2.What is the relative importance of within-country inequality and between-country inequality in explaining total world income inequality? Compared with within-country inequality, between-country inequality plays an important role in the income inequality among the world. According to the graph showing inequality from 1820 to 1990, it is evident that inequality between countries is a major source of income inequality. What's more, inequality between countries is increasing while inequality within acountry is constant and slightly decreasing. Many factors can be taken into consideration to account for the phenomenon. Between-country inequality is caused by institutions、technology、capitalaccumulation、educational leveland cultures. According to Solow‘s Growth Model, developing countries have a catch-up effect to decrease the inequality with developed countries. However, different institutions between developed countries and developing contries hinder the convergence of economics, andthe great difference of technology result in a great advantage of developed countries over developing countries, which leads to higher marginal productivity of developed countries over developing countries and increases the inequality. As for within-country inequality, the same institution、technology and culture make the growth pattern within a country more likely to correspond to Solow's Growth Model, causing the catch-up effect to achieve and decrease the inequality. For example, the gap between West Germany and East Germanyis becoming smallsincetheir unification.
Some Stock Markets Are More Equal Than Others: Global Performance Since 2009 Submitted by Tyler Durden on 07/28/2012 12:19 -0400 Back in March 2009, when the US financial system was imploding, one of market oddities was that European financial risk was far more muted than that of its American counterparts, with European stock markets trading, on a relative basis, far better than the epic collapse that the SP had just experienced having plunged by over 50% in months. It was this freefall that forced the Fed to take on the most daring capital markets rescue attempt ever attempted, and by injecting and guaranteeing tens of trillions at the nadir of the financial crisis, it spawned a doubling of the US stock markets (at a huge cost: US capital markets are now all centrally planned, and the price of gold: that inverse indicator of faith in fiat currencies, has also doubled in the past 4 years following an epic fiat dilution orgy). Over the same time period, Europe has demonstrated what happens to capital markets when there is no central planner willing and able to accept the risk of runaway inflation in the future (not to mention soaring deficits and deferred austerity) in exchange for instant stock market gratification right here, right now. End result: the French, Italian and Spanish stocks markets have barely budged since their 2009 lows (and Spain is well below). How does this look in the context of all global stock markets on a Price to Book ratio? The answer is below. The next logical question becomes: just why is the global investor willing to pay over 2 times book value for the average US stock, and unwilling to pay more than 0.8 Book for Italy and Spain. And how long until the realization that the rickety house of cards supporting the US stock market's 2.0+ P/B ratio is resting purely on the shoulders of a profligate Fed now that US corporations have once again resumed their downward "profitability" trajectory? 9490 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: Bill Gross On Doo Doo Economics Things That Make You Go Hmmm - Such As The Spread Between Gold And Gold Miners Futures Tumble, Spreads At Record, Euro Drops On Another Awful Spanish Auction; More LCH Margin Hike Rumors "China Accounts For Nearly Half Of World's New Money Supply" A Record $2 Trillion In Deposits Over Loans - The Fed's Indirect Market Propping Pathway Exposed
The Unabridged And Illustrated Federal Budget For Dummies - Part 4: Entitlements By Tyler Durden Created 05/04/2012 - 00:10 Submitted by Tyler Durden on 05/04/2012 00:10 -0400 Afghanistan Medicare Obamacare In this final part of the four-part series from The Heritage Foundation , we look at the scale of the entitlement society we live in relative to the Federal Budget. Medicare, Medicaid, and Social Security spending is set to explode, placing enormous pressure on other priorities such as defense and the rest of the budget. Entitlement Spending Will Nearly Double by 2050 Spending on Medicare, Medicaid, Social Security, and the Obamacare subsidies will soar as 78 million baby boomers retire and health care costs climb. Total spending on federal health care programs will more than double. Future generations will be left with an untenable debt burden. Tax Revenues Devoured By Medicare, Medicaid, and Social Security in 2045 Spending on Medicare, Medicaid, the Obamacare subsidies, and Social Security will devour all revenues by 2045. Entitlement spending is already crowding out vital constitutional functions, such as defense. Medicare Adding to Federal Deficits Faster than Other Government Spending Programs Entitlement spending is the main cause of long-term runaway federal deficits. Medicare is the fastest-growing program due to retiring baby boomers, the effects of an aging population, and rising healthcare costs. Social Security Deficits are Permanent and Growing Social Security began running deficits in 2010, paying out $48.9 billion more in benefits than it received through payroll taxes. Nor will these deficits ever end, meaning that without reforms, Social Security will continue to add billions to the deficit and debt each year. Without Entitlement Reform, Federal Spending Will Exceed 40 Percent of the Economy by 2050 The major entitlements— Medicare, Medicaid, the Obamacare subsidies, and Social Security—are pushing spending to unsustainable levels. These programs must be restructured to prevent crippling debt or tax burdens on future generations. Discretionary Spending Cuts Alone Will Not Balance the Budget Annual spending on entitlement programs is massive compared to other federal spending priorities. Cutting discretionary spending is necessary, but cuts to foreign aid alone or pulling out of Afghanistan will not close the deficit. Entitlement programs must be reformed. Even Eliminating Defense Spending Completely Would Not Balance the Budget Unsustainable entitlement spending is the key driver of future deficits. Rather than tackle them directly, some would cut defense. But even if spending on this crucial national priority was eliminated completely, entitlements would continue to drive deficits to unmanageable levels. Letting Tax Cuts Expire Will Not Balance the Budget Some call for letting all 2001 and 2003 tax cuts expire, including subjecting the middle class to the alternative minimum tax, in order to balance the budget. Under this scenario, unaffordable spending would still rise, and economic growth and job creation would suffer. Balancing the Budget Without Cutting Spending Would Cause Taxes to Skyrocket America is running massive deficits, and a balanced budget requirement is often considered a way to rein in red ink. Without serious entitlement and spending reforms, the level of taxes required to balance the budget would reach economically stagnating levels. Hiking Taxes to Balance the Budget Would Require Doubling Tax Rates The costs of Medicare, Medicaid, and Social Security are rising substantially. Paying for this spending solely through federal income tax increases would require more than a two-fold increase of current tax rates, even for the lowest tax bracket. Taxing the Wealthy to Balance the Budget Will Not Work Some argue for taxing the wealthy to reduce federal deficits. However, hiking taxes on taxpayers in the two highest brackets would increase their tax rates to mathematically impossible levels. To close the 2035 deficit, the top two tax rates would increase to 159 percent and 166 percent, and in 2050 they would reach 236 percent and 246 percent. Government Policy Reform Needed to Keep Spending Low and End Deficits Without Raising Taxes Bold, transformational reforms are needed to solve America's spending and debt crises. The Heritage plan, Saving the American Dream , solves these crises through spending, entitlement, and tax reforms. It reduces the size of government, encourages personal fiscal responsibility, and fosters economic growth. It balances the federal budget by 2021 and does not raise taxes. Source: The Heritage Foundation Tweet Similar Articles You Might Enjoy: The Unabridged And Illustrated Federal Budget For Dummies - Part 1: Spending The Unabridged And Illustrated Federal Budget For Dummies - Part 2: Revenues The Unabridged And Illustrated Federal Budget For Dummies - Part 3: Debt Deficits
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