TIME Economics

The Wealthy and Powerful Discover Inequality

President Obama Hosts Summit On Working Families
Goldman Sachs Chairman and CEO Lloyd Blankfein participates in a panel discussion on 'Talent Attraction and Retention' during the White House Summit On Working Families at the Omni Shoreham hotel June 23, 2014 in Washington, DC. Chip Somodevilla—Getty Images

Even the rich are admitting that inequality is bad for business

As the Gilded Age has been peaking, a number of the rich and their foundations have been helping the hungry, the sick, the homeless, the battered, the less educated and veterans in need of opportunity. However, aside from the palliative approach, “the system,” as President Franklin D. Roosevelt liked to call it, until now, has had no serious proactive strategy to address the inequality in incomes and wealth.

The dominant social message has been that for most of the population – the huge middle class – one can work hard and raise oneself up through education, solid contributions, good performance and, ultimately, economic rewards that will be the fruit of these virtues and labor. But there are signs everywhere that this is no longer the case. Wages are flat, returns to education are down, and solid-paying jobs with benefits are the old, not the new, norm. As recent data from the U.S. Department of Commerce shows, employee compensation – wages and benefits – comprise an ever-smaller piece of the economic pie, while wealthy Americans collect significantly more in capital income – interest and dividend payments. As Brookings Institution labor economist Gary Burtless put it, “everything’s coming up roses for people who own a chunk of American capital.” The structure of the economy rewards those who own capital and derive income from that capital. Work hours alone simply do not cut it. Automation and robotization will only accelerate the process.

Who has stepped forward to analyze the problem and start a national conversation about the solution? Many have, but one recent surprising group of trenchant commentators this summer is the wealthy and powerful themselves. In defining the problem of inequality in early June, Goldman Sachs Chairman and CEO Lloyd Blankfein told CBS This Morning that inequality is “destabilizing” and “responsible for the divisions in the country. The divisions could get wider. If you can’t legislate, you can’t deal with problems. If you can’t deal with problems, you can’t drive growth and you can’t drive the success of the country. It’s a very big issue and something that has to be dealt with.” In mid-July, Bill Gross, a billionaire in Southern California and the founder of PIMCO Asset Management, headlined a USA Today op-ed with the claim that “Economic inequality threatens capitalism.” In the piece, Gross goes on to argue that “income equality is good for business” – underscoring this group of observers’ concern that inequality threatens economic growth – and says that solutions to inequality should guide a Republican platform. In the July issue of Politico, billionaire Nick Hanauer wrote a “memo” to his “fellow zillionaires.” As the first nonfamily investor in Amazon.com and founder of an Internet company that sold to Microsoft to for $6.4 billion, Hanauer represents the high technology side of “the system.” His message would be downright scary if it were not written by a billionaire himself. In his piece, “The Pitchforks Are Coming…For Us Plutocrats,” he wrote, “Our country is rapidly becoming less a capitalist society and a more feudal society…. No society can sustain this kind of rising inequality.” In mid-July, Walmart President and CEO Bill Simon commented to Reuters and CNBC that its lowered sales were because the “middle and down are still pretty challenged.” Even philanthropy magazines are filled with worry about the inequality conundrum. Alms for the poor and vulnerable just won’t cut it anymore.

This group has not been shy about discussing possible solutions. Bill Gross called attention to Henry Ford’s “broad-based” solution to expand incomes early in the last century – which echo the generous cash profit-sharing checks on top of wages, which every Ford worker still enjoys today – and suggested large increases in the minimum wage. While not offering specifics, Hanauer suggests our policies must “change dramatically,” and he admits the performance/reward gap of the new economy by saying that “I’m not the smartest guy you’ve ever met, or the hardest-working.” Blankfein’s solution is to “grow the pie” and “distribute it in a proper way.” He lays out this criterion for a solution: “If you grow the pie and too few people enjoy the benefits of it and the fruit, then you have an unstable society.”

The insights from the top do not let up, and their analyses are wide-ranging and sharp. However, “the system” has not been systematic about exploring solutions. If one trolls the websites of the foundations of the rich and powerful, there is a decided lack of willingness to look at systematic economic solutions. Occasional ideas should not be mistaken for careful and deliberate problem-solving on this complex problem.

We will never solve the problem of inequality unless we develop mechanisms for the middle class to share in the ownership and profits – the capital – of the economy. The reason is that the private ownership of capital assets, such as businesses, stocks and bonds, are highly concentrated. Moreover, in 2011 almost 90% of all capital gains and all capital income, such as dividends and interest, went to the top 20% of the population.

One possible avenue is to apply to the middle class at large the approaches that the rich and powerful apply to themselves. Most of their income is from having a share of ownership and profits in businesses. In order to give middle class workers access to these types of capital income, we must dramatically expand the tax incentives for businesses of every size to offer shares of ownership to all of their employees. This ownership can come in the form of grants of restricted stock, stock options, ESOPS (Employee Stock Ownership Plans) and profit sharing, a la Henry Ford. There is a long history of citizen shares in American workplaces since the late 1700s, with many worthy examples among the Fortune 500, high tech firms and the thousands of privately held corporations offering generous ESOPs.

Shares of profits and equity at the workplace will help, but will not be sufficient because much of the population works in the public sector – in the military, government or non-profits. Big ideas are necessary. For soldiers and teachers and others, we need to explore how to apply the lessons of the Alaska Permanent Fund Corporation to the rest of America. The Corporation receives oil and mineral rental, royalty and revenue-sharing payments from corporations allowed to use Alaska’s resources. This capital is invested in a diversified portfolio so that every Alaskan citizen can receive an annual dividend check.

To replicate this arrangement here, assets and leases of the Federal government and states should be made available to private corporations – similar to the Alaskan initiative – in order to pay citizen dividends nationwide. The wind and solar energy fields popping up around the nation should be largely owned by these corporations, as should the wireless spectrum controlled by the Federal Communications Commission and other future technologies receiving tax subsidies funded by citizens at large. States and cities should stop the corporate welfare of huge tax abatements and receive ownership shares to be deposited in citizen share corporations. For example, the DeBlasio Administration should do a top to bottom review of New York City’s tax abatements and monetize them as equity shares for the middle class. These corporations can be licensed by the Treasury and borrow funds to invest in the new technologies and robots of the future. As a sign of hope for the younger generation, we should revisit the idea of Baby Bonds, where an account is set up for each newborn using the same low interest loans that the Treasury and the Federal Reserve recently used to bail out Wall Street and revive its capital ownership. These Baby Bond funds would also be privately managed to be invested in assets that pay regular capital income. Relatives and the rich could make deposits to the accounts, the children could learn how to track them in elementary school, and the dividend income could supplement wages in adult life.

If citizens do not privately own more of the economy, the flat wages of the middle class will never dig us out of inequality. It is time for the rich and powerful to encourage both political parties to set up a national bipartisan commission to explore these and other useful ideas. Charity and philanthropy will never be enough.

Joseph Blasi’s latest book, The Citizen’s Share: Reducing Inequality in the Twenty First Century (written with Richard B. Freeman and Douglas L. Kruse) tells the story of the American history of the shares in business and the economy. Blasi is the J. Robert Beyster Distinguished Professor at Rutgers University.

TIME Culture

No Thanks: 8 Products Women Have Stopped Buying

Less Diet Coke, more scarves

With the financial collapse of 2008 behind us, and an economic recovery underway, buying trends for women have had their own kind of renaissance. Over the past five years, key fads have gone by the wayside (so long, diet foods) while other purchasing trends have taken center stage (hello, student loans!) “All put together, it looks like there’s a bit more empowerment and independence for women,” says Anita Gandhi, Vice President of Strategic Services at Experian Marketing Services, which provided the data.

Turns out, women are now spending more money on experiential events like going out to concerts or watching live performances, which Gandhi attributes to the increase in financial security. “In 2009, people didn’t have a lot of discretionary spending,” she says, “and if they did they were more concerned about [whether] they were spending their money on frivolous things.”

So what day-to-day products are women ditching? Here’s the breakdown:

1) Pantyhose of any kind

Sorry, Kate Middleton, not everyone is on board with your nude pantyhose trend. In the last five years, control-top pantyhose purchases have plummeted by 47%, regular pantyhose purchases have dropped 40%, and knee-high buying is down 59%. Women seem to be ditching hose in favor of tights– those are up 18% since 2009. Because newsflash: black tights look great with anything.

2) Diet foods

We’ve seen some serious pushback against chemical-laden “diet foods” in the last five years: sales of sugar-free foods are down 15%, fat-free foods have dipped 17% (low-fat is down 13%,) and low-cholesterol foods are down 22%. But that doesn’t mean women are any less health-conscious than before. Instead, the definition of “healthy” has evolved, says Gandhi. Now women are gravitating toward natural and organic foods, which have seen a 10% uptick in sales.

3) Diet cola

Remember when women downed diet sodas like water? Not anymore. Diet cola sales have plummeted 21% since 2009, and non-cola diet soda sales have dropped even more, by 26%. We hate to break it to you, Taylor Swift, but those numbers include Diet Coke. “People saw diet soda as a healthy alternative,” says Gandhi. “You could drink soda [thinking] it doesn’t have the calories and sugar.” Yet in the past five years, we’ve seen an influx of information touting the “negative impacts of even diet soda, the chemicals in it,” says Gandhi. And then there’s the bad press brought about by anti-soda campaigns like the one Mayor Michael Bloomberg backed in New York City, which certainly didn’t help soda sales.

4) Cigarettes and anti-smoking products

Both cigarettes and products that help people quit smoking (like patches or gum) have seen sales dip in the last five years: Cigarettes are down 13%, and anti-smoking products have sunk by 18%. Since fewer women smoke than men (only about 16% of American women smoke, compared to more than 20% of men) and since smoking overall has been on the decline since 2005, this shouldn’t come as a huge surprise.

5) Hair products

Apparently the natural look is in, because women are buying less styling cream and fewer home perms and relaxers than they did in 2009. Both styling purchases have gone down by 14% in the last five years. Perhaps this is the resurgence of the boho-chic? Cue the flowing braids.

6) Business casual: blazers, skirts, slacks

Are offices getting more casual in the age of the hoodie-tech-genius? Maybe so, since purchases of business casual attire have dropped in the last five years. Women are buying fewer blazers and suit jackets (sales have plummeted by 32%,) skirts (down 18%) and business slacks (down 24%, but that doesn’t include jeans, which, we hate to inform you, aren’t business casual.)

On the other hand, dresses, scarves, and boots are on the upswing. Dress purchases are up 15%, boots are up 44%, and scarves are up 68% compared to five years ago. Moral of the story: scarves are back!

7) Non-scarf accessories: gloves, purses, watches, sunglasses

Women also seem to be spending less on accessories that aren’t scarves. Glove purchases are down by 25%, watches are down 15%, and fashionable sunglasses (not Rx) are down 26%. Even purses saw a 14% drop. Did we mention that scarves are back?

8) Books:

Despite the runaway success of The Fault in Our Stars, book purchases are still down among women. Paperback, hardcover, and audiobook sales dropped 13% in the last five years.

 

So what are women doing with all the money they’re saving on Diet Coke, pantyhose, cigarettes and suit jackets? Having a blast, apparently. Here are the products that female purchasers have gravitated to in the last five years:

1) Healthy moderation

Along with the 10% rise in natural and organic food purchases, women spent more money on gym memberships (up 26%) but also bought more chocolate (up 8%.)

2) Fun stuff

Concerts and music festival ticket purchases saw an 11% rise since 2009, while live dance performances had a 9% spike and comedy club tickets went up 8%. In other words, women just want to have some fun.

3) Big financial decisions

The majority of home equity loans, new car loans, and U.S. savings bonds are now owned by women (51%, 52% and 54%, respectively) and 59% of personal loans for education are made to women. Meanwhile, only 48% of women say they’re the sole decision-maker when it comes to buying food products, and only 49% say they decide which household goods to buy, down from 51% and 52% in 2009. The result: women are making more of the big financial decisions, but fewer small, household ones.

So if you’re planning on putting on your dress, tights, boots and scarf, munching some chocolate, checking on your home equity loan and heading to a music festival, you’re right on trend.

 

TIME Money

Bank of America Reported Close To Record DOJ Settlement

Paying up for their role in the housing crisis

+ READ ARTICLE

Bank of America may pay $16 billion to $17 billion to the Department of Justice as a settlement for their role in the housing crisis, according to media reports.

That would be the highest payment to the DOJ for mortgage securities fraud to date, exceeding the $13 billion settlement that J.P. Morgan Chase negotiated in November.

Bank of America issued the most mortgage securities of any large bank on Wall Street in the years leading up to the financial crisis. According to the Wall Street Journal, of the $965 billion in mortgage securities that the bank issued between 2004 and 2008, $245 billion in securities have defaulted or become delinquent.

 

MONEY Sports

How the Economics of Playing Football and Basketball Compare

That loud roar you heard this week was NFL training camp getting under way. With less than six weeks until the Green Bay Packers head to Seattle for a game against the Super Bowl Champion Seahawks, fans across the country are following every move of their favorite players and planning for their fantasy football draft.

We decided to take a look at some of the important markers in the life-cycle of a professional athlete. From sporting gear to concussion rates, the gallery below provides a snapshot of what parents have to pay to get their kids on the field—and how long players stay in the big leagues once they actually get there.

To put the numbers in a little bit of context we compared football’s costs to basketball’s.

TIME Education

Obama to Sign Bill Improving Worker Training

Barack Obama, Joe Biden
Vice President Joe Biden greets President Barack Obama as he arrives to speak at Community College of Allegheny County West Hills Center, Wednesday, April 16, 2014, in Oakdale, Pa., about the importance of jobs-driven skills training. Carolyn Kaster—AP

On Tuesday, President Obama and Vice President Biden will announce new executive actions on job training at the signing of the Workforce Innovation and Opportunity Act

Congress and the President have finally found some common ground: Obama will sign the first significant legislative job training reform effort in nearly a decade on Tuesday.

The Workforce Innovation and Opportunity Act passed by Congress on July 9 will streamline the federal workforce training system, trimming 15 programs that don’t work, giving schools the opportunity to cater their services to the needs of their region, and empowering businesses to identify what skills workers need for success and help workers acquire them.

The bipartisan, bicameral bill is a response to a projection that by 2022, 11 million workers will lack the education necessary to succeed in a 21st century workplace including bachelor’s degrees, associate’s degrees, and vocational certificates.

“Workforce training is critically important to help grow the American economy still recovering from recession and bridge the widening skills gap separating thousands of unemployed workers from promising careers in 21st century workplaces,” said Senator Johnny Isakson (R-Ga.) when the bill passed.

The Obama Administration apparently agrees. On Tuesday, when Obama signs the bill into law, he and Vice President Joe Biden will also announce new federal and private sector actions to address the need for an improved job training system, which currently serves about 21 million Americans including veterans, Americans with disabilities, the unemployed, and those who lack skills to climb the career ladder. The Obama administration’s new actions also complement the new Workforce Innovation and Opportunity Act by improving federal training programs not included in the bill.

Earlier in 2014, President Obama tasked Biden with reviewing the federal training system to find ways to improve it. As a result of that review, Biden will issue a report Tuesday that outlines “job-driven” strategies that the Administration says will make the federal training system “more effective, more responsive to employers, and more accountable for results” in Tuesday’s report.

Chief among these strategies is a new “job-driven checklist,” a tool that measures how effective programs are in preparing students for careers that will be incorporated into applications for all 25 federal training grants, at a total of about $1.4 billion, starting Oct. 1. The checklist requires programs to engage with local employers in designing programs that cater to their needs, ramp up opportunities for internships and apprenticeships, and keep better data on employment and earning outcomes.

“From now on, federal agencies will use specific, job-driven criteria to ensure that the $17 billion in federal training funds are used more effectively,” a senior White House official said on a Monday evening press call.

The Obama administration will also expand opportunities for apprenticeships, considered a “proven path to employment and the middle class,” according to a White House statement. After completing these programs, 87% of apprentices gain employment at an average starting salary of $50,000.

In addition to using competitions and grants to bolster job training in the U.S., the administration will also use technology. On Tuesday, Obama and Biden will announce $25 million award from the Department of Labor to develop a web-based “skills academy” for adult learners. And the Department of Education will experiment with education models that award skills based on a person’s tangible skills rather than their performance in a classroom setting.

“Too often job training programs are focused on providing the skills needed for yesterday’s jobs, not the jobs of today and tomorrow,” an administration official said Monday. “And teaching methods are often rooted in outdated, class-based models that haven’t kept pace with technology and new training techniques.”

TIME China

The U.S. Has Good Reason to Be Fed Up With China’s Economic Policy

U.S. Treasury Secretary Jacob Lew listens during a panel discussion at the North American Energy Summit in the Manhattan borough of New York
U.S. Treasury Secretary Jacob Lew listens during a panel discussion at the North American Energy Summit in the Manhattan borough of New York, June 10, 2014. Adam Hunger—Reuters

Talks in Beijing between American and Chinese officials made little progress on key economic issues

No one expected big breakthroughs from the latest round of the annual U.S.-China Strategic and Economic Dialogue, held this week in Beijing. But the results didn’t even meet those lowly expectations. After two days of talks with Chinese officials, U.S. Treasury Secretary Jacob Lew left empty-handed. A much-coveted but long-discussed treaty to boost investment between the two countries only inched forward. Nor did China offer firm commitments to further liberalize its currency — an issue of great importance to Washington. That apparently left Lew searching for something positive to say to his Chinese hosts. “The commitments China has made here in Beijing over the past two days reflect the economic reform goals set forth” previously, Lew said on Thursday, “and we look forward to future progress.”

Washington has been waiting for progress for quite a while. U.S. officials have been repeatedly pressing Beijing to open markets wider to American companies, improve the protection of intellectual property, and make the economy more transparent and market-oriented. But in return, Washington just gets vague pledges and expressions of caution. Meanwhile, the two continue to bicker over trade practices — most notably these days, Washington’s punitive tariffs on Chinese solar panels. The stalemate in economic ties between the U.S. and China is symbolic of the greater strain between the two nations. China has responded angrily to U.S. charges that its military cyberspies on American companies, while officials from both sides have exchanged hostile barbs over China’s territorial disputes with Japan and other neighbors. Relations between the U.S. and China are arguably at their lowest point in years.

That’s bad news. What happens between the world’s two largest economies has ripple effects around the world. Each country, furthermore, needs the other for its own economic growth. U.S. companies require access to Chinese consumers to keep their profits growing, while China badly needs advanced U.S. technology to upgrade its industry. Still, the two sides often look upon each other warily. As China’s clout increases, the U.S. is frustrated that Beijing is not making the Chinese economy more open or playing by the perceived rules of international commerce. Beijing’s policymakers get upset when Washington badgers them on reforms they consider none of America’s business.

But the U.S. has good reason to be annoyed. Many of the issues that matter to Washington have been dragging on interminably with no resolution in sight. Take, for instance, the sticky issue of China’s currency, the yuan. Washington has complained for many years that Beijing manipulates the value of the yuan to promote its own exports, and during this week’s meetings, Lew again pressed his Chinese counterparts to make the process by which it is valued more market-driven. Though I have written on many occasions that the U.S. has exaggerated the impact the yuan’s value has had on the country’s trade deficit with China, Lew has a right to be fed up with the slow pace of change. The Chinese have been blabbering about allowing market forces to determine the yuan’s exchange rate for ages, and the reform is considered an integral part of China’s greater goal of liberalizing capital flows in and out of the country. But the government still wields tremendous influence over the direction of the yuan — a degree of control is has been reluctant to relinquish, promises aside. In this week’s meetings, China offered only more excuses. “If we move too fast, we will be tripped by the demons of details,” Chinese Vice Premier Wang Yang cryptically responded to Lew. Instead, Wang said Beijing was looking for “balance.”

“Balance,” however, has become Beijing-speak for “do nothing.” Currency reform is only one of many changes Chinese policymakers have promised, but never seem to implement. President Xi Jinping and his team have pledged to liberalize markets, fix the financial sector and allow private businessmen a bigger role in the economy. Economists swooned over a bold policy document released in November that committed the leadership to a sweeping reformation of China’s economic system. No one should expect such major changes to happen overnight, of course. But the fact is we’re still waiting for the process to really get started. Meanwhile, the Chinese economy is facing a host of unresolved problems that threaten its future. Growth has slowed, debt has mounted to dizzying levels, the financial sector is fundamentally flawed, and a property bubble appears to be bursting.

What Lew wants to see from China is a true effort to overhaul an economic model that is badly broken. That would be good for China, the U.S., and everybody else.

TIME India

India’s Modi (Barely) Passes His First Big Test on Economic Reform

Indian PM Modi walks in front of a picture of former Indian PM Vajpayee after a news conference in New Delhi
Indian Prime Minister Narendra Modi walks in front of a picture of former Indian Prime Minister Atal Bihari Vajpayee after a news conference in New Delhi on July 9, 2014. Anindito Mukherjee—Reuters

The new Prime Minister indicated change will come in steps, not all at once

Narendra Modi and his Bharatiya Janata Party (BJP) rode into office in May on a tidal wave of support created by hopes he would revive India’s stumbling economy. India, once one of the world’s best-performing emerging economies, has witnessed growth shrink under 5% — too low to rescue the hundreds of millions of countrymen still trapped in desperate poverty. Business leaders have had high expectations that Modi would push ahead with the long-stalled but painful reforms necessary to restart the country’s economic miracle.

In his first major policy pronouncement, however, Modi indicated change would come — but slowly. On Thursday, Modi’s Finance Minister, Arun Jaitley, presented the new government’s budget in Parliament in New Delhi. Indian budgets are considered a bellwether for the direction of economic policy. What emerged was a very gradualist approach, with some encouraging tidbits, but no signs Modi is in a big rush to remake the Indian economy. In his speech, Jaitley said the budget was “only the beginning of a journey” to bring growth back up to 7% to 8% over the next three to four years. “It would not be wise to expect everything that can be done or must be done to be in the first budget,” he said.

Investors got some items on their wish list. The government pledged to open the defense and insurance industries wider to foreign investors, bring down the budget deficit more rapidly, press ahead with much needed tax reform, improve the country’s inadequate infrastructure and support manufacturing to create more jobs. Jaitley also promised an overhaul of costly food and fuel subsidies, which are a huge burden on the strained budget, to make them “more targeted” on the most needy.

Yet for a government that has pledged to control spending and unleash the country’s growth potential, the budget was still puffed up with plenty of populist pork. The budget reiterated Modi’s campaign pledge to provide toilets for all. Jaitley also decided to maintain the previous administration’s expensive and controversial program to guarantee jobs for rural workers, though he suggested its oversight would be strengthened to ensure funds got utilized more wisely. On other issues, Jaitley seemed to fudge a bit. Widely criticized efforts by the previous government to impose retrospective taxes scared foreign investors, and though Jaitley said the Modi administration would limit any such taxes and “provide a stable and predictable taxation regime that would be investor-friendly,” he didn’t emphatically close the door on them, either.

The most disappointing aspect of the Modi budget is that it was no bold statement that a new era of economic policy was coming. Details on many of Jaitley’s proposals were sparse. For example, he did offer many specifics on such key issues as reducing subsidies. Other important reforms weren’t addressed, such as loosening up the country’s restrictive labor laws, which hurt job creation. “Nothing that was announced today marks this government out as being significantly different from the last,” complained Mark Williams, chief Asia economist at research firm Capital Economics. “If market enthusiasm for Mr. Modi’s government is to be sustained, that will have to change.”

Ultimately, though, Modi’s incremental methods may be simply good politics. Even though Modi scored a landslide victory in the last election, many of the reforms most critical to the economy are certain to face stiff opposition. If he charges ahead too quickly, his entire reform effort could get derailed. Modi has already been forced to reverse course on one of his initial reforms. In late June, Modi partially rolled back a hike in train fares aimed at putting the strapped railway system on a stronger financial footing after protests erupted and the BJP’s political allies objected.

At the same time, Modi has to play a delicate political game. If he moves too slowly on reform, growth won’t improve, and his support could suffer. Fixing India’s economy will take a huge amount of political will. We’re still waiting to see if Modi has it.

TIME Hong Kong

Here’s What Keeps Asia’s Richest Man Awake at Night

Li Ka-shing Inequality
Li Ka-shing stands for a photo during the Carnegie Medal of Philanthropy award ceremony in New York on Thursday, October 20, 2011. Bloomberg/Getty Images

Hong Kong businessman Li Ka-shing disclosed to graduating students at China’s Shantou University the chief reason for his insomnia: wealth inequality.

“So why am I sleepless in Hong Kong?” Li, the world’s 15th richest man, posed in his commencement address. “I fear that widening inequality in wealth and opportunities, if left unaddressed could fast become ‘the new normal.'”

Indeed, in Hong Kong (and worldwide) the rich have become richer, the poor only poorer. The city-state has the highest growth of millionaires, yet nearly one-fifth of its population lives in poverty. Li’s net worth, now $34.5 billion, has increased nearly 50% since 2010, while the average household income of Hong Kong’s poorest 10% in 2011 fell by 16% since 2001.

Aside from Li’s sleeplessness, wealth inequality is also fueling Hong Kong’s annual Occupy Central movement, scheduled for July, in which demonstrators are blaming Chinese politicians — who select Hong Kong’s chief executive — for Hong Kong’s skewed wealth distribution.

One measurement of income equality is called the Gini coefficient, which measures the dispersion of income across a nation’s residents: the higher, the more unequal. Hong Kong has the world’s 12th highest Gini index; in 2011, the Hong Kong government logged the highest Gini index since it began recording the score in 1971:

Hong Kong Gini Coefficient 1971-2011
Half-Yearly Economic Report 2012, Government of the Hong Kong Special Administrative Region

While Li’s commencement speech is laced with ostensible irony — he is, after all, Asia’s richest man — his urging of students to promote economic equality is derived from his own philanthropy. He’s known as “Superman” to his fans, and not just for his staggering wealth: Li has made nearly $2 billion in charitable donations, the majority towards education reform.

Still, Li has said that while he supports democratic reform, he does not support Occupy Central, which he estimates will cost at least HKD 1.6 billion if the protest disrupts business for just one day. Instead, Li proposed in his address that the Hong Kong government must introduce “dynamic and flexible redistribution policies that can strike a fine balance between the need to promote equity and economic objectives.”

Li is chairman of Hong Kong-based investment holding company Hutchison Whampoa.

TIME Employment

10 States With the Fastest Growing Economies

Oil Boom Shifts The Landscape Of Rural North Dakota
Andrew Burton—Getty Images

247-LogoVersions-114x57
This post is in partnership with 24/7Wall Street. The article below was originally published on 247wallst.com.

The United States economy grew 1.9% in 2013, down from the 2.8% growth rate in 2012, as growth in the world’s largest economy remained inconsistent. The largest contributors to the national economy were nondurable goods manufacturing, real estate and leasing, as well as agriculture and related industries.

While the U.S. economy grew less than 2%, the output of a number of states grew well in excess of 3% last year. North Dakota continued its torrid growth pace, leading the nation with a state GDP growth rate of nearly 10%. This year, Wyoming and West Virginia were the second- and third-fastest growing states, respectively, rebounding from slow growth in 2012. Based on data released this week by the Bureau of Economic Analysis (BEA), these are the 10 states with the highest real GDP growth rates for 2013.

There were considerable differences in what drove national growth and what drove output in the fastest growing states, according to Cliff Woodruff, an economist at the BEA. “For the nation, it was nondurable goods manufacturing and agriculture, forestry, fishing and hunting [that] were the top two contributors to national growth,” Woodruff said.

On the other hand, in “five of the top states, [growth] was primarily a result of mining,” which includes oil, natural gas and coal production. Among these was Wyoming, the nation’s second-fastest growing state, where mining accounted for 6.1 percentage points of the state’s 7.6% growth rate.

MORE: The States With the Strongest and Weakest Unions

All of the top four states for GDP growth were among the top four nationwide in terms of the mining sector’s share of growth. Additionally, three other top states were among the top 10 for GDP growth contributions from the mining sector.

Outside of those states that benefited from mining activity, a few of the nation’s fastest growing states did follow the national trend, deriving a significant share of their growth from agriculture. Among these were Idaho, Nebraska, North Dakota and South Dakota, where agriculture and related industries added at least one percentage point to growth. These states were all among the top five nationwide for the contribution of agriculture to the states’ growth rate.

Outside the mining and agriculture sectors, however, these states often shared little in common. For example, nondurable goods manufacturing contributed 1.2 percentage points to Texas’ 3.7% GDP growth, a larger contribution than in most states. However, the sector contributed far less in most other fast growing states.

Similarly, Colorado, Oklahoma, North Dakota, and Texas were all among the top states for construction’s relative contribution to output growth. However, construction output was a large drag on growth in both Wyoming and West Virginia, lowering GDP growth by 0.2 and 0.3 percentage points, respectively.

One common trait among a number of the fastest growing states, however, was a resilient government sector. According to Woodruff, “government was the largest detractor — if you will — from growth in most states.” While the government sector directly pulled down GDP nationwide, and served as a drag on output in all but 11 states, this was not the case in the fastest growing states. In fact, six of the top 10 growing states did not experience a drop in output from the government sector.

MORE: 10 Companies Paying Americans the Least

Strong GDP growth was also reflected in state job markets. The unemployment rate in all of the 10 fastest growing states was below the national rate of 7.4% in 2013. Each of the four states with the lowest annual average unemployment rates was among the 10 fastest growing states in 2013. This includes North Dakota, the nation’s fastest growing state, where the unemployment rate was just 2.9% in 2013. South Dakota and Nebraska, also among the fastest growing states, had unemployment rates below 4% last year.

Since having more people means more spending on goods and services, population growth often coincides with GDP growth. In fact, while the U.S. population rose just 0.7% between July 2012 and July 2013, the population growth in most of the states with the fastest growing economies was well above that. Five of the six states with the fastest population growth rates were also among the top 10 for GDP growth.

Based on figures published by the BEA, 24/7 Wall St. reviewed the 10 states with the fastest growing economies. The BEA’s state growth figures and the industries’ contributions to growth are measured by real gross domestic product, which accounts for the effects of inflation on growth. GDP figures published by the BEA for 2013 are preliminary and subject to annual revision. Real GDP figures for past years have already been revised. Population figures are from the U.S. Census Bureau and reflect estimated growth between the July 1, 2012, and July 1, 2013. We also used median household income from the U.S. Census Bureau. Last year’s unemployment rates are annual averages and from the Bureau of Labor Statistics. Home price data are from the Federal Housing Finance Agency. Information from the Energy Information Administration was also utilized.

These are the 10 states with the fastest growing economies.

1. North Dakota

> GDP growth: 9.7%
> 2013 GDP: $56.3 billion (5th lowest)
> 1-yr. population change: 3.1% (the highest)
> 2013 unemployment: 2.9% (the lowest)

North Dakota has been the fastest growing state in the nation every year since 2010. In fact, the state’s GDP grew by 9.7% last year after it already grew by a stratospheric 20% in 2012 alone. The state’s oil boom, driven by hydraulic fracturing — or fracking — in the Bakken shale formation, has been responsible for much of this growth. Last year, mining directly contributed 3.6 percentage points to the state’s growth rate. Other growing industries, such as real estate and construction, have also contributed to the state’s growth. State residents have benefited from this growth. The state’s unemployment rate as of last year was just 2.9%, the lowest in the nation, while home prices were up nearly 28% over the past five years, also better than any other state.

2. Wyoming
> GDP growth: 7.6%
> 2013 GDP: $45.4 billion (2nd lowest)
> 1-yr. population change: 1.0% (11th highest)
> 2013 unemployment: 4.6% (6th lowest)

Wyoming’s economy grew by 7.6% in 2013, just one year after its economy experienced the worst contraction in the nation. The fact that growth rates in Wyoming may be somewhat volatile should not come as a surprise. The state was the nation’s least populous last year, with slightly less than 583,000 residents.. Additionally, the state is highly dependent on the fortunes of the mining sector. Last year, 37% of Wyoming’s total output came from mining, the most of any state. The state’s budget is also highly dependent on taxes from resource extraction. Mining alone accounted for 6.2 percentage points of the state’s 7.6% growth in 2013. Wyoming leads the U.S. in coal production, and all eight of the nation’s largest mines are in Wyoming’s Powder River Basin, according to the EIA. Wyoming is also among the largest states for natural gas production.

3. West Virginia
> GDP growth: 5.1%
> 2013 GDP: $74.0 billion (12th lowest)
> 1-yr. population change: -0.1% (the lowest)
> 2013 unemployment: 6.5% (18th lowest)

After shrinking by 1.4% in 2012, West Virginia’s economy grew by 5.1% last year, more than all but two other states. While West Virginia is well-known as one of the nation’s largest coal miners, the state is also a burgeoning source of natural gas. According to a report by the Bureau of Business & Economic Research at West Virginia University, the state’s coal production is expected to decline in the coming years, while natural gas production has risen dramatically and is expected to continue to grow. However, outside the mining sector, the state had little in the way of growth. Last year’s 5.1% rise in GDP was driven largely by the mining sector, which added 5.5 percentage points to GDP growth, meaning, on balance, the state actually contracted outside the sector. By one measure, West Virginia is among the poorest states in the nation. The median household income in the state was just $40,196 in 2012, lower than in all but two other states.

To see the rest of the list, click here.

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