All the news, views, and filtered excellence fit to consume during your morning grumpy.
1. The Self-Destruction of the 1%
The story of Venice’s rise and fall is told by the scholars Daron Acemoglu and James A. Robinson, in their book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty,” as an illustration of their thesis that what separates successful states from failed ones is whether their governing institutions are inclusive or extractive. Extractive states are controlled by ruling elites whose objective is to extract as much wealth as they can from the rest of society. Inclusive states give everyone access to economic opportunity; often, greater inclusiveness creates more prosperity, which creates an incentive for ever greater inclusiveness.
Even as the winner-take-all economy has enriched those at the very top, their tax burden has lightened. Tolerance for high executive compensation has increased, even as the legal powers of unions have been weakened and an intellectual case against them has been relentlessly advanced by plutocrat-financed think tanks. In the 1950s, the marginal income tax rate for those at the top of the distribution soared above 90 percent, a figure that today makes even Democrats flinch. Meanwhile, of the 400 richest taxpayers in 2009, 6 paid no federal income tax at all, and 27 paid 10 percent or less. None paid more than 35 percent.
The choice in this election is indeed about what kind of country we want to be. Are we still a nation which believes in “E Pluribus Unum”? Or will we choose to follow Governor Romney’s path towards an extractive American state?
2. The “reverse brain drain” and how it is destroying the competitiveness of American business and engineering.
United States policymakers are failing to address the departure from this country of tens of thousands of talented immigrants — including engineers, doctors, lawyers and teachers. These highly-skilled workers are leaving the U.S. because they can’t obtain permanent residency here. Outdated immigration laws and regulations, bureaucratic delays and partisan bickering have created a Kafka-esque situation where the U.S. is inexplicably telling the smartest immigrants to go home.“For several years, anecdotal evidence has suggested that an unwelcoming immigration system and environment in the U.S. has created a ‘reverse brain drain.’ This report confirms it with data,” said Dane Stangler, director of Research and Policy at the Kauffman Foundation. “To maintain a dynamic economy, the U.S. needs to embrace immigrant entrepreneurs.” According to the study, immigrant founders are most likely to start companies in the “innovation/manufacturing-related services (45%) and software (22%) industries,” and employed some 560,000 workers nationwide. These companies generated an estimated $63 billion in sales from 2006 to 2012, the study found.
3. The final word on Mitt Romney’s tax plan.
Mitt Romney‘s campaign says I’m full of it. I said Romney’s tax plan is mathematically impossible: he can’t simultaneously keep his pledges to cut tax rates 20 percent and repeal the estate tax and alternative minimum tax; broaden the tax base enough to avoid growing the deficit; and not raise taxes on the middle class. They say they have six independent studies — six! — that “have confirmed the soundness of the Governor’s tax plan,” and so I should stop whining. Let’s take a tour of those studies and see how they measure up.
As you might imagine, this doesn’t turn out so well for the Romney campaign.
4. The next crisis, sponging baby boomers.
These boomers have lived a charmed life, easily topping previous generations in income earned at every age. The sheer heft of the generation created a demographic dividend: a rise in labour supply, reinforced by a surge in the number of working women. Social change favoured it too. Households became smaller, populated with more earners and fewer children. And boomers enjoyed the distinction of being among the best-educated of American generations at a time when the return on education was soaring.
More worrying is that this generation seems to be able to leverage its size into favourable policy. Governments slashed tax rates in the 1980s to revitalise lagging economies, just as boomers approached their prime earning years. The average federal tax rate for a median American household, including income and payroll taxes, dropped from more than 18% in 1981 to just over 11% in 2011. Yet sensible tax reforms left less revenue for the generous benefits boomers have continued to vote themselves, such as a prescription-drug benefit paired with inadequate premiums. Deficits exploded. Erick Eschker, an economist at Humboldt State University, reckons that each American born in 1945 can expect nearly $2.2m in lifetime net transfers from the state—more than any previous cohort.
Unsurprisingly, boomers are the voters who most demonstrably populate tea party groups.
5. Every once in a while, I like to watch the “All About Mormons” episode of South Park to remind myself how incredibly insane it is that we’re thinking of electing a guy who believes this shit. Most religions can be dismissed as bizarre, but this one is special.
Here’s a clip from the show, but you can click here to watch the whole thing. It’s actually quite accurate as well as being funny.
Fact Of The Day: The Doctor who claimed a link between vaccines and autism created fraudulent data for his paper and lost his medical license as a result. Of course, hundreds of thousands of people still believe in his disproven research and now threaten herd immunity against dozens of deadly diseases.
Quote Of The Day: “I put up my thumb and shut one eye, and my thumb blotted out the planet Earth. I didn’t feel like a giant. I felt very, very small.” – Neil Armstrong
Video Of The Day: Crash Course In World History: World War I – This guys makes awesome, educational videos
Song Of The Day (Monday Morning Wakeup Edition): “Last Caress” – The Misfits
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