Two Economic Realities

The semester I am teaching a course on anthropology and urban poverty. Right now, we have been reading some classic America works on poverty, its definitions, causes, and solutions. On the other hand, I have been reading alot of finance stuff, mainly posted by bloggers or commentators in the media. Though, I am still also slowly getting through Polanyi's Great Transformation ... But technically, his book falls between the two concerns, or rather encompasses them both.

Thinking about the juxtaposition of the two, I am struck by the way the poverty literature emphasizes the important connection between labor and well-being, that one earns a place in society through work, so long as he is not unfairly blocked by external circumstance or otherwise handicapped by personal characteristics. The world of finance is obsessed with speculative profit. Indeed other than the regular worry about the poor who find themselves unemployed, the finance set holds all labor in disdain.  *Real* money is won through successful bets in the markets.

The world of labor remains in some sense a world of practical necessity, of sweat and substance. Finance is about abstraction, math, breathing in the ether, and, of course, power.

Stiglitz on Measures of Well-Being

This is a very interesting by Joseph Stiglitz in the Financial Times.  Amartya Sen lurks in the background here.  ...

TOWARDS A BETTER MEASURE OF WELL-BEING
By Joseph StiglitzPublished: September 13 2009 19:59 | Last updated: September 13 2009 19:59
Apolitical leader attempting to promote the well-being of his citizens is pulled in different directions: he will be graded on economic performance but there are many other dimensions to the quality of life, including the state of the environment. While there is no single indicator that can capture something as complex as our society, the metrics commonly used, such as gross domestic product, suggest a trade-off: one can improve the environment only by sacrificing growth. But if we had a comprehensive measure of well-being, perhaps we would see this as a false choice. Such a metric might indicate an increase in wellbeing as the environment improved, even if conventionally measured output went down.
This was one of several motivations for Nicolas Sarkozy, president of France, when he established the International Commission on the Measurement of Economic Performance and Social Progress, which I chaired and for which Amartya Sen served as adviser and Professor Jean-Paul Fitoussi of the Institut d'Etudes Politiques served as co-ordinator, and whose final report is issued on Monday.

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http://www.ft.com/cms/s/0/95b492a8-a095-11de-b9ef-00144feabdc0,_i_email=y.html
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Copyright The Financial Times Ltd 2009

US Median Incomes 2008 Update

The US Census just released median income estimates for 2008.  When broken out by the age of the household head, an interesting pattern emerges. For those households headed by individuals older than 55 years, the last decade was a period of sustained income growth, until the 2007 recession hit.  For the rest of American households, the last decade was not so great, the last couple of years have been particularly ugly for the younger baby boomers (45-55 year olds). Given the historic highs in levels of household debt, particularly for mortgage holders, there is now overwhelming evidence that the last decade of 'growth' was a mirage. Consider me still firmly in the bearish camp for household economic well-being.