Nabila Tabassum Chowdhury > Recent Status Updates

"The rosy American view does not reflect reality today in the United States. Along with the general stagnation at the bottom, intergenerational mobility has declined sharply in the US. Mobility is now substantially lower in the United States than it is in Europe."

"Americans have another peculiar problem of their own. Fed a steady diet of the “American dream” along with their breakfast cereals, Americans tend to believe, in spite of everything, that although their society is unequal, it rewards industry and effort."

"This creates a vicious cycle, with people who feel economically vulnerable being particularly eager to demonstrate their worth through useless purchases they can ill-afford, and an industry all too ready to provide these services for a handsome fee."

"What we saw right after the data went online was that the poor were sadder and the rich happier. The awareness of one’s place on the totem pole does seem to affect well-being."

"This changed in 2001, when they were put online, and it became possible to snoop on your neighbors or your friends with just a few clicks of your mouse. This was very popular, to the point it was dubbed “tax porn,” and everyone seemed to know exactly where they stood."

"The reason is that the increase in inequality has been at the root of a deep increase in social anxiety and unhappiness."

"The “Citizens United” decision of the US Supreme Court, which ruled as unconstitutional legislative limits on corporations’ ability to fund electoral campaigns, has formally legitimized the unlimited power of money in influencing elections."

"The difficulty of raising top tax rates is a political one. Indeed, we seem to be in the midst of a vicious cycle of concentration of political and economic power. As the rich become richer, they have more interest and more resources to organize society to stay that way, including financing the campaigns of legislators willing to lower taxes at the top."

"The spirit of this book is to emphasize that there are no iron laws of economics keeping us from building a more humane world, but there are many people whose blind faith, self-interest, or simple lack of understanding of economics makes them claim this is the case."

"Identifying a set of steps is of course not sufficient. There needs to be the political will to implement them."

"Second, it is easy to avoid the taxes, legally or not, particularly in small European countries where people can move or park their wealth abroad. This gives rise to a race to the bottom on tax rates."

"There are two reasons why wealth taxes are so politically difficult. First, because of effective lobbying. High-net-worth individuals finance the campaigns of politicians on the left and on the right, and few are in favor of wealth taxation, even when they are otherwise quite liberal."

"Instead, it is simply a convenient and administratively (relatively) simple way to ensure they pay a tax on all their income, regardless of what they chose to do with it"

"A wealth tax on very high fortunes solves this problem. The best way to think about it is not, as the economic press and the politicians try to explain it, as a way for the wealthy to make a special effort to “give back” (though if that makes them feel better maybe it’s okay)."

"A study estimated that those in the top 0.01 percent in the wealth distribution of Norway, Sweden, and Denmark evade 25– 30 percent of personal taxes they owe. 66 If taxes go up a lot, so will tax evasion."

"All in all, therefore, it seems to us that high marginal income tax rates, applied only to very high incomes, are a perfectly sensible way to limit the explosion of top income inequality."

"However, high top marginal tax rates may also reduce the lure of the most lucrative, but not necessarily the most socially useful, professions, such as finance."

"The answer is yes. The argument that the best CEO will go wherever he makes the most money works no differently when the government takes 70 percent of the money. The highest-paid job is still the highest-paid job, as long as the tax rate is the same in all firms."

"The authoritative review of the literature by Emmanuel Saez and his colleagues concludes that real work effort does not respond to top tax rates, although effort to evade or avoid taxes does."

"The rich could go ahead and pay themselves more money than they could ever spend, without raising any hackles, as long as they had “earned” this money."

"Germany, Sweden, Spain, Denmark, and Switzerland, where top marginal tax rates stayed high, did not experience sharp increases in top income shares. In contrast, the United States, Ireland, Canada, the UK, Norway, and Portugal cut the top tax rates significantly and experienced large increases in top income shares."

"In other words, high top tax rates may actually lead to a reduction not just in inequality after taxes, but also in inequality before taxes."

"For example, the CEO could prioritize growing the firm, being popular with the workers, or pursuing some new product because it is good for the world, even if it is not the best for share value. The shareholders may tolerate this to keep their CEO happy. It might even be part of the reason why workers’ salaries were rising when top tax rates were high."

"In addition, linking managerial pay to the stock market meant that managers’ pay was no longer linked to a salary scale within the enterprise. When everyone was on the same scale, CEOs had to grow salaries at the bottom to increase their own. With stock options, they had no reason to increase wages at the bottom, and in fact every reason to squeeze costs."

"In the UK, which is the most finance-dominated large economy, between 1998 and 2007, employees in the financial sector, who represented only about one-fifth of those in the top 1 percent, swallowed 60 percent of the rise in earnings in this group."

"But its top incomes never went sky high. The same is true of many very different countries in Western Europe and also of Japan. 45 What’s different between these countries and the United States? A part of the answer is finance."

"In other words, globalization and the rise of the infotech industry, combined with the sticky economy, and no doubt with other important but perhaps more local changes, created a world of good and bad firms, which in turn contributed to an increase in inequality. In this view, what happened may have been unfortunate, but it probably could not have been stopped."

"The rise in top incomes, in this view, is just the flip side of the rise of superstar firms that value getting the best top management and are willing to pay a lot for them."

"In fact, in the United States, the increase in inequality between the average salaries at different companies can explain two-thirds of the overall rise in inequality (increase in inequality between workers within the same company explains the rest)."

"In addition, the globalization of demand has increased the value of brands, as rich Chinese and Indian customers can now aspire to the same goods. And the ability to browse, compare, and boast on Facebook has made consumers more aware of differences in prices and quality, but also more sensitive to fads."