US inequality is getting worse
by Linda Beale
US inequality is getting worse
The Congressional REsearch Service released a report in March showing that US inequality is getting worse. Linda Levine, US income distribution and mobility: trends and international comparisons, Congressional Research Service (Mar. 7, 2012).
Here’s an excerpt from the summary provided in the report itself.
Approaching three years into the recovery from the 2007-2009 recession, the unemployment rate remains over 8%. The persistent difficulty of many of the workers who lost jobs to find reemployment has meant reduced incomes for them and their families. A historically slow rebound in the labor market appears to be partly responsible for some groups’ focus on the distribution of the benefits of economic growth and for some policymakers’ interest in redistributing income through the tax code, for example. Varying perceptions about a trade-off between economic growth and income equality appear to underlie longstanding congressional deliberations about such policy issues as the progressivity of income tax rates, the tax treatment of capital gains, and the adjustment of the federal minimum wage. If income were equally divided across households, each quintile (fifth) would account for 20% of total income. The Congressional Budget Office and others have documented that the bottom fifth has long accounted for much less than 20% of total income. The bottom quintile’s share of income has remained little changed for the past few decades at less than 4%, according to U.S. Census Bureau data. In contrast, the income shares of the top fifth and the top 5% of households appear to have trended upward. The top fifth’s share of total household income rose from 42.6% in 1968 to 50.2% in 2010; the top 5%’s share, from 16.3% to 21.3%. (Estimates derived from
federal income tax data suggest that those at the very top of the income distribution have experienced greater gains.) The middle class, defined as the middle 60%, received a
disproportionately smaller share of the total economic pie in 2010 (46.5%) than in 1968 (53.2%).
***
Based on the limited data that are comparable across nations, the U.S. income distribution appears to be among the most uneven of all major industrialized countries and the United States appears to be among the nations experiencing the greatest increases in measures of inequality. Three leading explanations are put forth for these cross-country differences: (1) other advanced economies devote a larger share of national output to transfers, which tends to equalize income across households; (2) the progressivity of tax rates varies by country and thus has different effects on the distribution of after-tax income; and (3) equality in the distribution of earnings,
which account for most household income, varies substantially across countries.
So Inequality is increasing and mobility in the US economy is diminishing, as the rich get richer and the middle class gets poorer and the poor stay poor. Because so many Americans have believed the hype about “free markets” pushed by the right and the Chicago School economic perspective, they don’t understand the failures of the “free market” theory –for example, that it cannot accurately predict much of anything about the economy,and that its policy dictates are likely to be total failures since they are based on assumptions that simply don’t hold for actual societies (like infinite lifetimes, 100% consumption of incomes, a unitary preference and other nonsense).
They echo the radical right’s rhetoric antagonistic to redistribution in favor of those who are disadvantaged by the growing inequality, and blithely miss the way tax policy and spending policy redistributes upwards in ways that contributes to the increase in inequality. Americans are also lulled into complacency about the harm of increasing inequality by the American myth that everybody that has the will to take the risks can be a self-made millionaire. Thus, they miss any opportunities to force Congress to bring the oligarchy under control through wiser tax policy and legislative initiatives focused on addressing genuine public needs through democratic egalitarianism.
crossposted with ataxingmatter
Sorry, just could not finish this article. Just too much crap!
^ typical conservative response LALALALA I CAN’T HEAR YOU!
Anyhoo, the dude involved in establishing the physiocrat school (and the field of economics essentially) was a surgeon of the day, and his study in economics was informed if not prompted by his understanding of the body’s circulatory system.
And that’s what an economy is, a circulatory system of wealth.
But that word, wealth, has layers of meanings. At its most superficial, to be wealthy means to have a lot of money, but that obfuscates more than it explains, since money is not really wealth, but a claim on wealth.
But at the most fundamental level, wealth is simply the state of being well, to have no unmet needs or wants.
This is why (healthy) people in what we consider poverty can live happier lives than many of us in our first-world “wealth” — their needs are met.
Wealth can also be something between a means of exchange and a state of well-being — it can be the stuff that provides the services that satisfy our wants and needs (or in economics speak provide utility).
This form of wealth is consumer goods, and also services provided by human service providers (eg. hair stylists, doctors, etc).
There is also capital wealth, stuff that assists in the production and provision of consumer goods and services, but does not actually provide any utility of itself.
So the economy is a balance between the creation, distribution, and consumption of wealth in all its forms.
I don’t know about you, but for me the largest line-item in my budget (next to taxes) is the rent and health care. Why the the rent is so large is something of a mystery to me, since the apartment I rent was built in 1987 and is not providing any higher quality of wealth now than it was then, yet the rent is 2.5X higher now, 33% above “inflation” even.
I think rising rents are a big part why the paycheck economy is suffering so. I cam across an interesting chart on FRED today:
http://research.stlouisfed.org/fred2/graph/?g=7aY
which shows the annual inflation in rents — and that they have not gone down EVER since 1945.
That’s quite a ratchet effect, a parasitical tap on rent-payers to rent-takers. Rent-takers do not create wealth, they just collect it.
And it’s a lot of money, too. LA and SF are majority-renters, while 40% of the country overall rents (perversely, the higher cost an area, the more people have to rent).
Landlords across the country are smacking their lips at the windfall coming their way:
http://www.biggerpockets.com/renewsblog/2011/12/28/rental-outlook-2012-the-good-times-roll-on/
while we as a society stand helpless if not actively pursuing this bounty of rent-collection.
http://research.stlouisfed.org/fred2/graph/?g=7b0
for a comparison to rent inflation vs. nominal wage growth since the 1950s. Quite a treadmill.
This doesn’t surprise anyone who’s unfortunately been exposed to Henry George’s Progress & Poverty.
Oddly enough ol’ Henry was also something of a free trader, but these days I think free trade is also a dominant engine of divergence.
It’s hard to see, since free trade comes with immense immediate benefits — cheap stuff! — but AFAICT trade that comes with a trade deficit is trade that is not completed yet.
By whatever mechanisms and monetary machinations, the US is “enjoying” a ~$800B deficit in goods an $600B deficit with overall trade (once our surplus in services is added).
This is $600B+ of paycheck money flowing out of our economy every year, perhaps never to return as wages.
This is not theoretically sustainable, yet it persists, as our trading partners do whatever they do to keep the game going.
A large part of our trade deficit is our household gasoline cost, $4000/yr on […]
Try pointing out the errors in the piece rather than claiming that it is all not what you want to hear. That approach defines your perspective as coming from too much crap between your ears.
Linda:
It has been a steady progression downward for much of the payroll wage earning population not tied to capital income since the late seventies and a number of authors have taken the time to study it. The issue has become more aggravated since the late nineties.
I was asked to read James Gilligan’s “Violence, Reflections on A National Epidemic” 1996 by a judge in Alaska because of my familiarity with the US court system, the prison system, and the law as a nonprofessional. http://www.goodreads.com/review/show/287378551
“chapter 8: The Deadliest Form of Violence is Poverty” (Ghandi, if you are curious)
“Every one of those countries has a more equitable (and hence less shame-inducing) socio-economic system than the United States does. There is a much greater sharing of the collective wealth of the society as measured, for example, by the smaller gap between the income and wealth of the most and least affluent segments of their populations. Our rate of violent crime (murder, rape) is from two to twenty times as high as it is in any of the other economically developed democracies. This is precisely what the theory presented in this book would predict.” http://www.feminist.com/resources/artspeech/mensvoices18.html
In 2006, Tom Hertz wrote “Understanding Mobility in America” http://www.americanprogress.org/kf/hertz_mobility_analysis.pdf . This short study touches upon intergenerational mobility and short term mobility and the impacts to either causing a subsequent rise or fall in the class hierarchy.
Here is an earlier article by the EPI on the topic: http://www.epi.org/publication/bp224/ “What we need to get by: A basic standard of living costs $48,778, and nearly a third of families fall short.” 2008 I have often said that a Median Household Income of $50,000 is not middle income (not speaking statistically here) or middle class by the standards as we knew it in the past. The distinction of Middle Class (as we remember it) has bypassed a large segment of the population who believe they are such.
More recently, Dr Elizabeth Warren put on the hair shirt by defining what is happening to the Middle Class in her mini-study “The Coming Collapse of the Middle Class.” If you or anyone has not taken the time to hear of read it is certainly worth the hour required to read it and 45 minutes to listen to it (I am a slow and plodding reader).
If you skip down to Coberly’s article of Social Security where he references Monique Morrissey’s “Beyond Normal, Raising the Retirement Age is the Wrong Approach for Social Security” http://www.epi.org/page/-/old/briefingpapers/BriefingPaper287.pdf
” The bigger problems are weak wage growth and rising earnings inequality, which account for more than half the projected shortfall that has emerged since the system was last restored to long-term balance in 1983. […]
Jack:
Plus he can not even spell “moron” correctly.
From the quote from Levine’s article:
“A historically slow rebound in the labor market appears to be partly responsible for some groups’ focus on the distribution of the benefits of economic growth and for some policymakers’ interest in redistributing income through the tax code, for example.”
A poor example of what occurs as a result of a distortion of income. Taxation is not a process of wealth redistribution. That is what the right would want us all to believe. So long as the government isn’t sending the poor a stipend from general tax revenues there is no redistribution taking place. The vast bulk of tax revenues goes to such useful endeavors as military preparedness and waste, some to farm and other corporate subsidies, some to foreign aide rather than local aide and assistance, a little bit goes to maintenance of the natural wonders of the country, etc. Almost none of it can be construde as wealth redistribution. Continuing to advance this grossly inaccurate portrayal of taxation obfuscates the justification for taxing any and all of us.
The reason to tax the wealthy more than they are currently taxed is that they do not, and have not for a long while now, pay their fair share of the tax burden. Government is necessary in spite of what some fools want to believe and many propagnadists want us to believe. We do have armies, bridges, forests and schools to maintain along with all the other stuff that needs attending to that corporate America finds too risky to do, or simply not profitable enough to bother with. Again, the wealthy don’t come close to payiing their fair share of those costs. Fisrt of all we don’t even pay for all of it up front. It’s hocked up to our eyeballs and many of the wealthy get to lend money to the government at tax advantaged interest rates. The result of all of the tax advantages enjoyed by the wealthiest Americans is that they have much more money left over to buy yet more tax advantaged assets. Their wealth to grow at an accelerated rate, taxed at advantaged rates and, thereby, grow yet faster. A distorted distribution of wealth is like a self fulfilling prophecy. Once it gets a foot hold on the economy it just keeps on growing.
Sadly No, you are dealing with a troll. Best to wait for the sun to come out and turn them to stone.
There is some demographic and geographic component to this as land, particulary land near desireable urban locations (say the top 20 metro areas in the U.S. is limited) and populaiton since WWII has grown by more than 100%. However, there are also lots of local laws and regulatoins, and I am not talking about environmental rules, which aggravate the situation (zoning rules, lot size restrctions, and HOA rules on non-family members sharing ostensibly single family homes (see Matt Yglesias, “The Rent is To Damn High”).
As for labor, starting in the 1970s, (as women and the U.S, Japan, and Western European baby boom entered the work force, but really accelerating in the 1990s and Oughts, was a massivie increase in the world’s literate labor force as India, Bangladash, ASEAN, China, and the old Soviet block countries joined the global economy and pro-corporate treaties that protected monopolies on copyrights and patents, exposed unprofessional first world labor to wage competition with that labor pool. Hence, it appears that U.S. medium wages have not increased since 1970 in real terms. Dan Alpert at Economonitor has some good posts on the subject.
Finally, an elite, particularly in the U.S., who see looting and crony capitalism as the “fruit of their genius” and doing “God’s work,” and therefore feel cranky that anybody who is not a 9 figure millionaire, and is therefore basically a moocher and a loser, deserves nothing. They believe that they owe nothing to the society as a whole that has made their wealth possible and which protects it and allows them to expand it. This elite and its selfishness prevents society from acting to solve the economic issues discussed above, as well as the growing environmental crisis.
yeah, demographics are a big part of the story.
It’s my thesis that the big spike in rents 1965-1980:
http://research.stlouisfed.org/fred2/graph/?g=7aY
was entirely due to the baby boom arriving into adulthood and establishing new households, putting immense pressure on existing housing stock. Even aside from the general inflation of the day.
The first boomers were arriving as adults in 1964, the median boomers in 1973, and the tail-end boomers turned 18 in 1979. Banks started lending based on total household income in the early 1970s, and houses were off to the races.
They believe that they owe nothing to the society as a whole that has made their wealth possible and which protects it and allows them to expand it.
We are talking about trillions of dollars of wealth position here — the top 5% controls 70% of the financial wealth in this country (and owe little of the debt). The rentier class is not going to part with this without a fight, and they’ve been building up their institutional defenses since before the Powell Memo. Well before, actually:
http://homepage.ntlworld.com/janusg/coe/!index.htm
Alas, the American people are clearly too stupid to see what’s coming for them. Someone somewhere else likened a wage-earner putting Republicans and their “Ryan Plan” into power as intelligent as sticking one’s head in a woodchipper. I fail how anyone could disagree with that, yet it’s entirely possible this electorate will yield all 4 federal branches to Republican control this cycle.
I can only be thankful that I was old enough to get through the system before the Republicans dismantled it. I was more than halfway through public school when Prop 13 passed, and they didn’t come after higher education until I was through that too.
another reason to tax the wealthy is that it’s better to tax them than to borrow from them.
We’ve got a $1.4T/yr fiscal deficit that isn’t going away — quite the opposite in fact.
Someday we’re going to have to either cut spending or raise taxes.
I’m actually OK with substantially raising taxes on the middle class, since I’m still renting and my thesis tells me a tax raise/shift onto the middle class from capital earners would utterly destroy housing valuations.
Right now the rentiers are having their cake and eating it too with low taxes on everyone and high borrowing (from them). Like China and Japan, they’re just redirecting a portion of the free money flowing to them into treasuries to keep the game going a little longer.
The housing crisis is another underappreciated contributor to wage depression. People who have job opportunities in other cities can be stuck if they can’t unload a house. The underwater mortgages in some parts of the country (AZ, FL, NV, parts of CA) are probably limiting a portion of the workforces ability to migrate to better paying jobs.
And now that employers are rejecting applicants for low credit scores (not hard to find recent stories) it becomes even more problematic. Hold on tight this recovery is gonna be a rough one kids.
The housing crisis is another underappreciated contributor to wage depression. People who have job opportunities in other cities can be stuck if they can’t unload a house. The underwater mortgages in some parts of the country (AZ, FL, NV, parts of CA) are probably limiting a portion of the workforces ability to migrate to better paying jobs.
And now that employers are rejecting applicants for low credit scores (not hard to find recent stories) it becomes even more problematic. Hold on tight this recovery is gonna be a rough one kids.
The housing crisis is another underappreciated contributor to wage depression. People who have job opportunities in other cities can be stuck if they can’t unload a house. The underwater mortgages in some parts of the country (AZ, FL, NV, parts of CA) are probably limiting a portion of the workforces ability to migrate to better paying jobs.
And now that employers are rejecting applicants for low credit scores (not hard to find recent stories) it becomes even more problematic. Hold on tight this recovery is gonna be a rough one kids.
Thought this was interesting, from a London newspaper….. posted without comment
Socialist Hollande owns three homes on the Riviera President-elect: Francois Hollande Share inShare6 Peter Allen
11 May 2012
France’s new Socialist president owns three holiday homes in the Riviera resort of Cannes, it emerged today.
Francois Hollande, 57, who “dislikes the rich” and wants to revolutionise his country with high taxes and an onslaught against bankers, is in fact hugely wealthy himself.
His assets were published today in the Official Journal, the gazette which contains verified information about France’s government.
Maybe Francois dislikes the very wealthy because he knows them close up and personal. Being very wealthy doesn’t require one to be a scumbag, but so many are and those who aren’t generally are well acquainted with the others. So he’s very wealthy. As they say in Brooklyn “Vat den?” Does he vote in favor of the mass of the citizenry? Or, does he cater to the avaricious greed of the rich and powerful?
What drivel this this?
“Because so many Americans have believed the hype about “free markets” pushed by the right and the Chicago School economic perspective, they don’t understand the failures of the “free market” theory –for example, that it cannot accurately predict much of anything about the economy,and that its policy dictates are likely to be total failures since they are based on assumptions that simply don’t hold for actual societies (like infinite lifetimes, 100% consumption of incomes, a unitary preference and other nonsense).”
What?
“(like infinite lifetimes, 100% consumption of incomes, a unitary preference and other nonsense).”
Free market economics does not depend upon any of these three. Infinite lifetimes? WTF? We’ve the lifetime income hypothesis and its counterpart the lifetime savings hypothesis. Both well ensconced in free market thinking. We certainly talk about household and individual savings so we’re at no time talking about 100 % consumption of incomes (Keynes marginal propensity to consume might be what’s confusing matters here?) and untiary preference? What does that even mean? Rational preferences, sure (and even this only means that if you prefer A to B and B to C then you prefer A to C)……but we don’t even assume consistent preferences, that they stay static over time.
So WTF are you talking about here?
Good Morning Tim:
In order to understand the conclusion Linda draws, one would have to read the US Congressional Research Service attachment. You did not, did you?
I added to it with my own documentation (there is more and I was lazy today) going back to the nineties. Intragenerational Mobility over the population’s lifetime is more likely skewed downward for those born into the bottom two income quintiles and if per chance you do make it into the next quintile there exists a high probability you will slip backwards. The probability increases of not moving up the ladder or slipping backwards increases if one were a minority.
This clearly does not fit the hype of the free market (Horatio Alger rags to riches myth) of being able to improve your lot in life by working hard and having a good work ethic (with a few and increasing smaller number of exceptions). In which case, much of the population does not understand the free market is heavily skewed against their being successful and climbing the ladder demonstrating unfettered mobility. On the other side if you are born into an upper quintile, the probability of your remaining there is higher than it is of sliding backwards. Increasingly more so with the skewing of productivity gains to Capital (more than likely owned by those in the upper quintile and skewed upwards within it) as opposed to Labor (Spencer does a nice chart of this).
The trends over infinite economic life times are evident and much of the population is on the losing side. You would have to read the report in order to understand the full thrust of what Linda gives a snapshot of in her post. Just to assist you in understanding it a couple of quotes:
“The time period in which income is measured may also affect comparisons in well-being across
households. Over the course of the business cycle unemployment rises and falls, affecting labor
income. Some households tend to be more adversely affected than others by recessions, so the stage
of the business cycle has an influence on relative income. Similarly, income generally varies
substantially over the course of an individual’s lifetime. New entrants to the labor force typically have
lower incomes than those who have been working for some time, and income tends to decrease upon
retirement. Because of these life-cycle changes in income, the age mix of the population also
influences the relative incomes of households.” page 3, “The U.S. Income Distribution and Mobility: Trends and International Comparisons”
and here:
“among 25-44 year olds between 1989 and 2004. They estimated that intragenerational mobility among
young adults has been stable since the 1980s. For example, slightly over one-half of 25-44 year […]
Good Morning Tim:
In order to understand the conclusion Linda draws, one would have to read the US Congressional Research Service attachment. You did not, did you?
I added to it with my own documentation (there is more and I was lazy today) going back to the nineties. Intragenerational Mobility over the population’s lifetime is more likely skewed downward for those born into the bottom two income quintiles and if per chance you do make it into the next quintile there exists a high probability you will slip backwards. The probability increases of not moving up the ladder or slipping backwards increases if one were a minority.
This clearly does not fit the hype of the free market (Horatio Alger rags to riches myth) of being able to improve your lot in life by working hard and having a good work ethic (with a few and increasing smaller number of exceptions). In which case, much of the population does not understand the free market is heavily skewed against their being successful and climbing the ladder demonstrating unfettered mobility. On the other side if you are born into an upper quintile, the probability of your remaining there is higher than it is of sliding backwards. Increasingly more so with the skewing of productivity gains to Capital (more than likely owned by those in the upper quintile and skewed upwards within it) as opposed to Labor (Spencer does a nice chart of this).
The trends over infinite economic life times are evident and much of the population is on the losing side. You would have to read the report in order to understand the full thrust of what Linda gives a snapshot of in her post. Just to assist you in understanding it a couple of quotes:
“The time period in which income is measured may also affect comparisons in well-being across
households. Over the course of the business cycle unemployment rises and falls, affecting labor income. Some households tend to be more adversely affected than others by recessions, so the stage of the business cycle has an influence on relative income. Similarly, income generally varies substantially over the course of an individual’s lifetime. New entrants to the labor force typically have lower incomes than those who have been working for some time, and income tends to decrease upon retirement. Because of these life-cycle changes in income, the age mix of the population also influences the relative incomes of households.” page 3, “The U.S. Income Distribution and Mobility: Trends and International Comparisons”
and here:
“among 25-44 year olds between 1989 and 2004. They estimated that intragenerational mobility among young adults has been stable since the 1980s. For example, slightly over one-half of 25-44 year olds were in the lowest quintile of the income distribution in both the 1984-1994 and 1994-2004 periods. Aboutone-fourth of those in the bottom quintile moved up to the […]
Tim:
Sorry about the quotations, either I or the format was incorrect. In any case, the quotations are drawn from the report.
A comment from the great economic maestro himself:
“The real lesson here appears to be that bank regulators cannot fully or accurately forecast whether, for example, subprime mortgages will turn toxic, or whether a particular tranche of a collateralized debt obligation will default, or even if the financial system will seize up. A large fraction of such difficult forecasts will invariably be proved wrong.” Greenspan addressing the Economic Club of New York, http://online.wsj.com/public/resources/documents/EconClub.PDF
“casting a shadow of regulatory uncertainty over an otherwise thriving market.” 1998, Congress, and Larry Summers commenting on Brooksley Born’s efforts as the head of the CFTC to regulate the derivatives market. I do not believe Keynes took into account the deliberate tampering with the economy by Greenspan, Phil and Wendy Gramm, Rubin Levitt, Summers, (and Geithner). Most American citizens do not understand the economy or the free market and how it has been tampered with since the late nineties. They still believe it is theirs to be had; but, the results of this report and the others I have cited do not support this contention. In fact, much
Greenspan was wrong and many other walked away secure because main street bailed them out. Defintely, the economy was not static.
Tim:
Sorry about the quotations, either I or the format was incorrect. In any case, the quotations are drawn from the report.
A comment from the great economic maestro himself:
“The real lesson here appears to be that bank regulators cannot fully or accurately forecast whether, for example, subprime mortgages will turn toxic, or whether a particular tranche of a collateralized debt obligation will default, or even if the financial system will seize up. A large fraction of such difficult forecasts will invariably be proved wrong.” Greenspan addressing the Economic Club of New York, http://online.wsj.com/public/resources/documents/EconClub.PDF
“casting a shadow of regulatory uncertainty over an otherwise thriving market.” 1998, Congress, and Larry Summers commenting on Brooksley Born’s efforts as the head of the CFTC to regulate the derivatives market. I do not believe Keynes took into account the deliberate tampering with the economy by Greenspan, Phil and Wendy Gramm, Rubin Levitt, Summers, (and Geithner). Most American citizens do not understand the economy or the free market and how it has been tampered with since the late nineties. They still believe it is theirs to be had; but, the results of this report and the others I have cited do not support this contention.
Greenspan was wrong and many others walked away secure as main street bailed them and the economy out. Defintely, the economy was not static.
“The trends over infinite economic life times are evident and much of the population is on the losing side.”
I’m fine with that….not in the sense of its OK, but in the sense that it’s a reasonable point to make. But that’s entirely different from Linda’s statement that free market whatever (economics, politics, whatever) depends upon the assumption of infinite lifetimes. That is what she says and it’s nonsense.
Similarly her statement that free market whatever assumes the 100% consumption of incomes. It’s simply untrue, nonsensically so. We make all sorts of assumptions (in fact note all sorts of examples in reality) of people consuming 200% of their incomes (like, for example, when they’re in college( and more, consuming 50% and saving and so on. And there isn’t a single part of free market anything: nor even a single part of economics of any stripe, that assumes 100% consumption of incoms. How the hell could you have savings if this were true?
Please note I’m not complaining about her political views which I know are, as your’s are, very different to mine. I’m also not complaining about noting that inequality is rising…..it is….nor even that maybe some people might like to do something about this.
I’m complaining about the way that Linda is taking some half understood phrases from somewhere or other and liberally sprinkling them around her writing without their making any form of sense at all.
Tim, is it at all possible that Linda, and others reading her post, fully understand the phrases used and rather than simply sprinkling them around in a liberal fashionshe is using them to explain a concept that is both complex and uncertain enough that you fail to comprehend that expanation? Keep in mind that the term free market is has no established operational definition. Even those who would be regarded as strong proponents of a free market economy will differ in their conceptualization of the details of how such an economy would actually function. To what extent do we leave participants free to operate their share of the market without any over sight? Governments structure the interpersonal activities of their citizens, in part on an individual basis and otherwise on a group level. We have legal limits to what we can do and businesses have limits on their activities. Or should we leave the econoomy to the Madoff’s of the world? And that’s only the most obvious example of the need for regulation of market activities. Where do we draw the line? How free would you like your markets to be? Or, how above board would you prefer all the players to operate in the so-called free market?