Wal-Mart, the nation’s largest private sector employer, is also the biggest consumer of taxpayer supported aid. According to Florida Congressman Alan Grayson, in many states, Wal-Mart employees are the largest groupof Medicaid recipients. They are also the single biggest group of food stamp recipients. Wal-mart’s "associates" are paid so little, according to Grayson, that they receive $1,000 on average in public assistance. These amount to massive taxpayer subsidies for private companies."
1. Beer has only recently been labeled as an alcoholic beverage.
Bitcoin is an online crypto currency that has grown significantly from its introduction in January 2009. While tech enthusiasts like using it for its own sake, it is mainly used in black and grey market transactions. If you want to get money out of Cyprus or if you want to switch your money into Argentinian pesos without going through official channels then bitcoin is the right tool.
Thanks in large part to the internet connecting the world like never before, the first decade of the third millennium saw unconditional convergence. The poorer countries didn't have to become significantly less corrupt in order to approach the technological frontier, they just had to let their citizens get online and connect with the world. This naturally resulted in an increase in outsourcing and trade as global coordination was made possible.
We are a couple of days into the government shutdown. The GOP doesn't want to pass a continuing resolution without a concession from the Democrats, while the Democrats don't want to grant any concessions to the GOP after they gave away what they felt to be too much in previous negotiations over the federal budget and debt ceiling.
During this standoff, Obama apparently attempted to scare the markets.
Obama dismissed talk on Wall Street that Washington will solve its problems, warning that the fight this time is putting not only government operations at risk, but the debt ceiling as well.
“I think this time it’s different,” Obama said in the interview. “I think they should be concerned.”
Tyler Cowen's analysis of the situation is broadly accurate - a market panic which would result in a solution won't occur because there would be no reason for the market to panic in the first place if a solution would result from that panic. Assuming he understands the nature of markets, Obama is probably more concerned with getting Wall Street donors talking to congressmen than he is with helping cause a market panic in order to force everyone to act. When thinking about what would cause markets to panic, a conclusion we should draw from this is that the markets won't panic about the situation until and unless even a market panic has some chance of not resolving the situation. The market crash after the first TARP vote failed falls into this category. In our current situation, it means that if the political institutions require a market panic in order to act then things will probably occur on a very last minute basis, perhaps just as the Treasury is running out of ways to borrow money despite almost hitting the debt ceiling.
Right now the political situation looks like a zero sum game. Either the GOP lose by not even getting a small concession to show for their trouble or the Democrats lose by going back on their word about not negotiating until a continuing resolution is passed. Unless both sides figure out a solution they can rhetorically pass off as a victory there isn't an obvious compromise on the table.
So Warren Buffett is probably right when he says that the US will approach but not cross the point of extreme idiocy.
Which way is global inequality going?
This should be a question with a simple answer. First, the question must be clarified. Usually answers to this question refer to the Gini coefficient, where a number close to 1 implies all of the wealth is owned by a few and a number close to 0 indicates that income is distributed more evenly. If the question is asking about the direction of income inequality in various countries around the world, the answer is obvious: It is going up.
The above chart from a 2011 OECD report on income inequality highlights that income inequality has been rising in most countries around the world. It may be that national inequality is more important than global inequality, as electoral (or revolutionary) politics have a history of working more on a national basis than a global basis.
Still, the direction of global income inequality is still interesting for its own sake. A World Bank working paper, Global Income Inequality by the Numbers: In History and Now by Branko Milanovic looks at three different ways of measuring global inequality.
Concept 1. Inequality between countries.
Concept 2. Inequality between countries weighted by population.
Concept 3. Inequality between individuals of the world.
The first two are easy to measure while the third metric is much harder to get data for until the 1980's. Concept 2 is clearly superior to concept 1, as smaller countries should not be weighted the same as significantly larger countries. By the same measure, concept 3 is superior to concept 2, as wealth in developing countries is less significant if it is wholly in the hands of a few. The only downside to concept 3 is the inherent data problems as surveys of the very poor and the very rich will often be skewed.
Looking at concept 2 and concept 3, it appears that worldwide inequality has actually been falling during the 2000's. It may be a little unintuitive that inequality can go up everywhere but down in total. But those in the bottom third of the income distribution have seen their real incomes rise between 40% and 70% over the past 20 years. This has created a new middle class and the income distribution has become somewhat more equal overall even if countries where people are coming out of poverty are also creating many new US dollar billionaires.
Whether or not this trend will hold is another question entirely. The internet gave a boost to the economic institutions of almost every country in the world, so from the mid 2000's up until the financial crisis we had unconditional convergence between developing and developed countries. Going forward, institutional quality might again begin to cap the growth of developed countries around the world. And if that happens, world inequality may start to increase yet again.