Forgotten men

Tracking the fortunes of the white working-class

IN 1922 Donald Trump’s father, Fred, left high school at 16 to work for a carpenter. He was a “very smart guy” who could “add five columns of numbers in his head”. Construction came naturally to him, too. By 1971 he had amassed a multi-million-dollar fortune. Working-class success stories like Fred’s are rare in America, and becoming rarer. The president wants to see more of them.

At his inauguration he declared that America’s “forgotten men and women” will “be forgotten no longer”. And he has vowed to bring back jobs to states that have been “hurt so badly” by globalisation. By America’s forgotten people, he means above all white working-class men: three-quarters of white men who left school at 18 and voted in November did so for Mr Trump, the highest share of any demographic group.

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Assessing the assessments

Housing is taxed more heavily in New York than London—unless you’re rich

NEW YORK may have a reputation as a brusque, unfriendly place, but to those who buy expensive properties, at least, it can be very welcoming. Take the anonymous owner of the penthouse in Midtown Manhattan’s 90-storey One57 skyscraper. The flat sold for $100m in December, a New York record. The city collected a modest $2.8m in taxes, 2.8% of the price, when the deal went through. And the new owner’s first annual property-tax bill came to $17,268, just 0.02% of its value.

In contrast, if Britain’s main political parties can agree on anything, it is that expensive homes in London should be taxed heavily. In 2009 Vince Cable, a senior Liberal Democrat, first proposed a “mansion tax” on residences worth over £1m ($1.6m). Five years later Ed Balls, then Labour’s shadow chancellor, said he aimed to raise £1.2 billion a year from a similar policy. Not to be outdone, last December George Osborne, the Conservative chancellor, raised stamp duty, a levy on property purchases, for houses worth more than £1.13m. A hefty 12% of the portion of the sales price above £1.5m now goes straight into the government’s coffers.

Property puzzles

Housing markets across the globe both underperform and overwhelm

EXHIBIT A is a powerhouse of the world economy whose GDP has grown by 158% over the past ten years. Exhibit B is a basket-case whose economy has contracted by 18% over the same period and where a quarter of the workforce is unemployed. China may think Greece an unlikely bedfellow, but the weakness of their housing markets ties the two together in our latest roundup of global house prices.

The Economist tracks the health of housing in 26 markets around the world, encompassing a population of over 3 billion. Prices are now rising in 19 of these markets at a median pace of 5.2% a year. But in China, whose decade-long construction boom appears to be coming to an end, and in much of the periphery of the euro area, which is just starting to recover from an especially severe bust, prices are falling.

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The wrong yardstick

Oxfam causes a stir with a stat

THE theme of inequality has loomed large in recent years for delegates of the World Economic Forum’s annual meeting in Davos. This year’s gathering of plutocrats is no different, thanks in part to a much-publicised forecast from Oxfam, a charity, that the world’s wealthiest 1% will soon hold more net wealth than the other 99% put together.

Oxfam’s projection (see left-hand chart) should be treated with caution. The charity uses a straight-line projection of the trend in wealth shares in 2010-14 to forecast that just 50m adults will hold the majority of the world’s household wealth by next year. That is both too simplistic and arbitrary. If Oxfam had based its forecast on the trend in 2000-14, then the crossover point would have been 2035.

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The maths behind the madness

Our interactive guide to government-debt dynamics

ALL EYES are on Spain ahead of the European Council’s two-day meeting in Brussels beginning on October 18th. In just three short years, the country’s horrendous housing bust and subsequent recession have caused government debt to increase from a sustainable 40% of GDP in 2008 to 70% of GDP in 2011. Despite brutal government spending cuts, by the end of this year the IMF forecasts government debt will reach 90% of GDP. The question of whether Spain will seek a bail-out preoccupies markets and policymakers alike.

Our interactive graphic above shows the IMF’s latest forecasts (updated in October 2012) for government gross debt as a percentage of GDP through to 2017. It also allows you to input your own long-term assumptions to project the likely path of debt to 2020.

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Up means down

The Economist’s gauge of gloom

IT HAS been a thoroughly wretched summer in the rich world: weak growth, dismal jobs numbers and plunges in stockmarkets. Now there is yet another cause for concern.

The Economist’s informal R-word index tracks the number of newspaper articles that use the word “recession” in a quarter. The index has the advantage of being timely: data for the articles are available immediately, whereas first estimates of GDP are typically released four weeks after the end of the quarter. If not foolproof, it boasts a decent record: previous incarnations of the index pinpointed the start of American recessions in 1990 and 2007.

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