Category: Podcast

Today’s guests are Sylvain Catherine and Natasha Sarin of the University of Pennsylvania. They discuss their research on wealth inequality, specifically with respect to social security’s impact on calculated wealth inequality. When you account for the value of all future payroll taxes into Social Security and all future benefit payments from Social Security, the present value of that stream of payments accounts for a large fraction of the wealth held by the bottom 90% of households.

Recent influential work finds large increases in inequality in the U.S., based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. Wealth inequality has not increased in the last three decades when Social Security is accounted for. When discounted at the risk-free rate, real Social Security wealth increased substantially from $5.6 trillion in 1989 to just over $42.0 trillion in 2016. When we adjust for systematic risk coming from the covariance of Social Security returns with the market portfolio, this increase remains sizable, growing from over $4.6 trillion in 1989 to $34.0 trillion in 2016. Consequently, by 2016, Social Security wealth represented 58% of the wealth of the bottom 90% of the wealth distribution. Redistribution through programs like Social Security increases the progressivity of the economy, and it is important that our estimates of wealth concentration reflect this.

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The post Social Security and Wealth Inequality with Sylvain Catherine and Natasha Sarin appeared first on The Economics Detective.

Today’s episode features my conversation with Mark Blyth, co-author (with Eric Lonergan) of Angrynomics.

Why are measures of stress and anxiety on the rise when economists and politicians tell us we have never had it so good? While statistics tell us that the vast majority of people are getting steadily richer, the world most of us experience day in and day out feels increasingly uncertain, unfair, and ever more expensive. In Angrynomics, Mark Blyth and Eric Lonergan explore the rising tide of anger, sometimes righteous and useful, sometimes destructive and ill-targeted, and propose radical new solutions for an increasingly polarized and confusing world. Angrynomics is for anyone wondering, where the hell do we go from here?

In the course of our conversation, Mark mentioned a talk he gave called The Mustang and the Volvo describing the different economies of America and Europe.

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Ilya Somin of George Mason University joins the podcast to discuss his book Free to Move: Foot Voting, Migration, and Political Freedom.

Ballot box voting is often considered the essence of political freedom. But, it has two major shortcomings: individual voters have little chance of making a difference, and they also face strong incentives to remain ignorant about the issues at stake. “Voting with your feet,” however, avoids both of these pitfalls and offers a wider range of choices. In Free to Move, Ilya Somin explains how broadening opportunities for foot voting can greatly enhance political liberty for millions of people around the world.

People can vote with their feet by making decisions about whether to immigrate, where to live within a federal system, and what to purchase or support in the private sector. These three areas are rarely considered together, but Somin explains how they have major common virtues and can be mutually reinforcing. He contends that all forms of foot voting should be expanded and shows how both domestic constitutions and international law can be structured to increase opportunities for foot voting while mitigating possible downsides.

Somin addresses a variety of common objections to expanded migration rights, including claims that the “self-determination” of natives requires giving them the power to exclude migrants, and arguments that migration is likely to have harmful side effects, such as undermining political institutions, overburdening the welfare state, increasing crime and terrorism, and spreading undesirable cultural values. While these objections are usually directed at international migration, Somin shows how a consistent commitment to such theories would also justify severe restrictions on domestic freedom of movement. That implication is an additional reason to be skeptical of these rationales for exclusion. By making a systematic case for a more open world, Free to Move challenges conventional wisdom on both the left and the right.

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