Shift Of Wealth Research Articles

The Great Recession: Some Niebuhrian Reflections

The Great Recession: Some Niebuhrian Reflections

Congress Should Impose a Two-Generation Limit on the GST Exemption: Here's Why

In 1986, Congress enacted the federal Generation-Skipping Transfer Tax (GST Tax). The purpose of the tax was to supplement the federal estate and gift taxes. When private wealth shifts from generation to generation or bypasses a generation without incurring federal estate or gift taxes, the GST Tax steps in and fills the void. When Congress adopted the GST Tax, it added a provision known as the GST Exemption. The GST Exemption allows trust settlors to create trusts of a certain value without incurring a GST Tax. The maximum amount originally exempted was $1 million ($2 million for a married couple), but over time, Congress increased the maximum amount to $3.5 million ($7 million for a married couple). When Congress originally fashioned the GST Exemption, the duration of private trusts was controlled by state law — the Rule Against Perpetuities. The Rule Against Perpetuities was then undergoing reform in the states, but the reforms retained the basic durational limit of a life in being plus 21 years or a close equivalent that has been part of Anglo-American law for centuries. Presumably relying on state law, Congress failed to place its own durational limit on trusts that qualify for the GST Exemption. The state-law perpetuity landscape has now changed. Interstate competition for trust business has taken hold. In order to attract trust business for local banks and other institutional trustees, legislatures in several states have repealed or modified their state perpetuity rule to allow trust settlors to create GST-Exempt trusts that can last forever or for several centuries. An empirical study has established that the wealthy are creating GST-Exempt perpetual or near-perpetual trusts in large numbers in these trust-friendly states. Considerable private wealth is pouring into such trusts from out-of-state settlors, thereby escaping federal transfer taxation for centuries and in some cases forever. In this essay, the author makes the case for Congress to impose a two-generation limit on the GST Exemption. Without such a limit, private wealth will continue to pour into GST-exempt trusts that can last forever or for several centuries. The loss of tax revenue will become more and more significant as time goes along, undermining the integrity of the generation-skipping transfer tax and the federal transfer tax system as a whole. The matter is timely because the GST Tax is in abeyance this year, but returns in 2011. Two questions that Congress seems poised to resolve later this year are what the rate and maximum exemption will be when the tax returns and whether the tax will be reinstated for this year. As part of its 2010 tax bill, Congress should also close the loophole in the GST Exemption by providing that a trust loses its exemption once the trust continues beyond the death of the youngest beneficiary who is no more than two generations younger than the trust settlor. A two-generation limit would be consistent with the policy of the GST Tax, which focuses on taxing private wealth as it shifts from generation to generation or bypasses a generation without incurring federal estate or gift taxes. Coincidentally, a two-generation limit would also be consistent with the perpetuity rule recently adopted by the American Law Institute, which requires a trust to terminate no later than the death of the youngest beneficiary who is no more than two generations younger than the trust settler.

Life-Cycle Portfolio Choice, the Wealth Distribution and Asset Prices

This paper examines a canonical stochastic overlapping generations model with dynamically complete markets. Belief differences lead agents to place bets against each other and so wealth shifts across agents and across generations. Such changes in the wealth distribution strongly affect prices of long-lived assets since older generations have a lower propensity to save than younger generations. Contrary to the prices of long-lived assets, prices of short-lived assets are much less affected by the wealth distribution. Therefore, belief heterogeneity and life-cycle concerns are major forces contributing to the large gap between the volatility of stock returns and of the risk-free rate found in U.S. data.

Sovereign Wealth Funds and National Security: The Dog that Will Refuse to Bark

Concerns have been raised that Sovereign Wealth Funds (SWFs) might be used by governments to advance international political goals, raising red flags about their possible economic and national security consequences. These concerns are overstated. Warnings about national security threats related to foreign investment have been sounded repeatedly throughout history, but they have invariably been false alarms. Although there are novel attributes about SWFs in contemporary world politics, establishing their national security consequences is much more difficult than it might seem. And in those instances where theoretical connections between SWFs and “high politics” can be established, on closer inspection the SWFs appear to be intervening variables – manifestations of other pathologies – rather than the root cause of the postulated problem. The potential geopolitical problems caused by SWFs are the result of shifts in wealth in the international system, and not by the establishment or functioning of wealth funds.

World Cricket as a Postcolonial International Society: IR Meets the History of Sport

This article brings together the English School literature, postcolonial approaches to culture, the historical sociology of sport, and IR's own tentative engagement with sport to argue that world cricket constitutes a sui generis postcolonial international society in the sporting sector. The international society tradition within IR has been criticised for its failure to take sufficient note of the history of imperialism, and contributions from postcolonial scholarship can provide a necessary corrective here. However, the adoption of cricket in colonial societies involved a complex mixture of acceptance of and resistance to elements of British imperial culture, as has been documented in the work of some historical sociologists of sport and of philosophers of cricket such as C.L.R. James and Ashis Nandy. Contemporary world cricket is an arena in which the former imperial centre and a number of postcolonial states compete with each other within a framework of quasi-legal provisions (the Laws of Cricket), associated normative expectations (“The Spirit of Cricket”), and an international/transnational sporting organisation (the International Cricket Council). The concept of a geographically (but not regionally) limited, historically specific, and sectoral international society therefore still has some purchase here. This sphere is currently being shaped not by a clash between imperial values and postcolonial resistance, but by tension between the routinisation of international cricket and a shift of wealth and power within the game towards India. World cricket can be characterised as a sphere of non-violent sporting competition which may, perhaps, function as a source of international civility in relations between regions of the world influenced by British imperialism.

Financing the integration of climate change mitigation into development

The Bali Action Plan and many other authoritative recent climate reports point to expectations that additional financing will be central to future international agreements to address climate change. Several donor governments have announced commitments to contribute significant additional amounts of funding to support climate change financing in developing countries. However, the context for financing of climate change mitigation is evolving rapidly, with significant implications for climate policy. Two key changes are the dramatic improvement in access to capital in many of the most rapidly growing, large greenhouse-gas-emitting, developing nations and the increasing shift of wealth to oil-exporting countries and Asian central banks. Energy investment is fundamental to development and is capital-intensive, and access to finance is not equally available across countries and for different types of investments. Less carbon-intensive, clean energy investments frequently remain more difficult to finance, due to their smaller scale and innovative nature. Taking climate risk into account as an element of financing is potentially consistent with the investor's need to balance risks with expected returns, but the methodologies, geographical scale, and data required are not yet commensurate with the time periods and project scope typical of financing for developing countries. The policy challenge is in making the financing available commensurate with the scale and short time available for addressing climate change. Most of the likely targeted financing programmes will not be adequate for this purpose. Rather, policy makers need to focus on creating adequate signals that climate change will be an important and continuing factor in government policies for the foreseeable future in ways that will affect investor expectations of relative risk and reward. If this is done, financing will follow.

Financing the integration of climate change mitigation into development

The Bali Action Plan and many other authoritative recent climate reports point to expectations that additional financing will be central to future international agreements to address climate change. Several donor governments have announced commitments to contribute significant additional amounts of funding to support climate change financing in developing countries. However, the context for financing of climate change mitigation is evolving rapidly, with significant implications for climate policy. Two key changes are the dramatic improvement in access to capital in many of the most rapidly growing, large greenhouse-gas-emitting, developing nations and the increasing shift of wealth to oil-exporting countries and Asian central banks. Energy investment is fundamental to development and is capital-intensive, and access to finance is not equally available across countries and for different types of investments. Less carbon-intensive, clean energy investments frequently remain more difficult to finance, due to their smaller scale and innovative nature. Taking climate risk into account as an element of financing is potentially consistent with the investor's need to balance risks with expected returns, but the methodologies, geographical scale, and data required are not yet commensurate with the time periods and project scope typical of financing for developing countries. The policy challenge is in making the financing available commensurate with the scale and short time available for addressing climate change. Most of the likely targeted financing programmes will not be adequate for this purpose. Rather, policy makers need to focus on creating adequate signals that climate change will be an important and continuing factor in government policies for the foreseeable future in ways that will affect investor expectations of relative risk and reward. If this is done, financing will follow.

The world is flat: A brief history of the twenty‐first century; Three billion new capitalists: The great shift of wealth and power to the east

The world is flat: A brief history of the twenty‐first century; Three billion new capitalists: The great shift of wealth and power to the east

The gradual shift of wealth and power from African American males to African American females

Throughout history up to the 21st century, in almost all societies, males have dominated economic and political systems. However, we are witnessing a reverse of this trend in the United States, where within the African American population black females are becoming the most dominant group instead of black males. The paper provides numerous examples of the factors for this gradual major shift in economic and political leadership within the African American population.

Three billion new capitalists: the great shift of wealth and power to the east

Three billion new capitalists: the great shift of wealth and power to the east

Welfare and Distribution Effects of Bank Secrecy Laws

We analyze an overlapping-generations world comprising two groups of small countries whose preferences for public spending differ. Key steady-state effects from introducing bank secrecy and a withholding tax in countries with low government spending are: a reduction of global capital and income, a shift of wealth towards bank-secrecy countries, and falling consumption, welfare and government spending despite rising tax rates in the rest of the world. Qualitative results are robust to changes in tax-payer honesty, the Leviathan effect (permitting governments to drive public spending higher than citizens prefer), and the fraction of withholding taxes repatriated to countries of residence.

Three Billion New Capitalists: The Great Shift of Wealth and Power to the East

From one of America's shrewdest economic trend-spotters, this is a wake-up call that prosperity is about to shift from the West to the East, and what can be done before it's too late. By the beginning of this century, it was already commonplace to speak of the US as a hyperpower, to talk of its military, political, and economic clout as unprecedented in world history, and to assume that American dominance would continue at least throughout our lifetimes. It is conventional wisdom that America will have no serious rivals for at least a generation. But the American position is far more fragile and ephemeral than much of the world believes. In this eye-opening book, Prestowitz reveals the powerful, yet barely visible trends that are converging with the potential to turn the world upside down by ending the six-hundred-year run of Western domination of the world. These trends include the end of America's position as the world's premier place for invention and technological innovation; the sudden entrance of 2.5 billion people in India and China into the world's skilled job market; the role of the World Wide Web in permitting many formerly localized jobs to be done anywhere in the world; and the demographic meltdown of Europe, Japan, Russia, and, in later decades, even China. Three Billion New Capitalists is a clear-eyed and profoundly unsettling look at America's and the world's economic future, from an author with a history of predicting the important trends long before they become apparent to others.

Lauding the Leisure Class: Symbolic Content and Conspicuous Consumption

Symbolic consumption is assessed as an evolution of previously identified conspicuous consumption, after this has undergone a “de-materialization” that is socially, as much as ecologically, driven. As Veblen observed, the shift of wealth towards new forms of physical and financial capital with industrialization compels traditional wealth-holders to redefine privilege in terms of cultural capital. Accompanying social changes enable them to do so. The limited reproducibility of items consumed for their symbolic value, and slow transmissibility of the means of symbolic consumption, force holders of new wealth to compete for status on terms set by the established leisure class. Conspicuity shifts from quantity to quality, from the appropriation of materially valued products to the appreciation of culturally valued products. This paper examines some key implications of a shift from “waste” to “taste” in conspicuous consumption for the social and natural environment, and for economic development. In particular, it explores the possibility of branded products representing the mass production of symbolic goods in high-income economies; and the brand premium's potentially beneficial consequences for global income distribution, when branded production relocates to lower-income economies in conditions of free trade.

Poverty and the Limits of Literary Criticism

According to official figures of Census Bureau, 32.9 million people in US were living in poverty in 2001, an increase of 1.3 million on previous year. means that almost 12% of population was subsisting below income thresholds deemed minimal according to family size and composition-just over $14,000 per year for a family of three. Such official measures of poverty draw criticism for their outdated and inflexible ways of evaluating need, yet few social analysts would deny that significant numbers of people in US lack sufficient material resources for a theoretically adequate or normal standard of living.' The problems associated with poverty--illness, illiteracy, and homelessness, for example-become more alarming still in context of tremendous and widening economic inequality, what Paul Krugman has described as a tectonic shift in wealth and income distribution over last three decades, away from middle and lower classes toward wealthiest fraction. This association of poverty with progress is great enigma of our times, wrote American social reformer Henry George in 1879, the central fact from which spring industrial, social, and political difficulties that perplex world (10). For George, these difficulties seemed especially pronounced in an American context, where political institutions of theoretical equality were based on a state of glaring social inequality. Recognition of unacceptably low living standards among US persons has always unsettled beliefs in nation's special conditions of class mobility, its absence of social stratification. Yet two centuries of legislative, moral, and social debates over persistence of material need have registered enduring power of ideological assumptions about fluidity of American social structure, and opportunities for individuals within it, against which detection of poverty could become a subversive act, spinning observers into fear, disbelief, and existential shock, into explanations based on race or culture, into desires to yank welfare from spreaders of moral failure.

The enemy within: a commentary on the demonization of difference.

Ways in which the poor and the powerless, women in particular, have been made the focus of rhetoric aimed at the undoing of the federal welfare system are described. The stigmatizing of poor, single mothers as a means of diverting attention from recent substantial shifts in wealth in the U.S. is examined, and it is suggested that the essential problem is not the character and habits of poor women but the persistence of poverty as a fundamental structure of the society.

LIBERALIZATION EFFECT IN FINANCIALLY REPRESSED ECONOMY: THE CASE OF INDONESIA, 1982–90

T one time McKinnon and Shaw stated that rising interest rates promote saving and thus economic growth (McKinnon-Shaw hypothesis) [36][52]. Thereafter there was much discussion about how financial repression depresses the growth rates in many developing countries including some Latin American countries. Roubini and Sala-i-Martin actually showed that the introduction of the financial repression variable into the growth regression successfully explained the differences in growth rates of developing countries without using a Latin American dummy [50]. Recently financial liberalization has become a popular theme in the policy dialogues between developing countries and international organizations. On the other hand, Greene and Villanueva showed that the real deposit rate negatively influences private investment in developing countries, suggesting that a rising deposit rate might hinder accumulation [23]. Thus, McKinnon-Shaw hypotheses are still open for additional studies and debates. The effects of financial liberalization may differ depending on the stage of development and the institutional schemes. At an early stage of development, the rising interest rates can induce the shift of wealth from unproductive goods to the loan market. If government expenditures do not financially crowd out private investment, this inflow could accelerate capital formation. Morisset constructed a model along these lines and applied his theory to Argentina [39]. However, financial repression also occurs in other situations even when we assume the presence of fixed normal saving and investment schedules. Clearly it is important to analyze the effects of financial repression within the context of the usual scheme of the loan market. This orientation was selected in this paper. The inflow of funds from unproductive activities can be treated as a further shift of the saving schedule at a later time. In this paper I do not discuss wider topics such as the complementarity between money and capital. We must construct a model of the financial markets and test the McKinnonShaw hypothesis under the usual assumptions: saving (investment) is a positive (negative) function of interest rates. Also I want to explicitly reflect stylized facts such as the dual market structure in developing countries. Otherwise it is not intuitively clear whether financial repression depresses the average interest rate, or if the fund escapes by means of an informal market and raises the average cost of investment. The Developing Economies, XXXIII-3 (September 1995)

Bridging the gap: The village health worker as the cornerstone of the primary health care model

The Alma-Ata Conference in 1978 reiterated the goal of ‘Health for All by the Year 2000’ and declared primary health care (PHC) the vehicle through which this lofty goal was to be achieved. National governments were recognized as responsible agents for developing and implementing PHC plans. The emphasis on community-oriented delivery of care places great importance on the village health worker (VHW), the individual who serves as the ‘interface’ between the formal health care system and the community. Despite the acknowledged importance of the VHW role, the question of whether the PHC model, with the VHW as the cornerstone can be effectively implemented without a “fundamental shift of wealth and power” (Sidel) continues to be asked. This paper examines the evolution and current status of the VHW role in Costa Rica, Nicaragua and Colombia, three Latin American nations which have adopted the PHC model. The authors discuss the evolution of the PHC model in each country with particular reference to the occurence or non-occurence of fundamental changes in the society. The conclude that the primary determiner of successful implementation of PHC is a national commitment to PHC including recognition of the importance of community participation which is best achieved through reliance on the village health worker.

6 Redistribution of Income in Denmark

(1986). 6 Redistribution of Income in Denmark. International Journal of Sociology: Vol. 16, No. 3-4, pp. 139-160.

OPEC in world financial markets: Oil prices and interest rates

This article examines the relationship between the real rate of interest in world financial markets and the price of oil. If OPEC cannot be viewed as a ‘small’ participant in world financial markets, and should its savings and portfolio behavior differ from that of the rest of the world, then wealth shifts to or from OPEC would affect world interest rates. Subsequently, this paper examines the magnitude of oil price changes required to elicit a significant interest rate change. Our empirical results shed light on OPEC's behavior, which at times may differ from a pure profit maximizing cartel. The short-run price elasticity of the world demand for oil is -0.04 and the long-run elasticity is -0.10. OPEC itself, as expected, faces higher elasticities of -0.08 and -0.36, respectively. The demand elasticity of oil with respect to ‘world’ GNP is 0.8. A major objective of this paper has been to determine the effect of changes in oil prices on world interest rates, and vice versa. Our results imply that only very large oil price increases will have a significant impact on world interest rates. However, oil prices show a non-negligible sensitivity to changes in world interest rates.

The Meaning of Housing in America

Abstract Housing activity—households using dwellings—forms a central feature in the human use of the earth. A house is a structure; a home is an experience. Housing is an interactive process with meanings tied to status, social position, wealth, power, aspirations, and personal identity. Housing decisions reflect social drives for congregation and segregation within U.S. cities, thus making social and cultural categories of urban society visible, intelligible, and stable. U.S. urban housing landscapes are destabilized by changing population age structure, wealth transfers among neighborhoods, foreign immigration, and interregional wealth shifts. Despite vigorous initiatives to break down neighborhood lass barriers, zoning laws and court decisions staunchly protect single-family housing areas, perhaps as an expression of a basic conservative instinct to protect and nurture human life. Valiant efforts to modify zoning laws to improve the position of weaker classes without threatening the stronger may produc...