How Corporations Are Contributing To Wealth Inequality In The USA : American Inequality Series #1

The power of the Corporate Lobby, according to George Monbiot, is a ‘Great Unmentionable’- rarely discussed in the media or among politicians, it has maintained a firm grip on every level of American policymaking. Not only has it subverted the very system of representative democracy that the West prides itself upon, but it has potentially created conditions conducive to a strong socio-economic imbalance in the States.

Corporate lobbyists have one primary goal- to represent their employers in the political arena, not by competing directly within it but by gaining favour with those already within. 

Outgoing Congressional Speaker John Boehner was seen
handing out cheques on the House floor seeking votes
against the cutting of tobacco subsidies.

Of course, this cannot be done by a friendship alone- since 1998 the nation’s largest lobby, the US Chamber of Commerce, has spent over $1.1bn on lobbying activities. The massive payments involved reflect lobbying’s effectiveness; PepsiCo spent $10m in 2009 lobbying to (successfully) prevent 24 states attempting to pass a soda tax. Even more spectacularly, current House of Representatives Speaker John Boehner was caught handing out cheques to fellow politicians written by a lobbying tobacco company- on the very house floor a debate on cutting tobacco subsidies was to be discussed. The tobacco company saw these payments as an investment to prevent their own subsidies being cut- and, unsurprisingly, the House voted against cutting them. 

But a more appropriate action of the lobby to the topic of economic inequality is the influence of corporations over minimum wage legislation. A minimum wage naturally affects businesses, leading them to either spend more or reduce staffing. However, in a period of constantly inflating costs of living, arguments are being made that minimum wages set by every state are all insufficient to maintain a decent standard of living. Governments around the world have sought to address this issue- the British government, for example, recently implemented a 'living wage' designed to provide enough for workers to maintain a decent standard of living.

Housing is a key indicator of living standards- yet in Florida, the minimum wage ($7.93) is less than half of what is needed to rent a two-bedroom home at official ‘Fair Market Rent’ calculations. Similar results arise in every state- the National Low Income Housing Coalition calculates that it would take two minimum wages to afford a Fair Market Rent nationwide, even with many one-bedroom properties.

Corporate taxes have sunk in recent decades as profits
have boomed.

Corporations have repeatedly successfully lobbied for tax cuts- a significant reason why corporate taxes have sunk in recent decades while profits have boomed (see graph). For example, Whirlpool Corporation spent just under $2m in the year 2011-13 in lobby fees chasing the renewal of lucrative tax credits (equivalent to tax breaks) for creating environmentally friendly appliances. The passing of this motion, thanks to the lobbying, was worth an estimated $120m in 2012-13- a healthy return on the initial investment, and government revenue lost. 

Both movements of corporate lobbies to maintain low minimum wages (such as the success of the National Restaurant Association over employees in 2014) and win tax breaks, subsidies and such from the government have drastically exacerbated the issue of wealth inequality- they have made it easier for those higher up in business to profit more, often at the cost of employees lower down.

The American Inequality Series: An Introduction

“The richest country, is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad soil of extreme, degrading, damning poverty, but the land… where wealth does not show such contrasts high and low, where all men have enough- a modest living…”

The famous words of 19th-century American poet Walt Whitman ring true perhaps more than ever in the United States of today. The previous few decades have seen economic inequality in the USA escalating with little end in sight- and recent economic crashes have not exactly helped the situation either. 

Economic inequality has been a theme reoccurring throughout the world, throughout history- from the time of Ancient Greece, where Plato described any city to be split into “the city of the poor, the other of the rich… at war with each other.”, to today where inequality is often a side effect of economic development (India, China are notable contemporary examples). 

But the USA has experienced a more unorthodox growth in inequality. Like China and India, in recent decades the US economy has been growing- yet an almost unique mixture of politics and economic culture has made the USA, according to the Credit Suisse Global Wealth Databook, the most unequal of the top 20 developed global economies, scoring a GINI coefficient of 85.1% (the higher the coefficient, the more the inequality). In comparison, the UK scored a relatively modest 67.7%, the aforementioned India 81.1% and China 69.5%. 

The GINI coefficient is the most common mathematical measure of wealth inequality, measuring income distribution. Considering a score of 0% means perfect equality (everyone has the same income) and 100% means total inequality (one person holds all income, everyone else has nothing), 85.1% shows how far the USA’s inequality has grown.

The last time the USA saw inequality at the levels of today was in the years leading to the Great Depression- so what is it that is driving today’s inequality? 

Over the next few weeks at poponomics we'll be discussing all things America, from the idea of the 1%, to education, to politics, to the very nature of capitalism itself, as we closely analyse this massively important question.

Stay tuned- the American Inequality series starts on Wednesday, as we turn our attention to the impact Corporations have had on American society.

The Power of Groupthink

Entrepreneur Strategist and Founder of website entrepreneurialambitions.com Yura Bryant gives an insight into a sociological phenomenon that often escapes our minds.

Groupthink... What is groupthink? Groupthink is defined as the practice of thinking or making decisions as a group in a way that discourages creativity or individual responsibility. You could say groupthink is the key process which influences behaviour in mainstream society. It seems quite irrational to say when people are individuals, individuals who have the free will to produce their own thoughts. In actuality though, how free are we to form our own thoughts, when we are moulded from birth to listen to those who hold an authoritarian position over our development?

Think about that completely for a moment. Your development over time occurred under the process of being domesticated by the thoughts and beliefs of others. The world around you became to reflect the perception of those who held influence over you. From family, to school, to friends; your lenses to view the world were tainted by other viewpoints that formed "your" opinion. As this continues over time, you seek to have your opinion of the world validated by others because you need the acknowledgement of group approval.

Take, for instance, the power of social media. Social media platforms are widely used today as a means of communication and for gathering information. One of the most powerful aspects of social media is how a piece of information can be shared with millions of people in a matter of a few hours. But let's backtrack. What is the popular subject in mainstream society, it gets this special treatment, it is put on this pedestal of being ‘trending’ or being the ‘latest news’. What is not so popular gets the silent treatment. A study by Pew Research Centre found that, people refuse to talk about a controversial topic, unless a majority of the their peers agree with their views. That means people are unwilling to engage in open opinion, for fear that they will be persecuted for their thoughts.

If we were to analyse it for what it really is; groupthink is the movement to suppress original thought which can harm the status quo in place. There is a need to stifle opposing thoughts because allowing them to flow freely can lead to dissent and chaos. Going off that conclusion; is it safe to say that the very fragile fabric that holds the United States together is dependent on the power of groupthink? That answer seems to already be illustrated for you by examining everyday society. If a nation was truly operated under freewill; hundreds of small fractions in society would be at constant war with one another to control and rule supremely. But wait... Does this not already occur within the world we live within?

Yes, it does. That is why the power of groupthink resides in the ability to gain control of the majority so that the minority can be labeled as unruly and troubled. Now is this causing you to question your perception of your reality? Your society around you controls your views and opinions, but when given the ability to think and process without distractions, new realisations slowly take form. This presents major problems if this behaviour becomes widespread. Thus you are consistently bombarded with distractions which blocks your ability to think freely without bias.

The majority of society is controlled by some form of groupthink. We all circle around specific ideas, evolving movements and issues that resonate with our manufactured beliefs. But do the majority of people know how to subdue groupthink perception in favour of rational analysis? Groupthink is a danger in modern society, because it develops people who lack the ability to apply common sense in their daily interactions. Groupthink is a double edged sword. It has the ability to suppress opposing forces but it also has the ability to lead its sheep to the slaughter. Be careful of what you allow yourself to believe as truth because it becomes a dictating force in your life.

Opinions expressed in this article are those of the author.

Applying For Economics At University

Applying for economics at university? From someone who has just finished the process of university applications, here are the 5 things you need to do to give you an edge when applying for economics.

1. KNOW THE COURSE.

It's most essential to know exactly what it is that you are applying for. Economics at university is quite a different beast to most A-Level Econ courses, and this is something many applicants fail to recognise. Maths is incredibly important, that's why it's a compulsory A-Level for most Econ courses, but you have to make sure you're comfortable with doing a lot of it: many people (including myself) underestimate the dominance of maths-based work in an Economics degree.

Make sure you read up the syllabi (yes, that really is the plural of syllabus) of whichever universities you are applying for. Look at the units offered, and make sure that there are sufficiently interesting units at whichever universities you want to apply to. Not only does lacking interest in the course reduce your chances of getting admissions to give you a place, but even if you do get in, you don't want to suffer 3 years studying topics you lack interest in.

2. READ.
You probably know the importance of reading outside of the literature prescribed by your school/college, to note in your Personal Statement and discuss in any interviews. But remember, as admissions officers work through piles of cookie-cutter Personal Statements, you want to leave a lasting impression on them.

Saying you've read Freakonomics will not do this.

For sure, it's an excellent book that I would recommend to anyone, but the fact is that it's so popular that it shows off little about your interest in economics.

So find your own, lesser-known books to discuss. These don't have to as formal as academic papers, but there are plenty of economists who write superb literature. If you have a particular interest in a certain area of economics, browse around on Amazon to see what's out there. Putting a more obscure book (that is still from a credible source) will be likely to impress an admissions officer more, as it will highlight you using more of your own intuition.

3. ANALYSE, DON'T JUST STATE.
It's very easy to just regurgitate the outline of any books you've read in your PS, but, again, this would not be a particularly spectacular display of your passion for economics.

You need to ensure that your repetitions of the author's messages are brief, and your own, original analysis and commentary is longer. In this process, universities care more about what you, as a potential student, think than any author.

A way in which you can ensure you are analysing as well as stating is by using a method often ignored when it comes to the PS by many people: the PEE method. That is:

Point

Explain

Evaluate

There's a reason why the last 'E' appears the biggest- because that's how much attention you must give it compared to the others.

4. APPLY EARLY.

Applying early is a great idea for everyone- not just if you're applying to Oxford or Cambridge. Remember, the sooner your application has been sent off, the sooner your time will be freed up to pursue things like a social life, or sports- or, most importantly, the exams that are coming up in the summer!

Also, applying early can give you advantages in the application process. Some (not all) universities deal with applications as they arrive. This gives a slight advantage to candidates who apply earlier, as there are fewer applications to process in October, for example, as opposed to January, when the official deadline for everyone is. This can mean more attention is paid to your application, and also that there may be more available spaces and thus more chance of success for you earlier on in the process.

However, this doesn't mean you should rush your application- do make sure that it is of the highest quality you can make it before finally sending it off.

(Bonus Tip)
Applying to university is a stressful process for most people. But remember, it's one of the most important decisions of your life, one that (hopefully) will allow you to pursue exactly the kind of studies that you want to, rather than being prescribed subjects you may have lacked any interest in. University will also be a gateway to new friends, new surroundings, and new experiences that will influence greatly the person you will become.

So, my final piece of advice would be to work hard to achieve your future goals. Recognise how important and exciting the next future is for you, and ENJOY CREATING IT.

What's Happening To Poponomics? FAQ

Hello there. My name is Mohammad Lone. This is what's happening to poponomics.

So here I am, bashing away at my keyboard, alone, in a dimly lit room packed with empty boxes, books and a variety of knick-knacks. It's 11:11pm. I've just had a criminally powerful coffee, and am now nibbling on some grapes my mum bought for me earlier from Sainsburys as I pause to think about what to type next. I am feeling both excited for the time that lies ahead for me, and also a little mournful of my childhood life living under the roof of my family.

Welcome to university. Welcome to the promised land of education. Welcome to £27,000 of debt.

My confusion of emotions may be reflected in this piece of writing, and for that I do apologise- but here is, as briefly put as I can, an update on what exactly is going on with poponomics, among other things, in the form of answers to questions I have received from time to time. Hopefully this can clear a few things up.

What does poponomics mean?
Poponomics is a mashup of two words that I hope encompass some of the values of this website- 'popular' and 'economics'. Popular not necessarily in the sense that loads of people do read it, rather in the sense that loads of people can read it and understand it. Accessibility is one of the key things I focus on when I write- that readers are not overwhelmed with complex jargon and statistics.

'Economics', is pretty self-explanatory- the majority of the content on this site is on the topic of economics.

You haven't uploaded a video in ages. Are you still alive?
Yes, I am still alive. Thank you for your concern.

The video situation has been complex, as I've been facing difficulty finding a new camera that suits me (until now I have solely relied upon my laptop camera), and also with committing the large amount of time required to plan, film and edit a new video I am satisfied with.

But, the video production will continue soon. I have acquired a new, better quality camera and you can expect poponomics to return to YouTube on the 16th of October.

Do you write everything for the website yourself?
Not everything- I have been fortunate enough to have worked with some outstanding guest contributors, such as entrepreneurial guru Yura Bryant and InTouch CRM executive Didi Zheleva, who have lent their expertise on their specialist areas to poponomics.

However, the majority of the content is indeed written by myself- but I would like to gradually reduce my contributions to allow a greater spectrum of writers for the site.

Can I contribute an article for the website?
You want to contribute? Excellent! It doesn't matter whether you're a PhD in Economics or have never studied it in your life- as long as you can write, send an email over to us at mohammadlone@icloud.com and I'd be happy to take any request further and feature you on poponomics!

What credentials do you have to write about economics?

To be totally honest, not many. Yet. I haven't sat in a single economics class in my life (though now as a university econ student, hopefully that will change soon), and most of my thoughts have been derived from reading the news and books. 

Could you recommend any good introductory economics books for a non-economist? One that isn't Freakonomics?
Sure. 'Free Lunch' by David Smith is a great starter text, as it gives easily understandable yet in-depth introductions to various economic theories and concepts.

'The New Capitalist Manifesto' by Umair Haque is an incredibly thought-provoking yet accessible commentary on today's economic climate, particularly with regards to the failures and successes of today's businesses. And whatever economics book you're reading, the 'Penguin Dictionary of Economics' is always helpful to have at hand in case you come across any new words.

If you have any questions, comments, or suggestions for future poponomics articles and videos, don't hesitate to send them to mohammadlone@icloud.com.