Opinion

Chrystia Freeland

Matriarchy, patriarchy and the masters of the universe

Chrystia Freeland
May 31, 2013 19:39 UTC

The past week has underscored one more way in which the lives of the super-rich are diverging from the lives of everyone else: The middle class is becoming a matriarchy, while the plutocracy remains firmly patriarchal.

The sexist mores of the super-rich were exposed by one of that tribe’s most prominent philanthropists, the hedge fund billionaire Paul Tudor Jones. At an April symposium at the University of Virginia, Jones said that women didn’t trade as successfully as men because becoming a mother is a “killer” to professional focus. “You will never see as many great women investors or traders as men – period, end of story,” he said.

“As soon as that baby’s lips touched that girl’s bosom, forget it,” Jones said, describing the grim career impact of motherhood on two women who had worked with him in the late 1970s.

“Every single investment idea,” he said, “every desire to understand what is going to make this go up or go down is going to be overwhelmed by the most beautiful experience which a man will never share about a mode of connection between that mother and that baby.”

When they were revealed by the Washington Post last Thursday, Jones’s remarks swiftly became notorious, partly because of the vivid language he used to make his case. And Jones duly apologized.

Does inequality help growth- or hurt it?

Chrystia Freeland
May 16, 2013 20:56 UTC

One of the most urgent questions in economics today is the connection between inequality and growth. That is because one of the big economic facts of our time is the surge in income disparity, particularly between those at the very top and everyone else. The other big fact is the recession set off by the financial crisis and the consequent imperative to jump-start economic growth. Figuring out the relationship between these two tent-pole issues is therefore a good way for economists to spend their time.

There are two main and contradictory ideas about how that relationship might work. One is that inequality is the price of robust economic growth. If the private sector is thriving, the most successful capitalists will be getting very rich. Creating a system that allows – indeed, encourages – the best and the brightest to pull away from everyone else is how you shift your economy into its highest gear.

There is, however, another theory, and it has been winning adherents in the aftermath of the financial crisis. In this view, rising inequality is not a symptom of a fast-growing economy or an incentive that will help create one. Instead, too much income inequality crushes economic growth.

Poor little rich kids

Chrystia Freeland
May 9, 2013 19:51 UTC

If you doubt that we live in a winner-take-all economy and that education is the trump card, consider the vast amounts the affluent spend to teach their offspring. We see it anecdotally in the soaring fees for private schools, private lessons and private tutors, many of them targeted at the pre-school set. And recent academic research has confirmed what many of us overhear at the school gates or read on mommy blogs.

This power spending on the children of the economic elite is usually — and rightly — cited as further evidence of the dangers of rising income inequality. Whatever your views about income inequality among the parents, inherited privilege is inimical to the promise of equal opportunity, which is central to the social compact in Western democracies.

But it may be that the less lavishly educated children lower down the income distribution aren’t the only losers. Being groomed for the winner-take-all economy starting in nursery school turns out to exact a toll on the children at the top, too.

Twilight of the middle class?

Chrystia Freeland
Apr 26, 2013 17:52 UTC

It’s evening in America. That is the worrying news from the latest Heartland Monitor Poll, conducted quarterly and sponsored by the insurer Allstate and National Journal.

The researchers made a striking finding: The U.S. middle class, long the world’s embodiment of optimism and upward mobility, today is telling a very different story. The chief preoccupation of middle-class Americans is not the dream of getting ahead, it is the fear of falling behind.

The poll found that 59 percent of its respondents – a group of 1,000 people selected to be demographically representative of the United States as a whole – were afraid of falling out of their economic class over the next few years. Those who described themselves as lower middle class were even more scared than the overall group – 68 percent feared they could slip even lower down the economic ladder.

The sorrow and the pity of Obama’s budget

Chrystia Freeland
Apr 11, 2013 21:15 UTC

Pity Barack Obama. Everything in his life experience prepared him to be the president who would take on the big challenge of the 21st century: rising income inequality and the hollowing out of the middle class.

His peripatetic youth taught him about the price of plutocracy. In an interview unearthed by Zachary A. Goldfarb of the Washington Post, in 1995 Barack Obama, plugging his autobiography, “Dreams From My Father,” recalled that experience for the Hyde Park Citizen, his neighborhood edition of a newspaper that bills itself as the “Premiere African American Weekly” in Chicago.

“My travels made me sensitive to the plight of those without power and the issues of class and inequalities as it relates to wealth and power,” he said.

The permanent class divide

Chrystia Freeland
Mar 22, 2013 19:27 UTC

The one thing pretty much all of us agree on is the importance of equal opportunity. Opinion is divided about the significance of rising income inequality per se. Some see it as a problem in and of itself. But for others, a growing economic divide, so long as it is meritocratic, is a healthy characteristic of a growing, entrepreneurial society.

Nowadays, though, no one is in favor of a caste-based society. Income inequality is one thing, but a permanent division into the haves and have-nots is an entirely different thing – and much less acceptable.

That is why new economic research, released at a conference this week at the Brookings Institution in Washington, is so important. The comprehensive study is by five economists, including two who work at the Federal Reserve Board, Vasia Panousi and Ivan Vidangos, and one, Shanthi Ramnath, of the U.S. Treasury Department. It draws on a powerful new data set: a one-in-5,000, random and confidential sample of the population of U.S. taxpayers.

The political clout of the superrich

Chrystia Freeland
Mar 1, 2013 20:43 UTC

Louis D. Brandeis, the American jurist, famously warned: “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

Brandeis’s cri de coeur was inspired by an indignant observation of the shenanigans of America’s robber barons during the Gilded Age. Today, we live in a data-driven age, and some careful students of the connection between money and politics have now amassed a powerful body of evidence to support Brandeis’s moral claim. A lot of it is assembled in a report by the progressive research organization Demos, published this week.

One of the most striking findings is the extent to which economic power translates into political power.

Putting the magnifying glass on the one percent

Chrystia Freeland
Feb 8, 2013 19:15 UTC

Academics can be dismissive of the concerns of the popular media. But when it comes to the growth of the super-rich, the tabloids may have gotten it right.

The numbers tell the story. According to a study by John Van Reenen of the London School of Economics and Brian Bell of Oxford University, the share of national income earned by the top 1 percent in the United States surged to 18.3 percent in 2007, from 8 percent in 1979. In Britain, the trend was almost identical: The top 1 percent received 15.4 percent of the national income in 2007 compared with 5.9 percent in 1979. And these figures exclude capital gains.

“A lot of the action has been at the very top end of the distribution, the top 1 percent or the top 0.1 percent,” Van Reenen, director of the Center for Economic Performance at the LSE, told me. “It shows you that the media’s focus on the very rich and on bankers’ bonuses wasn’t misplaced.”

Politics makes a comeback

Chrystia Freeland
Dec 13, 2012 20:43 UTC

Prepare for the revenge of politics. For the past few decades, the quants – mathematicians, physicists and technologists – and their younger brothers, the economists, have been in the ascendant. With their mathematical models and their ability to crunch vast quantities of data, they have shaped the way businesses understand the world and operate within it.

But politics is making a comeback. That was one of the persistent themes at an invitation-only high-powered international conference about systemic risk in the financial services convened by the Global Risk Institute in Toronto this week (I was the rapporteur). As one of the bankers put it, if you want to understand the world economic outlook for 2013, and where your company should invest, you can’t just talk to economists anymore: “You need to talk to political scientists.”

I tested that idea with two thinkers – one an economist, the other a political scientist – who make their living helping businesses understand the world. Perhaps not surprisingly, Ian Bremmer, the political scientist and founder of the Eurasia Group, instantly agreed.

Opportunity missed in U.S. bailout?

Chrystia Freeland
Dec 7, 2012 16:03 UTC

Sometimes, the aftermath is more devastating than the storm. That is the story of the 2008 financial crisis. It was disastrous at the time, but what has been worse is how long it has lingered. That halting recuperation is why the global economic meltdown is still at the center of the political debate in the Western world.

Much of the discussion is a replay of the familiar battle between the economists John Keynes and Friedrich Hayek: Is the solution stimulus or austerity? Amir Sufi, a professor at the University of Chicago Business School, has been doing provocative research that suggests we should be focusing on a different angle.

The real issue, in Mr. Sufi’s view, is where stimulus dollars should be targeted.

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