The Economy, Social Class, and Inequality (cont)

currently, who is seeing income growth?

the top 1%

currently, who are wages stagnant for?

everyone not in the top 1%

what country has the highest level of income/wealth inequality

America

what do many "economic rules” seem to prioritize

corporate power and short-term growth

how many markets are perfectly competitive

very few

what do the outcomes of the market depend on

market power of the participants

what does the market power of participants depend on

rules of the market

what are “the rules”

regulatory/legal frameworks and social norms that structure how the economy works

market power

the ability to set both the terms of market exchange and the rules that govern that exchange

what are some examples of rules

property rights, enforcement of contracts, formations, behaviors, and responsibilities of businesses, obligations and protections for participants in financial markets, relationships between workers and employers, taxes, public spending, and monetary policy

what is the goal of supply-side economic theories

improve the “supply side” and the rest will benefit

when did supply side economic theories begin

1980s

why have supply side economic theories been largely discredited among economists

economy has gotten better, but hasn’t resulted in the middle and bottom of earners in America benefitting

trickle down economics

the belief that more wealth at the top will benefit everyone else

what is an example of supply side economics being weak

those at the top can only spend SO much money, and even if they buy a lot of expensive cars, not enough to justify opening new factories

why does supply side economics tend to fail

while a small percentage of money from the top gets reinvested into growth, most is stockpiled and doesn’t trickle down

what are some problematic changes associated with lower taxes for the wealthy

reduction of capital gains and corporate tax rates, increase in payroll tax

marginal tax rate

percentage of tax applied to your income

do taxes more heavily reflect income or weatlh?

income

what percent of all income tax does the bottom 50% contribute

3%

what percent of all income tax does the top 50% contribute

58%

what percent of all income tax does the top 1% contribute?

39%

what do corporations form a wall between

personal and corporate assets

what do corporations focus on

enriching those in charge of them like CEOs and Shareholders

why do corporations focus on benefitting those in charge of them

want to raise money for people who own them, they will engage in activities that benefit shareholders and who would see the most immediate dollar reward

what do CEOs become incentivized to increase

share price in the short-term

what does CEOs increasing share price in the short term lead to

reduces long-term investment in the corporation, employees get viewed as short term liabilities, excessive risk taking behavior

what was the average CEO salary between 1930s-1970s

$1 million

what was the average CEO salary in 2020

$24.2 million

how does increasing share price affect the average CEO

tenure goes down, compensation goes up

what did corporations invest heavily in reducing

the power of unions

what did the reduction of the power of unions result in

poor enforcement of labor laws

how many registered lobbyists did corporations have in the late 1960s?

175

how many registered lobbyists did corporations have in the early 1980s?

2445

how many registered lobbyists did corporations have in 2021?

12,137

what does OECD stand for?

organization for economic cooperation and development

what is 54% of OECD workforce covered by?

collective bargaining agreements

in the US, what percent of the workforce is covered by collective bargaining agreements

11%

what do lower labor standards include

reduced benefits and lower wages

what was minimum wage in 1968

$9.54

what was minimum wage in 2020

$10.65

what was minimum wage in 2022

$12.48

exempt

salaried jobs, don’t make overtime, not required by law to be paid overtime

non-exempt

must be paid overtime