AuthorTopic: 🤑 Wealth Maldistribution  (Read 1693 times)

Offline Surly1

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Re: 🤑 Wealth Maldistribution
« Reply #45 on: February 02, 2019, 03:21:17 PM »
THAT's how you amass wealth.

The argument isn't about what constitutes "real wealth".  It is about making a sensible definition of what constitutes Poor, Middle Class and Rich.  It's about how much money you have to live on each day of your life.  It's about whether you drive a junkyard special or a Mercedes.  It's about how big a house you live in and how many of them you own.  It's about how many vacations you can afford to take and how many jet flights you take every year.  Poor people don't take flights to Hawaii to stay on Waikiki beach.  Middle Class people might do one a year.  Bottom end Middle Class may save up for years to take their once in a lifetime dream vacation to see the ruins at Machu Pichu.  Rich people can take trips like this pretty much anytime they want to.

Fine, but none of which is responsive to the point I made. "Wealth" requires ownership, which in itself requires accumulation of lucre via passive income (rents, interest, dividends) and the the magic of compound interest.

Just my opinion.

Duly Noted and Filed.

RE

Nope. Utterly and completely ignored.
You want wealth? You have to own shit. Few people on the wage/salary treadmill ever own anything but the shroud they are buried in.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline AJ

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Re: 🤑 Wealth Maldistribution
« Reply #46 on: February 02, 2019, 03:24:35 PM »
Correct me if I am wrong: mean = $53,700  90% = 1σ = $157,500  95% = 2σ = $206,600. Where does 3σ start??
I think looking at income is the wrong measure. One should look at net worth.
My wife and I live on my SS plus a little rental income and interest. We are easily in the lower middle class right now.
However, when working we were in somewhere in the lower reaches of the upper rich.
Net worth wise we are wealthy and could probably live for 30 years on the principal of our assets (provided we didn't go to assisted living/dying centers, or get really expensive medical care).
Net worth is a better vehicle for putting people in a class.
Charles Hugh Smith gave some insight into this https://www.oftwominds.com/blogoct18/middle-class10-18.html
AJ
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Offline RE

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Re: 🤑 Wealth Maldistribution
« Reply #47 on: February 02, 2019, 03:42:11 PM »
Correct me if I am wrong: mean = $53,700  90% = 1σ = $157,500  95% = 2σ = $206,600. Where does 3σ start??


No, actually the Percentiles go like this

1σ = 68%

2σ = 95%

3σ = 99.7%

The US Census Curve doesn't show where the 3σ is in terms of actual income.  It's to the right somewhere of the 95% mark denoted on the chart.  I would need the actual data to be able to pin it down precisely, my guess would be an income of about $2M/year.

To me, your class is not defined by what you own, but by how much money you have left over each month to spend on anything but the essentials.  You can define class by any way you want to of course, but we won't make much headway in a discussion if we use different definitions.

RE
« Last Edit: February 02, 2019, 03:51:07 PM by RE »
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Offline K-Dog

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Re: 🤑 Wealth Maldistribution
« Reply #48 on: February 02, 2019, 06:24:03 PM »

To me, your class is not defined by what you own, but by how much money you have left over each month to spend on anything but the essentials.  You can define class by any way you want to of course, but we won't make much headway in a discussion if we use different definitions.

RE

Loosen up. You are seeing this from a narrow JSP point of view.  You are evaluating this from the point of view of someone who has been a 'worker'.  Assets totally matter and they affect how the rich see the world.  Most people do not come in contact with the uber rich to understand that they think differently from common men.  A different stench fills their heads.  Opportunity and good diet pushes the rich in the direction of real superiority but human forces keep the playing field equal to anybody watching 'out there'. 

The rich are better educated on average, but have less genius.  Life is full of contradictions, and that one I find delightful.  Easy come and easy slow.  American rich does not really advertise outside of California freakdom.  They quietly live among us but because they own big and are not concerned with actually surviving day to day, social status is their concern and their minds bifurcated in strange ways long ago.  They live among us but we are not aware of their rituals and rites of passage; mostly.  But through happenstance I have the secret handshake and they can mistake me for one of them.  This has let me learn a few things.

<a href="http://www.youtube.com/v/QPKKQnijnsM" target="_blank" class="new_win">http://www.youtube.com/v/QPKKQnijnsM</a>

Quote
“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we
are. They are different. ”

« Last Edit: February 02, 2019, 06:39:54 PM by K-Dog »
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline RE

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Re: 🤑 Wealth Maldistribution
« Reply #49 on: February 02, 2019, 06:36:51 PM »

To me, your class is not defined by what you own, but by how much money you have left over each month to spend on anything but the essentials.  You can define class by any way you want to of course, but we won't make much headway in a discussion if we use different definitions.

RE

Loosen up. You are seeing this from a narrow JSP point of view.  You are evaluating this from the point of view of someone who has been a 'worker'.

Indeed I do evaluate this from the "Worker" POV.  But isn't it the Workers out there wearing the Yellow Vests in Frogland?

I have lived on both sides of the Great Divide of Rich and Poor my friend.  I am just providing a metric here that the common J6P will see as wealth distribution in his neighborhood.

To give a historical example (somewhat still true) of a Factory.  Who represented the Upper Class?  The Owner of the Factory.  Who represented the Middle Class?  The managers and the Foremen in the Factory.  Who was the Lower Class.  The grunts operating the machines and actually doing the work.

Don't count on me "loosening up" anytime soon.

RE
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Offline K-Dog

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Re: 🤑 Wealth Maldistribution
« Reply #50 on: February 02, 2019, 09:56:18 PM »

Don't count on me "loosening up" anytime soon.

RE

I'm not saying disrupt your sympathies.  Just saying there is more too it.  Remember 'Animal Farm'.  Before you know it we are right back to two legs better than four all over again.  The poor become rich and go to shit.  We are built for it.
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline RE

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Re: 🤑 Wealth Maldistribution
« Reply #51 on: February 03, 2019, 12:29:03 AM »

Don't count on me "loosening up" anytime soon.

RE

I'm not saying disrupt your sympathies.  Just saying there is more too it.  Remember 'Animal Farm'.  Before you know it we are right back to two legs better than four all over again.  The poor become rich and go to shit.  We are built for it.

Yes, I had to read "Animal Farm" in my HS English class too.  At the time I thought to myself, "My, what marvelous anti-socialist propaganda!" lol.  I kept my mouth shut.  I wanted a decent grade in the class.

Next up, I will be told that some Pigmen are more Equal than Others.  ::)

RE
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Offline AJ

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Re: 🤑 Wealth Maldistribution
« Reply #52 on: February 03, 2019, 05:19:04 AM »

To me, your class is not defined by what you own, but by how much money you have left over each month to spend on anything but the essentials.  You can define class by any way you want to of course, but we won't make much headway in a discussion if we use different definitions.

RE


Yeah, we have to be on the same page. But as K-Dog's inserted video pointed out the 1% really do have an astronomical amount of wealth. And I think that your statement ". . . your class is not defined by what you own. . ." is to limiting. I don't have much income but have a decent amount of net worth and without a doubt that puts me in a wealthy class. That's why I think Liz Warren's plan to tax wealth is so important. The truly wealthy (say like Warren Buffett) have modest incomes relative to their wealth. Income is important but wealth much more so. IMHO.
AJ
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Offline Eddie

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Re: 🤑 Wealth Maldistribution
« Reply #53 on: February 03, 2019, 08:15:00 AM »
To me, your class is not defined by what you own, but by how much money you have left over each month to spend on anything but the essentials.  You can define class by any way you want to of course, but we won't make much headway in a discussion if we use different definitions.

RE


Certainly having a surplus is related to accumulating wealth. But many people who do have a surplus do NOT accumulate wealth, while some people who have a tiny surplus do, if they start young enough and are single minded about it.

But what we have now..the wealth inequality is our country and in our world....is not caused by some people having more left over after bills are paid. It's the results of massive intergenerational wealthy accruing to a tiny few over many decades and centuries of bought-and-paid-for special rules for the extremely rich.

That is a completely different dynamic.
What makes the desert beautiful is that somewhere it hides a well.

Offline Eddie

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Re: 🤑 Wealth Maldistribution
« Reply #54 on: February 03, 2019, 08:22:19 AM »
Correct me if I am wrong: mean = $53,700  90% = 1σ = $157,500  95% = 2σ = $206,600. Where does 3σ start??
I think looking at income is the wrong measure. One should look at net worth.
My wife and I live on my SS plus a little rental income and interest. We are easily in the lower middle class right now.
However, when working we were in somewhere in the lower reaches of the upper rich.
Net worth wise we are wealthy and could probably live for 30 years on the principal of our assets (provided we didn't go to assisted living/dying centers, or get really expensive medical care).
Net worth is a better vehicle for putting people in a class.
Charles Hugh Smith gave some insight into this https://www.oftwominds.com/blogoct18/middle-class10-18.html
AJ

You're the only one here who gets it, but your guilt makes you an apologist for those (like RE and most journalists) who want to reapportion my income to people they feel are treated unfairly.

News flash. You were the one treated unfairly. In your working career, you actually did your part to support the poor. More than your part.

Because you had high earned income and had NO CHOICE. The rich, those folks your wife has for clients, they didn't do their part.

You ended up with a little wealth. Good for you, you probably deserved more than you got.
What makes the desert beautiful is that somewhere it hides a well.

Offline RE

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Re: 🤑 Wealth Maldistribution
« Reply #55 on: February 03, 2019, 08:38:03 AM »
To me, your class is not defined by what you own, but by how much money you have left over each month to spend on anything but the essentials.  You can define class by any way you want to of course, but we won't make much headway in a discussion if we use different definitions.

RE


Certainly having a surplus is related to accumulating wealth. But many people who do have a surplus do NOT accumulate wealth, while some people who have a tiny surplus do, if they start young enough and are single minded about it.

But what we have now..the wealth inequality is our country and in our world....is not caused by some people having more left over after bills are paid. It's the results of massive intergenerational wealthy accruing to a tiny few over many decades and centuries of bought-and-paid-for special rules for the extremely rich.

That is a completely different dynamic.

Certainly, intergenerational wealth transfers are a BIG PROBLEM as well, but there are also issues with trying to tax that wealth, which I will go into later today if I get a recharge.  Right now I am just not up to it.

RE
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Offline RE

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🤑 Wealth Maldistribution: The State of the American Debt Slaves, Q4 2018
« Reply #56 on: February 11, 2019, 05:53:44 AM »
https://wolfstreet.com/2019/02/08/the-state-of-the-american-debt-slaves-q4-2018/

The State of the American Debt Slaves, Q4 2018
by Wolf Richter • Feb 8, 2019 • 109 Comments   
Consumers are doing their job only in a lackadaisical manner. But the student-loan scheme is hot.

It’s a tough job, but someone’s got to do it: Propping up the massive US economy. And consumers are doing it, but in a somewhat lackadaisical manner when it comes to spending money they don’t have. Consumer debt – more enticingly, “consumer credit” similar to “extra credit” – rose 4.7% in the fourth quarter 2018 compared to the fourth quarter last year. In the year 2018, Americans added $179 billion to their balances on their credit cards, auto loans, and student loans. Every dime was spent and added to GDP. It amounted to nearly 1% of GDP. If GDP grew 3.1% in 2018, just under one third of the growth was generated by that additional consumer debt.

Without this additional consumer borrowing, if consumers had just maintained their debt levels, GDP growth might only have been 2.2% in 2018, instead of 3.1%. So, a huge round of applause is due our debt slaves that now owe over $4 trillion for the first time ever, according to the Federal Reserve Thursday afternoon:


Consumer debt includes auto loans, student loans, credit-card debt, and personal loans, but it excludes housing related debt, such as mortgages and HELOCs.

The $4.01 trillion in consumer debt is up 52% from the peak early in the Financial Crisis in Q3 2008. This is not adjusted for inflation. Over the same period, the Consumer Price Index rose 16% and nominal GDP rose 39%. Thus, Americans are sticking to their time-honored plan of out-borrowing both inflation (by a big margin) and economic growth.

Over the past 12 months, consumer debt rose by 4.7% while nominal GDP likely rose just over 5% (due to the government shutdown, Q4 GDP data has not been released yet, so I’m guessing). But nominal GDP outgrowing consumer credit growth is a rare phenomenon. The last time it occurred, and the only time since the Great Recession, was from Q1 through Q3 2015.
Auto loans and leases

Total auto loans and leases outstanding for new and used vehicles in Q4 jumped by $41 billion from a year ago, or by 3.7%, to a record of $1.155 trillion, despite stagnant vehicle sales. The increase was due to rising prices of vehicles, the rising average loan-to-value ratio, and the lengthening average duration of loans:


On a technical note, the green line in the chart above represents the old data before the large adjustment to consumer credit in September 2017. Every five years, consumer credit data is adjusted, based on new Census survey data. This time, it hit auto loans hard. I included the green line to show that in Q3 2015 it wasn’t a collapse of the car business that caused the precipitous drop in auto loans.
Revolving credit

Credit card debt and other revolving credit, such as personal lines of credit, in Q4 rose 2.0% year-over-year to $1.045 trillion (not seasonally adjusted). Given that nominal GDP rose around 5% over the same period, consumers clearly fell short of the job they’re expected to do. Their job is to charge up their credit cards to the max. But they’re stubbornly refusing to do it. Credit card balances in Q4 2018 were only 4% higher than Q4 2008! What are these consumers thinking?!


Baffled economists are scratching their heads, and banks are desperate. Credit card debt is the most profitable activity for banks, with usurious spreads between the rates charged on credit card balances that can go well beyond 20%, and the banks’ cost of funds, which in December was on average 1.06%, according to the San Francisco Fed’s Cost of Funds Index.
The student-loan economy

Student loans jumped by 5.3% year-over-year in Q4, or by $80 billion, to a new record of $1.57 trillion (not seasonally adjusted), having doubled since the beginning of 2010, even as higher-education enrollment declined 7% from 2010 through 2016, according to the latest data from the National Center for Education Statistics. Fewer students, but they each borrow more, to fatten entire industries from Apple and concert-ticket sellers to investors in the hot category of commercial real estate called student housing. They’re all feeding at the big trough of government-guaranteed student debt:


What is systemically wrong with the student loan scheme is that it’s a three-party deal — universities, government, and students – but without any kind of discipline imposed on them by the market or the government. It just ratchets higher quarter after quarter at a ludicrous rate, even as enrollment is declining.

Just to see what consumer debt would look like without the student-loan scheme, here are auto loans and credit card loans combined – and it shows how lackadaisical consumers are in doing their job by borrowing money they don’t have, with the total having increased by 2.9% year-over-year. Since the peak in 2008, the total has risen 22%, while the Consumer Price Index has risen 16% and the US population 7%:


But averages hide where the difficulties are – and they’re always at the margin where people are struggling to make ends meet. Many of these folks have sub-prime rated credit, but there are also plenty of folks with high incomes and excellent credit scores, but who spend too much and borrow too much, and they’re living from paycheck to paycheck. Any shift in the labor market that would cause them to lose their jobs could push them into default in no time. And the averages don’t show the risks buried at the margins.

Americans love paying big profit margins for big equipment, and automakers love them for it, but total sales are declining, and something doesn’t add up. Read…  New Trucks are Hot, Prices Surge. But Cars Face Carmageddon. And Total Sales Fall 
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Offline Surly1

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Trump Wants Socialism for the Rich, Harsh Capitalism for the Rest
« Reply #57 on: February 13, 2019, 03:33:23 AM »
Trump Wants Socialism for the Rich, Harsh Capitalism for the Rest



Robert Reich
MONDAY, FEBRUARY 11, 2019
“America will never be a socialist country,” Donald Trump declared in his State of the Union address. Someone should alert Trump that America is now a hotbed of socialism. But it is socialism for the rich. Everyone else is treated to harsh capitalism.

In the conservative mind, socialism means getting something for doing nothing. That pretty much describes the $21 billion saved by the nation’s largest banks last year thanks to Trump’s tax cuts, some of which went into massive bonuses for bank executives. On the other hand, more than 4,000 lower-level bank employees got a big dose of harsh capitalism. They lost their jobs.

Banks that are too big to fail – courtesy of the 2008 bank bailout – enjoy a hidden subsidy of some $83 billion a year, because creditors facing less risk accept lower interest on deposits and loans. Last year, Wall Street’s bonus pool was $31.4 billion. Take away the hidden subsidy and the bonus pool disappears.

Trump and his appointees at the Federal Reserve are easing bank requirements put in place after the bailout. They’ll make sure the biggest banks remain too big to fail.

Trump is promoting socialism for the rich and harsh capitalism for everyone else in other ways. Since he was elected, GM has got more than $600 million in federal contracts plus $500 million in tax breaks. Some of this has gone into the pockets of GM executives. Chairman and CEO Mary Barra raked in almost $22m in total compensation in 2017 alone.

But GM employees are subject to harsh capitalism. GM is planning to lay off more than 14,000 workers and close three assembly plants and two component factories in North America by the end of 2019.

When he was in business, Trump perfected the art of using bankruptcy to shield himself from the consequences of bad decisions – socialism for the rich at its worst – while leaving employees twisting in the wind.

Now, all over America, executives who run their companies into the ground are getting gold-plated exit packages while their workers get pink slips.

Sears is doling out $25 million to the executives who stripped its remaining assets and drove it into bankruptcy, but has no money for the thousands of workers it laid off.

As Pacific Gas and Electric hurtles toward bankruptcy, the person who was in charge when the deadly infernos roared through northern California last year (caused in part by PG&E’s faulty equipment) has departed with a cash severance package of $2.5 million. The PG&E executive in charge of gas operations when records were allegedly falsified left in 2018 with $6.9 million.

Under socialism for the rich, you can screw up big time and still reap big rewards. Equifax’s Richard Smith retired in 2017 with an $18 million pension in the wake of a security breach that exposed the personal information of 145 million consumers to hackers.

Wells Fargo’s Carrie Tolstedt departed with a $125 million exit package after being in charge of the unit that opened more than 2 million unauthorized customer accounts.

Around 60 percent of America’s wealth is now inherited. Many of today’s super rich have never done a day’s work in their lives.

Trump’s response has been to cut the estate tax to apply only to estates valued at over $22 million per couple. Mitch McConnell is now proposing that the estate tax be repealed altogether.

What about the capitalist principles that people earn what they’re worth in the market, and that economic gains should go to those who deserve them?

America is on the cusp of the largest inter-generational wealth transfer in history. As rich boomers expire over the next three decades, an estimated $30 trillion will go to their children.

Those children will be able to live off of the income these assets generate, and then leave the bulk of them to their own heirs, tax-free. (Capital gains taxes don’t apply to the soaring values of stocks, bonds, mansions and other assets of wealthy people who die before they’re sold.)

After a few generations of this, almost all of the nation’s wealth will be in the hands of a few thousand non-working families.

To the conservative mind, the specter of socialism conjures up a society in which no one is held accountable, and no one has to work for what they receive. Yet that’s exactly the society Trump and the Republicans are promoting for the rich.

Meanwhile, most Americans are subject to an increasingly harsh and arbitrary capitalism in which they’re working harder but getting nowhere, and have less security than ever.

They need thicker safety nets and deserve a bigger piece of the economic pie. If you want to call this socialism, fine. I call it fair.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline RE

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🤑 Amazon and the End of the Growth Machine
« Reply #58 on: February 16, 2019, 02:52:35 AM »
As Diners know by now, Amazon paid ZERO in Taxes last year.  The HQ in Queens would not have helped all that many of the 10M or so people in and around NY Shity.

RE

https://slate.com/business/2019/02/amazon-new-york-and-the-end-of-the-growth-machine.html

Amazon and the End of the Growth Machine
Cities once worshipped job creation at any cost. The crumbling of New York’s HQ2 deal suggests they’re finding a new religion.

By Henry Grabar
Feb 14, 201911:51 PM


Photo illustration by Slate. Photos by Chip Somodevilla/Getty Images; King of Hearts/Wikimedia Commons.

I’m breaking up with you before you can break up with me.

That was the gist of Amazon’s Valentine’s Day announcement canceling its plans to build a large regional office in Long Island City, Queens, across the river from Midtown Manhattan. Polls showed 56 percent of registered New York state voters supported the company’s arrival in the city, with approval rising 58 percent in the city, 70 percent among black New Yorkers, and 81 percent among Hispanic New Yorkers. But a vocal cohort of city politicians, angered by the secret deal struck between the company, the city, and the state (and for the most part, angry to have been left out of the room), had signaled their intent to revise or halt the company’s plans. And they sensed enough grassroots discontent with the deal to give them cover.

Amazon saw which way the wind was blowing. On Thursday, three months after announcing the results of its pageant of civic debasement, the company changed course.

Like the company’s threats to Seattle over a corporate tax to support homeless shelters, or an earlier ultimatum to the state of Texas over fulfillment-center taxes, it’s a sign that Amazon will brook no dissent from the jurisdictions in which it operates. It’s also an astonishing rebuke to the political instincts of the city’s mayor and governor, who evidently thought they had caught the golden goose, only to find that the goose’s helipad, poor treatment of workers, and mercenary deal-making were not in fact so popular. For Andrew “Amazon” Cuomo, who has bent New York Democrats to his will for eight years, it is a career low.

But it also marks a significant rupture in the decades-old symbiosis between American cities and American commerce and industry—that is, to the idea of the city as a “growth machine.” In a famous 1976 essay, the sociologist Harvey Molotch wrote that growth was the very raison d’être of an American city. “The political and economic essence of virtually any given locality, in the present American context, is growth,” he wrote. “A common interest in growth is the overriding commonality among important people in a given locale.” It’s the reason why cities shell out for sports teams and corporate relocations, and try to get people to move in.

Molotch’s city was an onion of self-interest. At the core were big landowners and real estate developers who wanted to profit directly from land-use intensification, allowing say, the replacement of a tenement district with skyscrapers. Second came a larger, more diffuse class of businesspeople who would benefit from increased population and traffic, like newspaper owners or department-store magnates. A third group was labor, especially building trades unions. Finally, in the most generous interpretation, the growth machine would benefit everyone by providing increased tax revenue for public services. Most people, most of the time, believe it.

Under New York Mayor Michael Bloomberg, then-deputy mayor Dan Doctoroff routinely made the progressive case for expanding New York City’s tax base: “In order to be a progressive city, a city must be prosperous. In order to be a prosperous city, a city must grow.” It’s more or less the same argument that de Blasio made for Amazon, thought without much gusto.

The growth machine might sound like a far cry from the NIMBY-driven discourse about cities now. Molotch thought so. But NIMBYs weren’t all anti-growth. With their tolerance for corporate welfare, rejection of social programs, and fierce resistance to new housing, homeowners did an excellent job growing their own tax bases. They were their own growth machine, Mike Davis observed in City of Quartz: “Los Angeles homeowners, like the Sicilians in ‘Prizzi’s Honor,’ love their children, but they love their property values more.”

(There are prominent and important exceptions to this theory of money-driven politics: Height limits in San Francisco were defeated three times in the 1970s, but the city in 1986 passed a growth limit that offered few conceivable financial benefits. In the same year, Los Angeles passed citywide buildings restrictions on major commercial corridors. Both measures passed after California had enacted Proposition 13, which reduced the relative importance of property taxes.)

A good example of this Growth Machine 2.0 is Silicon Valley, which has welcomed job creation but stifled new housing, bringing about an affordability crisis. Or a city like Chicago, which has encouraged new housing and offices in select areas while preserving vast swaths of homes with zoning and historic designations. Growth is not inconsistent with NIMBYism if you view the latter as defined at its heart by a kind of resource-hoarding, whether that resource is classrooms or parking spaces or views or tax revenue.

This NIMBY-growth compromise has been fine for city revenues, but it’s hardly thrown off perks for the working class. In fact, as housing prices increased, the spillover effects of new jobs began to decline. While the consensus has persisted among rich and poor that increasing the tax base is the unquestioned goal of city government, the growth machine has cranked increasingly for the benefit of the few.
There is no precedent for what just happened in Queens.

In New York City in the 2000s, Michael Bloomberg downzoned vast swaths of the outer boroughs. “Homevoters are more powerful in urban politics than scholars, policymakers and judges have assumed,” researchers concluded, referencing William Fischel’s “homevoter hypothesis,” in which urban politics grows to resemble suburban politics, with its focus on preserving home values above all else. Nationwide, reformers turned a more critical eye to economic development gambits like stadium deals. Amazon has earned its share of ire in Seattle, where it’s generally thought to have contributed to a homelessness crisis.

But there is no precedent for what just happened in Queens. The opposition to Amazon was not really about the helipad. It was not really the company’s business model or its stance on unions or its work with ICE. It was not even about tax breaks. It was based on a more abstract, and more powerful, rejection of the fundamental assumption of growth-machine politics: the idea that any of that will do anything for me.

In November, I wrote about how New York— and other high-cost cities— had wound up so skeptical of growth at any cost: “It’s in some ways symbolic of the troubled American economy at large, in which nominal good news (Dow 26,000!) is meaningless to an underclass increasingly without stakes (half the country has no money in the stock market). But it’s also a very particular indictment of New York’s prolonged state of housing insecurity, in which any good thing, from a bike lane to a grocery store to a corporate headquarters, is seen first and foremost as an excuse for a landlord to kick out a tenant.”

Homeowner takeover of city politics? Hardly: Homeowners ought to relish a major office development on industrial land. Instead, the rejection of Amazon reflects a fundamental breakdown in the biggest and most diffuse cog of the growth machine: the broader labor market. Fears of displacement and change outweighed appetite for the benefits of new jobs, including the long-term goal of well-funded public services. The outermost layer of the onion has been peeled off.

Molotch thought it might happen. “As the growth machine is destroyed in many places, increasingly it will be the business interests who will be forced to make do with local policies, rather than the local populations having to bow to business wishes,” he wrote. Unfortunately, Amazon does not have to make do. They will find another city where the promise of the growth machine endures.

True: the deal was popular in New York. But it wasn’t that popular, not for a once-in-a-generation influx of high-paying jobs. It wasn’t so popular politicians felt cowed into supporting it. Instead, the burden now lies on businesses and politicians to show why new jobs are good for people who won’t be hired for them. A rising tide is seen as a threat. An open listing is an invitation to an out-of-towner who might take your apartment. Forget the jobs mantra. New Yorkers want to know something more: What’s in it for me?

A similar rebellion took place a few years ago in Detroit, which would otherwise to seem to have the opposite problems of New York. In 2016 the Motor City became the first big city to adopt formal requirements for large projects to commit to community benefit agreements, an increasingly popular way to tie new development to local improvements. Developments that cost more than $75 million and receive any tax abatements or subsidies will have to meet with a nine-member neighborhood advisory council. It’s where’s-my-cut urbanism at work. Investment doesn’t speak for itself anymore.
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Amazon’s Decision To Pull Out of NYC Is a Massive Blow To Corporate Welfare
« Reply #59 on: February 16, 2019, 03:36:16 AM »
All true. The news that Amazon paid $0 tax for the second consecutive year preceded this news. Opposition sprung up like dandelions atet prospect of handing over taxpayer cash and  concessions to the world’s most valuable company, when the city is having trouble funding public transit, affordable housing and other priorities.

“The Government and Mayor tried to impose a secretly negotiated deal with Amazon, that wasn’t released to the public or public officials, and it led to resistance. That should be the lesson here. If you want to make good public policy, you have to include the public.”

Amazon’s Decision To Pull Out of NYC Is a Massive Blow To Corporate Welfare

BY DAVID DAYEN

Facing mass public opposition, Amazon canceled its New York City headquarters project. (Photo by Holger Hollemann/picture alliance via Getty Images)

Amazon announced Thursday the company has canceled its bid to acquire nearly $3 billion in public dollars to locate a facility in New York City—the most substantial setback for corporate welfare in recent memory. 

Significantly, Amazon states in its announcement of the decision that it will continue to expand its workforce in the New York City area, up from the 5,000 workers the company already employs in Brooklyn, Manhattan and Staten Island. In other words, Amazon still plans to maintain a headquarters-sized presence in New York, the nation’s financial and economic hub. It just couldn’t win the political battle to obtain billions of dollars in subsidies from it.

As In These Timesreported, last week Amazon turned to the Washington Post, owned by its CEO Jeff Bezos, to float that it was reconsidering the proposed HQ2 headquarters in Long Island City, Queens, estimated to house 25,000 employees. This move was seen by many as a veiled threat to pack up and abandon New York if politicians didn’t turn over billions of dollars in tribute.

But opponents in New York’s city council and the state legislature refused to buckle to Amazon’s demands. They doubted the necessity of handing over taxpayer cash to the world’s most valuable company, at a time when New York has struggled to fund public transit and affordable housing. Furthermore, they feared a worsening of congestion, gentrification and displacement in Long Island City.

Amazon’s refusal to remain neutral if its New York City workers attempted to unionize was in many ways the last straw for opponents of the deal. According to the New York Times, New York Gov. Andrew Cuomo set up a meeting between Amazon executives and union leaders on Wednesday, but Amazon made no concessions at the meeting, and broke up with the state the next day.

State Sen. Michael Gianaris, a vocal critic of the deal, was tapped by his colleagues for a seat on the Public Authorities Control Board, which reviews and approves state-based economic development subsidies. He would have had an effective veto on about $1.5 billion of the subsidies for the project. After Thursday’s announcement, Gianaris said in a statement, “Like a petulant child, Amazon insists on getting its way or takes its ball and leaves… The only thing that happened here is that a community that was going to be profoundly affected by their presence started asking questions.”

Gianaris highlighted the fact that Amazon still plans to expand its New York workforce regardless of the new facility, suggesting that the billions of dollars the city and state would have forked over appeared meaningless considering Amazon’s resolve to build its presence locally anyway.

In its announcement, Amazon cited the need for “positive, collaborative relationships with state and local elected officials” over the long-term, which the company did not see materializing in New York City. Amazon cited a poll showing 70 percent of New Yorkers in support of the deal; a more recent poll showed 56 percent support, while another showed majority opposition in Manhattan and a split in Brooklyn.

According to Amazon, it would not re-open the HQ2 sweepstakes, but would proceed with its other HQ2 site in Crystal City, Virginia, as well as a 5,000-employee “Operations Center of Excellence” in Nashville, Tennessee. Politicians in those locations have been generally hospitable to the deals, which will yield close to a billion dollars more for Amazon. Restarting the bidding would have potentially compounded the negative attention Amazon has received over HQ2. The company has 17 other corporate offices and tech hubs across North America.

More broadly, the HQ2 debate in New York broadened awareness of the sordid process of economic development deals, by which powerful companies raid cities and states to the tune of up to $90 billion annually, while local services suffer from lack of funds. While these subsidies are often granted under the cover of secrecy, Amazon turned its demands into a spectacle, which appears to have backfired. All companies that enjoy corporate welfare will likely now receive more scrutiny for such massive subsidy deals.

Nathan Jensen, a public policy professor at the University of Texas who studies economic development deals, cited the secrecy as the main problem with the New York debacle. “The Government and Mayor tried to impose a secretly negotiated deal with Amazon, that wasn’t released to the public or public officials, and it led to resistance. That should be the lesson here. If you want to make good public policy, you have to include the public.”

DAVID DAYEN

David Dayen is an investigative fellow with In These Times' Leonard C. Goodman Institute for Investigative Reporting. His book Chain of Title: How Three Ordinary Americans Uncovered Wall Street's Great Foreclosure Fraud won the 2015 Studs and Ida Terkel Prize. He lives in Los Angeles, where prior to writing about politics he had a 19-year career as a television producer and editor.

"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

 

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