Relevant and even prescient commentary on news, politics and the economy.

What to do with $45 billion? Giving it to charity is too cliche. So old hat.

Facebook founder and his wife have decided to give away 99% of their fortune.   That is $ 45 billion.

Now, I know many will heap praise upon them for their generosity.  Same deal when the Gates and Buffet did their give away announcement.  But, I’m not so keen on this.  I know, how heartless of me.  How ungrateful.

Being grateful or not is my issue.  Why, in an economy designed to make money from money, where labor has lost it’s power to assure proper distribution of the income earned from its productivity should I be heaping praise on those who are giving away massive amounts of money that was accumulated off the skewed economy put in place by those with the money to politically create this system?

Just how does them giving away money such that the masses have to in essence beg to get some of the benefit of such money provide equality in this economy?

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Inequality for All, the film

If you do not know, Prof Reich’s film is currently up on youtube.  I just watched it.  For most readers it is nothing new.  But for the masses this is a great film.  Plus, I did not know that he literally went over on the same boat as Bill Clinton when they were going to their Rhodes Scholarship.

Do share it as it may not be up for long.

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Who is not retiring, and why?

Via Bloomberg comes this note on demographics and the work force, and continues a conversation about how that impacts all of us. Probably not in the way most often provided in punditry…such as taking jobs away from the millenium generation, wealthy old geezers stereotypes, or alarms sounded about who is to pay for services we want, etc.

It’s well known that the U.S. is turning gray. It’s less well known that the workforce is turning gray as well. The percentage of Americans who are 65 and older will rise from 13 percent in 2010 to 20 percent by 2030 — and, if the recent trend continues, a growing share of those elderly Americans will carry on working past the normal retirement age.

Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics

In 1990, 11.8 percent of those 65 and older worked. In 2010 the figure was 17.4 percent. By 2020, the Bureau of Labor Statistics expects it to be 22.6 percent. The numbers are even more surprising for Americans older than 75. Less than 5 percent of them worked in 1990. In 2010, it was 7.4 percent. By 2020, according to the BLS, 10 percent of them will still be toiling away.

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Wait. Canadians make more money than Americans? Yep.

David Zetland passes along some income figures via Aguanomics (re posted).  (Dan here…There are more American billionaires and millionaires, so not to worry) :

Cornelia and I were discussing household income and living standards, and I mentioned that median wages in the US were around $35,000.* She was shocked, saying that they were much higher in Canada.
Wait. Canadians make more money than Americans? Yep.

[1] USD** Median household income
50,050  USA
71,300 Canada
Household size
2.6  USA
2.5 Canada
[2] USD GDP per capita (2011 nominal)
48,400 USA
50,400 Canada
USD GDP per capita (2011 Purchasing-power-parity)
48,400 USA
40,500 Canada
[3] Gini Coefficient (CIA, 100 = most unequal)
45 USA
32 Canada
So here’s how I reconcile these numbers:

  1. Median household income is nearly 40 percent higher in Canada, even after adjusting for the number of people in the household.
  2. PPP GDP per capita is higher in the US by nearly 25 percent. This number, mind you, refers to total economic activity and cost of living, not income to individuals.
  3. These numbers are reconciled via inequality: Canada is more egalitarian (similar to Spain and Italy) than the US (similar to Bulgaria and Iran), circa 2005-2007. I reckon that inequality has recently worsened in the US.

So it seems that the income derived from economic activities in the US is skewed in distribution — with more going to rich people than the average person — compared to Canada.**

Bottom Line: Canadians are well known for their higher levels of social harmony. This harmony may be due to a fairer distribution of income, but it’s also accompanied by a higher average incomes.*** Americans are both poorer AND less equal than their neighbors.

* Average wages in 2011 are $42,000 in the US and $32,600 in Canada, but those numbers do not account for employment (66.7% and 71.5%, respectively) or the distribution of wages/capital gains. Right, Mitt?
** Gross income is not the same as income net of taxes, and total taxes are 27% of GDP in the US and 32% of GDP in Canada, but those rates ALSO do not take the distribution of the tax burden into account.
*** My definition of the American Dream — “being able to do what you want” — does not match common definitions that include upward mobility. That dream is — relative to the past and relative to other countries — more dream than reality [pdf].

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