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The Wall Street Journal uses this chart to illustrate a story on a new report issued by Morgan Stanley on “Inequality and Consumption.”*

Morgan Stanley’s research suggests weaker-than-usual consumption at the lower end of the income ladder helps explain why this economic recovery has been particularly anemic.

“It has taken more than five years for U.S. households to ‘feel’ like they are in recovery,” write economists Ellen Zentner and Paula Campbell in the report, entitled “Inequality and Consumption.”

Before the recession, they say, “the expansion of credit simply delayed the day of reckoning from declining incomes and rising inequality.”

Apparently, economists at Standard & Poor’s and Morgan Stanley have begun to understand the macroeconomic effects of rising inequality, a problem that legions of mainstream academic economists have simply ignored.

 

*I haven’t yet been able to obtain a copy of the report itself. I will write about it as soon as I do.

Update

Here are some other charts from the report (courtesy of Marketwatch):

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According to a recent survey commissioned by CNBC/Burson-Marsteller, corporations are facing a global legitimation crisis.

The vast majority of citizens—both the general population and business executives, in the United States and around the world—believe that governments are more on the side of corporations than of average citizens.

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“Greed” is the first thing that comes to mind when the general public think of corporations. And the first thing for business executives? “Big business.”

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What’s interesting is the degree of overlap between the two word clouds.

Clearly, in the midst of the Second Great Depression, corporations are facing negative perceptions on the part of both the general public and business executives in terms of the influence they have over governments and what they stand for.

It’s about time, then, to think of new ways of organizing the enterprises that play such a large role in people’s economic, political, and social lives.

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Maybe now that the proportion of unemployed workers on jobless benefits has fallen to an all-time low (thereby undermining John Boehner’s belief they don’t really want to work and prefer to just sit around, relying on government handouts) but the number of poor people remains at an all-time high, perhaps it’s time to take another look at Jonathan Swift’s “Modest Proposal” to advance the public good, relieve the poor, and give some pleasure to the rich:

The number of souls in this kingdom being usually reckoned one million and a half, of these I calculate there may be about two hundred thousand couple whose wives are breeders; from which number I subtract thirty thousand couple, who are able to maintain their own children, (although I apprehend there cannot be so many, under the present distresses of the kingdom) but this being granted, there will remain an hundred and seventy thousand breeders. I again subtract fifty thousand, for those women who miscarry, or whose children die by accident or disease within the year. There only remain an hundred and twenty thousand children of poor parents annually born. The question therefore is, How this number shall be reared, and provided for? which, as I have already said, under the present situation of affairs, is utterly impossible by all the methods hitherto proposed. For we can neither employ them in handicraft or agriculture; we neither build houses, (I mean in the country) nor cultivate land: they can very seldom pick up a livelihood by stealing till they arrive at six years old; except where they are of towardly parts, although I confess they learn the rudiments much earlier; during which time they can however be properly looked upon only as probationers: As I have been informed by a principal gentleman in the county of Cavan, who protested to me, that he never knew above one or two instances under the age of six, even in a part of the kingdom so renowned for the quickest proficiency in that art.

I am assured by our merchants, that a boy or a girl before twelve years old, is no saleable commodity, and even when they come to this age, they will not yield above three pounds, or three pounds and half a crown at most, on the exchange; which cannot turn to account either to the parents or kingdom, the charge of nutriments and rags having been at least four times that value.

I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection.

I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed, is, at a year old, a most delicious nourishing and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricasie, or a ragout.

Of course, Swift’s proposal would work even better in our own times, since according to conservative thinkers the lives of the poor are even better—which means their children should be even more delectable. In addition, even though the one percent have given up their role as “job creators,” their escalating incomes should be sufficient to purchase infant flesh. And, as Swift explains, because “they have already devoured most of the parents, [they] seem to have the best title to the children.”

Update

These days, of course, as a friend of mine informed me, many of the the rich prefer to eat only free range and organic and to deal directly with the breeder rather than through an unscrupulous supplier.

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