The Income Distribution Facts We Can't Escape: Increasing Inequality

Go to the OECD website OECD Statistics on Income Inequality and you will find a handy-dandy form for looking up income distribution information about countries of the world.

A particularly useful statistic is the Geni Coefficient.

Gini coefficient The Gini coefficient is defined as the area between the Lorenz curve (which plots cumulative shares of the population, from the poorest to the richest, against the cumulative share of income that they receive) and the 45° line, taken as a ratio of the whole triangle. The values of the Gini coefficient range between 0, in the case of "perfect equality" (i.e. each share of the population gets the same share of income), and 1, in the case of "perfect inequality" (i.e. all income goes to the individual with the highest income).

Put simply: A lower Gini coefficient means a more equal society; a higher Gini coefficient means more inequality.

Check out a few countries to see relative Gini coefficients before taxes and transfers and after.  I looked at Norway, Portugal and the US.  (Portugal is one of the poorest countries in Europe.  Norway is a wealthy country that has low social inequality.)  Here's the way the Gini coefficient has been moving over time in these three countries.  (You can click on the graph to see it in larger format.)  Notice how similar the US is to Portugal in terms of inequality.  In equality has been going up for all three countries over time, however.

Now look at this table:

OECD Countries, From Greatest to Least Inequality
Country		Gini Coefficient, after taxes and transfers mid-2000s
Mexico			0.47
Turkey			0.43
Portugal			0.38
United States			0.38
Poland			0.37
Italy			0.35
New Zealand			0.34
United Kingdom			0.34
Ireland			0.33
Canada			0.32
Greece			0.32
Japan			0.32
Spain			0.32
Korea			0.31
Australia			0.3
Germany			0.3
Hungary			0.29
France			0.28
Iceland			0.28
Norway			0.28
Switzerland			0.28
Austria			0.27
Belgium			0.27
Czech Republic			0.27
Finland			0.27
Netherlands			0.27
Slovak Republic			0.27
Luxembourg			0.26
Denmark			0.23
Sweden			0.23
OECD Total			0.31

This is a list you don't want to be on the top of.  The US is up there in terms of inequality with Mexico, Turkey, Portugal, and Poland.

These are the issues of Occupy Wall Street.  Not only is income inequality increasing globally, the US is particularly bad.  Our policies favor the rich, allowing them to get richer at the expense of the poor and increasingly the middle class.

When inequality is great, democracy fails.  When the rich can simply use dollars to out-vote the middle class and the poor, the fundamental tenet of democracy, that adult citizens are equal and their votes are of equal value, falls apart.

Ibn Khaldun, the 14th century Arab social theorist, wrote that "group feeling" was required to make a state great.  The loss of group feeling signaled the loss of greatness.  In my view, we are faced with a serious loss of group feeling.  The few at the top at the economic heap reap huge benefits and do not care, for the most part (Buffett is a notable exception!) that they are benefiting at the expense of others.  The end of group feeling -- the end of caring for the well-being of the community as a whole -- marks our country's decline.

A part of me is simply sad.  But a larger part of me is angry, especially at the distortions of economic theory that are spouted by those who choose to continue pushing the Gini coefficient higher and higher (inequality getting worse and worse).

That's why I am proud that disgruntled Americans have been exercising their American rights of free speech in the Occupy movement.  We cannot compete with those who seek greater inequality by spending more money; our opponents have more money.  We can compete with voice.  Sensible people raising their voices loud enough and persuasively enough with these simple facts can -- I hope, I hope! -- make a difference.

A Guide for the Perplexed College Student

This has nothing to do with global political economy or burning political issues of the day, but I thought this guide might be useful to college students.  I occasionally have reason to notice that students don't necessarily understand what academic ranks mean and how to address the people they come into contact with on the college or university campus. Here are some guidelines that are generally in use.  

First: What to call your that person standing in front of the class and lecturing to you

In the University context, all faculty with the rank of anything with the word "professor" in the title -- Assistant Professor, Associate Professor, Professor, or Professor Emeritus/a -- may be addressed as Professor. You can find out the professor's rank by going to the departmental website. And, by the way, the rank of Professor is often referred to as "full professor."

You are always safe with "professor" for anyone who is teaching you. Even those who are not officially of a professorial rank will not (in my experience) object to being called professor by their students.

It is also correct to refer to anyone with a doctorate as "doctor." Most university professors have doctorates. Typical exceptions to this are often instructors in the arts and advanced grad students who are teaching their own courses. Folks with JDs (juris doctor, the initial law degree in the US) are not referred to as "doctor." (Note, however, that a few colleges have the custom of using Mr./Ms./Miss/Mrs. rather than Dr.)

A graduate student serving as a course instructor or a more senior instructor who does not have a PhD may be politely referred to as Mr. or Ms. (Ms. because marital status is irrelevant in the work context. There's one exception: If the instructor herself introduces herself as "Mrs." or "Miss" then she has chosen that title.)

By the way, many staff members at the university will have doctorates, and they should be addressed as "Dr." Anyone with "Dean" in the their title -- Assistant Dean, Vice Dean, Dean -- should be addressed as "Dean."

And all of this goes out the window when the professor says, "Call me Joe."

Complicated enough?

In my case, "Mrs." is a social title that I do not use. In non-university contexts I use "Ms." I personally dislike "Mrs." for sociological reasons: it suggests that a woman somehow gains authority by virtue of being attached to a man. But I think this is a recent phenomenon, actually. I understand that until recently (the last couple hundred years?), an unmarried woman became "Mrs." as she got older: Mrs. at one point was at least partially a title of respect rather than of marital status. Hmm. I should check that out.  

Second, what university titles mean 

Universities are very hierarchical places, alas. Each part of the university (faculty, staff, and students -- the academic trinity) has its own hierarchies.

Students

freshman, sophomore, junior, senior, master's student, doctoral student (pre-comprehensive exams), ABD doctoral student ("all but dissertation," sometimes referred to as "all but dead -- one who has passed his/her comprehensive exams).

In-between student and faculty

Post doctoral fellows, often referred to as "postdocs." These are folks who have a short term appointment where they can polish their dissertation into a book manuscript and/or publish some articles, and sometimes teach a class or two.  

Faculty

At all most all universities and colleges, faculty have three obligations: research, teaching, and "service" (sitting on committees and stuff like that). The relative weights of these three tasks depends on the character of the college or university. "Research Intensive Universities" (sometimes referred to as R1 Universities) expect their faculty to focus more on research. Teaching obligations are less heavy at these schools. Many small colleges are teaching intensive, and faculty are expected to spend more of their time on teaching and little or no time on research.

Faculty ranks are complex. Note that below I am referring only to faculty ranks in the US!

Adjunct instructor/lecturer, adjunct assistant professor, adjunct associate professor, adjunct professor: These are (usually) part time teachers. Ideally these folks have day jobs and just teach a class now and then because they enjoy the interaction with students. Unfortunately, too many PhDs try to cobble together an income on multiple adjunct teaching gigs.

Instructor or lecturer (usually someone without a PhD). Some schools have promotion paths for such instructors, so someone might be called a "senior instructor" or "senior lecturer." (However, in other countries, lecturer and senior lecturer may be the equivalent of the US's assistant or associate professor.)

Assistant professor. No, an assistant professor doesn't assist a more senior professor in the US. It's just the lowest professorial rank. What is generally not listed on the departmental webpage will be whether the assistant prof. is non-tenure track or tenure track. Tenure track assistant professors -- those who will be eligible for tenure and promotion at the end of a (usually 7 year probationary period) -- are higher in the hierarchy than non-tenure track.

Associate professor. This is one step up from assistant professor. Associate professors usually have tenure.

Professor. The title is Professor, but we often refer to "full professor," to distinguish the title from assistant and associate professors. One is promoted from "associate to full." This is the highest rank most faculty can hope to reach.

University Professor. This is sort of a super-professor -- usually someone with a superior scholarly reputation whose contributions cut across fields.

Other Faculty Ranks

"Visiting" is usually added to a title of someone who has another institutional affiliation and is spending a period of time at a host institution.

"Research" is usually added to the title of someone who only conducts research and does not (under normal circumstances) teach. A research professor may be on "soft money," funding that comes from grants that are awarded to him/her. Research professors must often earn their salaries by writing grant proposals.  

University Units and Faculty Leadership Ranks

It seems like there infinite variation on these themes Here's a typical way a university is organized and the faculty leadership at each level:

Departments are led by a chair or head (usually a tenured professor in the department who takes on this role for a time-limited term).*

Several linked departments may be grouped together into a School or College, led by a dean (usually a tenured professor in one of the departments in the School or College). The dean may be assisted in his or her duties by assistant deans, associate deans, or vice deans. These can be either faculty deans (faculty from one of the departments) or staff deans (members of the university's staff, not faculty). A vice dean for admissions, for example, is usually a staff dean. A vice dean for research is usually a faculty dean.

The Provost is above the deans, and the President is above the Provost.

The Board of Trustees is the ultimate authority for the University or College.

Small colleges generally have fewer levels of governance.  

Why should students care about university hierarchies?

It's nice to know who's the boss (dean, department chair) -- especially if you have any sorts of problems.

It's a wise strategy to take at least some courses from members of the tenured faculty. Three years after you graduate, when you need a letter of recommendation for grad school, the tenured faculty are more likely to be around (or at least locatable).

It's good to know that you should probably not ask the assistant prof which professor he or she is assisting.

It's great to know why you are congratulating your favorite prof when her or his title changes from assistant to associate...

And the most important people really are...

the administrative assistants and secretaries, janitors, food service workers, and all the other people who make the place run.  Remember to be respectful and grateful. 

------
*An important exception (for me) to the smallest unit being the department in the School of International Service at American University. SIS is composed of "divisions," each of which has a "director." I served as the Division Director of International Politics and Foreign Policy for many years.

Government spending and taxing: room for improvement

This all started with my comment on Krugman's op-ed piece in the NY Times
I posted this on my Facebook status:

Krugman's cogent argument against the Ryan Proposal is in two parts. 1. Despite some theory to the contrary, other theory AND EMPIRICAL EVIDENCE shows that simply cutting taxes does NOT spark the economy and create more revenue. 2. The Ryan Proposal, because it throws the elderly and those who are not rich (not even just the poor) under the bus, is immoral.

One of my high school classmates, with whom I occasionally politely debate political and economic issues (he's an Independent who tends toward the Right but not on everything; I'm a Democrat) commented. He hoped that both sides of the aisle would see the Ryan proposal as a starting point for negotiations about needed cuts. My general impression is that the Ryan Proposal is too extreme for that. But my friend's comment got me thinking about areas where he and I might disagree and where we might agree.

Agreement. There are vulnerable people out there who have a right to government help. A particular area of agreement between us is that the developmentally disabled have special needs which we, as a society, are morally obligated to fulfill. Charitable efforts (and this friend works very hard for Special Olympics) are not enough; we need tax-funded, governmental efforts.

Probable agreement. I think that we need to look at cutting the kinds of subsidies and tax loopholes that provide what I think are unfair benefits for large, profitable corporations. Look, for example, at agricultural subsidies that are primarily helping Archer Daniels Midlands and not family farms. That GE owed no taxes is ridiculous. Oh, it's not ridiculous that that it paid no taxes -- why should they pay more than the tax code requires? -- but the loopholes and the opportunities for "offshoring" profits are ridiculous. So, I think we could do a lot by cutting corporate taxes IFF we also cut out corporate loopholes.

Probably disagreement. Where I think we differ is in our views of what the government *should* be spending money on (in addition to care for the disabled). (See this link for spending categories and expenditures in the budget.) I suspect that my friend would want to see more services privatized. I have not actually seen any evidence that privatizing saves money or makes services more efficient. (Neither have I seen any evidence that it doesn't, to be fair.) One of the privatization trends that I really oppose is in military services. We privatize a lot of tasks that are specifically related to the provision of national security, but it's the State (the US Government) that is supposed to provide security.

I also am a big fan of having the government have sufficient regulators on payroll to make sure that its rules are enforced. (Providing appropriate regulation is a form of "internal" security.) Further, the pay scale needs to be good enough to attract smart, highly trained people (and to keep them from being tempted by bribes.) You get what you pay for. Penny wise, pound foolish.

I would like to see a lot more regulators out there working on food products, determining that food processing plants meet FDA requirements, etc. And need I mention the need to have REALLY highly qualified regulators for the nuclear industry?

Mostly disagreement, I think. There are a lot of other areas on which I believe the government needs to spend. Social security, Medicare, and Medicaid, as well as Defense are very important, in my view. I also believe the government should be spending money on various social safety-nets, on basic research, on the arts, on infrastructure (roads, bridges, railroads [including bullet trains]), and foreign aid.

Probably agreement. Tax cuts on personal income tax will fuel the economy most if they are given to the people who are in the lowest tax brackets because they will go out and spend the money. At the higher end, yes, we should tax more. I'm willing to pay an appropriate amount more in taxes as long as everyone else in my bracket does, too. Cut out the loopholes in personal tax (simplify!) and there might be opportunities for tax cuts at the lower end.

Probable disagreement. I think we need to reconsider the tax break for mortgage income. Think how that works. People of modest incomes who rent get no benefit. For us more well-to-do people, the more house we buy, the bigger the benefit we get. The gap between rich and poor gets bigger, especially across generations. Poor people have little accumulated wealth to leave their children; rich people get tax breaks for mortgages that allow them to accumulate more wealth than they would have accumulated without the tax breaks. Their children inherit, and have a tax-break funded leg-up in the world. The gap between rich and poor increases.

Probable disagreement, but I'm hoping to win him over on this. Our lack of national health care funded by the government (through taxes) ends up being a "tax" on businesses, and the incidence of that tax falls disproportionately on SMEs (Small & Medium size Enterprises.) Why? Because SMEs have to compete for good employees in part with benefits, which include health insurance. The insurance company looks at the SME and thinks about the risk they take on by insuring the SME given its relatively small pool of employees. An individual SME's rates are high. And the SME is pretty much a "price taker." It doesn't have much clout for bargaining. But a large firm or other large employer (like my nonprofit Benevolent Employer) has lots of advantages in negotiating prices because its risk is spread over a larger pool and because it controls a larger market share. My Benevolent Employer is virtually a monopsonist in Maryland! So SMEs are at a significant disadvantage relative to large firms and relative to competing firms from abroad that don't have to worry about health care benefits.

Definite disagreement. I think the economy needs more stimulating through more government spending as we are climbing out of this recession. I expect that cuts -- including Obama's cuts -- will be damaging and will slow the recovery. What we need now is for the government to spend more on things like infrastructure (fixing roads and bridges, etc.), spurring the economy through increased employment while providing tangible benefits.