Democracy And Free Markets: Is That All?

Recap and Refocus (May 25-31)

The fact that economics has emerged as the primary concern of most people in this society (who more easily see themselves as consumers than citizens, owners than leaders) sees to me to be a symptom, but of what? What larger forces are moving through the society that causes economics to be the most regarded framework of the epoch?

And with that, I'd like to take a new look at comments I’ve made about democracy. It is not clear what it is, and why it is valuable.

Another way of looking at it is: why are we hoping that democracy can be a sufficient corrective to market awkwardness? :

Democracy meant mob rule until Madison came up with "representative democracy" which mystifies the whole by treating a referendum on party sponsored candidates as "representative". Using the word "democracy", as Bush Co propose in Iraq, to cover the procedure of getting people to agree to choices made by the administration, is to confuse the issues. The issue in "democracy" is, ok, who then decides candidates, and how does a structure of governance and leadership emerge, and if we get governance and leadership, is it still a democracy? Is acquiescence to choices made at the top really democracy?

While I think it important to discuss democracy, I don’t want to lose touch with the main focus here on the theme democracy and markets. Is that all? By which I mean, is there more to the human future than these two defining the future, especially to the extent that the economy narrows wealth, and democracy is so easily manipulable by the corporate mainstream media?

Please note the supporting discussions in other items, especially the new ones of scenarios and history.

Income Disparity, Economic Standards, and Growing Discontent

Douglass Carmichael John posted in 22:

"My argument is that this is not a trend and not specific to democracy and capitalism and that the focus on determining an erosion of the benefits of capitalism should be on whether or not over a long period of time we have seen a decrease in absolute levels of income and standard of living."

What do we lose if we measure the future strictly by income? A little world travel leads to the conclusion that happiness is not measured by income, or wealth. John leaves out any sense of self-determination, or local control. Irrelevant? Leaves out the quality of culture. Irrelevant? leaves out the number of people in prison. irrelevant?

I have argued that income alone does not even measure market success, if the goods I want - a house by the sea, quiet, love, friends, community - are destroyed by the mechanisms of my getting that income, forcing me to live in a high rise with security, surrounded by HDTV and junk mail.

The passions of people move history. Freedom, community coherence, values, freedom, dignity, even the now officially repressed but obviously active at both the top and bottom of society, capacity for marauder and chaos (as in Boewulf).

It also leaves out any sense of fairness as social mobility declines. We will not stand for the possibility of advancement if the odds begin to shift towards restriction and inherited position. How will this discontent manifest? Hard to say. But how about a move towards federalism and away from national goal setting?

What is really missing for me is the flow of history. the struggle against communism, the problem of religion and values, Goldwater to Bush, A simple focus on economics will hand the country to the financial types and the wealth hoarders, because there is no other logic to stop rationalization of the market.

The money definition is too narrow. An interesting recent article

http://www.washingtonmonthly.com/features/2003/0303.florida.html

on the new American dream, creativity rather than income.

This article is stimulating about value, but still hypes the "creativity" of the current market and the obvious numbers show that the 'creativity" markets lead to great wealth and income disparities.

Also the very interesting political analysis of trends by Paul Ray

http://www.culturalcreatives.org/Library/docs/NewPoliticalCompassV73.pdf

This paper cuts a touch deeper than the first of the two, by paying more attention to the values proposition.

Is it the economy that narrows wealth? As you have pointed out in earlier comments income disparity has existed throughout history and continues to exist regardless of the political system, including communism and socialism. Much of this disparity can be explained by the power of compounding. Once one has attained a certain level of wealth, short of irresponsible management of assets, the power of compounding provides an insurmountable advantage for increased growth in wealth. Does this matter? Some could argue that there is a net benefit to society from the opportunities created by the investments of the wealthy.

My argument is that this is not a trend and not specific to democracy and capitalism and that the focus on determining an erosion of the benefits of capitalism should be on whether or not over a long period of time we have seen a decrease in absolute levels of income and standard of living.

The measure of deterioration should be is there a lessening of standard of living and opportunity. In economic terms, the long term data (100 years, 50 years, and 25 years) indicates that we continue to make progress at all income levels. In addition, despite what we might see as industry consolidation, the data indicates consistent growth in the number of employers at all levels, which includes small, medium, and larger employers, and the rate of increase has increased. With regard to trend to monopoly, the top companies aren't the same over time; in other words we see turnover in their ranks, which could also be viewed as a measure of opportunity (who heard of HomeDepot, WalMart, and Dell Computers 20 years ago?)

If one focuses on income disparity they are inclined to reach a different conclusion than if you include other information. I favor the counter-intuitive approach.

You say "In addition, despite what we might see as industry consolidation, the data indicates consistent growth in the number of employers at all levels, which includes small, medium, and larger employers, and the rate of increase has increased." But note the ambiguity. That statement is consistent with

The percentage of the total that is owned by the top (10,100, 500) firms globally is increasing, which is all that I have argued. I like the increase in smaller firms, but I also see that their years average years of existence are declining and failure rates are also increasing.

The reason it is consistent is that the total output is (has been) increasing rapidly, the percentage owned by the top is increasing (and hence the percentage owned by the rest is decreasing, and within that decreasing percentage new firms are being created at an accelerating rate.

It could be that we are getting a kind of "punctuated disequilibrium" at the lower levels - that is, when things are stuck, people try things with much more vigor, and, to get some success, the failure rate increases dramatically.

One way to look at this is, what is the range of experiences people are having in the US in relation to the economy right now, and what are the trends?

They were not intended to address the overall well being of our society.

On industry consolidation, I said, "In addition, despite what we might see as industry consolidation, the data indicates consistent growth in the number of employers at all levels, which includes small, medium, and larger employers, and the rate of increase has increased. With regard to trend to monopoly, the top companies aren't the same over time, in other words we see turnover in their ranks, which could also be viewed as a measure of opportunity (who heard of Home Depot, Wal-Mart, and Dell Computers 20 years ago?)"

Notice the data include employers at all levels not just small companies. I consider Home Depot, Wal-Mart, etc. to be large companies. Companies with fewer than 2,500 employees employ more individuals than larger companies in total. The issue is similar to the question of income disparity. Is the trend negative because more output is concentrated in fewer companies or positive because more jobs have been created at all levels with increases in income?

In surveys most people respond that they are in favor of a cleaner environment, affordable healthcare, less crime, better education, etc. The difficulty is when they are asked if they are willing to pay for it. Even if someone else pays for it, we ultimately all pay for it. Unless you have a level playing field globally we would put our corporations at a disadvantage which will result in loss of jobs and higher prices. If we restrict our markets and only rely on domestic resources for production, we again will have fewer jobs and higher prices. If we "soak the rich", similar consequences.

Even if money isn’t an issue how do you allocate finite resources? As I said before there is not enough coast line for us all to live at the beach.

How do we get our fellow citizens to care more about the environment, education, etc., than bigger houses and cars? We want the players to care more about how they play the game than winning at all costs.

There are countless ways in which the wealthy have managed to achieve a negative tally on many millions of individual score cards. Not because they are wealthy but because they are perceived as using their wealth, status and power in a selfish manner. And, when caught in the most egregious acts of greed, self serving naked ambition, moral turpitude, ethnic and religious prejudice, they so control the system that their punishment is perceived by many millions as falling far short of what should be meted out.

(Participant) The question of free markets trending toward monopoly shouldn't be considered simply in the business sense of markets but in the broader scope. Is the free market system trending toward a monopoly of power and opportunity by the top tier players across multiple layers of the social fabric?

(Participant) The main reason that people are not upset by the CEO making a thousand times what the average worker does is that an amazing number of these workers expect to be in the wealthy elite.

(Participant) As long as that hope is nourished by the system and is perceived as a potential reality. At what point might a perceived decrease of opportunity and potential seriously affect people?

Douglass Carmichael I don't think that absolute income is what is important and is independent of what others make is logical. For key goods, I have tried to be persuasive, there is real competition between top and middle and bottom.

And there is a tendency people have to either see

1. individual cases - there are full scholarships for the poor

2. trends - the number of poor at universities is declining.

these are two different mental sets of mind, predispositions to intuit reality. They both are "true", s that is not the issue. It's the path from that "truth" to policy that is wickedly complex.

Is the competition the result of differences in income or population growth within each income group and over all?

Could we all live at the beach if income wasn’t the limiting factor?

Where is the evidence of this simmering discontent? In surveys the public indicates that they are concerned about the environment, but they buy bigger less fuel efficient cars. They answer that they are in favor of environmental sustainability, but they buy bigger houses that require more lumber and more land. They care about the poor and other social issues but they buy clothes made in Jakarta by children and vote for middle of the road candidates.

Ralph Nader understood this and is why his response to his critics for taking votes away from Gore was that with Bush as President things were bound to get bad enough to shake America out of its complacency and demand change. It hasn’t happened yet because irrespective of relative differences in income most people in an absolute sense are doing pretty well.

Dick you make a good point which relates to your comments about revolution. As long as people believe that either they can or their children can have a better life (not necessarily wealthy) the seeds for dissent aren’t there. Unfortunately, the definition for a better life can be shortsighted and focus more on material possessions rather than on the other issues that Doug has mentioned previously.

Kip your comments about how people feel about the rich sounds like why so much of the rest of the world hates America in large part because they don’t believe they have the opportunity for a better life.

The reason the simmering is not showing up is, it is discontent with both parties, I believe. that leads to a growing cynicism and a desire to bypass the system into personal life. But that increases the market for the expensive stuff, so we see housing and car markets most active at the high end.

The larger car- larger house phenomena is part of the monopolization, by creating a more narrowly based higher rising pyramid of income and choices (fewer winners, bigger stakes). Such a structure is more, not less decentralized. hence easier to manage and easier to own and control.

In the state of Washington I am seeing the failure of volunteer groups aimed at environment, community development, non-profits. One I know has had an annual fundraiser and this year two thirds of the board has declined participation. they are folding next week. I did some interviews. "Too hard", "no one cares" "I don't see how we can get enough money. Better move on." "My heart is no longer in it." "We no longer have a vision of what to do." "I am too busy." "My daughter is graduating from Harvard and I need to go to the graduation, and then to Switzerland." Every one of them is building an addition to their house; all but one have an SUV.

Is part of the difference in perception generational? Most younger people I know are pretty enthusiastic about the future. People in their 20’s and 30’s making independent short films and sharing them with others on the web, people recording their own music, all because of the digital revolution. People starting their own companies because today’s technologies create either new industries or provide a better way to provide goods and services in established industries where entrenched companies are stuck with expensive overheads.

Is it that we don’t like the priorities of this younger generation? Are we right and they are wrong?

If there are large numbers of discontented individuals why aren’t they doing something to address their concerns? Do they feel powerless? So their only response is to shop with their higher incomes. They don’t sound very committed. No wonder the rapacious capitalist rule the world

Lets look for numbers.

Americans happy at home

7 of 10 say so; another poll shows we have hope for 2000

October 25, 1999

We'll paraphrase James Brown, who so succinctly put it:

"We feeeeeel GOOD!"

On the verge of the 21st Century, about four of five Americans have told a private survey group they're hopeful for whatever lies ahead in 2000. And nearly 7 of 10 Americans say they like their homes and their neighborhoods, according to the Census Bureau.

Asked to rate their homes and neighborhoods on a scale from 1 to 10, 69 percent of Americans rated their houses 8 or better and 67 percent gave that endorsement to their neighborhood.

For many Americans, what's not to like? The economy is going gangbusters, unemployment and crime are down, much of America is wired for cable and the Detroit Lions are doing well.

The US and India are the world's happiest nations.

Americans and Indians are the happiest people in the world, while Russians and Chinese are the saddest, according to a new global survey. Global market research agency, Roper Starch Worldwide, and its Indian partner, ORG-Marg, conducted their "1999 Happiness Barometer" in 22 countries over five continents.

They said they wanted to find out how people around the world felt in the run-up to the millennium.

Poll: Most Americans Happy With Their Jobs

Majority Surveyed Not Concerned About Losing Job

Posted: 2:48 p.m. EST March 1, 2002

Updated: 2:52 p.m. EST March 1, 2002

CLEVELAND -- The overwhelming majority of Americans, 83 percent, said they are satisfied with their current jobs, according to a new a Parade and Harris poll.

The poll also found that despite today's rocky economy 72 percent of respondents said they are not concerned about losing their jobs.

Fifty-nine percent say their lifestyles are better than their parents', and the median age at which Americans plan to retire is 62. The poll was conducted in January 2002 among 1,011 Americans.

Copyright 2002 by TheIowaChannel.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed

A majority of America's well-off households are independent, goal-oriented and confident.

October 10, 2002: 3:12 PM EDT

By Marion Asnes, Money Magazine Senior or

NEW YORK (Money Magazine) - After a year in which Americans endured a terrorist attack, layoffs, a stock market swoon and news of billion-dollar corporate swindles, we wanted to gauge the mood of affluent Americans. Are they worried? What, if anything, are they changing about their financial lives? How much is enough to feel rich? What do they think their chances are of becoming wealthy? What's the best way to do it? What does affluence mean to them, anyway?

According to Dr. Gary Buffone, director of the Family Business Center in Jacksonville, Fla., his clients prefer the term comfortable, even when their assets approach $10 million. "These people are primarily self-made and they can't identify with being rich. They retain the middle-class values and lifestyle they grew up with, and even though they've accumulated millions, most live well below their means. If you've grown up in the middle class, that's who you are, even when you become wealthy."

For the entire above article: http://money.cnn.com/2002/09/23/pf/saving/welloff_views/

And this from a Seniors Magazine:

Challenge of Health Care availability, affordability shows dissatisfaction

Jan. 28, 2003 - Americans give the "availability of affordable healthcare" the most negative rating on quality of life issues in the annual state of affairs survey by Gallup Poll, which also found senior citizens taking unique positions on some of the questions and the general mood of the nation becoming negative.

Gallup's overall measure of the way things are going in the country—a key Gallup indicator of the public's mood—has switched from net positive in 2000 and 2001, to net negative. As shown below, by a 56% to 42% margin, the majority of Americans today are dissatisfied with the way things are going in the United States.

A 54% majority of Americans aged 65 and older are satisfied with the Social Security and Medicare systems, while a majority of younger Americans (62%) are dissatisfied.

While a majority of all age groups say they are dissatisfied with the acceptance of homosexuality in the country, a follow-up question reveals that it is for different reasons: by a 43% to 20% margin, adults aged 18 to 29 think homosexuality should be more widely accepted rather than less widely accepted. The figures are nearly reversed for those aged 65 and older. Adults aged 30 to 49 and 50 to 64 favor less acceptance by a slight margin.

Attitudes toward immigration differ by age: 40% of 18- to 29-year-olds are satisfied with the level of immigration today, but this drops to about 25% among the middle-aged groups, and to 18% among those 65 and older.

In Gallup's annual "Mood of America" survey, conducted each January, survey respondents were asked to rate their degree of satisfaction or dissatisfaction with the state of national affairs in 28 different areas. The results suggest satisfaction with the U.S. military's strength and the overall quality of life in the country, but indicate action is needed in healthcare, immigration, poverty, the nation's economy, and taxes. These are the high and low points of the nation's state of affairs, according to the American public as reflected in a Gallup Poll conducted Jan. 13-16.

The highest negative on the survey was for "the availability of affordable healthcare," and coming in at sixth was "the Social Security and Medicare systems."

Negative Ratings Satisfied Dissatisfied Net Diff.

1. The availability of affordable healthcare 25 72 -47

2. The level of immigration into the country today 27 65 -38

2. The nation's efforts to deal with poverty and

homelessness 30 66 -36

4. The state of the nation's economy 34 64 -30

5. The amount Americans pay in federal taxes 33 63 -30

6. The Social Security and Medicare systems 35 60 -25

7. The moral and ethical climate 38 61 -23

8. The nation's campaign finance laws 28 50 -22

9. The acceptance of homosexuality in the nation 37 54 -17

10. The quality of public education in the nation 42 57 -15

11. The size and influence of major corporations 43 54 -11

Notice the challenge in the above information, as we have discussed before, people want better healthcare, less poverty, better education, etc. but lower taxes.

Would anybody disagree with the following?

1. It's POSSIBLE for democracy to become fascist or free markets to become monopolistic.

2. It's PRUDENT to be particularly vigilant in watching for early signs of such.

3. It's WISE to consider various ways to deal with such possibilities before they become actual.

Data.

Most recent Gallup

http://www.gallup.com/poll/stateNation/

satisfied with the nation 54 % plus 45 minus state of the economy

21 excellent good 78 fair poor

Sorry for the very long post. (These from Jeff Gates- 2000. Some figures have gotten much worse since. I'll be poking Fed Reserve stats and others.)

The financial wealth of the top one percent of households now exceeds the combined wealth of the bottom 95 percent. [Note 1]

The wealth of the Forbes 400 richest Americans grew by an average $940 million each from 1997-1999 [Note 2] while over a recent 12-year period the net worth of the bottom 40 percent of households declined 80 percent. [Note 3]

For the well-to-do, that's an average increase in wealth of $1,287,671 per day. [Note 4]

If that were wages earned over a 40-hour week, that would be $225,962 an hour or 43,876 times the $5.15 per hour minimum wage. The Federal Reserve found in its latest survey of consumer finances that although median family net worth rose 17.6 percent between 1995 and 1998, family wealth was "substantially below" 1989 levels for all income groups under age 55. [Note 5]

From 1983-1997, only the top five percent of households saw an increase in their net worth while wealth declined for everyone else. [Note 6]

As of 1997, the median household financial wealth (marketable assets less home equity) was $11,700, $1,300 lower than in 1989. [Note 7]

Anticipated Social Security payments are now the largest single "asset" for a majority of Americans. Funded by a levy on jobs, the Social Security payroll tax is now the largest tax paid by a majority of Americans (the largest for 90 percent of GenXers), funded with a flat tax of 12.4 percent on earnings up to $72,600.

For the first time since the Great Depression, the national savings rate turned negative (during the first quarter of 1999). [Note 8]

What about the largest intergenerational transfer of wealth in history—that $12 trillion in the hands of baby-boomers' parents? Current wealth patterns indicate that one-third of that pending transfer will go to 1 percent of the boomers ($1.6 million each). Another third will go to the next 9 percent ($336,000). The final slice will be divided by the remaining 90 percent (an average $40,000 apiece). [Note 9]

A Boom for Whom?

The richest 400 Americans hold wealth equivalent to one-eighth of the GDP. [Note 10]

The average wealth of the Forbes 400 was $200 million in 1982, just after the enactment of the Reagan-Bush "supply-side" tax package - paid for with $872 billion in deficit financing. [Note 11]

By 1986, their average wealth was $500 million.

In 1982, inclusion on the Forbes 400 required personal wealth of $91 million. The list then included 13 billionaires. By 1999, $625 million was required for inclusion on a list that included 268 billionaires. [Note 12]

The federal debt was $909 billion in 1980. At the close of the Reagan-Bush era, the debt was $4,202 billion. It currently hovers around $5,700 billion. [Note 13]

Government debt securities are owned dominantly by upper-crust households. The latest figures show that tax-exempt interest was reported on 4.9 million personal tax returns for 1997, about 4 percent of all taxpayers. Total tax-exempt interest income was $48.5 billion in 1997. [Note 14]

The combined net worth of the Forbes 400 topped $1 trillion in September 1999, up from $738 billion 12 months earlier, for an average one-year increase of $655 million each ($12.6 million per week). [Note 15]

Less than one-fifth of that increase ($48.4 billion) would have been enough to bring every American up to the official poverty line, leaving each of the Forbes 400 with an average one-year increase of $534 million ($10.2 million per week).

While the number of households expanded 3 percent from 1995 to 1998, households with a net worth of $10 million or more grew 44.7 percent. [Note 16]

Eighty-six percent of stock market gains between 1989 and 1997 flowed to the top ten percent of households while 42 percent went to the most well-to-do one percent. [Note 17]

If Congress adopts Martin Feldstein's proposal for the partial privatization of Social Security, the U.S. Treasury will pump budget surpluses equal to 2.3 percent of the national payroll into the stock market each year. That's $100 billion-plus per year in tax revenues to boost stock prices. [Note 18]

In a Nation of Equals

In 1998 the top-earning one percent had as much income as the 100 million Americans with the lowest earnings. [Note 19]

From 1983-1995, only the top 20 percent of households saw any real increase in their income while the middle-earning 20 percent, if they lost their jobs, had enough savings to maintain their standard of living for 1.2 months (36 days), down from 3.6 months in 1989. [Note 20]

Economist Robert Frank reports that the top one percent captured 70 percent of all earnings growth since the mid-1970s. [Note 21]

The Federal Reserve found that "median income between 1989 and 1998 rose appreciably only for families headed by college graduates." [Note 22]

On an inflation-adjusted basis, the median hourly wage in 1998 was 7 percent lower than in 1973 - when Richard Nixon was in the White House. [Note 23]

The pay gap between top executives and production workers grew from 42:1 in 1980 to 419:1 in 1998 (excluding the value of stock options). [Note 24]

Executive pay at the nation's 365 largest companies rose an average 481 percent from 1990 to 1998 while corporate profits rose 108 percent. [Note 25]

Had the typical worker's pay risen in tandem with executive pay, the average production worker would now earn $110,000 a year and the minimum wage would be $22.08. Business Week reports that in 1998 the average large company chief executive was paid $10.6 million, a 36 percent jump over 1997. [Note 26]

That omits unexercised stock options.

Compensation expert Graef Crystal identifies five CEOs who each saw their wallets widen by more than $232 million in 1998 as they exercised their stock options. For a 40-hour week, that's $116,000 per hour.

In the Pursuit of Happiness

The work year has expanded by 184 hours since 1970, an additional 4-1/2 weeks on the job for the same or less pay. [Note 27]

Household working hours reached 3,149 in 1998, roughly 60 hours a week for the typical family, moving Americans into first place worldwide in the number of hours worked, nudging aside the workaholic Japanese. [Note 28]

According to the Bureau of Labor statistics, the typical American now w/orks 350 hours more per year than a typical European -- almost nine full weeks. More than 65 million anti-depressant prescriptions were written in 1998. Parents spend 40 percent less time with their children today than they did thirty years ago. [Note 29]

A 40-hour week at today's minimum wage of $5.15 per hour nets a pre-tax annual income of $10,300. That's $6,355.00 below the official 1998 poverty line for a family of four. Had increases in the minimum wage kept pace with inflation since the 1960s, the minimum wage would now exceed the earnings of nearly 30 percent of U.S. workers. [Note 30]

The after-tax income flowing to the middle 60 percent of households in 1999 is the lowest recorded since 1977. Among the bottom fifth of households, average after-tax income fell nine percent from 1977 to 1999. In New York, the highest-income five percent of families gained nearly $108,000 in average income per family from the late 1970s to the late 1990s, while the lowest-income 20 percent of New Yorkers lost $2,900. [Note 31]

The Census Bureau reports that the pretax median income was $1,001 higher in 1998 than in 1989. For the decade of the 1990s, that's an average annual raise, adjusted for inflation, of $111.22, or 0.3 percent. ccording to the Census Bureau, the top fifth of households now claim 49.2 percent of national income while the bottom fifth gets by on 3.6 percent. [Note 32]

Except for inflation adjustments, today's poverty formula remains unchanged since 1965 when it was designed by Lyndon Johnson to address severe nutritional deprivation but only if "the housewife is a careful shopper, a skillful cook and a good manager who will prepare all the family's meals at home."

The national poverty rate remains above that for any year in the 1970's.

One in every four preschoolers in the United States now lives in poverty. [Note 33]

Bill Clinton reported a 12.7 percent poverty rate in September 1999, the lowest level in a decade.

Raising the poverty threshold to $19,500 (as recommended by the Census Bureau) boosts the poverty rate to a record-high 17 percent, leaving 46 million Americans short of that minimal level.

In 1998, the nation's three primary income security programs -- Social Security, Medicare and civil service pensions -- consumed $805.2 billion in federal tax revenues. [Note 34] Meanwhile, the U.S. General Accounting Office (GAO) reports that we need $112 billion to repair dilapidated public schools.

In 1973, the United States imprisoned 350,000 people nationwide. By 1998, the prison population was 1.8 million or roughly 674 people in prison per 100,000, while Europe-wide the imprisonment rate is 60 to 100 per 100,000. Florida now spends more on corrections than on colleges. California spent nine percent of its 1998 budget on prisons as it responded to an 8-fold increase in its prison population over the past two decades. The Rand Corporation projects that California's prison spending will top 16 percent by 2005.

Whose Wealth of Nations?

In 1998, Disney CEO Michael Eisner received a pay package totaling $575.6 million, 25,070 times the average Disney worker's pay. [Note 35]

In the same year (1998) when one American (Bill Gates) amassed more wealth than the combined net worth of the poorest 45 percent of American households, [Note 36] a record 1.4 million Americans filed for bankruptcy -- 7,000 bankruptcies per hour, 8 hours a day, 5 days a week. [Note 37]

Personal bankruptcy filings topped 1.3 million in 1999.

Since 1992, mortgage debt has grown 60 percent faster than income while consumer debt (mostly auto loans and credit cards) has grown twice as fast. The fastest growing segment of the credit card market consists of low-income holders, with the average amount owed growing 18 times faster than income. [Note 38]

Nine years into the longest economic expansion in the nation's history, labor's share of the national income remains two to four percentage points below the levels reached in the late 1960's and early 1970's. [Note 39]

Household debt as a percentage of personal income rose from 58 percent in 1973 to an estimated 85 percent in 1997. In 1997, 142,556 people reported adjusted gross income of $1 million or more, according to the IRS, up from 86,998 for 1995. [Note 40]

For 1999, the Congressional Budget Office (CBO) projects that the top one percent will report average before-tax income of $786,000 and average after-tax income of $516,000. [Note 41]

The top one percent pocketed, on average, an annual tax cut of $40,000 since 1977, an amount exceeding the average annual income of the middle fifth of households. [Note 42]

If the richest one percent of the population had received the same share of the nation's after-tax income in 1999 as it did in 1977, it would have received $271 billion less in 1999 -- $226,000 less per household. [Note 43]

Between 1977 and 1999, the after-tax income of the top one percent grew faster (115 percent) than their before-tax income (96 percent). [Note 44]

In 1998, 9,257 new and existing homes sold for $1 million or more, triple the number of million-dollar homes on the market in 1995. Annual mortgage interest payments on a newly purchased $1 million home total $79,247 (assuming 10 percent down and a 30-year adjustable rate mortgage at 8 percent). The home mortgage interest deduction for someone in the top 39.6-percent tax bracket saves on that house $31,382 a year in federal income taxes. When that saving is added to the $40,000 average annual tax cut allowed the top one percent since 1977, that $1 million home costs $7,865 per year, or $655 per month.

Federal tax law allows a personal income tax deduction on home mortgage interest costs up to $1 million. If that limit were reduced to $300,000, the CBO calculates that federal tax receipts would increase by $40.8 billion over nine years. In 1998, four percent of new mortgages exceeded $300,000.

For every age group under 55, home ownership remains below where it was in the early 1980s. [Note 45]

Minorities and Foundations

The percentage of black households with zero or negative net worth (31.3 percent) is double that of whites. [Note 46]

As of 1997, the net worth of white families was 8 times that of African-Americans and 12 times that of Hispanics. The median financial wealth of African-Americans (net worth less home equity) is $200 while that of Hispanics is zero. [Note 47]

The poverty rate among blacks, 26.1 percent, is 2.5 times greater than the rate for whites. For Hispanics, the rate is 25.6 percent.

Black applicants were granted less than one percent of total home mortgages approved between 1930 and 1960. [Note 48]

Only in 1999 did home ownership among blacks recover ground lost since 1983.

Black-owned small businesses were three times as likely as whites to have their loan applications turned down in the 1990s. [Note 49]

The United States has 18,000 black farmers, down from 925,000 in 1920. Less than one percent of farmers are black, and they are abandoning farming at three times the rate of whites. In 1999, the Agriculture Department gave its long-delayed assent to a class-action settlement to compensate black farmers who have complained for decades at being shut out of federal loan programs due to racism. [Note 50]

In 1865, blacks owned 0.5 percent of the nation's net worth. In 1990, their net worth totaled 1 percent. [Note 51]

Black students scored 144 points less on the SAT than white students where the parents of both earn over $70,000. When black test scores are compared to those of white students with the same family wealth, the "achievement gap" disappears. [Note 52]

If your financial wealth is $225,000 (about 20 times the national median) and you give $1,500 to charity, how large a donation would be required for Bill Gates to experience a similar dent in his net worth? According to Wired magazine, $6.7 billion. That's almost seven times the amount he pledged in September 1999 to provide 20,000 minority scholarships over the next two decades. [Note 53]

With the December 1999 completion of Windows 2000, the value of Gates’ personally held Microsoft shares rose to more than $130 billion, almost 12 times the $11 billion or so in securities owned by all 33 million African-Americans combined.

If an entry-level Forbes 400 member gives away $1 million of their income, how much would a median-level household need to donate to make a similar financial sacrifice? A bit less than $60.

Making the World Safe for Plutocracy

The world's 200 richest people more than doubled their net worth in the four years to 1999, to more than $1 trillion, for an average $5 billion each. [Note 54]

Their combined wealth (the top seven are Americans) equals the combined annual income of the world's poorest 2.5 billion people. [Note 55]

Microsoft co-founders Bill Gates and Paul Allen plus Berkshire Hathaway's Warren Buffet have a net worth larger than the combined GDP of the 41 poorest nations and their 550 million people. [Note 56]

Warren Buffet's 1999 net worth ($31 billion) equals the GDP of Kuwait.

The wealth of the world's 84 richest individuals exceeds the GDP of China with its 1.3 billion people. [Note 57]

If the value of Bill Gates’ Microsoft stock continues to grow at the same pace as it has since Microsoft's 1986 initial public offering (58.2 percent a year), Wired projects he will become a trillionaire in March 2005, at the age of 49, and his Microsoft holdings will top $1 quadrillion (one million billion) in March 2020, at the age of 64. The Gross World Product for 1998 was $39,000 billion.

The UN Development Program (UNDP) reports that 80 countries have per capita incomes lower than a decade ago. [Note 58] Sixty countries have been growing steadily poorer since 1980. [Note 59]

Three billion people live on less than $2 per day while 1.3 billion of those get by on less than $1 per day. [Note 60]

In 1960, the income gap between the fifth of the world's people living in the richest countries and the fifth in the poorest countries was 30 to 1. By 1990, the gap had widened to 60 to 1. By 1998, it had grown to 74 to 1. [Note 61]

With global population expanding 80 million each year, World Bank President Jim Wolfensohn cautions that, unless we address this "challenge of inclusion," 30 years hence we will have 5 billion people living on less than $2 per day.

The UNDP reports that two billion people suffer from anemia, including 55 million in industrial countries. Current trends suggest that in three decades we could inhabit a world where 3.7 billion people suffer from anemia.

UNDP's assessment of today's development trends: "Development that perpetuates today's inequalities in neither sustainable nor worth sustaining." [Note 62]

In Indonesia, 61.7 percent of the stock market's value is held by the nation's 15 richest families. The comparable figure for the Philippines is 55.1 percent and 53.3 percent for Thailand. [Note 63]

A Closer Look at Globalization

The world's 200 largest corporations account for 28 percent of global economic activity while employing less than one-quarter of one percent of the global workforce.

The World Bank estimates that $100 billion to $150 billion has flowed out of the former Soviet Union since the fall of the Berlin Wall. As of July 1999, one-third of Russians were living below the official poverty line of $38 per month.

The UNDP identifies six core ingredients as minimal conditions for a decent life: safe drinking water (1.3 billion people lack access to clean water), [Note 64]

adequate sanitation, sufficient nutrition, primary health care, basic education (one in seven children of primary school age is out of school), [Note 65] and family planning services for all willing couples. UNDP calculates the cost at $35 billion each year for the next 15 years. That's about what the United States spent in 1999 to maintain its nuclear readiness, a decade after the fall of the Berlin Wall. For the world community to bear the cost would require 1/7 of 1 percent of global GDP; the United States contributes to the UN 0.09 percent of its GDP. [Note 66]

Every jet fighter sold by a developed country to a developing country costs the schooling of three million children. [Note 67]

The cost of a submarine denies safe drinking water to 60 million people.

In the 1997 fiscal year, the United States exported $8.3 billion of arms to non-democratic countries.

The Clinton-Gore Administration is calling for a $110 billion increase in the Pentagon budget, including a 50 percent increase in weapons procurement through 2004; Republican Congressional leaders insist on considerably more funds for military remobilization.

What if those individuals who have captured the most wealth in the global economy were to bear this $35 billion development cost? An annual 3.5 percent levy on the $1 trillion in assets owned by the world's 200 wealthiest people would raise the requisite funds. Three-quarters of those people live in OECD countries; one-third of them reside in the United States. [Note 68]

Experts report that the well-to-do have hidden at least $8 trillion in tax havens. [Note 69]

If the international community identified the owners of that $8 trillion -- held in an estimated 1.5 million offshore corporations (up from 200,000 just since the late 1980s) -- an annual "freeloader levy" of 3.5 percent, less than the typical sales tax, could generate $280 billion each year. That's 165 times the current budget for all UN development programs. Or 93 times the UN's annual expenditure for peacekeeping operations, now raised pass-your-hat style. That's enough to build 140,000 schools at $2 million apiece. That's also the bulk of the $300 billion that environmental researchers at Cambridge and Sheffield Universities report would be required each year to "save the planet." [Note 70]

Eighty percent of the world's people live in developing countries.

Ninety-five percent of the next generation's children will be born to women there.

Seventy percent of those women live on less than $1 per day.

Ninety percent of those women labor on average 35 hours more per week than the typical paid workman. None of their work is reflected in the GDP.

Women in developing countries produce 80 percent of the food and receive 10 percent of the agricultural assistance.

Seventy percent are illiterate.

For every year that women attend school beyond the fourth grade, the birth rate declines 20 percent.

Fifty percent of women over age 18 can neither read nor write.

Less than one percent of the world's assets are held in the name of women.

--------------------------------------------------------------------------------

END NOTES

1 Edward N. Wolff, "Recent Trends in Wealth Ownership," a paper for the conference on "Benefits and Mechanisms for Spreading Asset Ownership in the United States," New York University, December 10-12, 1998. In 1995, the financial wealth of the top one percent was greater than the bottom 90 percent. [Back to text]

2 Forbes 400, October 11, 1999. [Back to text]

3 Edward N. Wolff, "Recent Trends in Wealth Ownership," Ibid. The period cited was 1983 to 1995, based on the Federal Reserve's 1995 Survey of Consumer Finances. [Back to text]

4 Forbes 400 wealth was $624 billion in 1997, $738 billion in 1998 and $1 trillion-plus in 1999. See www.forbes.com. [Back to text]

5 Federal Reserve Bulletin, January 2000, p. 6. [Back to text]

6 Ibid., p. 10. [Back to text]

7 Median household financial wealth was less than $10,000 in 1995. The $11,700 figure is based on a 12-percent growth projection in Wolff, "Recent Trends in Wealth Ownership," Ibid. [Back to text]

8 Albert B. Crenshaw, "Taking Reduced Saving Into Account," The Washington Post National Weekly ion, June 28, 1999, p. 21. [Back to text]

9 Near Karlen, "And the Meek Shall Inherit Nothing," The New York Times, July 29, 1999, p. B1. [Back to text]

10 See www.forbes.com. [Back to text]

11 Joint Committee on Taxation, General Explanation of the Economic Recovery Tax Act of 1981, p. 401. [Back to text]

12 Forbes 400, September 13, 1982; Forbes 400, October 11, 1999. [Back to text]

13 Economic Report of the President (February 1999), p. 419. [Back to text]

14 "Tax Report," The Wall Street Journal, July 21, 1999, p. 1 [Back to text]

15 Forbes 400, October 11, 1999 (see www.forbes.com). [Back to text]

16 Louis Uchitelle, "More Wealth, More Stately Mansions," The New York Times, June 6, 1999, p. A 16, citing research by Prof. Edward N. Wolff. [Back to text]

17 David Wessel, "U.S. Stock Holdings Rose 20% in 1998," The Wall Street Journal, March 15, 1999, p. A6.. [Back to text]

18 Feldstein, chairman of Reagan's Council of Economic Advisers, was a key architect of supply-side economics. [Back to text]

19 Congressional Budget Office Memorandum, Estimates of Federal Tax Liabilities for Individuals and Families by Income Category and Family Type for 1995 and 1999, May 1998. [Back to text]

20 Edward N. Wolff, Ibid., p. 10. [Back to text]

21 Robert Frank, Luxury Fever (New York: Simon & Schuster, 1999). [Back to text]

22 Federal Reserve Bulletin, January 2000, p. 53. [Back to text]

23 Median earnings based on Commerce Department's Bureau of Economic Analysis data reported in State of Working America 1998-99; labor's share of non-farm business sector income based on Bureau of Labor Statistics data reported in Economic Report of the President (February 1999), at p. 384. [Back to text]

24 Business Week, "49th Annual Executive Pay Survey," April 19, 1999. [Back to text]

25 A Decade of Executive Excess: The 1990s (Boston: United for a Fair Economy and Institute for Policy Studies, 1999). [Back to text]

26 Business Week, "49th Annual Executive Pay Survey," April 19, 1999. [Back to text]

27 Juliet S. Schor, The Overworked American (New York: Basic Books, 1992) indicating that the annual work year increased by 139 hours from 1969-1989. The Washington, D.C.-based Economic Policy Institute found that the annual hours worked expanded by 45 hours from 1989-1994. [Back to text]

28 Steven Greenhouse, "So Much Work, So Little Time," The New York Times, September 5, 1999, p. WK1. [Back to text]

29 Charles Handy, The Hungry Spirit (New York: Broadway, 1998), p. 17. [Back to text]

30 See Joel Blau, Illusions of Prosperity: America's Working Families in an Age of Economic Insecurity (New York: Oxford University Press, 1999). [Back to text]

31 "State Income Inequality Continues to Grow in Most States in the 1990s, Despite Economic Growth and Tight Labor Markets," report by the Economic Policy Institute and the Center for Budget and Policy Priorities, Washington, D.C., January 18, 2000. [Back to text]

32 See www.census.gov ("income" at Table H-2). [Back to text]

33 Tamar Levin, "Study Finds That Youngest U.S. Children are Poorest, The New York Times, March 15, 1998, p. Y 18. [Back to text]

34 Economic Report of the President (February 1999), p. 421. [Back to text]

35 It was only after strenuous objection from institutional investors that Eisner agreed to remove his personal attorney from the compensation committee of Disney's board of directors. [Back to text]

36 Professor Edward N. Wolff cited in "A Scholar Who Concentrates... on Concentrations of Wealth," Too Much, Winter 1999, p.8. [Back to text]

37 Doug Henwood, "Debts Everywhere," The Nation, July 19, 1999, p. 12. [Back to text]

38 Ibid. [Back to text]

39 Louis Uchitelle, "As Class Struggle Subsides, Less Pie for the Workers," The New York Times, December 5, 1999, p. BU4 (reporting on research by Professor Edward N. Wolff). [Back to text]

40 "Tax Report," The Wall Street Journal, July 28, 1999, p. 1. [Back to text]

41 CBO Memorandum, Estimates of Federal Tax Liabilities for Individuals and Families by Income Category and Family Type for 1995 and 1999, May 1998. [Back to text]

42 Issac Shapiro and Robert Greenstein, "The Widening Income Gulf," Washington, D.C., Center for Budget and Policy Priorities, September 4, 1999, citing CBO figures. [Back to text]

43 Isaac Shapiro and Robert Greenstein, Ibid. [Back to text]

44 Ibid. [Back to text]

45 Homeowners are also now much more highly leveraged than in the 1980s, with down payments at record lows and mortgage levels at record highs. Lou Uchitelle, "In Home Ownership Data, A Hidden Generation Gap," The New York Times, September 26, 1999, p. BU4. [Back to text]

46 Edward N. Wolff, Ibid. [Back to text]

47 Ibid., p. 41, table 6. [Back to text]

48 Results of 1991 Federal Reserve Board study analyzing 1990 Home Mortgage Disclosure Act data. [Back to text]

49 "Cr Gap in Black and White," FOMC Alert, Financial Markets Center, May 18, 1999, p. 11. [Back to text]

50 "15,000 Black Farmers File Claims in Racial Settlement," The New York Times, September 21, 1999, p. A25. [Back to text]

51 Dalton Conley, Being Black, Living in the Red, (Berkeley: University of California Press, 1999). [Back to text]

52 Ibid. [Back to text]

53 Evan L. Marcus, "The World's First Trillionaire," Wired, September 1999, p. 163. [Back to text]

54 United Nations Human Development Report 1999, Ibid. [Back to text]

55 United Nations Human Development Report 1998 (New York: Oxford University Press, 1998). [Back to text]

56 "Rich Comparison," The Wall Street Journal, July 30, 1999, p. 1. [Back to text]

57 United Nations Human Development Report 1998, Ibid. [Back to text]

58 United Nations Human Development Report 1999 (New York: Oxford University Press, 1999), p. 2. [Back to text]

59 Ibid. at p. v. [Back to text]

60 Ibid., at p. 3. [Back to text]

61 United Nations Human Development Report 1999, Ibid., p. 28. [Back to text]

62 United Nations Human Development Report 1996 (New York: Oxford University Press, 1996), p. 4. [Back to text]

63 Stijn Claessens, Simeon Djankov and Larry H.P. Lang, "Who Controls East Asian Corporations?" (Washington, D.C.: The World Bank, 1999). [Back to text]

64 United Nations Human Development Report 1999, Ibid., p. 28. [Back to text]

65 Ibid. [Back to text]

66 Mahbub ul Haq, "Charter of Human Development Initiative," State of the World Forum (San Francisco, October 3, 1996). [Back to text]

67 See Oscar Arias, "Stopping America's Most Lethal Export," New York Times, June 23, 1999, p. A23. [Back to text]

68 United Nations Human Development Report, 1998, p. 30. [Back to text]

69 The IMF estimates that the amount in offshore tax havens grew from $3.5 trillion in 1992 to $4.8 trillion in 1997. Other estimates put the amount as high as $13.7 trillion. See Douglas Farah, "A New Wave of Island Investing," The Washington Post National Weekly Review, October 18, 1999, p. 15. Alan Cowell and Edmund L. Andrews, "Undercurrents at a Safe Harbor," The New York Times, September 24, 1999, p. C1. [Back to text]

70 The Times (London), September 23, 1999. [Back to text]

97 million is such an abstract number. That's an awful lot of bodies, energy and potential.

(Participant) As an old population watcher, I have this nagging question: For those of us who retain the idea that Democracy is the worst except for all others, should we consider breaking our "Union" into four or five smaller United States? I can think of a lot of both positive and negative predictions if we did.

Douglass Carmichael I sense those of us here are moving in more or less the same direction, with the possible exception of John, whose view is getting more articulate an needs deep consideration.

Moving towards federalism, or even leaving the Union, would liberate a lot of human entropy. We currently live in a bound structure that prevents much local regional activity. It would cause a lot of pain and a lot of creativity. Shumpater's "creative destruction."

It would also go a long way towards solving the security problems. Much to think about here.

One issue: is the world better of or worse if the American experiment moved to the sidelines and became parochial? Would Americans be better off? How? Why?

Since the civil rights movement in the fifties to free blacks, I have been involved in several liberation movements, notably those for women and children. Among my learnings were that oppressed groups usually don't know or feel that they are oppressed, no matter how terrible their situations may be. They take it for granted that such is their lot, or that the constraints they live with are simply givens, or in the case of women and children, that far from being oppressed, they enjoy special privileges honoring their status (e.g. play, not work, for children and opening doors and lighting cigarettes for women). It never occurs to children that discrimination against them (such as going to jail for behavior that would not be a crime if an adult did it (e.g. truancy, incorrigibility, sexual promiscuity, etc.) is anything but normal. It never occurred to the great mass of women that they could a aspire to become physicians instead of nurses, or that after getting a Harvard MBA that there was anything unusual in being asked how fast they could type, or that the "protective" legislation passed by men to protect women in the workplace had prevented them from having leadership positions, had justified their being paid a little over half what men were making and in effect had protected them into poverty. To develop a liberation spirit there has to be an awakening to the discrimination. There has to be leadership. And often there has to be an event--Rosa Parks not moving to the back of the bus.

Those most oppressed are the last to recognize that oppression. The leadership of liberation movements never comes from those most oppressed, but from those least oppressed. Gloria Steinem was not the most oppressed woman in America. And sometimes it comes from those completely outside the group that needs liberation. Abolitionists were almost all white. George Bernard Shaw was an early feminist.

The inequities that Doug documented are indeed measures of oppression. For the CEO who makes 1000 times what the average worker does (and some do) and at the same time act to limit the wages of workers, or worse to "downsize" them, or eliminate their retirement benefits, while he increases his own, is truly oppression. And it is oppression for the administration to do the same thing, as it is doing now. It's just that we don't have the consciousness as a society that there is anything wrong with that, anymore than whites in both north and south, for more than a century, could see that there was anything wrong with slavery. For that matter, neither could the slaves.

But when that special event occurs, or that leader emerges, or that consciousness is raised, then we will realize that we are sitting on a powder keg. And before we credit ourselves with having handled those liberation movements very well (which, of course, we still haven't--blacks are more geographically segregated now than they were in Martin Luther King's day), we should remember that not all liberation movements will be as non-violent as the ones we are witnessing in the US with blacks and women, and have hardly started to consider with respect to children. Lest we forget, 650,000 American soldiers died in the Civil War fighting about such an issue.

Conflict is not the only form revolution can take. The more common approach is refusal to play the game by those rules that one perceives as being unfairly disadvantageous (note when I say perceived I am referring to what makes the news). Why be honest, reliable, compassionate, etc., if you perceive those behaviors are eschewed by the wealthy? Enron, Worldcom, Qwest, Peregrine, Price Waterhouse are just recent examples. Under Reagan there was the Savings and Loan debacle. We see in the news that our politicians lie to us (Clinton), we see in the news that the wealthy look for shady ways to avoid paying taxes (offshore accounts), that they are utterly devoid of compassion (slumlords), arrogant and unrepentant when caught (Leona Helmsley) etc. Shoplifting, insurance fraud, lying on resumes, cheating on taxes, etc. are all in accord with the perceived behaviors of today's wealthy.

Once a large percentage of the population begins to follow the perceived wealth acquisition model employed by the wealthy a trend is set to toward ignoring whatever rules are inconvenient. We develop a general apathy toward such antisocial acts as drunk driving, violence at schools, muggings, carjackings, etc. Anyone in the country might lose their life or that of a loved one to such an act, yet there seems to be no serious consideration that it MIGHT indicate a breakdown in the social fabric - a revolution.

Of course one way to change public perception would be to control the news. Thank God we live in the USA where that's impossible. Isn't it?

Even the data on the wealthy suggest that many of these are newly rich with middle class values providing continued inspiration that the dream is still alive. More reason for a lack of discontent.

Dick I have also numerous times stated that an attitude change comes from leadership. But I think that the leadership needs to focus on making everyone better off in an absolute sense and not be preoccupied with relative differences. Even without money as the limiting factor, we can’t all live at the beach, or be the pretty girl, or the smart one, etc. What we should strive for is a society that provides people with the opportunity to be the best that they can possibly be. The psychic benefit of that is different than the economic benefit. Whose fault is it if I feel less worthy because I make less money if I am doing what I want? It’s how you play the came that matters and that attitude comes from leadership.

The following is a report which I have referenced before which goes into more detail regarding absolute versus relative income.

If you are in a hurry the conclusion is on page 18. I couldn't figure out how to copy the conclusion to this discussion because my absolute level of computer skills is lacking.

Is it possible today to not think globally? Does a heightened awareness of community have to exclude the world community or worse yet occur at its expense?

As Don has pointed out before, how much are we prepared as a nation to risk lowering our standard of living to bring income equality to the rest of the world? Is it hypocritical to ask the wealthy in this country to accept what we are unwilling to do relative to the global community?

What if, as the UCLA study suggests, we can improve the absolute standard of living for the global community without reducing ours and that this is more important than worrying about relative differences? Otherwise, the risk is far greater for US imperialism to preserve our way of life than domestic revolution if one worries about relative differences because as Dick has pointed out if you deny ones aspirations or worse move them backwards they will strike out. This supports the attitude that we are entitled to Iraq’s oil and China’s labor. It is an attitude of dominance rather than cooperation.

Pareto (sp?) optimality, if I recall my college econ. doesn’t require that both parties be equal but that you maximize the benefit to both without making each other worse off or that you can make yourself better off without making the other worse off or you can make the other better off without making yourself worse off? Good negotiators understand this. Bad negotiators always worry about what the other guy is making instead of how good the deal is for them. Their bad or small minded attitude most often results in no deal.

On overseas. Of course a real problem and much of Jeff's data cited above has to do with international disparities.

The policy problem is that we can't help the Iraqi’s without creating markets, and those markets will lessen the ability of our US employees to earn, which means downsizing expectations. It is hard to seek equilibrium between two systems by merely pulling the plug that separates them. Too much danger, too much entropy. I do not think the idea of the world as a connected set of bathtubs, all at the same internal water level (of monetary value), is a good idea. I much prefer local and regional economies with a very sluggish trade policy among them, so we have different systems with different local cultures—not one giant mega mall.

"Choices and Pareto Optimality

How do social choices get made? Last time we discussed one social choice mechanism, the Pareto Criterion or unanimity rule. This seems like a pretty tough standard to meet. However, it turns out to be the most used method of deciding how society's resources get used in a market economy. Given that the private market allocates the vast majority of the resources in our economy, it's nice to know that (under certain fairly reasonable assumptions) it does so in a Pareto efficient manner."

There would be no Pareto Optimality, with scarcity, if you wanted to buy more but there wasn't any available. In other words I would make you worse off if I buy more and you want more but my actions prevent that.

(Participant) Today's main stories--about the FCC move to permit monopolistic growth of big media and thereby reduce the range of information available to the public, and the Inspector General's report on the detainees after 9/11 confirming the unjust treatment they received (the reports from the detainees themselves were much more horrifying, of course) were just two more events that contribute to the climate conducive to the development of totalitarianism. The act that bothered me most was the official response of the Attorney General's office to the Inspector General's report: "Anyone is wrong to criticize the behavior of our staff after 9/11 because the situation was so intense." Wrong to criticize? The US Inspector General? Too intense for justice?

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