These before-and-afters will make you question everything about how our economy works.

 

When the economy crashed in 2008, it was because of shady financial practices like predatory lending and speculative investing, which is basically gambling, only the entire economy was at stake.

When the recession hit, it literally hit home for millions of people. And Detroit was right in the middle of it.

I spoke with Alex Alsup, who works with a Detroit-based tech company that’s mapping the city’s foreclosed homes to help city officials see the bigger picture and find solutions. He also runs the Tumblr GooBingDetroit, where he uses Google Street View’s time machine to document the transformation of Detroit’s neighborhoods over the last few years.


It’s a pretty cool feature that you can try out for yourself.

“There’s a common sentiment that Detroit’s looked the way it does for decades, but it’s just not true,” Alsup said.

It’s astonishing to see how quickly so many homes went from seemingly delightful to wholly unlivable.


GIF via GooBingDetroit.

When the recession went into full force, home values took a nosedive. But the city expected homeowners to pay property taxes as if they hadn’t.

Not only does the situation defy logic, but it’s like a brass-knuckled face punch to the people the city is supposed to be looking out for. Alsup explains:

“You had houses tens of thousands of them that were worth only $20,000 or so, yet owed $4,000 a year in taxes, for which very few city services were delivered (e.g. police, fire, roads, schools). Who would pay that?”

Indeed.


GIF via GooBingDetroit.

A local group calls what happened to Detroit a “hurricane without water.”

And like a real hurricane, homeowners aren’t the ones to blame. They’re even calling for what is essentially a federal disaster response.

Here are the three strategies they want to see in action and they can work for basically anywhere in the country that’s struggling with a housing crisis.

1. Stop kicking people out of their homes.

They want the city to end foreclosures and evictions from owner-occupied homes. Many people aren’t just losing their homes they’ve lost jobs, pensions, and services because of budget cuts. Putting them on the street is like a kick in the teeth when they’re down.

2. If a home is worth less on the market than what the homeowner owes on their loan, reduce what they owe.

Those are called underwater mortgages. Banks caused this mess, and governments ignored it. It’s only fair that people’s mortgages be adjusted based the current value of their home.

3. Sell repossessed homes at fair prices to people who actually want to live in them.

Selling to banks and investors only encourages what led to the financial crisis in the first place. Wouldn’t it make more sense to sell to people who are going to live in them and have a genuine interest in rebuilding the community?

Housing is a human right. And an economy based on financial markets doesn’t care about human rights. Maybe it’s time for a new economy?

Click play below for a silent cruise down a once lovely residential block in Detroit.

 

Read more: http://www.upworthy.com/these-before-and-afters-will-make-you-question-everything-about-how-our-economy-works?c=tpstream

Using Lego bricks, an economist demonstrates how taxes affect income inequality.

 

One of the most common tools in adjusting the wealth gap is the tax code.

Some more liberal economists argue that the tax code doesn’t put enough of a burden on the country’s top earners. On the other hand, some conservative economists make the argument that if top earners didn’t have to pay so much in taxes, they’d be able to spend their money directly within the economy, which would (in theory) result in a healthier economy with a smaller gap (see trickle-down economics).

But let’s take a look at the current tax system. Does it actually shrink the gap between the rich and the poor?

A little.

In a video for the Brookings Institution, David Wessel uses Lego bricks to illustrate the tax system.

Each stack represents the average income before taxes for each 20% segment of the population.

GIFs via Brookings Institution.

The bottom 20% of Americans (baristas, fast food workers) made $14,248 before taxes.

The next 20% (massage therapists, substance abuse counselors) made around $35,551.

The next (nurses, welders), $63,270.

The next (pharmacists, experienced programmers), $105,666.

And finally, the top 20% (CEOs, surgeons), averaged $306,320.

The average income of the top 1% is a whopping $2 million pear year.

So what does all of this look like after taxes? Kind of the same.

Sure, top earners saw almost 25% of their income go to taxes, but it’s still pretty massively unequal.

So wait, since the average income for the top earners dropped by a higher percentage than others, does that mean income is being redistributed?

Again, kind of.

It’s extremely hard to live on barista wages.

For the tax system to actually have a large impact on the U.S.’s wealth distribution, it would have to get significantly more progressive.

That is, it would need to tax the top earners even higher and the lower earners even less.

So, as much as it’s a political talking point, no, the tax code is not a form of socialism. (I wish!) It is not some massive redistribution of wealth. (Again, I wish!) It’s just the bare minimum the country needs to avoid completely burying the lower and middle economic classes.

So while taxes don’t have a huge effect on income inequality, the good news is that they CAN have an effect.

All we need to do is push for a system that puts more of a burden on the high earners.

Check out the Brookings Institution video for more details on how taxes relate to income inequality:

 

Read more: http://www.upworthy.com/using-lego-bricks-an-economist-demonstrates-how-taxes-affect-income-inequality?c=tpstream