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Economic Growth and the Ruling Class

Rolls-Royce-Front-Part

In our present “age of elites,” as author Chrystia Freeland has dubbed it, this ideological shift among the rich, particularly the new rich, is critical to understanding the new class order. Some of the nation’s wealthiest regions, many of which were once Republican strongholds, are now among the most reliably Democratic. In 2012, for example, President Obama won eight of the country’s ten wealthiest counties, sometimes by margins of two- to- one or better. He also triumphed easily in virtually all of the top counties with the highest concentrations of millionaires, as well as among managers of hedge funds.

Perhaps the biggest difference between the ruling classes of the nineteenth century and those emerging in the twenty- first can be seen in attitudes toward economic progress. The old plutocracy— notably energy, manufacturing, mass agriculture, and construction— generally supported and even encouraged economic progress among those below them, who also served as their customers. This fixation on growth was also shared by many on the left, including labor leaders such as Walter Reuther. Agreement that broad- based expansion was a good thing remained largely universal, at least until the late 1960s.

This approach has implications for the nature of growth, according to economist Benjamin Friedman. Growth, Friedman notes, is critical to maintaining a socially just order, increasing opportunity both for individuals and regions, particularly those historically left behind. For all its many environmental and social shortcomings, the old economic regime emphasized growth and upward mobility. In contrast the new economic order focuses more on the notion of “sustainability”— so reflective of the feudal worldview— over rapid economic expansion.

This shift in emphasis can be seen in many of the often palpably good causes touted by Oligarchs— notably, contemporary environmentalism. Yet while progressive in their intent, these policies in practice turn out to be socially regressive in their application. Take up less space, make a smaller impact, consume less: this has replaced the notion of accelerating economic mobility. This behavior often hurts most those “tangible” industries, such as energy, manufacturing, logistics, and housing, that heavily employ blue- collar workers. Ironically, the mandate to “live small” frequently comes from individuals who are ensconced on huge estates or in incredibly expensive trophy apartments and who travel by private jet. For all the trappings of progressivism, the current ideology is remarkably degenerative.

from The New Class Conflict by Joel Kotkin

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Uber and DUIs

In LA Weekly Dennis Romero writes IS UBER REDUCING DUIS IN L.A?

In a vast, 4,000-square-mile county, it’s hard for many folks to get around without a car. And that has meant that DUIs have become a much-feared epidemic.

But ride-sharing apps like Uber, Lyft and Sidecar have become a go-to Godsend for party people in L.A. And it’s conceivable that they’re starting have their impact on DUI statistics, possibly making streets safer for everyone.

How many friends do you know who now “Uber it” rather than get behind the wheel for a night out?

Brewer told us that she’s not sure why there’s such a serious drop in DUIs for Labor Day weekend….

HKO

This data is still being greeted with some skepticism, but I believe it will prove significant. This same report is being repeated in several cities.  There are just too many anecdotes and stories from passengers and drivers and the incredible growth in the use of Uber make the conclusion one that would be logically expected.

Further the elimination of cash payments reduces theft, and there may be some social (crime reducing) benefits from the increase of the sense of community these service engender.  That last benefit may be a stretch, but the DUI reduction should be expected.

In New York there are stories of people getting rid of their cars in light of the ease and availability of Uber type services.  This may be unique to New York given the high costs of car ownership there.

Government efforts to limit Uber in an effort to protect the taxi franchise may be coming at a high cost.

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Authoritarian Posers of Capitalism

chinese

Joel Kotkin writes Choosing Fortune Over Freedom

Excerpts:

This is not surprising, given the rapid progress that country has made in recent years. China has expanded its share of global gross domestic product from 2 percent in 1995 to 12 percent in 2012. Its economic model – communist control of thought and politics but welcoming to most enterprise – has vastly outperformed that of the strongest democracies, the United States, the European Union and Japan, particularly in light of the Great Recession. This recalls the 1930s, where Germany’s state-directed economy and that of the Soviet Union seemed to cope far better with the Depression than their Western democratic counterparts.

Chinese success has made it painfully clear that globalization of capitalism does not require pluralism or Western standards of legality. Nor has it done much to promote global understanding, in the China Sea or elsewhere in the world. Religious and ethnic divisions are, if anything, ever more pronounced. The failure of the much-heralded Arab Spring to create anything remotely pluralistic epitomizes this trend, leaving the West with the dilemma of selecting which repressive regimes to ally with to defeat even more heinous entities, like Hamas or the Islamic State.

HKO

Democratic Capitalism requires broad participation, a strong legal foundation, and a virtuous population. Authoritarian posers are mere cronies.  This success will be short lived as we found our fascination with Fascism to solve conditions of economic turmoil to unwind.

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Raising the Price of Exit

from Scott Grannis from Calafia Beach Pundit, Obama’s attempt to block tax inversion is a mistake;

As the WSJ article notes, it’s still questionable whether the administration has the authority to block inversions via executive order. But in the meantime, this is likely to add up to a disincentive to invest in the U.S. economy. Capital only goes where it is welcome and treated nicely. One essential ingredient for a strong economy is to ensure the owners of capital that they are free to come and go as they wish. Trying to keep company headquarters here by force will only work to keep headquarters from coming here in the first place.

My years living in Argentina taught me firsthand that the best way for a country to stimulate capital flight is to try to prevent capital from leaving. It’s very sad to see the U.S. emulating the proven-to-fail mistakes of the Argentine government.

This probably won’t keep the dollar from appreciating further, but it will add to the headwinds that are keeping the U.S. economy from realizing its full potential.

HKO

When you adapt policies that rely on the reality you want rather than the reality you have,  the natural course is a tyrannical force to bend reality to your will.  This is why Utopian ideals end up becoming so oppressive.  A growing economy is a free economy.  The price of raising the price of exit is to also raise the price of entry.

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we have much more in common with one another than we dare to realize.

nytimes

Economist Mark Perry writes in his blog Carpe Diem, Evidence shows significant mobility in income and affluence – 73% of Americans will be in ‘top 20%’ for at least a year:

Excerpts:

quoted from Mark Rank from the New York Times, From Rags to Riches:

It is clear that the image of a static 1 and 99 percent is largely incorrect. The majority of Americans will experience at least one year of affluence at some point during their working careers. (This is just as true at the bottom of the income distribution scale, where 54% of Americans will experience poverty or near poverty at least once between the ages of 25 and 60).

Ultimately, this information suggests that the United States is indeed a land of opportunity, that the American dream is still possible — but that it is also a land of widespread poverty. And rather than being a place of static, income-based social tiers, America is a place where a large majority of people will experience either wealth or poverty — or both — during their lifetimes.

Rather than talking about the 1 percent and the 99 percent as if they were forever fixed, it would make much more sense to talk about the fact that Americans are likely to be exposed to both prosperity and poverty during their lives, and to shape our policies accordingly. As such, we have much more in common with one another than we dare to realize.

HKO

Much of the data and information on social inequality is misleading and hard to measure.  Thomas Sowell has spoke of the need to recognize that individual journeys are also very different than a description of mere statistical categories.  This piece adds another dimension that even individuals rise and fall among categories during the course of a single life.