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For centuries, happiness was exclusively a concern of the humanities; a matter for philosophers, novelists and artists. In the past five decades, however, it has moved into the domain of science and given us a substantial body of research. This wellspring of knowledge now offers us an enticing opportunity: to consider happiness as the leading measure of well-being, supplanting the current favourite, real gross domestic product per capita, or GDP.

The post Why the science of happiness can trump GDP as a guide for policy appeared first on OUPblog.

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What is happiness and how can we promote it? These questions are central to human existence and human flourishing now plays a central role in the assessment of national and global progress. Paul Anand shows why the traditional national income approach is limited as a measure of human wellbeing and demonstrates how the contributors to happiness, wellbeing, and quality of life can be measured and understood across the human life course. The following extract looks at the connection between income and wellbeing.

The post “The economics of happiness” – an extract from Happiness Explained appeared first on OUPblog.

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In central Africa, the World Food Program is shifting from aid in kind to cash and vouchers in the refugee camps that it runs. The hope is to create benefits for the surrounding host-country economies as well as for the refugees, themselves.

In West Gonja, Ghana, the UN Food and Agricultural Organization is investing in cassava processing and marketing, in the hope of stimulating incomes, employment, and welfare in one of the country’s poorest regions.

In a small-scale fishery in the Philippines, the government hopes to introduce new regulations to ensure the fishery’s long-term sustainability. The long-term gains are clear, but in the short run, nobody knows what limiting access will mean for an economy in which most fisher households are poor, and income from fishing is vital to these as well as other poor households with whom they interact.

These are classic situations in which local economy-wide impact evaluation (LEWIE) methods can be incredibly useful. These methods model the way local economies function, and can be used to simulate how these economies might behave under shifting conditions. In cases such as those mentioned above, impacts depend critically on how local economies adjust. For example, if local supply responses around refugee camps or in the cassava-producing communities of West Gonja are low, policies that simulate demand could raise prices and harm people they intend to benefit, with collateral damage on other linked sectors and household groups.

For those designing or evaluating a policy or program, LEWIE methods can highlight impacts not only on those directly affected by the intervention, but also the spillover impacts around them. Policy makers and donors want to know what sorts of complementary interventions might be needed in order to make sure that their programs are successful. Often, answers are needed before programs and policies are put into place. LEWIE methods were designed to provide such answers.  The stakes are high, and as always, time and resources are limited.

We find that LEWIE often has impacts far beyond what we anticipate when we begin an evaluation. Often, it reveals benefits missed by other approaches. Documenting likely impacts beyond those affected directly by an intervention ex-ante can tip the cost-benefit scale in favor of funding the intervention. More and more, governments and donors want to know that a development project not only benefits targeted households and sectors but also creates positive economic spillovers—and they want to know what can be done to enhance those spillovers. Documenting impacts beyond the treated can be critical in order to garner political and institutional support for projects and policies.

Here’s a recent example: Our LEWIE of LEAP, Ghana’s flagship social cash-transfer program, found that each cedi transferred to a poor household increases local income by as many as 2.5 cedi. (A summary of this evaluation can be found at the UN-FAO’s From Protection to Production website.

Ghana’s President John Dramani Mahama, opening the Pan-African Conference on Inequalities last April, stated: “LEAP has had a positive impact on local economic growth. Beneficiaries spend about 80 percent of their income on the local economy. Every GH1 transferred to a beneficiary has the potential of increasing the local economy by GH2.50.” His goal was clear: to demonstrate that social protection and economic growth can be complements. It appears that LEAP accomplishes both. Read the President’s speech.

Understanding LEWIE is basic to designing rigorous and innovative RCTs. Development projects are likely to create spillovers within treated localities as well as with neighboring ones. LEWIE gives us a way of thinking about these spillovers so that RCTs capture them and avoid control-group contamination and other problems that often raise questions about the validity of experimental results.

Most practitioners and policy makers do not construct LEWIE models or carry out RCTs, but they often find themselves involved in designing interventions and coming up with strategies to evaluate their impacts. Insights from LEWIE studies, which have been carried out for a wide variety of interventions in diverse contexts, can inform their work, at a time when more and more donors include “local economy impacts” in their list of evaluation criteria. LEWIE changes the way we think about impacts, direct or indirect, on people who are so vulnerable that we cannot risk being wrong.

Headline image credit: Highway Fruit Stall, by flöschen. CC BY-NC-SA 2.0 via Flickr

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The Great Recession of 2008–09 badly shook the global market, changing the landscape for finance, trade, and economic growth in some important respects and imposing tremendous costs on average citizens throughout the world. The legacies of the crisis—high unemployment levels, massive excess capacities, low investment and high debt levels, increased income and wealth inequality—reduced the standard of living of millions of people. There is an emerging consensus that global economic governance, as well as national policies, needs to be reformed to better reflect the economic interests and welfare of citizens.

Global recovery is sluggish and the outlook uncertain. The economies of the Eurozone, which may have fallen into a “persistent stagnation trap,” and Japan remain highly vulnerable to deflation and another bout of recession; in the advanced economies that are growing, recovery remains uneven and fragile. Growth in emerging and developing economies is slowing, as a result of tighter global financial conditions, slow growth of world trade, and lower commodity prices. Because consumption and business investment have been tepid in many countries, the gradual global recovery has been too weak to create enough jobs. Official worldwide unemployment climbed to more than 200 million people in 2013, including nearly 75 million people aged 15–24.

Professor Roubini, one of the few economists who predicted the 2008 crisis, has argued that the global economy is like a four-engine jetliner that is operating with only one functioning engine, the “Anglosphere.” The plane can remain in the air, but it needs all four engines (the Anglosphere, the Eurozone, Japan, and emerging economies) to take off and stay clear of storms. He predicts serious challenges, including from rising debt and income inequality.

Relatively slow growth in the advanced economies and potential new barriers to trade over the medium term have significant adverse implications for growth and poverty reduction in many developing countries. Emerging economies, including China and India, that thrived in recent decades in part by engaging extensively in the international economy are at risk of finding lower demand for their output and greater volatility in international financial flows and investments. A combination of weaker domestic currencies against the US dollar and falling commodity prices could adversely affect the private sector in emerging economies that have large dollar-denominated liabilities.

Rising inequality is holding back consumption growth. The ratio of wealth to income, as well as the income shares of the top 1% of income earners, has risen sharply in Europe and the United States since 1980, as Professor Piketty has shown.

The ratio of the share of income earned by the top 10% to the share of income earned by the bottom 90% rose in a majority of OECD countries since 2008, a key factor behind the sluggish growth of their household consumption. During the first three years of the current recovery (2009–12), incomes of the bottom 90% of income earners actually fell in the United States: the top 10%, who tend to have much lower propensity to consume than average earners, captured all the income gains. In developing countries for which data were available for 2006–12, the increase in the income or consumption of the bottom 40% exceeded the country average in 58 of 86 countries, but in 18 countries, including some of the poorest economies, the income or consumption of the bottom 40% actually declined, according to a report by the World Bank and IMF.

Some signs of possible relief may lie ahead. In September 2014, leaders at the G20 summit in Brisbane agreed on measures to increase investment infrastructure, spur international trade and improve competition, boost employment, and adopt country-specific macroeconomic policies to encourage inclusive economic growth. If fully implemented, the measures could add 2.1% to global GDP (more than $2 trillion) by 2018 and create millions of jobs, according to IMF and OECD analysis. (These estimates need to be treated with caution, as the measures that underpin them and their potential impact are uncertain, and the nature and strength of the policy commitments vary considerably across individual country growth strategies.)

Another potential sign of hope is the sharp decline in the prices of energy, a reflection of both weaker global demand and increased supply (particularly of shale oil and gas from the United States). The more than $40 a barrel decline in Brent crude prices is likely to raise consumers’ purchasing power in oil-importing countries in the OECD area and elsewhere and spur growth, albeit at considerable cost (and destabilizing effects) for the more populous and poorer oil exporters. It could also be a harbinger of energy price spikes down the road, as the massive investments needed to ensure adequate supplies of energy may not be forthcoming as a result of their unprofitability at low prices.

Major global challenges have wide-ranging long-term implications for the average citizen. By 2030, the world’s population is projected to reach 8.3 billion people, two-thirds of whom will live in urban areas. Massive changes in the patterns of energy and resource (particularly water) use will be needed to accommodate this 1.3 billion person increase—and the elevation of 2–3 billion people to the middle class.

A citizen-centered policy agenda would need to reform national economies to spur growth and job creation, placing greater reliance on national and regional markets and the sustainable use of resources; emphasize social policies and the economic health of the lower and middle classes; invest in human capital and increase access to clean water, sanitation and quality social services, including a stronger foundation during the early years of life and support for aging with dignity and equity; improve labor market flexibility to employ young people productively; and enhance human rights and the freedom of people to move, internally and internationally. These policies would need to be complemented by policies that use collective action to mitigate risks to the global economy.

To prevent another global crisis, there is an urgent need to strengthen global economic governance, including through global trade agreements that favor the bottom half of income distribution; reform of the international monetary system, including the functioning and governance structure of the international financial institutions; encouragement of inclusive finance; and institution of policies to discourage asset bubbles. To achieve sustainable growth, all countries need to remove fossil fuels and other harmful subsidies and begin pricing carbon and other environmental externalities.

Worldwide surveys show that citizens everywhere are becoming more aware and active in seeking changes in the global norms and rules that could make the global system and the global economy fairer and less environmentally harmful. This sense is highest among the young and better-educated, suggesting that over time it will increase, potentially leading to equitable results for all citizens through better national and international policies.

Headline image: World Map – Abstract Acrylic, by Free Grunge Textures. CC-BY-2.0 via Flickr.

The post Where is the global economy headed and what’s in store for its citizens? appeared first on OUPblog.

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Like most published writers, I spend much of my time wondering why I'm not paid more than I am. I'm not sure I signed up for this, I think, as I contemplate my meagre royalty cheques. Of course, it's wonderful to have your books out there, but 'out there' is a bit of a vague designation, encompassing as it does a range from the cramming of multiple copies into every branch of Waterstones to the presence of one lonely copy in an independent bookshop in your home town. And if the surveys are to be believed, more of us find ourselves in the latter position than the former.

Among many blogs and comments on making a living from writing, I found one recently from Emma Darwin which gave me pause for thought. The median income from professional writing - that is, for those who spend the majority of their time writing - is down, according to the ALCS, from £15,450 in 2005 to £11,000 a year in 2013.

That's people who spend the majority of their time writing. Even if they spent only half their working hours writing, that's the equivalent of an annual wage of £22,000, and the likelihood is that they spend less than half not writing, so their annual wage is likely to be nearer £15-20,000. Currently, the UK median wage for full-time workers is £27,000. Advances, as Darwin notes, have steadily fallen over the last ten years, and royalties are squeezed by the sheer number of published and self-published books competing in the marketplace, as well as discounters like Amazon, whose sales result in mere pennies per book for the writer.

So what made it easier to make a living from writing ten or twenty years ago? In trying to fathom out the economics of publishing, I have been haunted by a quote from Andrew Wylie - the jackal of literary agents - who once said that if one of his writers got paid royalties, he hadn't done his job properly. The implication was that he aimed to get such a high advance from the publishers that the book couldn't possibly earn out. Ever.

What makes that an attractive proposition for publishers? It can surely only be the prestige of publishing a well-known and highly respected literary writer. Well, I imagine the commissioning editor saying as he joins his fellow publishing mates for a drink, we've got the latest Martin Amis. And they all turn green with envy while rapidly increasing their offer to Ian McEwan.

Is that how it works? Or worked?

It implies a goal, for publishers, that is not necessarily that of making a profit. Rather it's something to do with having a part in producing the most respected art. (I leave aside whether you think Amis or McEwan represent the highest pinnacles of writing - but undeniably there are literary critics who would claim this to be so...) Certainly, however inflated the big-names' advances got, there was a willingness to support the middle tier of good but less commercially successful writers that argues a focus on quality writing rather than solely on profit.

At some point in the recent past, Amazon (and perhaps Harper-Collins) changed all that. A recent book (One Click: The Rise of Jeff Bezos) on Amazon had some fascinating things to say about Bezos's attitude to the publishing industry. Basically, as the slick young tech-geeks of Amazon started to investigate publishing they realised that the industry was run by editors, who were primarily interested in the writing and didn't pay a great deal of attention to the money. Art trumped commerce.

As a consequence, Amazon started to take them down - and lo and behold, ten or fifteen years later, publishers have had to respond. Now, generally, commerce is starting to trump art - something Ursula le Guin has criticised fiercely in this wonderful recent speech at the National Book Awards.

As le Guin points out, "the profit motive is often in conflict with the aims of art", and when profit (sales and marketing) starts to rule what will and will not be published, then literature suffers. But how to counter this? Can what le Guin calls "responsible book publishing" exist any more in an era where market profit appears to have triumphed over every other measure of worth?

I think it still does, in little niches here and there and in the efforts of editors to circumvent sales and marketing and still get great books published. I think there are still stupendous works of art being produced out there.  But undeniably this is at the expense of authors, who are holding fast to their principles but being paid less and less for what they do.

So what can we do, as writers, in a society that does not value the art of writing?

We can give up writing - and some of us will simply have to, because we can't pay the bills. Or we can try and play the game, and aim our writing closer and closer to what le Guin calls "the production of a market commodity". Or we can carry on being artists, knowing that what we do, interrogating received truths, challenging people's beliefs, encouraging the imagination, has immense value for many people. But not for enough people to pay us a living wage.

There is, however, another kind of perspective on what is happening in publishing.

Some would dispute that the sort of distinction between art and commerce that le Guin posits is valid. Notions of art, in this view, are not universal, they are culture-bound and generally elitist. The upper strata supports 'art' that it enjoys and appreciates (opera) while denigrating commercial art (soap opera), yet commercial art exists precisely because it is the favoured art of the majority. Thus it would be fundamentally wrong and undemocratic to claim elite art as somehow of greater worth or value. From this perspective the actions of sales and marketing teams who refuse to cross-subsidise experimental or literary fiction with the profits from mass-market romance are fundamentally democratic. Money is the arbiter of worth. "Currency", as Lord Cutler Beckett says in the second Pirates of the Caribbean film, "is the currency of the realm."

It's an argument with merits. For the French sociologist Bourdieu, the upper echelons prefer 'high' to 'low' art because of the way class acts as a 'learned' practice, rather than because of any universally valid aesthetics. There is certainly something very elitist about the state subsidising opera when 90% of the population would consider it nothing but caterwauling in costumes. Equally, should the government fund grants for small touring theatre companies whose audiences are in their hundreds?

The debate is not dissimilar to the one we recently had on ABBA about children's reading. Is it right to censure children for reading commercial pap, to see the mere act of reading as not in itself enough, or is this elitist? Should we instead respect the idea that many children prefer undemanding commercial fiction and that it has as great a worth as more carefully crafted children's books? In the money world of Amazon, popular commercial books clearly have inherently greater worth than that those that sell less well, regardless of any judgements of the quality of the writing.

Well, to continue the Pirates of the Caribbean theme, let me nail my colours to the mast.

I believe some writing has more merit than others. Writing as art aims to interrogate the status quo, to provoke questions, to encourage readers to think about the world they live in. It draws on carefully honed craft and on a deep and wide imagination. I believe the more people that are encouraged to read or have access to this kind of writing, the better for society as a whole. I believe commercial considerations do not always favour writing as art, because it is often challenging, unsettling, difficult and it takes time to get right - but it changes readers, and inspires them, and once they 'get' it they will seek out more of that kind of art in all areas. They will be more questioning in their daily lives, more open, more imaginative, and they are more likely to challenge received wisdoms. This is a good thing.

Let me just make it clear though - when I say writing as art, I am not upholding the 'high'/'low' art distinction, which would see le Guin's science fiction/fantasy novels as a poor second to literary fiction. I am not condemning you all to reading Kafka or Joyce! (Excellent as both authors are). What I would consider 'art' in writing is intelligent, thoughtful, honed writing, aiming to be the best it can be, whether that's the best sort of comic book story or the best fantasy or the best romance. Writing that aims to make its readers engage completely in the world it presents and hence inevitably reflect on the world they live in. Malorie Blackman's Noughts and Crosses is a good example; but also less overtly political books that just give free reign to the imagination - Philip Reeve's Mortal Engines, or Diana Wynne Jones's Hexwood. Luckily, in children's fiction there are some great examples that are both commercially successful and works of art - but it's still the case that the rewards for that great writing are not as high as they were.

So, in the end, maybe we writers have to accept that we are not going to be top earners under the conditions of global financial capitalism. But we can contribute to sowing the seeds of imagination, thoughtfulness, empathy and a questioning intelligence in our readers that will hopefully one day contribute to undermining the dominance of that economic system.

As le Guin points out in her speech,  market-driven capitalism seems triumphant and unassailable. But so did the Divine Right of Kings, once.



Cecilia Busby writes humorous fantasy for children of 7 upwards. Her latest book, Dragon Amber, was published in September by Templar.


www.cjbusby.co.uk

@ceciliabusby

"Great fun - made me chortle!" (Diana Wynne Jones on Frogspell)

"A rift-hoping romp with great wit, charm and pace" (Frances Hardinge on Deep Amber)

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Quite abruptly income inequality has returned to the political agenda as a prominent societal issue. At least part of this can be attributed to Piketty’s provoking premise of rising concentration at the top end of the income and wealth distribution in Capital in the Twenty-First Century (2014), providing some academic ground for the ‘We are the 99 percent’ Occupy movement slogan. Yet, this revitalisation of inequality is based on broader concerns than the concentration at the very top alone. There is growing evidence that earnings in the bottom and the middle of the distribution have hardly risen, if at all, during the last 20 years or so. Incomes are becoming more dispersed not only at the top, but also more generally within developed countries.

We should distinguish between increasing concentration at the top and the rise of inequality across the entire population. Even though both developments might take place simultaneously, the causes, consequences, and possible policy responses differ.

The most widely accepted explanation for rising inequality across the entire population is so-called skill-biased technological change. Current technological developments are particularly suited for replacing routine jobs, which disproportionally lie in the middle of the income distribution. In addition, low- and middle-skilled manufacturing jobs are gradually being outsourced to low-wage countries (see for instance Autor et al., 2013). Decreasing influence of trade unions and more decentralised levels of wage coordination are also likely to play a role in creating more dispersed earnings patterns.

Increased globalisation or technological change are not likely to be main drivers of rising top income shares, though the larger size of markets allows for higher rewards at the top. Since the rise of top income shares was especially an Anglo-Saxon phenomenon, and as the majority of the top 1 per cent in these countries comes from the financial sector, executive compensation practices play a role. Marginal top tax cuts implemented in these countries and inherited wealth are potentially important as well.

So should we care about these larger income differences? At the end of the day this remains a normative question. Yet, whether higher levels of inequality have negative effects on the size of our total wealth is a more technical issue, albeit not a less contested one in political economy. Again, we should differentiate between effects of increasing concentration at the top and the broader higher levels of inequality. To start with the latter, higher dispersion could incite people to put forth additional effort, as the rewards will be higher as well. Yet, when inequality of income disequalises opportunities, there will be an economic cost as Krugman also argues. Investment in human capital for instance will be lower as Standard & Poor’s notes for the US.

High top income shares do not lead to suboptimal human capital investment, but will disrupt growth if the rich use their wealth for rent-seeking activities. Stiglitz and Hacker and Pierson in Winner-Take All Politics (2010) argue that this indeed takes place in the US. On the other hand, a concentration of wealth could facilitate large and risky investments with positive externalities.

If large income differences indeed come at the price of lower total economic output, then the solution seems simple: redistribute income from the rich to the poor. Yet, both means-tested transfers and progressive taxes based on economic outcomes such as income will negatively affect economic growth as they lower the incentives to gain additional wealth. It might thus be that ‘the cure is worse than the disease’, as the IMF phrases this dilemma. Nevertheless, there can be benefits of redistribution in addition to lessening any negative effects of inequality on growth. The provision of public insurance could have stimulating effects by allowing individuals to take risks to generate income.

How to leave from here? First of all, examining whether inequality or redistribution affects growth requires data that makes a clean distinction between inequality before and after redistribution across countries over time. There are interesting academic endeavours trying to decompose inequality into a part resulting from differences in effort and a part due to fixed circumstances, such as gender, race, or educational level of parents. This can help our understanding which ‘types’ of inequality negatively affect growth and which might boost it. Moreover, redistribution itself can be achieved through multiple means, some of which, such as higher heritage taxes, are likely to be more pro-growth than others, such as higher income tax rates.

All things considered, whether inequality or redistribution hampers growth is too broad of a question. Inequality at which part of the distribution, due to what economic factors, and how the state intervenes all matter a great deal for total growth.

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By Edward Zelinsky

The American Taxpayer Relief Act of 2012 is widely understood as a victory for President Obama. However, the long-term story is more complicated than this. The Act in large measure confirms in bi-partisan fashion the tax-cutting priorities of George W. Bush.

In the Act, President Obama achieved his proclaimed goal of increasing income taxes on the country’s most affluent taxpayers through higher income tax rates and reduced deductions. The Act creates a new 39.5% income tax bracket for individuals with taxable incomes above $400,000 and for married couples filing jointly with taxable incomes above $450,000. It phases out personal exemptions for individuals with adjusted gross incomes over $250,000 and for married couples with adjusted gross incomes over $300,000. It also reduces itemized deductions for these affluent taxpayers.

For high income taxpayers, the Act increases the maximum capital gains tax rate from 15% to 20%. When combined with the new Medicare tax on investment income, this results in a combined tax of 23.8 % on capital gains for the highest income taxpayers.

It is thus unsurprising that the Act has been heralded as a triumph for Mr. Obama and his vision of a more progressive income tax law.

However, the reality is more complex than this. For the long run, the winner under the Act was Mr. Obama’s predecessor, George W. Bush. The Act, as it gave Mr. Obama some of what he wanted, also made permanent much of what Mr. Bush desired as a matter of tax policy. Indeed, as a result of the Act, federal taxes are in important measure now permanently at the lower levels where President Bush wanted them.

The vast majority of Americans are not affected by the Act’s changes for the highest income taxpayers. For most taxpayers, the Act thus permanently ratifies the lower federal income tax rates championed by Mr. Bush in 2001. Moreover, the Act confirms that corporate dividends will be taxed at lower capital gains rates rather than as ordinary income. True: capital gains rates are now higher for the most affluent of taxpayers as a result of the Act. However, even at these higher rates, taxing dividends as capital gains, rather than as regular income, significantly reduces the tax burden on such dividends.

Consider, moreover, the federal estate tax. When President Bush took office in 2001, the federal estate tax applied to estates over $675,000. That floor was scheduled to increase in stages to $1,000,000. The maximum federal estate tax rate was then 55%.

While President Bush did not succeed in abolishing the federal estate tax, the Act provides that federal estate taxation will only apply to estates over $5,000,000 adjusted for increases in the cost of living. For 2013, an estate must be over $5,250,000 to trigger federal estate taxation. When it applies, the estate tax will be levied at a flat rate of 40%.

In the area of tax policy, President Bush did not achieve all he sought. No president does. If we define success more realistically, the 2012 Act confirms President Bush’s triumph in permanently lowering federal income tax rates for most Americans, reducing the effective tax burden on corporate dividends, and significantly reducing the reach of the federal estate tax.

To some, these tax reductions are welcome restraints on the federal leviathan. To others, the Bush tax reductions, now permanent, regrettably hamper the federal fisc. What cannot be doubted is that the Internal Revenue Code we have today in large measure reflects the tax-cutting priorities of George W. Bush. In adopting the Act, a Democratic President and Senate, along with a Republican House, permanently confirmed much of these tax-reducing priorities.

Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University. He is the author of The Origins of the Ownership Society: How The Defined Contribution Paradigm Changed America. His monthly column appears on the OUPblog.

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luclatulippe:

This short clip from Studio 360 talks about an ongoing series by Scott Timberg at Salon.com called No Sympathy For The Creative Class which explores how artists are making 20–45% less income than before the recession.  (my bold). This echoes what I’ve been seeing and hearing from hundreds of other illustrators since 2008/2009. 

As the country has battled the Great Recession, we’ve been inundated with reports of corporate layoffs and manufacturing jobs vanishing. But there’s another group of American workers that has been particularly hard hit — the creative class.

In an ongoing series for Salon, reporter Scott Timberg writes that the last few years have seen a huge drop-off in jobs in the creative industries. He cites figures from the Bureau of Labor Statistics that show declines from 20 to 30 percent in photography, architecture, and graphic design since the recession began. In other fields, Timberg found, the downturn simply aggravated existing trends. “‘Theater, dance and other performing arts companies’ [are] down 21.9 percent over five years,” he writes. “Musical groups and artists plummeted by 45.3 percent between August 2002 and August of 2011.”

But the public — including the media and politicians — doesn’t have much sympathy, Timberg tells Kurt Andersen. Partly, it’s a problem of perception. Celebrity artists seem to be “doing fine … the Frank Gehrys, the Nicole Kidmans, the Drakes and so on.” Kurt suggests that since creative workplaces tend to be small, layoffs don’t generate the publicity of a large factory relocating to China. (via Recession Wanes, But Artists Still Starving - Studio 360)

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Can you please tell me if a publisher takes care of income tax in royalty payments? Or is paying tax the job of the author or agent?

As an author you are not an employee of the publisher, you are an independent contractor. Therefore you are responsible for filing your own taxes and paying them (quarterly). Typically, all payments are sent through your agent and issued from your agent, less her commission. Therefore, at tax time you should receive a 1099 from your agent that shows your actual earnings. And don't forget to save those receipts for things like your computer, Internet access, printer ink, or the ereader you use. All of those would be considered business expenses.


Jessica

**Quick disclaimer. I'm not even close to a tax attorney so before filing make sure you check with your accountant on what you really can write-off and what you can't.

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Today's Inspiration:

Y’all should head over to Leif Peng’s “Today’s Illustration” blog for some great stories and discussions about how much illustrators in the 1950s used to earn. The three most recent posts cover a lot of this. Pop ‘em into your Instapaper for some bedtime reading. 

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“We are pleased to release the first annual Illustrator Income Survey; this 88-page book details the incomes of 616 illustrators from all over the world. Easy-to-read charts and graphs detail income information by country, age and gender.”

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3x3, THE MAGAZINE OF CONTEMPORARY ILLUSTRATION: Illustrator Income Book Now Available ($30 for a hard copy at Blurb, or $5 for a downloadable PDF)

You may be interested in knowing that one illustrator somewhere in the US banked $980,000 last year. 

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Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University. He is the author of The Origins of the Ownership Society: How The Defined Contribution Paradigm Changed America. In the article below he looks at the Clinton’s federal tax returns.

President and Senator Clinton’s federal tax returns provide much fodder for commentators who are debating a diverse set of questions in light of those returns: Has Mr. Clinton understandably maximized his post-presidential income in our celebrity-crazed culture – or has he exploited the presidency for unseemly financial gain? Does the Clintons’ private foundation reflect a worthy model of charitable giving – or the federal fisc’s subsidization of Senator Clinton’s presidential candidacy? Was Mr. Clinton financial relationship with Yucaipa appropriate for a former president – or for the spouse of a prospective president?

The Clintons’ tax returns raise one further issue which also requires public discussion: The federal subsidy the Clintons have received over the last seven years while earning in excess of $100 million. Mr. Clinton’s aggressive pursuit of post-presidential income is incompatible with the extensive public support he has received from federal taxpayers since leaving office. That public support was designed to preclude the nation’s chief executives from facing financial hardship after their terms of office. It was not intended to subsidize the aggressive pursuit of a post-presidential fortune.

The federal taxpayer’s subsidy of Mr. Clinton has several components. First, as a former president, Mr. Clinton is entitled to receive, for the remainder of his life, the salary of a cabinet secretary. That salary is today $191,000 per annum. In addition, as a former president, Mr. Clinton also receives, at taxpayer expense, “suitable office space appropriately furnished and equipped.” Mr. Clinton’s office in New York City costs federal taxpayers over $700,000 per year to lease and operate. Federal taxpayers also defray the salary and benefits for office staff and some of Mr. Clinton’s travel outlays. The General Services Administration currently budgets for all of these costs a yearly total of $1,162,000 for Mr. Clinton. The equivalent annual figures for former President Bush and former President Carter are $786,000 and $518,000 respectively.

In addition, Mr. Clinton is also entitled, at taxpayer expense, to Secret Service protection for the remainder of his lifetime – even though, as president, Mr. Clinton signed legislation limiting Secret Service protection for his successors to the first ten years after they leave office.

For most Americans, Mr. Clinton’s package would constitute a heady lifestyle. For President and Senator Clinton, however, this post-presidential package merely provided a tax-financed base for the aggressive pursuit of unprecedented financial gain for a former chief executive.

Mr. Clinton has apparently treated as tax-free much of the federal largesse he has received. While the Clintons’ federal tax returns report as taxable income his cabinet-level salary payments, he has apparently elected to exclude from his taxable income the other benefits he receives, namely, his federally-financed office, staff, travel costs and protection.

If the Clintons had treated these items as taxable, they most likely would have been reported on their Forms 1040 on line 21 for “other income”. On the Clintons’ 1040 for 2006, line 21 is blank, suggesting that they did not include in income the office, staff, travel costs or protection provided to them by federal taxpayers.

The tax-free treatment of this federal subsidy of Mr. Clinton makes it particularly valuable for him.

This post-presidential package and the federal subsidy it represents were not intended as a conventional deferred compensation arrangement. They instead reflect the judgment that former presidents should not be required to hustle in the marketplace after they leave office.

The story of an impoverished Ulysses Grant, financially-impelled to write his memoirs as he was dying of cancer, is an iconic image of American history. From this tragedy, the world received one of the great military autobiographies of all time. However, most Americans would prefer that the nation’s former leaders not confront the kind penury which plagued Grant at the end of his life.

The immediate stimulus for the modern post-presidential compensation package was the report that former president Truman lacked the resources to return his mail from the American public.

This post-presidential package was designed to preclude Grant’s and Truman’s successors from experiencing the financial problems they confronted. It was not intended to serve as a federal subsidy for the aggressive pursuit of a post-presidential fortune.

President Clinton is not required to accept all or any of the proffered subsidy from the federal Treasury. He can also make a payment to the federal fisc reimbursing it, in whole or in part, for the costs of this subsidy. Such reimbursement could, for example, be geared to the taxes Mr. Clinton would pay if his post-presidential benefits were treated as taxable income.

The federal taxpayers provide post-presidential benefits so that former chief executives will not replicate the unfortunate financial history of Grant or even the more moderate financial discomfort in which President Truman found himself. We do not subsidize former presidents so that they may pursue lucrative private sector careers. As a federal taxpayer subsidizing Mr. Clinton’s lifestyle, I hope he feels my pain.

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One of the great things about my colleagues at ALA is that they tend to have very interesting backgrounds. Some of them do improv comedy, some are artists, one has a radio show, and one is an honest-to-god-real-live documentary filmmaker. Last month I had the pleasure of seeing the Chicago premiere of Dan Kraus’ second film, Musician, at the Gene Siskel Film Center. I enjoyed it very much, and I’m looking forward to watching Sheriff on DVD and seeing future entries in the Work series.

You may already be enjoying some of Dan’s work, as he’s been creating and editing videos on AL Focus, the online video arm of American Libraries. Inspired by what he has learned about our profession through his work as an AL editor, he is hoping to focus his next entry in the Work series on a librarian. If you meet the following description, or if you know someone who does, please email Dan.

“The first movie was called SHERIFF. The second was MUSICIAN. The fourth will be PROFESSOR, the fifth will be PREACHER, and the sixth should be SOCIAL WORKER.

What’s missing there is the third movie, which I’ve been having trouble with. Because of the demographic spread of the other movies already shot or in-progress, I would really like to profile a Latina/Hispanic woman. And I was thinking (duh), what about LIBRARIAN?

Although I am open to any and all suggestions, I think it would be fascinating to profile someone dealing with multiple cultures, languages, and economic levels. I also think it could be good to find someone who works at a very small library with limited resources, a place where the librarian is forced to be everything at once: Librarian, Teacher, Career Counselor, Babysitter, IT Specialist, Sage, Freedom Fighter, Fundraiser, and so on. For these reasons, I think finding a librarian in a small town, possibly one with a heavy immigrant population, could be quite dramatic.

Also (although this is not a hard-and-fast rule) I’d prefer to avoid the following states that I’m already shooting movies in: North Carolina, Illinois, Iowa, Virginia, and Florida.”

daniel kraus, films, librarians, movies

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