, Turkey, the United States, and elsewhere—especially the form of populism variously characterized as right-wing, nationalist, or authoritarian. It has attracted increasing support and achieved notable political victories within the institutions and procedures of liberal democracy.
The problem is that liberal democracy has failed to confront, much less solve, the problems that have led to the

From David Ruccio

And as Angus Deaton reminds us, those struggling to survive in conditions of extreme poverty aren’t just “over there,” in the Third World. Notwithstanding the focus of the World Bank-sponsored campaign to eradicate extreme poverty and the ubiquitous appeals on behalf of the needy in poor countries, a large portion—approximately 14 million people—live in wealthy countries—some 5.3 million in the United States alone.
Is there any more damning condemnation of contemporary economic institutions, in both the North and the South?
But wait, there’s more.
We’re talking about hundreds of millions of people living—barely—on less than $1.90 a day!
That’s the official World Bank number, updated in recent years from the original $1 a day and then $1.25 a day. But let’s put that

David Ruccio
Students are much too busy to think these days. So, when a junior comes to talk with me about the possibility of my directing their senior thesis, I ask them about their topic—and then their schedule. I explain to them that, if they really want to do a good project, they’re going to have to quit half the things they’re involved in.
They look at me as if I’m crazy. “Really?! But I’ve signed up for all these interesting clubs and volunteer projects and intramural sports and. . .” I then patiently explain that, to have the real learning experience of a semester or year of independent study, they need time, a surplus of time. They need to have the extra time in their lives to get lost in the library or to take a break with a friend, to read and to daydream. In other words,

From David Ruccio

According to Oxfam’s analysis of data produced by Credit Suisse (which I analyzed in a different manner late last year), 42 billionaires now own the same wealth as the bottom half—3.7 billion people—of the world’s population. 
Together, those 3.7 billion people own only one half of one percent (0.53 percent) of the world’s wealth, a figure that rises to just about one percent (0.96 percent) when net debt is excluded.
In 2017, 42 billionaires on the Forbes billionaires list had a cumulative net worth of $1,498 billion—more than the wealth of the bottom 50 percent. When debt is excluded, that figure rises to 128 billionaires, who had a net worth of $2,694 billion.
Over the last decade, ordinary workers have seen their incomes rise by an average of just 2 percent a

From David Ruccio

Last week, Thomas Frank welcomed Paul Krugman to the ranks of those who believe that the American working-class in recent decades has often voted against its fundamental economic interests by supporting conservative Republicans.  
Appropriately enough, Frank then chastises Krugman for having repeatedly used his New York Times column to argue exactly the opposite, denying the idea that working-class Americans had defected to the Republican Party.
Frank, the author of What’s the Matter with Kansas? then draws the appropriate conclusion: that the tendency on the part of Krugman and other liberals to underestimate working-class conservatism, in both southern and northern states, prepared the way for Donald Trump’s victory in the presidential election of November 2016.
To

From David Ruccio

One of the most important stories I read, but did not write about, while I was away was the launch of the World Inequality Report 2018.*

The authors of the report confirm what Branko Milanovic and others had previously discovered: that a representation of the unequal gains in world economic growth in recent decades looks like an elephant. Thus, the real incomes of the bottom 50 percent of the world’s population (except the poorest, at the very bottom) have increased, the incomes of those in the middle (especially the working-class in the United States and Western Europe) have decreased, and the global top 1 percent has captured an outsized portion of world economic growth since 1980.**
As I explained back in 2016, the “elephant curve” makes sense of some of the

From David Ruccio

There’s no real mystery behind the spectacular gains in the stock market over the course of 2017. Much of it can be explained by the rise in U.S. corporate profits. 
But, as is clear from the chart above, the relationship between corporate profits (after tax, in red, measured on the right-hand side) and the stock market (the Dow Jones Industrial Index, in blue on the left) actually goes back almost a decade. Corporate profits have increased, from their low in the fourth quarter of 2008, some 176 percent. Meanwhile, the stock market has risen 182 percent from its own low in the first quarter of 2009.
Corporate profits are, of course, a signal to investors that their stocks will likely rise in value. Moreover, increased profits allow corporations themselves to buy back

From David Ruccio
Over the course of the last two days, I’ve discussed mean gifts (which promise significant tax relief only to a small group of corporations and wealthy individuals) and mean exchanges (which leave middle-class Americans with a declining share of national income).
Now, thanks to recently completed Reuters investigation, we’re forced to confront the reality in the United States of mean exchanges that transform generous donations into desperate, mean gifts. I’m referring to the largely unregulated trade in body parts.
The selling of body parts—heads, knees, feet, torsos, and entire bodies—actually begins with the gifting of the bodies of deceased Americans, who have decided to donate their bodies to science. But in many cases it’s a mean gift, not because of the

From David Ruccio

Yesterday, I discussed the mean-spiritedness of the Republican tax cuts—which are being sold as a gift to the middle-class but, in reality, represent a massive transfer to a small group of large corporations and wealthy individuals.
But, of course, the real violence associated with the tax-cut gift occurs before federal taxes are even levied, in the pre-tax distribution of income.
As is clear from the chart above, since the mid-1970s, the share of income captured by the top 1 percent (the red line, measured on the right-hand side) has almost doubled, rising from 10.6 percent to over 20 percent. Meanwhile, the share of income going to the middle 40 percent (the blue line, on the left) has eroded, falling from 45.2 percent to 40.4 percent.

But that’s not enough for

From Daivd Ruccio
Liberal mainstream economists all seem to be lip-synching Bobby McFerrin these days.
Worried about automation? Be happy, write Laura Tyson and Susan Lund, since “these marvelous new technologies promise higher productivity, greater efficiency, and more safety, flexibility, and convenience.”
Worried about the different positions in current debates about economic policy? Be happy, writes Justin Wolfers, and rely on the statistics produced by government agencies and financial firms and the opinions of mainstream economists.
Me, I remain worried and I have no reason to accept mainstream economists’ advice for being happy.
Sure, new forms of automation might lead to higher productivity and much else that Tyson and Lund find so alluring. But who’s going to benefit? If we go

From David Ruccio

The United States is now more than eight years out from the end of the Great Recession and the one-side nature of the recovery is, or at least should be, clear for all to see.  
Even as unemployment has dipped below the so-called “natural rate,” workers are far from recovering all they’ve last in the past decade.
According to the official data illustrated in the chart above, the labor share of national income remains just above the lowest level it reached in the entire postwar period. Using 100 in 2009 as the index value, the current labor share has fallen to 96.5—down from 110.24 in 2001 and 114 in 1960.
The question is, how low can the labor share go?
Update

From David Ruccio

If you read the business press in the United States (e.g., the Wall Street Journal), you’ll find something along the lines of the following argument: the fact that U.S. worker productivity rebounded in the third quarter while hourly wages rose moderately is a sign “the economy is strengthening.”
But look at the numbers. Nonfarm business sector productivity (the blue line in the chart above) rose 1.5 percent (from the same quarter a year ago) while real hourly compensation (the green line) fell 1.1 percent.* The result is that unit labor costs (the red line) fell 0.7 percent. 
According to Stephen Stanley of Amherst Pierpont Securities,
lighter regulation under the Trump administration and the prospect of a $1.4 trillion tax-cut package being passed by Congress are