Andrew Sullivan's Blog, page 233

Chart Of The Day

Derek Thompson shares the results of a recent survey about teenagers’ Internet habits. One of his takeaways:

If you’re confused why digital publishers obsess over Facebook and social media, make this graph your smartphone wallpaper. Even the most popular site among teens – BuzzFeed – has fewer daily visitors than any network or app in the graph. (Even Beats, which is considered a tiny music service, has more daily users than any website in the survey.) Seventy three percent of teens don’t read BuzzFeed, 84 percent don’t read Reddit, and 96 percent don’t read Mashable or Gawker.

For young people, Facebook is the newspaper, and websites are the authors.

Inherit The Windfall, Ctd

Jared Bernstein “didn’t think [Mankiw] made much of a case” in his defense of inherited wealth:

In fact, in an article based on nervousness over a wealth or inheritance tax—they’re not the same thing but their differences are not germane to what follows—there was a conspicuous lack of any discussion of such taxes in practice.  As with any tax, the question is: given its magnitude and scope, what is its distortionary impact on behaviors relative to the benefits its revenues provide?

In the US case, the current estate tax—a tax on the value of estates at death—is tiny.  As we point out here, because individuals and couples can exempt $5.25 million and $10.5 million, respectively, “fewer than 2 of every 1,000 estates will owe any estate tax in 2013.”  In other words, “everybody dies, but only the richest 0.14% of estates pay the estate tax.” Though the top statutory rate on estates is 40%, because of the exemption and other provisions that to reduce the liability of heirs to the estate, the effective rate—the average share of the estate paid in taxes—is about 16%.

Danny Vinik also knocks Mankiw:

[A]ll of this misses a fundamental argument against substantial sums of inherited wealth: fairness. Kids from wealthy families already have numerous advantages over low-income children, including receiving a better education and having access to more social capital. Huge inheritances only exacerbate those advantages.

A particularly strong point from Vinik:

Not only are these huge disparities unfair, but they also reveal a double standard among conservative policymaking.

Republicans often argue that giving people money – or health insurance – will disincentivize them from working and reduce economic growth. … If [Paul] Ryan is so concerned about Obamacare discouraging low-income Americans from working, he should have the same qualms about huge inheritances discouraging kids from wealthy families from working. But you never hear that argument from Republicans.  Apparently, free money – whether from the government or your parents – only acts as a disincentive to work when poor people receive it.

Krugman joins in:

[T]he larger criticism of Mankiw’s piece is that it ignores the main reason we’re concerned about the concentration of wealth in family dynasties – the belief that it warps our political economy, that it undermines democracy. You don’t have to be a radical to share this concern; not only did people like Teddy Roosevelt openly talk about this problem, so (as Thomas Piketty points out) did Irving Fisher in his 1919 presidential address to the American Economic Association.

A few readers get their say:

Mankiw’s argument that inherited wealth is not something to worry about is dubious at best. The argument assumes that investing in productivity, and the storing of wealth necessary to make those investments (“financing capital”) are desirable pursuits. And I think many of us would agree that this is the lynchpin of civilization. But what is not at all clear from Mr. Mankiw’s argument is that a system of inheritance is an efficient way to both save and invest this wealth in capital. Are those who inherit money more likely than any other entity to invest it in capital, and to do so wisely?

The part about rising wages is even worse. Mankiw’s writes, “[H]eirs induce an unintended redistribution of income from other owners of capital toward workers.” Now, I’m not a professional investor, but I believe the point of investing in capital is to yield a better return on your money then you would get from labor. I mean, sure, some people’s wages will increase. But that will be more than offset by the number of man-hours saved. So in the end there is a smaller share of money going to workers as wages and a larger share going to owners of capital. That is the whole point of owning capital.

Historically, labor has done OK because new capital has created a larger demand for skilled labor. But as automation becomes increasingly sophisticated and better able to replace skilled labor, it is not at all clear that this will continue to be the case. And if the rate of labor replacement outstrips the rate of job creation, what do we do with all of these unemployed people? Wealth that is locked into blood lines by inheritance sure isn’t going to help them.

Another objects to Mankiw’s characterization of Capital in the Twenty-First Century:

He dismisses Piketty’s book as “provocative speculation.” It might be speculative in the sense that it makes some broad assumptions about the future (with equally broad caveats), but its predictions are supported by data. Manikaw’s article is mostly a series of unsupported assertions. For example, he says that “because increased capital raises labor productivity, workers enjoy higher wages,” which is obviously not true if you observe the last 20 years or so – the gains from increased worker productivity don’t necessarily go to workers, especially in an environment of ever-increasing pay for executives.

Mankiw also talks about how the “regression toward the mean” is some sort of natural enemy of inequality. However, part of Piketty’s point is that we’re returning to the historical “mean” rates of growth and return on capital: something like 1-2 percent growth and 5-7 percent on capital annually (with larger fortunes getting higher gains). He goes on to show how this basic mathematical inequality resulted in economic inequality throughout recorded history. For now, we’re still waiting for a rebuttal of Piketty’s book that’s based on data and actual research.

The Genre That Refuses To Ride Into The Sunset

Noah Gittell checks in with the Western:

To try and understand the western’s return, it’s important to understand why it left in the first place. There are many theories out there, but a lot of film critics attribute the decline of the western to the Vietnam War. Most films of the genre are essentially war pictures, detailing combat between American Indians and frontiersmen. J. Hoberman wrote that “save for a handful of releases, the western itself has remained defunct since the fall of Saigon,” noting that the ugliness of the conflict rendered the often blindly patriotic tone of the western obsolete. …

The underlying subject of nearly every western is the tension that erupts when an ascending civilization comes into conflict with the savage wilderness. Whether it is a sheriff chasing an outlaw or a homesteader fighting off an Indian attack, classical westerns depict an America trying to balance its frontier spirit with the need for manmade justice and order. Films like Stagecoach, My Darling Clementine, and High Noon show the difficult process of extending a young nation into new territory. Perhaps that’s why westerns resonate less and less: Precious few among us would still call America a country on the rise.

An Abrahamic Turducken

A design has been chosen for the House of One, a project that aims to bring a church, a mosque, and a synagogue under one roof in the heart of Berlin:

Each of the three areas in the House will be the same size, but of a different shape, architect Wilfried Kuehn points out. “Each of the singular spaces is designed according to the religious needs, the particularities of each faith,” he says. “There are for instance two levels in the mosque and the synagogue but there’s only one level in the church. There will be an organ in the church. There are places to wash feet in the mosque.” He and his team of architects researched designs for the three types of worshipping place and found more similarities than expected.

“What’s interesting is that when you go back a long time, they share a lot of architectural typologies. They are not so different,” Kuehn says. “It’s not necessary for instance for a mosque to have a minaret – it’s only a possibility and not a necessity. And a church doesn’t need a tower. This is about going back to the origins when these three faiths were close and shared a lot architecturally”.

Update from a reader:

While never a bad idea, it’s not as new as people seem to think. For example, in Ann Arbor, a Jewish synagogue and an Episcopal church have been sharing space for going on 30 years. Maybe a little easier for two faiths to share the same sanctuary when they have different days of worship, of course, but it’s not a new idea.

Face Of The Day

Former government Director of Communications and News of The World editor Andy Coulson leaves the Old Bailey on June 24, 2014. Coulson has been found guilty of conspiracy to hack phones after an eight month trial at the Old Bailey. Rebekah Brooks, former editor and News International Chief Executive, has been found not guilty of all charges against her. The charges of phone hacking were brought by numerous celebrities and members of the public against the media company and forced the closure of the News of the World newspaper. By Alex Huckle/Getty Images.

Sponsored Content Watch

A reader points up north:

Your watchful eye on the metastasizing world of advertorials and so-called “native ads” is an essential counterpoint to what’s becoming an alarming trend, even outside of US borders. Case in point: a series of unmarked oil industry advertorials that recently made it to print in newspapers owned by Canada’s right-leaning Postmedia. Hawk-eyed readers were able to connect the dots and alerted Advertising Standards Canada (whose webpage is emblazoned with the motto “Truth in Advertising Matters”). After a review, the organization decided not to issue a ruling.

An increasingly desperate oil sands industry is pulling out all the stops to curry public favour with Keystone on wobbly ground and the Northern Gateway pipeline being met with fierce public opposition. It’s discouraging to find that all too many media organizations are willing to undermine the tireless work of their reporters with deceptive advertising practices.

A Canadian economist, Robyn Allan, tried to write a rebuttal to a piece about the oil industry that she read in a Postmedia newspaper:

[She] took issue with the economic claim [that Canada is losing $50-million a day due to limited export markets]. When she submitted an opinion piece in response, she was informed it couldn’t be run because the article she was responding to was actually a paid advertisement.

It wasn’t labeled as such; yet, as our reader noted, Advertising Standards Canada declined to censure Postmedia, which owns nearly every broadsheet daily in the country. Then it happened again – another paid pro-oil-industry piece not labeled as such. It gets better:

Earlier this year, the Vancouver Observer reported on a Postmedia presentation that outlined a content strategy that includes several Financial Post “Special Report” sections, with topics to be arranged by Postmedia and the Canadian Association of Petroleum Producers [CAPP]. … Add to that the tone of the leaked Postmedia presentation, which is graphically designed to follow the route of a cartoon pipeline (snazzy!) and includes this note from Douglas Kelly, the publisher of the National Post:

“From its inception, the National Post has been one of the country’s leading voices on the importance of energy to Canada’s business competitiveness internationally and our economic well being in general. We will work with CAPP to amplify our energy mandate and to be part of the solution to keep Canada competitive in the global marketplace. The National Post will undertake to leverage all means editorially, technically and creatively to further this critical conversation.”

Huh. You almost get the impression that Postmedia sees itself as being on the same team as CAPP — which is rather disconcerting.

And the beat goes on.

Thin Skin Deep

As summer-camp season approaches, Alyson Krueger reports from Eden Village, a Jewish organic farming program that has a “no-body-talk” rule for kids:

“The specific rule is while at camp, we take a break from mentioning physical appearance, including clothing,” said Vivian Stadlin, who founded the camp six years ago with her husband, Yoni Stadlin. “And it’s about myself or others, be it negative, neutral or even positive.”

On Friday afternoon, when the campers, girls and boys from 8 to 17, are dressed in white and especially polished for the Sabbath, they refrain from complimenting one another’s appearances. Rather, they say, “Your soul shines” or “I feel so happy to be around you” or “Your smile lights up the world,” Ms. Stadlin said. Signs posted on the mirrors in the bathroom read, “Don’t check your appearance, check your soul.”

Marcotte is wary:

It sounds wonderful on paper to live in “this wonderful, utopian kind of place where you’re not judged on anything except your spirit,” as one parent described Eden Village. But in the real world, there are plenty of legitimate reasons to include the body as part of your overall judgment of a person, such as when you are picking people to be on your tug-of-war team or auditioning potential sex partners. Doing things like covering up mirrors, which one camp does, treads a little too far in the direction of treating the body like it’s a source of shame instead of helping campers embrace their bodies for what they are and what they can do for them.

She offered similar criticism of a New York City ad campaign last year featuring the slogan “I’m a girl; I’m beautiful the way I am”:

No doubt it satisfies adults to pat little girls on the head and tell them they’re perfect and beautiful just the way they are, but kids often have better BS detectors than adults give them credit for. A handful of slogans on local ads will not change the fact that, in the real world, girls and women do suffer relentless judgment about their looks and are, whether they like it or not, frequently treated as if how they look matters more than anything else about them. For kids already picking up on this grim reality, having adults tell them that they’re perfect just the way they are has a strong chance of being read like yet another bit of adult wishful thinking.

Katy Waldman also criticized the campaign:

[W]hat’s with the slogan? As Kat Stoeffel at the Cut notes, “There’s something slightly contradictory about the NYC Girls Project message—‘Don’t worry about how you look. You look beautiful!’ ” Isn’t the point of the program to encourage girls to disassociate their sense of worth from their physical appearance? Why couldn’t the slogan simply be, “I’m Awesome the Way I Am?”

The Literary Piketty

Thomas Piketty’s Capital famously uses the 19th century bourgeois novel – Austen and Balzac especially – to give a sense of what life was like in that previous age of inequality. Stephen Marche finds that he could have done the same for our own day, noting that the processes the economist describes “have already been reflected in American fiction with almost ridiculous specificity.” One example? The novels of Jonathan Franzen:

Future economic historians won’t have to look very far to find fictional descriptions of our current financial realities. The social realist novel of the moment can be identified by the preeminent, almost exclusive, emphasis it places on social expressions of the changing economic reality. Currently, the large-scale realism of Jonathan Franzen, articulated in his famous article for Harper’s in 1996 and achieved most fully in The Corrections and Freedom, stands utterly triumphant. The narrative forms that thrived in the mid-nineties — minimalism, with its descriptions of poor and rural men; magical realism which incorporated non-Western elements into the traditional English novel; the exotic lyricism of John Berger or Michael Ondaatje — have been pushed to the side.

The principal subject of mainstream literary fiction today is the way we live now, meaning the way the upper middle class lives now. The characters’ lives are aimed, with single-minded purpose, toward the achievement of comfortable and socially acceptable financial security, which is threatening always to collapse or is in the process of collapsing. If Raymond Carver was the master of the death of the American dream, Franzen is the chronicler of its ghostly persistence — the combination of economic growth with deepening insecurity. His characters run on the currents of two polarizing forces — a sense of entitlement and a sense that those entitlements might soon be taken away. “The problem was money and the indignities of life without it,” Franzen writes in The Corrections. “Every stroller, cell phone, Yankees cap, and SUV he saw was a torment. He wasn’t covetous; he wasn’t envious. But without money he was hardly a man.”

Scott Esposito isn’t as impressed with Piketty’s literary chops:

To be sure, Piketty does invoke Balzac and Austen, as Marche says, but not nearly enough to warrant the claim that “Capital in the Twenty-First Century is perhaps the only major work of economics that could reasonably be mistaken for a work of literary criticism.” If only. Piketty mainly invokes Austen to help support his observations that monetary inflation didn’t exist in the 19th century. Balzac gets a little more play, as Piketty uses him to demonstrate both his inflation claim, and another claim: that the aristocrats of Balzac’s day were so far ahead of the rest of society in the 19th century that there was really no point in ever trying to catch them by hard work—it would be much better to marry into wealth and live off of that money (as many of Balzac’s characters attempt to do). That’s it. As far as they go, Balzac and Austen are fine ways of making Piketty’s points more concrete for a mass audience, but Piketty makes no attempt to demonstrate the existence of something called the patrimonial novel. (And nor should he; he’s writing a work of economics, not literary criticism.)

Read previous Dish on Piketty here, here, here, and here, and read the Dish thread “A Global Tax On The Super Rich?” here.

Face Of The Day

A zookeeper handles a week-old newborn baby Langur at Bali Zoo in Gianyar, Bali, Indonesia. Javan Langurs are found in Java, Bali and Lombok in Indonesia and are listed as a threatened species due to hunting, agricultural expansion and habitat loss. By Putu Sayoga/Getty Images.

Inherit The Windfall

Greg Mankiw argues that inherited wealth is actually a good thing:

When a family saves for future generations, it provides resources to finance capital investments, like the start-up of new businesses and the expansion of old ones. Greater capital, in turn, affects the earnings of both existing capital and workers.

Because capital is subject to diminishing returns, an increase in its supply causes each unit of capital to earn less. And because increased capital raises labor productivity, workers enjoy higher wages. In other words, by saving rather than spending, those who leave an estate to their heirs induce an unintended redistribution of income from other owners of capital toward workers.

The bottom line is that inherited wealth is not an economic threat. Those who have earned extraordinary incomes naturally want to share their good fortune with their descendants. Those of us not lucky enough to be born into one of these families benefit as well, as their accumulation of capital raises our productivity, wages and living standards.