David Leonhardt

You are currently browsing articles tagged David Leonhardt.

“The Numbers, However, Make Clear That Inequality Isn’t Destined To Rise”

February 17, 2015 in Excerpts, Politics, Science/Tech | Permalink

As soon as George Washington University economist Steve Rose looked at the numbers and determined that income inequality has actually decreased since the Great Recession, others in the field immediately pushed back. More certainly will. Whomever you believe, even the bearish on the topic think wealth inequality is still at dangerous levels. Of course, depending on how policy is enacted, it’s not destiny. From a post about Rose’s conclusions by David Leonhardt in the New York Times:

The income of the top 1 percent – both the level and the share of overall income – still hasn’t returned to its 2007 peak. Their average income is about 20 percent below that peak. Yet we have all become so accustomed to rising inequality that we seem to have lost the ability to consider the alternative. Maybe it’s because many liberals are tempted to believe inequality is always getting worse, while many conservatives are tempted to believe that the Obama economy is always getting worse.

The numbers, however, make clear that inequality isn’t destined to rise. Not only can economic forces, like a recession, reduce it, but government policy can, too. And Washington’s recent efforts to fight inequality – as imperfect and restrained as they’ve been – have made a bigger difference than many people realize.

The existing safety net of jobless benefits, food stamps and the like cushioned the blow of the so-called Great Recession. So did the stimulus bill that President Obama signed in 2009 and some smaller bills passed afterward. “Not only were low-income people protected – middle-income and some higher income-households had much lower losses because of these public policies,” Mr. Rose said. “For those who think government programs never work, maybe they need to think again.”

Before diving into the numbers on the government’s role, let’s start with the pretax statistics. These are the data on what’s happened before the government redistributes income through taxes and benefits.•

Tags: ,

“You Need Education But You Also Need Progressive Taxation”

May 8, 2014 in Books, Excerpts, Politics, Science/Tech, Urban Studies | Permalink

From Josh Eidelson’s new Salon interview with economist Thomas Piketty, an exchange about leveling wealth inequality with taxes and/or education:

“Question:

David Leonhardt, in his New York Times Magazine essay on your book, writes that rather than a wealth tax, there’s ‘another, more politically plausible force that can disrupt [Piketty’s] first law of inequality: education. When a society becomes more educated, many of its less-wealthy citizens quickly acquire an ephemeral but nonetheless crucial form of capital — knowledge — that can bring enormous returns.’ Do you share that view?

Thomas Piketty:

I do share partly that view. As I say in the book, education and the diffusion of knowledge are the primary forces towards reduction in inequality…

The question is, is that going to be sufficient?

…You need education but you also need progressive taxation.

It’s not an all-or-nothing solution. I think a lot can be done at the national level. We do already have progressive taxation of income, progressive taxation of inherited wealth, at the national level. We also have annual taxation of wealth at the national level. For instance, in the U.S. you have a pretty big property tax… Technically, it is perfectly possible to transform it into a progressive tax on net wealth…

The main difficulty is not so much to make it a global tax. The main difficulty is not international tax competition. The main difficulty is more internal political [obstacles]… Right now the property tax is a local tax, and so the federal government cannot do anything. You know, it was the same with the income tax one century ago.

So I don’t share the pessimistic view that a progressive wealth tax will never happen.”

Tags: , ,

“The Market — The Wisdom Of Crowds — Turned Out To Be Wrong”

July 8, 2012 in Excerpts, Science/Tech, Urban Studies | Permalink

“This development matters because predictions matter.” (Image by John Haslam.)

Plenty of insiders were wrong about the Supreme Court decision regarding the Affordable Care Act, but how did large collections of outsiders do? Not so hot. From David Leonhardt’s analysis at the New York Times of the cooling of prediction markets and what that means:

“With the rumors swirling, I began to check the odds at Intrade, the online prediction market where people can bet on real-world events, several times a day. The odds had barely budged. They continued to show about a 75 percent chance that the law’s so-called mandate would be ruled unconstitutional, right up until the morning it was ruled constitutional.

The market — the wisdom of crowds — turned out to be wrong.

I have since come to think of the court’s ruling as the signature example of the counterattack of the insiders. After the better part of a decade in which various markets, from Intrade to the stock market, became many people’s preferred way to peer into the future, a backlash is clearly under way. Not so long ago, knowing about the existence of Intrade was a mark of being in the vanguard. Today, mocking Intrade, ideally on Twitter, is a sign of sophistication.

This development matters because predictions matter. They allow government officials, corporate executives and citizens to plan for the future. They are an unavoidable part of life.”

Tags: