Cross-posted at Montclair SocioBlog.

The Washington Post has provided some data on medical costs across a selection of countries (Argentina, Canada, Chile, and India in grey; France, Germany, Switzerland, and Spain in blue; and the U.S. in red). The data reveal that American health care is very expensive compared to other countries.

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No wonder the US spends twice as much as France on health care.  In 2009, the U.S. average was $8000 per person; in France, $4000.  (Canada came in at $4800).  Why do we spend so much?  Ezra Klein quotes the title of a 2003 paper by four health-care economists:  “it’s the prices, stupid.”

And why are US prices higher?  Prices in the other OECD countries are lower partly because of what U.S. conservatives would call socialism – the active participation of the government.  In the U.K. and Canada, the government sets prices.  In other countries, the government uses its Wal-Mart-like power as a huge buyer to negotiate lower prices from providers.  (If it’s a good thing for Wal-Mart to bring lower prices for people who need to buy clothes, why is it a bad thing for the government to bring lower prices to people who need to buy, say, an appendectomy? I could never figure that out.)

There may also be cultural differences between the U.S. and other wealthy countries, differences about whether greed, for lack of a better word, is good.  How much greed is good, and in what realms is it good?  Klein quotes a man who served in the Thatcher government:

Health is a business in the United States in quite a different way than it is elsewhere.  It’s very much something people make money out of. There isn’t too much embarrassment about that compared to Europe and elsewhere.

So we Americans roll along, paying several times what others pay for medical procedures, doctor visits, and drugs.

Jay Livingston is the chair of the Sociology Department at Montclair State University. You can follow him at Montclair SocioBlog or on Twitter.

Cross-posted at Reports from the Economic Front.

While newspapers give a lot of ink to arguments about whether reducing the budget deficit will boost or reduce growth, they seem to have little interest in the related issue of whether economic growth really benefits the great majority.

David Cay Johnston, the Pulitzer Prize winning financial journalist, recently addressed this issue drawing on the work of economists Emmanuel Saez and Thomas Piketty:

In 2011 entry into the top 10 percent… required an adjusted gross income of at least $110,651. The top 1 percent started at $366,623.

The top 1 percent enjoyed 81 percent of all the increased income since 2009. Just over half of the gains went to the top one-tenth of 1 percent, and 39 percent of the gains went to the top 1 percent of the top 1 percent.

Ponder that last fact for a moment — the top 1 percent of the top 1 percent, those making at least $7.97 million in 2011, enjoyed 39 percent of all the income gains in America.

So, 81 percent of all the new income generated from 2009 to 2011 was captured by the top 1 percent income earners, where income is defined as adjusted gross income, which refers to income minus deductions or taxable income.  In other words, growth, even accelerated growth, is not going to do the majority much good if the economic structure remains the same.

Johnston highlights the problem with our existing economic model with perhaps an even more shocking example.  He compares the average income growth of the bottom 90 percent with the average income growth of the top 10 percent, 1 percent, and top 1 percent of the top 1 percent over the period 1966 to 2011.

It turns out that the average income of the bottom 90 percent rose by a miniscule $59 over the period (as measured in 2011 dollars).  By comparison, the average income of the top 10 percent rose by $116,071, the average income of the top 1 percent rose by $628,817, and the average income of the top 1 percent of the top 1 percent increased by a whopping $18,362,740.  In short, growth alone means little if the great majority of people are structurally excluded from the benefits.

In an effort to highlight this extreme disparity in adjusted income growth rates, Johnston suggests plotting the numbers on a chart, with $59, the amount gained by the bottom 90 percent, represented by a bar one inch high.  As the chart below shows, the bar representing average gains for the top 10 percent would be 163 feet high, that for the top 1 percent would be 884 feet high, and that for the top 1 percent of the top 1 percent would be 4.9 miles high.

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In sum, the real challenge facing the great majority of Americans is not figuring out how to make the economy growth faster.  Rather, it is figuring out how to create space for a real debate about how to transform our economy so that growth will actually satisfy majority needs.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Last week many media outlets were busy celebrating the Dow Jones record high, suggesting that it was indicative of the United States’ recovery from the greatest economic downturn since The Great Depression.  The graph below comes from a New York Times story with the headline “As Fears Recede, Dow Industrial Hits a Milestone.”

However, another story buried in the Business section of the New York Times, titled “Recovery in U.S. Is Lifting Profits, but Not Adding Jobs,” contains a graph illustrating how the supposed economic recovery is bitter-sweet at best:

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The second graph uses data from the Bureau of Economic Analysis to highlight the fact that corporate profits and stock prices are at record highs, but the share of profits workers have taken home has steadily dropped since the early 1980s.  Some of the steepest declines have come during the last few years, or during the supposed “recovery.”

These two graphs illustrate that while ”The Market” is probably considered the go-to indicator of economic well-being, stock indexes are not always indicative of the economic reality experienced by non-investors.  If businesses and corporations were increasing their stock value by investing to expand productivity, thereby creating good-paying jobs and opportunities for workers, rising markets would be a sign good of economic times for all.  But this data suggests that is not what is happening; instead, as the twin charts show, rising corporate profits are at least partly the result of wage suppression.

Jason Eastman is an Assistant Professor of Sociology at Coastal Carolina University who researches how culture and identity influence social inequalities.

Emma K. submitted a sobering illustration of wealth inequality in the U.S.  It compares American ideal distributions of wealth, with what they think it is and what it really is. Suffice to say, Americans wish for more equal distributions, but the reality far outpaces their worst nightmare.

Here’s a snapshot:

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A worthwhile 6 minutes:

Lisa Wade, PhD is a professor at Occidental College. She is the author of American Hookup, a book about college sexual culture, and Gender, a textbook. You can follow her on Twitter, Facebook, and Instagram.

Cross-posted at Policy Mic and The Huffington Post.

The gap between the household wealth of Black and White families is massive.  Today the median wealth held by White households is 20 times that of Black households.  There are lots of reasons for this difference and a new study offers great data on one of them: the need to assist poor relatives.

Kevin Hartnett, at Braniac, writes:

Middle-income blacks are more than twice as likely as middle-income whites to have a poor sibling and more than four times as likely to have parents below the poverty line. And because of these relationships, they’re called upon more often to provide financial assistance.

Sociology graduate student Rourke O’Brien used data on spending and other financial patterns among Americans to test whether this is a significant source of the wealth gap (link).  He found that, at all but the most low income level, Black households are more likely than White households to give money to struggling relatives.  And the wealthier the Black household, the more likely they were to help others.

The graph below illustrates this.  The vertical axis represents the proportion of households offering assistance and the horizontal axis represents increasing income levels (in thousands of dollars).

blackwhitewealth

The lesson is simple, but all too often unnoticed.  Due to hundreds of years of enslavement and discrimination, African Americans are more likely to be poor than Whites. If you grow up poor then most of the people in your family are poor.  Accordingly, even if you “make it out” and arrive in the middle class (income-wise), you will likely be less financially secure than a person that earns the same income but came from a middle class family.  That person can put all of their extra money towards buying a home (and earning equity), retirement, additional degrees, starting a business, and sending their kids to college.

But the poor person who earns a middle-class income might use a significant portion of their income keeping their parents’ heat on, helping their little brother go to college, or buying back-to-school clothes for their nieces and nephews.  This makes it much harder for poor and working class people who become middle class to stay that way.  And the cycle continues.

Via Citings and Sightings.

Lisa Wade, PhD is a professor at Occidental College. She is the author of American Hookup, a book about college sexual culture, and Gender, a textbook. You can follow her on Twitter, Facebook, and Instagram.

The current political discourse is so focused on a single form of government revenue, that the word taxes has become essentially synonymous with just one tax in particular; the federal income tax.  In fact, unless there is a foreign policy crisis, the federal income tax usually dominates most political discussion given how the federal budget (or increasingly the federal debt) relates to almost anything and everything the federal government does (or does not do in more and more instances).

For example, during the closing months of 2012 we watched how a fight over a sunset of the Bush Tax Cuts almost shoved the United States over a fiscal cliff.  Just prior to this near crisis, the most discussed difference between 2012 presidential candidates was their disagreement about a 4 point increase in the highest federal income bracket.  Also, Mitt Romney will likely be remembered mostly for his disparagement and disregard of “The 47% of United States Citizens who pay no federal income tax.”

However, limiting discussion about government funding and spending to just the federal income tax and ignoring the other types of payments we make to the treasury is not without consequence, especially given how the federal income tax is actually a very unique kind of tax.  Unlike excise taxes, payroll deductions, sales taxes and most property taxes that are regressive or require the poor to pay a larger proportion of their resources than the wealthy; the federal income tax is one of the few progressive taxes in the United States because at least on paper (I say that because these marginal rates often do not equate the larger effective rates given that the wealthy are afforded more loopholes, deductions, and lower rates on investment income), the rich pay larger marginal rates than the middle-class and poor.   Thus, with our political discussion largely limited to the federal income tax, it should come as no surprise conservatives are so easily able to frame “The State,” especially the federal government, as a perverse Robin Hood who steals from the rich (the makers as they are being called now) to give to the poor (the takers).

The non-profit, non-partisan Institution on Taxation and Economic Policy recently released its research on the taxes families in the United States paid in 2010.  These findings reveal when the focus is taken off the federal income tax and the entire tax system is examined, cumulative household taxes in nearly every state are regressive because the less money a family makes, the larger proportion they pay to the different levels of government.  As the graph below shows, the cumulative tax system is regressive because sales, excise and property taxes offset progressive income taxes at both the state, and federal levels.

The tax system as a whole is largely regressive because the higher one’s class standing, the lower the proportion of total taxes they pay.  While the report provides great details in the variations across each state, the graph below shows that on average, the lowest 20% of earners pays an overall tax rate that is more than twice of what the top 1% of earners pay.

While many citizens perceive the U.S. tax code as inherently unfair because the wealthy have higher marginal rates on their federal income tax (the only one anyone ever seems to talk about); an examination of the entire system reveals the opposite as cumulatively, the poor pay a larger proportion of their income to local, state, and the federal governments.

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Jason Eastman is an Assistant Professor of Sociology at Coastal Carolina University who researches how culture and identity influence social inequalities.

Cross-posted at Reports from the Economic Front.

The British economy is a disaster.  Oddly enough most analysts find it difficult to explain why.

Actually the reason is quite simple. The British government responded to its own Great Recession by cutting spending and raising taxes.  The result, which is anything but mysterious, is that the county remains in deep recession.

Matthew O’Brien, writing in The Atlantic, describes the situation as follows:

…public net investment — things like roads and bridges and schools,  and everything else the economy needs to grow — has fallen by half the past three years, and is set to fall even further the next two. It’s the economic equivalent of shooting yourself in both feet, just in case shooting yourself in one doesn’t completely cripple you. Austerity has driven down Britain’s borrowing costs even further, but that’s been due to investors losing faith in its recovery, rather than having more faith in its public finances. Indeed, weak growth has kept deficits from coming down all that much, despite the higher taxes and slower spending. In other words, it’s economic pain for no fiscal gain.

Below is a chart taken from The Atlantic article.  It shows that:

Britain’s stagnating economy has left it in worse shape at this point of its recovery than it was during the Great Depression. GDP is still more than 3 percent below its 2008 peak, and it hasn’t done anything to catchup in years. At this pace, there will be no recovery in our time, or any other time.

 gdp to december 2012

In other words, while the British economy suffered a deeper decline during the Great Depression period of 1930 to 1934 than to this point in the Great Recession which started in 2008, the economy recovered far more quickly then than now.  In fact, it doesn’t seem to be recovering now at all.

Perhaps the most surprising thing about the situation is that political leaders appear determined to stay the course.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Cross-posted at Montclair SocioBlog.

The Wall Street Journal had an op-ed this week by Donald Boudreaux and Mark Perry claiming that things are great for the middle class.  Here’s why:

No single measure of well-being is more informative or important than life expectancy. Happily, an American born today can expect to live approximately 79 years — a full five years longer than in 1980 and more than a decade longer than in 1950.

Yes, but.  If life-expectancy is the all-important measure of well-being, then we Americans are less well off than are people in many other countries, including Cuba.

The authors also claim that we’re better off because things are cheaper:

…spending by households on many of modern life’s “basics” — food at home, automobiles, clothing and footwear, household furnishings and equipment, and housing and utilities — fell from 53% of disposable income in 1950 to 44% in 1970 to 32% today.

Globalization probably has much to do with these lower costs.  But when I reread the list of “basics,” I noticed that a couple of items were missing, items less likely to be imported or outsourced, like housing and health care.  So, we’re spending less on food and clothes, but more on health care and houses. Take housing.  The median home values for childless couples increased by 26% between just 1984 and 2001 (inflation-adjusted); for married couples with children, who are competing to get into good school districts, median home value ballooned by 78% (source).

The authors also make the argument that technology reduces the consuming gap between the rich and the middle class.  There’s not much difference between the iPhone that I can buy and the one that Mitt Romney has.  True, but it says only that products filter down through the economic strata just as they always have.  The first ball-point pens cost as much as dinner for two in a fine restaurant.  But if we look forward, not back, we know that tomorrow the wealthy will be playing with some new toy most of us cannot afford. Then, in a few years, prices will come down, everyone will have one, and by that time the wealthy will have moved on to something else for us to envy.

The readers and editors of the Wall Street Journal may find comfort in hearing Boudreaux and Perry’s good news about the middle class.  Middle-class people themselves, however, may be a bit skeptical on being told that they’ve never had it so good (source).

Some of the people in the Gallup sample are not middle class, and they may contribute disproportionately to the pessimistic side.  But Boudreaux and Perry do not specify who they include as middle class.  But it’s the trend in the lines that is important.  Despite the iPhones, airline tickets, laptops and other consumer goods the authors mention, fewer people feel that they have enough money to live comfortably.

Boudreaux and Perry insist that the middle-class stagnation is a myth, though they also say that

The average hourly wage in real dollars has remained largely unchanged from at least 1964—when the Bureau of Labor Statistics (BLS) started reporting it.

Apparently“largely unchanged” is completely different from “stagnation.”  But, as even the mainstream media have reported, some incomes have changed quite a bit (source).

The top 10% and especially the top 1% have done well in this century.  The 90%, not so much. You don’t have to be too much of a Marxist to think that maybe the Wall Street Journal crowd has some ulterior motive in telling the middle class that all is well and getting better all the time.

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Jay Livingston is the chair of the Sociology Department at Montclair State University.  You can follow him at Montclair SocioBlog or on Twitter.