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The Impossibility of Growth Demands a New Economic System |
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Wednesday, 28 May 2014 14:59 |
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Monbiot writes: "To succeed is to destroy ourselves. To fail is to destroy ourselves. That is the bind we have created. Ignore if you must climate change, biodiversity collapse, the depletion of water, soil, minerals, oil; even if all these issues were miraculously to vanish, the mathematics of compound growth make continuity impossible."
George Monbiot. (photo: Alicia Canter/Guardian UK)
The Impossibility of Growth Demands a New Economic System
By George Monbiot, Guardian UK
28 May 14
Why collapse and salvation are hard to distinguish from each other.
 et us imagine that in 3030BC the total possessions of the people of Egypt filled one cubic metre. Let us propose that these possessions grew by 4.5% a year. How big would that stash have been by the Battle of Actium in 30BC? This is the calculation performed by the investment banker Jeremy Grantham.
Go on, take a guess. Ten times the size of the pyramids? All the sand in the Sahara? The Atlantic ocean? The volume of the planet? A little more? It’s 2.5 billion billion solar systems. It does not take you long, pondering this outcome, to reach the paradoxical position that salvation lies in collapse.
To succeed is to destroy ourselves. To fail is to destroy ourselves. That is the bind we have created. Ignore if you must climate change, biodiversity collapse, the depletion of water, soil, minerals, oil; even if all these issues were miraculously to vanish, the mathematics of compound growth make continuity impossible.
Economic growth is an artefact of the use of fossil fuels. Before large amounts of coal were extracted, every upswing in industrial production would be met with a downswing in agricultural production, as the charcoal or horse power required by industry reduced the land available for growing food. Every prior industrial revolution collapsed, as growth could not be sustained. But coal broke this cycle and enabled – for a few hundred years – the phenomenon we now call sustained growth.
It was neither capitalism nor communism that made possible the progress and the pathologies (total war, the unprecedented concentration of global wealth, planetary destruction) of the modern age. It was coal, followed by oil and gas. The meta-trend, the mother narrative, is carbon-fuelled expansion. Our ideologies are mere subplots. Now, as the most accessible reserves have been exhausted, we must ransack the hidden corners of the planet to sustain our impossible proposition.
On Friday, a few days after scientists announced that the collapse of the West Antarctic ice sheet is now inevitable, the Ecuadorean government decided that oil drilling would go ahead in the heart of the Yasuni national park. It had made an offer to other governments: if they gave it half the value of the oil in that part of the park, it would leave the stuff in the ground. You could see this as blackmail or you could see it as fair trade. Ecuador is poor, its oil deposits are rich: why, the government argued, should it leave them untouched without compensation when everyone else is drilling down to the inner circle of hell? It asked for $3.6bn and received $13m. The result is that Petroamazonas, a company with a colourful record of destruction and spills, will now enter one of the most biodiverse places on the planet, in which a hectare of rainforest is said to contain more species than exist in the entire continent of North America.
The UK oil company Soco is now hoping to penetrate Africa’s oldest national park, Virunga, in the Democratic Republic of Congo; one of the last strongholds of the mountain gorilla and the okapi, of chimpanzees and forest elephants. In Britain, where a possible 4.4 billion barrels of shale oil has just been identified in the south-east, the government fantasises about turning the leafy suburbs into a new Niger delta. To this end it’s changing the trespass laws to enable drilling without consent and offering lavish bribes to local people. These new reserves solve nothing. They do not end our hunger for resources; they exacerbate it.
The trajectory of compound growth shows that the scouring of the planet has only just begun. As the volume of the global economy expands, everywhere that contains something concentrated, unusual, precious will be sought out and exploited, its resources extracted and dispersed, the world’s diverse and differentiated marvels reduced to the same grey stubble.
Some people try to solve the impossible equation with the myth of dematerialisation: the claim that as processes become more efficient and gadgets are miniaturised, we use, in aggregate, fewer materials. There is no sign that this is happening. Iron ore production has risen 180% in ten years. The trade body Forest Industries tell us that “global paper consumption is at a record high level and it will continue to grow.” If, in the digital age, we won’t reduce even our consumption of paper, what hope is there for other commodities?
Look at the lives of the super-rich, who set the pace for global consumption. Are their yachts getting smaller? Their houses? Their artworks? Their purchase of rare woods, rare fish, rare stone? Those with the means buy ever bigger houses to store the growing stash of stuff they will not live long enough to use. By unremarked accretions, ever more of the surface of the planet is used to extract, manufacture and store things we don’t need. Perhaps it’s unsurprising that fantasies about the colonisation of space – which tell us we can export our problems instead of solving them – have resurfaced.
As the philosopher Michael Rowan points out, the inevitabilities of compound growth mean that if last year’s predicted global growth rate for 2014 (3.1%) is sustained, even if we were miraculously to reduce the consumption of raw materials by 90% we delay the inevitable by just 75 years. Efficiency solves nothing while growth continues.
The inescapable failure of a society built upon growth and its destruction of the Earth’s living systems are the overwhelming facts of our existence. As a result they are mentioned almost nowhere. They are the 21st Century’s great taboo, the subjects guaranteed to alienate your friends and neighbours. We live as if trapped inside a Sunday supplement: obsessed with fame, fashion and the three dreary staples of middle class conversation: recipes, renovations and resorts. Anything but the topic that demands our attention.
Statements of the bleeding obvious, the outcomes of basic arithmetic, are treated as exotic and unpardonable distractions, while the impossible proposition by which we live is regarded as so sane and normal and unremarkable that it isn’t worthy of mention. That’s how you measure the depth of this problem: by our inability even to discuss it.
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How UC-Santa Barbara Can Turn Grief Into Action: Divest From Gun Manufacturers |
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Wednesday, 28 May 2014 14:59 |
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Excerpt: "There is a solution, and it starts with putting economic pressure on the gun industry. The companies that manufacture guns and ammunition and the NRA are responsible for the United States having the weakest gun laws among modern democracies."
(photo: unknown)
How UC-Santa Barbara Can Turn Grief Into Action: Divest From Gun Manufacturers
By Peter Dreier, Jennifer Fiore, The Nation
28 May 14
Our communities are bearing the brunt of gun violence while corporate executives reap the financial rewards.
 tudents and faculty at the University of California–Santa Barbara are understandably in shock after the murder of six innocent people Friday in the Isla Vista community that borders the campus. Over the next few weeks, there will be many memorial services, tributes and other events to remember the victims and provide family and friends with opportunities to mourn. But if UCSB students, alumni, faculty and staff want to channel their feelings into constructive action, here’s a suggestion: ask the University of California Regents if its $88 billion endowment is contributing to gun violence by being invested in gun companies that fund the National Rifle Association (NRA) and obstruct common-sense gun policies. If it is, demand that the UC system divest itself from these merchants of death.
America mourns with the families affected by this latest mass shooting. We face the responsibility to work together to stop the epidemic of gun violence.
“Not one more,” said a heartbroken Richard Martinez, the day after his 20-year-old Christopher, a UCSB student, was killed in the Isla Vista tragedy. “Why did Chris die? Chris died because of craven irresponsible politicians and the NRA. They talk about gun rights. What about Chris’s right to live?”
The following day, Martinez made additional comments: “There’s a tendency to think that this was a madman and that we can’t do anything about it. I think that’s an easy out. I don’t believe it. I know this is a complicated problem but I do believe it has a solution.”
Martinez is right. There is a solution, and it starts with putting economic pressure on the gun industry. The companies that manufacture guns and ammunition and the NRA are responsible for the United States having the weakest gun laws among modern democracies. In April of 2013, a few months after the Sandy Hook massacre, the gun lobby killed legislation to extend background checks for gun sales, ban assault weapons and limit the size of guns’ ammunition magazines.
The NRA has even used its political clout to block medical and academic research that would help us understand and end the epidemic of gun violence. According to ProPublica, “Since 1996, when a small CDC-funded study on the risks of owning a firearm ignited opposition from Republicans, the CDC’s budget for research on firearms injuries has shrunk to zero.” Last week, Senator Ed Markey (D-MA) filed a bill that would fund the CDC research. The NRA issued a statement calling Markey’s bill “unethical” and an “abuse of taxpayer funds for anti-gun political propaganda under the guise of ‘research.’”
Although the NRA likes to portray itself as representing grassroots gun owners, only about 4 million of the 90 million American gun owners are NRA members. The bulk of the NRA’s money comes from gun and ammo manufacturers that donate millions of dollars to further political obstructionism and fear-mongering among a small but vocal minority of gun owners. The gun makers’ profits—and the profits of Walmart (the nation’s largest seller of guns and ammunition) and other retailers—grow when there are few restrictions on the sale and ownership of guns and ammunition.
“There is a lot of profit to be made for all of this sorrow, all of this death, and all of this destruction,” said Dr. Sheldon Teperman, director of trauma surgery at the Jacobi Medical Center in New York City, who routinely deals with gunshot victims and who was interviewed for a video urging people to unload gun companies from their 401k investments.
The gun industry—led by Remington Outdoor, Sturm Ruger, Smith & Wesson and Olin—has profited, even as more Americans die by the products they manufacture and aggressively market. The value of these companies has grown significantly just as the rate of mass shootings has increased.
Cerberus Capital Management owns Freedom Group, maker of the Bushmaster XM-15, which Adam Lanza used at Sandy Hook Elementary School to massacre twenty children and six educators in minutes. Cerberus promised to sell the gun maker, but after eighteen months it has not yet done so.
Sturm Ruger is the manufacturer of assault weapons banned in California and in 2012 donated over $1.25 million to the NRA through a program of selling guns and donating $1 for each gun to the lobby group.
Smith & Wesson is the maker of the assault weapon used in the Aurora, Colorado, and LAX airport shootings and the semiautomatic pistol used at the recent Fort Hood shooting. Smith & Wesson recently gave the NRA a check for $600,000 to continue its work promoting guns and gun culture.
Olin owns Winchester Ammunition, an NRA donor of between $500,000 and $1 million and maker of ammunition intended to quickly expand inside the body, leading to greater human damage.
By divesting from these companies, we bring a new kind of pressure to bear on the forces of obstruction that Martinez called out. Divestment was a useful tool in the anti-apartheid efforts in the 1980s and again in bringing the tobacco industry to the table in the 1990s.
University endowments play a special role here, given the escalation of gun violence in our school and college campuses. According to Everytown for Gun Safety, at least seventy-two shootings have occurred on school campuses in the seventeen months since the Sandy Hook massacre. In 2010, the most recent year for which data is available, gun deaths—homicides, suicides and accidents—were the second-highest reason for death of young people ages 15–24, after only automobile accidents, according to a recent Center for American Progress report. Universities should lead to ensure that they do not further the epidemic of gun violence by financially supporting the companies that profit from the devastation of young people’s lives.
That is beginning to happen. In February, Occidental College became the first higher education institution to pledge to stay away from any investments in companies that manufacture military-style assault weapons and high-capacity ammunition magazines for general public sale. The college’s trustees did so at the urging of faculty and students who were horrified by the epidemic of gun violence, including those at schools and universities across the country. It turned out that Occidental’s endowment did not have investments in such companies, but its board’s policy ensured that it would not add any such stocks to its portfolio in the future.
Last year, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), both large public pension funds, moved to divest from manufacturers of assault weapons. The University of California endowment is one of the largest in the country. If the UC system announced a similar policy, it would have a huge impact, inspiring other universities to follow its example.
Media coverage of the Isla Vista tragedy has primarily focused on the details of the rampage, the mental problems, loneliness and anti-women manifesto of killer Elliot Rodger, and the grieving of the families and friends of Rodger’s victims. Rodger was seriously mentally ill. So was Adam Lanza. There are lots of such people in this world. But if we make it easy for them to obtain guns, they are more likely to translate their psychological problems into dangerous and deadly anti-social behavior.
Guns are a large part of American culture. Few object to the manufacture and sale of rifles used in hunting, a sport that millions of Americans enjoy relatively safely. But according to a CBS News poll last December, 85 percent of all Americans—including 84 percent of Republicans, 92 percent of Democrats, 81 percent of independents and 84 percent of gun owners—favor a federal law requiring background checks on all potential gun buyers.
Some will point out that Rodger passed background checks and purchased his Glock 34 and SIG Sauers weapons legally. That simply suggests that we should made it much more difficult for people to purchase assault weapons. In fact, a Rasmussen Reports survey in December revealed that 59 percent of likely US voters think there should be a ban on the purchase of semi-automatic and assault-type weapons. Only 33 percent disagree.
That’s the only way to prevent mass killings like we witnessed in at Sandy Hook Elementary, at Columbine High School and Virginia Tech University and last week in Isla Vista.
Our communities—especially students from kindergarten through university—are bearing the brunt of gun violence while corporate executives reap the financial rewards. Our institutions of higher learning should not profit from the violence that is wracked upon their students, whom schools are pledged to care for.
Toward that end, the University of California should join with major pension funds, unions, religious organizations and individuals by withdrawing its investments from gun manufacturers that profit from the violence wracked on our schoolchildren. We can stop the madness. We can learn from this horror, and even as we grieve, we can move forward.
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FOCUS | Parsing Piketty: Is Wealth Inequality Rising in the US? |
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Wednesday, 28 May 2014 12:53 |
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Cassidy writes: "Reading the online commentary, it often sounds as though Piketty's book came out of the blue, and as if it says something startling and fresh. In fact, his big contribution was to bring together a lot of existing empirical work and put a provocative spin on it: the rising concentration of wealth is capitalism's natural tendency, or, in Piketty's words, its 'central contradiction.'"
French economist Thomas Piketty. (photo: AFP)
Parsing Piketty: Is Wealth Inequality Rising in the US?
By John Cassidy, The New Yorker
28 May 14
 s you may have seen over the weekend, Thomas Piketty’s “Capital in the Twenty-First Century” has been subjected to another attack—a detailed and critical examination of some of the data it presents, by Chris Giles, the economics editor of the Financial Times.
Since its emergence as a surprise best-seller, Piketty’s book has been challenged on theoretical grounds from the left and the right. (I’ll get into that academic debate in a future post.) But what has given Piketty’s critique of modern capitalism heft is the trove of data on which it relies. Now comes Giles, who accuses him of cherry-picking among the various sources he used for his charts, altering some figures, and making others up “out of thin air.” After parsing and redoing some of Piketty’s numbers, Giles says, “there is little evidence in Prof Piketty’s original sources to bear out the thesis that an increasing share of total wealth is held by the few.” In the case of the United Kingdom, Giles claims, the corrected data indicate that the concentration of wealth has actually fallen over the past few decades. In the United States, he suggests, inequality of wealth has stayed more or less constant.
Is that true? I’ll concentrate here on the United States. (I’ll deal with the British case, with whose details I’m less familiar, in a separate post.) Let’s start with some context, which has been sorely lacking in this debate. Reading the online commentary, it often sounds as though Piketty’s book came out of the blue, and as if it says something startling and fresh. In fact, his big contribution was to bring together a lot of existing empirical work and put a provocative spin on it: the rising concentration of wealth is capitalism’s natural tendency, or, in Piketty’s words, its “central contradiction.”
For decades now, researchers have been documenting a rise in the concentration of income and wealth in mature capitalist economies. On this side of the Atlantic, these researchers include New York University’s Ed Wolff, the Federal Reserve’s Arthur Kennickell, and Larry Mishel and Jared Bernstein, who are associated with the Washington-based Economic Policy Institute. Back in the nineteen-nineties, I took Wolff’s graduate course, which was based on the material in his 1997 book, “Economics of Poverty, Inequality, and Discrimination.” In this context, it is perhaps worth looking back at Figure 10.3 from that book, which displays the share of wealth owned by the top one per cent of households in the United States. The top line represents “marketable wealth,” which includes money held in bank accounts, real estate, financial securities, and consumer durables, net of debts. The bottom line, “augmented wealth,” also includes the value of future retirement benefits from social security and private pension plans. From the mid-seventies until the mid-nineties, both lines rise steadily.
Now let’s turn to Piketty’s book, which extends the data to more recent years and presents a very similar picture. Figure 10.5 shows the share of wealth going to the richest one per cent of households and the richest ten per cent, and there is a strong resemblance to Wolff’s chart. Between 1930 and 1970, the concentration of wealth falls considerably; then, it starts to rise again, and keeps rising. It is worth noting that neither Piketty nor Wolff suggests that the level of concentration is back to where it was in 1930, before the Great Depression wiped out a great deal of wealth, but both of them do identify a rising trend. In a 2010 update to his earlier work, Wolff estimated that the share of over-all wealth accruing to the top ten per cent of households went from 68.2 per cent in 1983 to 73.1 per cent in 2007. To my eyes, anyway, that is practically identical to what the top line in Piketty’s figure 10.5 shows. Where, then, is the controversy?
Wolff’s research isn’t an outlier. His estimates for the period from 1983 to 2007 are based on the Federal Reserve’s Survey of Consumer Finances, a questionnaire-based exercise that includes a supplemental sample of high-income households and has been carried out every three years since 1989. The Fed’s own Kennickell has also made extensive use of these surveys, which seek to make adjustments for some common problems with household surveys, such as the fact that many rich people don’t respond to them.
Although Kennickell and Wolff differ on some things, including the validity of Wolff’s adjustments to the raw figures in the Fed surveys, and although they cover different years, their conclusions about the broad direction of wealth inequality are similar. In a long and detailed article published in 2009, Kennickell reported that the share of total net worth owned by the wealthiest one per cent of households went from 30.1 per cent in 1989 to 33.8 per cent in 2007. (See Table 4 in the paper.) Over the same period, the share of the top ten per cent went from 67.2 per cent to 71.5 per cent. Other measures of wealth inequality, including the Gini coefficient and the mean-to-median ratio, also indicated a rise in the concentration of wealth, Kennickell reported, largely due to very rapid growth at the top of the distribution.
These conclusions make intuitive sense. They jibe with recent economic history and the lopsided ownership of assets, particularly stocks and bonds. In his 2010 paper, Wolff noted that the richest one per cent of households own about forty per cent of all stocks, and the top ten per cent of households own about eighty per cent of all stocks. (These figures include stocks that are held indirectly, through mutual funds, 401(k) accounts, and other retirement accounts.) Middle-class people, a group that for this purpose is often taken to be those households between the fortieth and eightieth percentiles, tend to have most of their wealth tied up in their homes. And the bottom forty per cent of households have hardly any wealth at all.
Since the early nineteen-eighties, we have seen a prolonged and historic rally in the value of stocks and bonds—one that the market crashes of 1987, 2000, and 2007 to 2008 merely interrupted. If the wealthiest households have most of their wealth tied up in financial assets like stocks and bonds, it stands to reason that their share of over-all wealth has increased. As Kennickell points out, the issue isn’t that middle-class households haven’t see any increase in wealth: with real-estate prices rising strongly before the 2007 bust, “wealth grew strongly and roughly comparably for the center of the distribution” from 1989 to 2007. But, with the value of financial assets increasing even faster than real-estate prices, “wealth rose much more rapidly for the top of the distribution.”
As far as I could see, neither Wolff nor Kennickell have updated their conclusions to take account of the 2010 and 2013 results of the Survey of Consumer Finances, which covered the period following the financial crisis, when the prices of stocks and real estate both plunged. But Linda Levine, an economist at the Congressional Research Service, has done a study that incorporates the 2010 survey. According to Levine’s calculations, the share of total wealth held by the wealthiest one per cent of households rose from 33.8 per cent in 2007 to 34.5 per cent in 2010. During the same period, the wealthiest ten per cent of households saw its share of total net worth rise from 71.5 per cent to 74.5 per cent. Evidently, the slump in asset prices hit the rich less severely than the not-so-rich, perhaps because stock prices recovered more quickly than the price of homes.
Levine’s figures also go back further than 2007, and they confirm the story told by Wolff, Kennickell, and, now, Piketty. “Net worth has become more concentrated in recent decades,” Levine writes. “The share of wealth held by the top 10% of wealth owners grew from 67.2% in 1989 to 74.5% in 2010. Declines occurred in the remaining 90% of households.” (Update: In an unpublished analysis for the Economic Policy Institute, Wolff did update his figures to take account of the 2010 Survey of Consumer Finances, and his conclusions were pretty much the same as Levine’s: the shares of over-all net worth going to the top one per cent and the top ten per cent had both increased slightly between 2007 and 2010.)
That seems pretty definitive, but it doesn’t answer all of the points that Giles raises. In a long blog post, Giles points to several ways in which Piketty treats the data that do appear to raise concerns. For example, Giles points out that Piketty seems to add an arbitrary two per cent to the wealth share of the top one per cent in 1970. From 1910 to 1950, a period for which some data is lacking, Piketty estimates the wealth share of the top ten per cent by simply adding thirty-six percentage points to the figures for the top one per cent, according to Giles, and doesn’t offer an explanation for this procedure.
In addition, Piketty’s treatment of the nineteen-seventies differs from that of earlier authors. Most accounts, including Wolff’s Figure 10.3, show the wealth share of the top one per cent and the top ten per cent falling sharply from the late sixties to the late seventies, an inflationary period in which stocks and bonds did very poorly. Piketty’s Figure 10.5 shows the concentration of wealth rising steadily after 1970.
Giles also points out that Piketty switches from one data series to another, despite the fact they are derived from different sources and convey different stories. The figures he uses for the earlier period, up until the eighties, are based on a 2004 study that relies on estate-tax returns, which was carried out by Wojciech Kopczuk, of Columbia, and Emmanuel Saez, of Berkeley. For more recent decades, Piketty switches to the data derived from the Survey of Consumer Finances, which Wolff and Kennickell also use. Giles writes, “The result is that his line does not have the fall in inequality seen by Kopczuk-Saez but instead shows a rise.” In fact, the paper by Kopczuk and Saez shows that the share of wealth accruing to the top one per cent bobs up and down a bit in the period from 1983 to 2000. But it doesn’t show a rising trend; Giles is right about that. As the authors note, “Surprisingly, our top wealth shares series do not increase during the 1990s, a time of extraordinary stock price growth and perceived as having been extremely favorable to the creation of new fortunes.”
Piketty, in a response to the Financial Times, pointed out that because the data are “very diverse and heterogeneous,” one “needs to make a number of adjustments … to make them more homogenous over time and across countries.” The issues are whether Piketty’s choices were reasonable, and whether they misrepresented the underlying reality. The question of reasonableness is one for other experts in the field to rule on. But, despite the concerns raised by Giles, the over-all picture that Piketty presents—one of rising inequality of income and wealth—seems to be accurate.
There is, however, one exception, or qualification, which complicates the picture, and which Piketty would have been well-advised to acknowledge. The study by Kopczuk and Saez isn’t the only one to suggest that the share of the top one per cent hasn’t risen in the past fifteen or twenty years. Since 1995, several studies suggest, the biggest gains appear to have accrued to households just outside the top one per cent, while the share taken by the top one per cent has stabilized, or even fallen slightly.
In Table 2 of his 2010 paper, Wolff estimated that the top one per cent’s share of over-all net worth peaked in 1995, at 38.1 per cent. By 2007, the last year in his study, it had fallen back to 34.6 per cent. In the same twelve-year period, though, the share of the next four per cent—i.e., households that fall between the ninety-fifth percentile and the ninety-ninth percentile—rose from 21.8 per cent to 27.3 per cent. As a result, the share of the top ten per cent rose slightly. Inequality increased.
The figures in Levine’s 2012 paper are broadly similar. They show the top one per cent’s share of over-all net worth peaking at 34.6 per cent in 1995, dipping a bit in subsequent years, and then rising to 34.5 per cent in 2010. Basically, the picture is flat. Meanwhile, the rest of the top ten per cent were gaining ground. Between 1995 and 2010, their share of over-all net worth went from 33.2 per cent to 40.0 per cent, according to Levine’s numbers.
If these studies are accurate, the Occupy Wall Street movement and its supporters should perhaps have been demonstrating against the five per cent or the ten per cent rather than the one per cent. But this is a matter for further investigation, not a settled finding. Different ways of measuring inequality can produce very different results. An innovative new study by Saez and Gabriel Zucman, also of Berkeley, says that the wealth share of the top 0.1 per cent of households—the very, very rich—has risen sharply and consistently since the mid-seventies. The chart below, which shows the rising trend, is from a presentation by Saez and Zucman. At the very top of the distribution, the two authors conclude, the United States is “back to early 20th century wealth concentration levels.”
In reaching this conclusion, Saez and Zucman used a methodology that dates back to the interwar era but hasn’t been used very much recently. Rather than rely on household surveys or estate records, they worked backward from the capital income that taxpayers report on their annual 1040s: dividend payments, capital gains, rents, royalties, interest payments, and profits from unincorporated businesses. Utilizing a different rate of return for each type of asset, the two researchers capitalized the annual payments to produce estimates of over-all wealth for each household group.
Is this capitalization method reliable? Saez and Zucman concede that it relies on a number of assumptions and adjustments to the data, but they say it’s the “only way to have long run, yearly series covering the full distribution, including the very top.” The new paper will be subjected to inspection and criticism. That is how things should work. But it may provide a solution to the puzzle of why the other studies don’t show a further rise in the share of the one per cent since 1995: even within the one per cent, there is more inequality. In this scenario, the gains have been concentrated among the very richest families, whose finances aren’t adequately captured in household surveys.
In any case, the broad pattern from nearly all of the studies is one of rising wealth inequality, which is the story that Piketty tells. Some of the details are still hazy, it should be conceded. But, as far as the United States goes, the concerns that Giles raises don’t knock down the Piketty thesis.
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FOCUS | Our Fraudulent Two-Tiered Justice System |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=7118"><span class="small">Carl Gibson, Reader Supported News</span></a>
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Wednesday, 28 May 2014 11:30 |
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Gibson reports: "We're all familiar with the golden rule, right? I'm not talking about the "do unto others" bit from The Bible, but the "He who has the gold makes the rules" one."
The poor end up in jail. (photo: i-stock)
Our Fraudulent Two-Tiered Justice System
By Carl Gibson, Reader Supported News
28 May 14
 e’re all familiar with the golden rule, right? I’m not talking about the “do unto others” bit from The Bible, but the “He who has the gold makes the rules” one. Nowhere is this golden rule more evident than in the American justice system. And it won’t change until we collectively refuse to acknowledge its legitimacy. Matt Taibbi also makes this point eloquently in his book “The Divide.”
The most glaring evidence of our fraudulent judicial branch is shown in the treatment of Credit Suisse’s admission that it helped up to 22,000 wealthy Americans hide approximately $12 billion in assets from the IRS. Attorney General Eric Holder got everyone worked up into a frenzy when he made a statement that big banks who engaged in criminal activity were “no longer too big to jail.” But that turned out to be false when Credit Suisse, who enabled tax dodging on a massive scale, was allowed to slide back into good graces by paying a $2.6 billion fine, which amounts to 10% of its annual $26.2 billion in revenues. That's a lesser rate than lawful Americans pay in taxes. The penalty assessed by the US Department of Justice is essentially a “cost of doing business.” Disgust over such lax treatment is likely why the US's top tax enforcer stepped down after negotiating the settlement after originally saying she would favor prosecution of the bank.
When you combine Credit Suisse’s kid-gloves treatment with similar lax settlements for HSBC – who helped launder money for violent Mexican drug cartels – and the pittance of a settlement JPMorgan Chase had to pay for swindling millions of Americans out of their homes in fraudulent foreclosure schemes, the golden rule is clearly the guiding principle for the US Justice Department. We need not even mention all of the fraud and deception from Bank of America, Citigroup, and other big banks that created the subprime housing bubble, got bailed out after it burst, and never faced any jail time. Even the chief of the International Monetary Fund has said that the biggest banks haven’t changed a bit since the financial crisis.
However, a much different brand of justice is saved for those without the gold to make the rules. Cecily McMillan, a grad student, while trying to lawfully leave the scene at a protest, had her breast grabbed from behind by a plainclothes police officer who never identified himself as a cop. Reacting reflexively, she inadvertently struck the officer with her elbow. McMillan was then beaten in the street until she had a seizure, was never given medical attention, and was arrested on the charge of assaulting a police officer. At the trial, Judge Ronald Zweibel allowed no discussion of the violent past of her attacker, Grantley Bovell, who had a history of unprovoked attacks on civilians. Zweibel also didn’t allow discussion of the NYPD’s violent crackdown on nonviolent protesters in the Occupy Wall Street encampment. While McMillan got only 3 months out of what could have been a 7-year sentence, it’s still an injustice that a sexual assault victim was the one to do time, not her attacker.
Another sexual assault victim that won’t ever see justice served to her attacker is the 3-year-old daughter of Robert H. Richards IV. Richards is the great-grandson of Irénée DuPont, of the DuPont chemical dynasty. He lives off of trust fund money in a $1.8 million, 5800-square-foot mansion. Richards’ daughter told her grandmother that she didn’t “want my daddy touching me anymore,” detailing her father’s history of sexual assault throughout her young life. Richards faced two charges of second-degree rape of a child, which is normally a mandatory 20-year prison sentence. However, his judge allowed him to skate on a probation rap, saying he “wouldn’t fare well” in prison.
Richards fared much better than Gregory Taylor, a homeless man who was victimized by California’s draconian “three strikes” law. Since 1994, the state of California has had a policy stating that anyone who commits an offense after having previously been convicted of the same offense gets double the jail time. Anyone who commits that same offense again is automatically sentenced to 25 years to life. For most “three strikes” offenders, the harsh punishments they face are simply the result of crimes committed out of economic necessity. In Gregory Taylor’s case, he had broken into a church kitchen to steal bread, because he was hungry and had no money. Taylor was sentenced to 25 years, but was mercifully released from prison after 8 years behind bars.
On the other hand, one California man who should have definitely been behind bars for at least 25 years is Gurbaksh Chahal, CEO of RadiumOne. Chahal was caught on video beating and kicking his girlfriend 117 times during a 30-minute attack, and faced 43 felony counts. But Chahal’s money and status as a tech CEO in the San Francisco Bay Area got him a lawyer who negotiated his punishment down to probation, attendance at a domestic violence class, and 25 hours of community service. Chahal’s attorney is James Lassart, a former federal prosecutor who is also defending state senator Leland Yee, who faces multiple corruption charges. San Francisco Superior Court judge Brendan Conroy didn’t allow the surveillance video showing the 30-minute attack to be used as evidence, on the grounds that police obtained the video illegally, while prosecutors argued the video would have been erased if police filed for a warrant.
We as a nation can see these gross injustices in the judicial sphere, but there are only two options – either we allow the fraudulent two-tiered justice system to continue, or we refuse to accept its legitimacy, by voting out justices who are electable, voting out the politicians who appoint unelected justices, and simply not respecting the decisions made by the Supreme Court. While judges can’t state their political opinions when running for elections, it’s completely acceptable to ask candidates for judicial posts about whether or not they will uphold the law regardless of a person’s privileged status, either in race, gender, or class. What we allow is what will continue.
Carl Gibson, 27, is co-founder of US Uncut, a nonviolent grassroots movement that mobilized thousands to protest corporate tax dodging and budget cuts in the months leading up to Occupy Wall Street. Carl and other US Uncut activists are featured in the documentary We're Not Broke, which premiered at the 2012 Sundance Film Festival. Carl is also the author of How to Oust a Congressman, an instructional manual on getting rid of corrupt members of Congress and state legislatures based on his experience in the 2012 elections in New Hampshire. He lives in Sacramento, California.
Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.
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