As if ordered up directly by the Obama White House and Occupy Wall Street, the Congressional Budget Office has produced a timely report looking at income inequality. The CBO found that between between 1979 and 2007, average real after-tax household income grew by 275 percent for the top 1 percent of households, 65 percent for the next 19 percent, just under 40 percent for the next 60 percent, and 18 percent for the bottom 20 percent.
Blogger Derek Thompson of TheAtlantic.com, always worth reading, draws this conclusion from the CBO study:
This is complicated stuff, and I’d be lying to you if I said I understood all of it. But let’s all agree about square one. Income inequality is not a myth, so what do we think we should do about it? If we can’t agree on the question, we’ll never find an answer.
Like Obama and OWS, Thompson is worried. I am far less so. Here’s why:
1. Liberals frequently claim the average American family has been losing ground for the past three decades—or at least since Ronald Reagan took the presidential oath in January 1981. (As if the 1970s with its sky-high Misery Index was a great economic time.) The CBO refutes this. Its data show real median after-tax household income (half of all households have income below the median, and half have income above it) grew by 35 percent over the past three decades.
Indeed, look at this chart from Jim Sullivan of Notre Dame and and Bruce Meyer of the University of Chicago (via recent presentation at AEI):
2. The CBO fails to factor in that American households in the top income quintile have, on average, almost five times more family members working than the lowest quintile. (Analysis by AEI blogger Mark Perry.) Those folks are also far more likely, as Perry notes, than lower-income households to be well-educated, married, and working full-time in their prime earning years. Perry also notes that “individuals are not stuck forever in a single income quintile but instead move up and down the income quintiles over their lifetimes.” (Indeed, a Treasury study on income mobility found that starting in 1996, half of taxpayers who started in the bottom 20 percent had moved to a higher income group by 2005.)
3. Price indexes for the poor rise more slowly than for the rich, causing most empirical measures of inequality to overstate the growth of real income of the rich vs. the poor.
4. Apples-and-oranges kinds of issues—such a differences in household size and inflation indexes—has led highly respected Northwestern University professor Robert Gordon to conclude that the “rise in American inequality has been exaggerated both in magnitude and timing.”
5. The Minneapolis Federal Reserve concluded—after taking into account household size and differing price indexes—median household income for most household types increased by 44 percent to 62 percent from 1976 to 2006. In addition, its research shows that median hourly wages (including fringe benefits) rose by 28 percent from 1975 to 2005.
6. As technological change accelerates and becomes more pervasive, the market will reward workers with more education and skills. As CBO notes: “Numerous researchers have concluded that, on balance, the technological changes of the past several decades—and perhaps the entire past century—increased employers’ demand for workers with higher skills and more education. That increase, along with a smaller increase in the supply of workers with higher skills and more education, generated substantial gains in the relative wages of more-educated worker. In the past decades, inequality has been going up everywhere.” It is a global phenomenon.
7. And why did the top 1 percent do particularly well? One potential explanation from CBO: ”The compensation of ‘superstars’ (such as actors, athletes, and musicians) may be especially sensitive to technological changes. Unique characteristics of that labor market mean that technical innovations, such as cheap mass media, have made it possible for entertainers to reach much wider audiences. That increased exposure, in turn, has led to a manyfold increase in income for such people.” The CBO also mentioned ”changes in the governance and structure of executive compensation, increases in firms’ size and complexity, and the increasing scale of financial-sector activities” as possibilities.
My bottom line: a) income inequality has increased somewhat in recent decades, but not exploded; b) that increase is natural given technology and globalization; c) incomes could have risen faster with a better educated workforce (that also didn’t have to compete with an influx of workers from Asia), but did O.K.; d) we need to boost education to keep up with advancing technology and productivity; e) the past decade was one of slow growth followed by a nasty recession. No argument there. Looking forward, America will need a pro-growth tax system, smarter regulation and far better human capital (helped by higher teacher pay in exchange for eliminating tenure, more skilled immigration, etc.). That way, incomes won’t just be more equal, they’ll be growing.
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I’m all for people who honestly earn their money and pair their taxes to keep it.
It’s people like Koch, Trafigura, and Cargill and their buying of politicians and performing unregulated commodity trading.
“If you eat or drive… you’ve put cash into the deep pockets of the Koch brothers.
Their most important investment is not in a refinery or a fleet of ships. It’s Uncle Sam. Koch Industries has made more than $6 million in political donations since 1989, with more than $2.24 million in the last election cycle….
Despite the fact the top five commodity trading firms control over half the sector’s revenue ($629 billion) and never mind the idea they take dangerously large speculative stakes and hoard commodities to sway the market in their favor… Washington takes a hands-off approach.
Under the new, “tighter” rules for Wall Street, commodity trading firms have gone virtually untouched. And as long as they keep funneling money inside the Beltway and keep their business out of the public eye, it will stay that way. ” – Andrew Snyder, Editorial Director, Inside Investing Daily
Finally, the middle class is shrinking as companies go after cheaper, unregulated labor in other parts of the world. They are all highly educated individuals with college degrees just like we are. Look at HP, they laid off 500 people in San Diego and replaced then with staff in Singapore and Israel for less than half the cost. Question, when the 1% go after better profits by controlling their costs, who’s to blame. The only question is, in the future, who will be able to afford their products.
This is EXACTLY the reason we need to get $$$$$$$$$$$$$$$ out of politics!
Seven reasons refuted:
1. liberals do not claim that there has been no growth in middle class incomes. Only that the disparity between the growth of middle class incomes and upper class incomes has widened. Logical error: straw man.
2. Upper class households have “five times more family members working” than middle class. Hmmm, that would mean that one of the following must be true: a) either three children and both parents are working in most upper class households, a laughable premise, or b) a substantial segment of the middle class have no working household members at all. Equally implausible, since it would be impossible to stay in the middle class without working. Logical error: moving the goal posts.
3. “Price indexes for the poor rise more slowly than for the rich”. A fancy way of saying that essential goods and services have a different inflation rate than yachts and Picasso paintings. If there is any apples-to-oranging going on in this article, it’s here. Logical error: red herring.
4. “has led highly respected Northwestern University professor Robert Gordon to conclude that the “rise in American inequality has been exaggerated both in magnitude and timing.” At best, an interpretive reach, as evidenced by calling for the cavalry in the form of someone “highly respected”. Logical error: Argumentum ad verecundiam, AKA appeal to authority.
5. Return to verse one, same song. Again, the claim that liberals believe that there has been no growth in middle class household income is simply a straw man.
6. This one is curious, because after five points arguing that growing income inequality is some kind of liberal fata morgana, this one suddenly concedes that growing income inequality is real, but suggests that the inequality should be attributed to an inevitable (and therefor blameless) wave of progress. Logical error: ignoratio elenchi, AKA the irrelevance fallacy.
6b) A bonus bogus argument. “In the past decades, inequality has been going up everywhere.” It is a global phenomenon.” Try this one the next time you get stopped for speeding: “but officer, everyone else was speeding too.” Logical error: Two wrongs make a right.
7) Again, after conceding the basic conclusions of the CBO, the author attempts to justify it: “ ”The compensation of ‘superstars’ (such as actors, athletes, and musicians) may be especially sensitive to technological changes.” Here the suggestion is that the growing inequality is due technology, and overpaid artists and performers, anything except the most obvious culprits: institutional capture, deregulation, globalization, privatization, and criminal/short-sighted practices in high-finance. Logical error: several fit the bill, notably the fallacy of composition.
The idea that those camped out on Wall Street are there because actors are overpaid is absurd. There’s nothing in this piece that’s going to make someone who’s underwater on their mortgage feel better. I doubt many who’ve been looking for a job for the last year and a half are going to console their families with the good news that the 10% unemployment figure is just the result of technology, and if the kids would only get some work they too could join the 1%.
But if this kind of thing is your idea of intellectual cover, have at it.
Did you even read the data at the link to #2? Your “refutation” is entirely incorrect. Logical error: Can’t read.
That [Census Bureau] data shows 2.04 workers per household on average in the top quintile. The bottom quintile has an average of 0.48 workers per household. So the actual ratio is 4.33:1 – a generous rounding up, yes – but not “laughable” and not your mis-quote of upper class vs. middle class.
And yes, a full 68% of lowest quintile households did not work. Middle class (2nd, 3rd, and 4th quintiles) households ranged from 0.93 workers to 1.73 workers, about what you would expect when dealing with averages.
7) I feel like you are attempting a bit of “fallacy of composition” yourself.
Criminal practices and regulatory capture are things we would all like to minimize/eliminate and are specifically against the law. What is illegal or fraudulent about globalization and privatization that we should hope to quash it for its own sake , i.e. not for the sake of reducing incomes because having a high income is bad, but because one organization operating across many countries or hiring private companies to do previously public activities is inherently bad?
Since income of the wealthy is more likely to be reinvested into the means of production, I’d be more interested to see the change in consumption inequality.
At any rate, I think income redistribution is largely futile. What would happen if you took a trillion dollars from the top 1% every year and gave it to the bottom 99%? That’s a few hundred dollars each, which they are going to turn right around and give back to the 1% in exchange for consumer goods, at somewhat higher prices due to increased demand without a commensurate increase in supply. With government bailouts being notable exceptions, the 1% are in the 1% from people voluntarily giving them money.
What about the role of the oligopoly? Few companies controlling our various industries means less competition and less jobs. Charts are all fine and dandy, but they don’t explain the totality of our financial situation.
The report is VAGUE. Is the top 1% of households in 1979 THE SAME HOUSEHOLDS in 2010? We are comparing apples to oranges.
A far more enlightening analysis would include WHERE or WHAT QUINTILE the top 1% from 1979 are in 2007 and where the top 1% in 2007 were in 1979.
Even a note that shows how many (as a %) names were in the top 1 % in both years.
Jock,
I can’t find anything more recent but here’s a couple of links that talk to your question:
from the Department of Treasury and from the Federal Reserve Bank of St Louis. The bottom line is that over 10 years more than half of the lowest quintile moved to a higher level. In addition over 30% of the highest quintile moved to a lower level. It’s apparent that MOST of the poor don’t get poorer and a sizable number of the rich don’t get richer.
Income equality is immoral. Some people work harder, smarter, and take more risks to get ahead. They deserve every penny they earn. Some people don’t work, aren’t smart, and take no risks. They don’t deserve every penny other people earn. To even out the income equality between the two groups you have to steal the wealth of the workers to give to the slackers. That’s immoral.
The rules from climbing out of poverty in America are to graduate from high school, take any job that pays, and get married before you have children. If you do these things, you will ascend into middle class. If you violate all those rules and take drugs to boot, you will stay in the lowest quintile where you belong.
The ultimate cause of poverty in America is inferior moral values. You have to be a lazy idiot to stay poor in a country where every opportunity lies open for you. Redistributing the wealth is a way of rewarding the worst values and punishing the best. That is another way it is immoral.
“The ultimate cause of poverty in America is inferior moral values. You have to be a lazy idiot to stay poor in a country where every opportunity lies open for you. Redistributing the wealth is a way of rewarding the worst values and punishing the best. That is another way it is immoral.”
Your little theory does not account for the “lazy idiot” million and billionaires, a significant percentage of the 1% who have never done anything of note aside from being born with a silver trust fund in their mouth. The revenues of which are largely untaxed because they are “investment income.” I have no moral qualms about taxing this class at about the 95% rate and then see how far their “morals” get them when they try to actually earn a living..
So if I work hard all my life, produce significant improvements for all of society, and become rich as a result, it’s OK for me to spend that money on myself, but somehow wrong when I leave it to my children? Is it equally evil if instead of leaving it to my children I leave it to other children who have done no more to earn it than mine have? Sorry, but those “lazy idiot” children have every bit as much a right to that wealth as does the person who originally created it and decided to give it to them.
Why?
“Your little theory does not account for the “lazy idiot” million and billionaires, a significant percentage of the 1% who have never done anything of note aside from being born with a silver trust fund in their mouth.”
In every sizeable town in this country there are historic homes, usually named after the well-to-do family that originally built the home. Go visit a few of them and listen to the history of those families. The same thing happens over and over again. A patriarch in the family emerges, works his butt off, amasses a fortune, passes that wealth onto his children. But inevitably something happens either with his son or his grandson and the fortune is pissed away because they are lazy or corrupt or whatever. The thing is downward mobility happens. Lazy millionaires wont be millionaires very long, this is an historical truth played out in every city in this country.
There are envious and spiteful people in this world who wouldn’t even blink an eye to burn it all down because they can’t have it all. There is always going to be that on kid in the sand box that kicks everyone else’s sand castle because they can’t figure out how to make their own.
As long as human societies are allowed to make progress, inequality must increase because mathematically the difference between its most valuable members and its least valuable members must increase.
No matter how primitive or advanced a society, its least valuable members make a contribution of zero. As children, we all start in that category, but as we grow, most of us (but not all) learn how to produce more value. What changes as a society advances is the amount of contribution from its more valuable members. As society advances, the difference between that increasing contribution from its more valuable members and the zero contribution of the least valuable members must increase since the base stays the same as the rest rises.
It also follows mathematically that, as society advances, the most valuable member of society, that is, the top must rise faster than the average. The average, after all, must factor in the unchanging base of the least productive.
If a society has less of a gap between the richest (most valuable) and poorest (least valuable) it can only mean that that society is declining. The gap can narrow only if the value of its most productive members is declining, that is, getting closer to zero.
As Jame’s article points out, treating the various quintiles as a stable sets of people is a fiction. If we acquire more valuable skills and assets, we move up through these groups as our value production increases. Most of us move up in our most productive years and then, getting older and producing less value, we start moving down.
The top 1% of income earners in any give year is the biggest fiction of all because it is the most transient group of all. When a small business owner sells the business he or she spent a lifetime building, he or she hits this 1% group from this one-time event. I have been there myself. Sports and movie stars can stay in this category for several years, but only the very rarest stay that category for a decade of more. Even CEOs of large corporations have shorter and shorter lifespans, averaging just 6 years. And as their pay goes up, their time earning that pay goes down.
If we want to live in a society that is advancing, we must embrace and increasing gap between the most valuable members of society and the least.
Up up and away goes America’s Gini Index toward that of Mexico.
MT said: The richest 1% control the largest percent of wealth in recent history. Had they been less felonius towards the rest of society, they might not be on the hot-seat.
Two problems:
1) “Income inequality”, which I’ve seen scads of my Progressive-leaning friends and their Left-wing sources pushing as proof of Wickedness In America, is not the same as “control” of “wealth”.
(Indeed, it’s not remotely clear why I should care about either in and of itself, given that all the data agrees that both the poor and the merely-not-rich are better off over the time series, consistently, for pretty much living memory.)
2) Who was felonious in exactly what way?
I can’t read your mind, but I’ve seen a lot of people pushing a line on this one, and that line, which I will – arguendo – assume to be the one you didn’t actually bother to specify, devolves into “that 1% are all/almost all bankers and finance types” and “they did something illegal because look at those CDOs and how their companies failed!”.
Problem is, both those assumptions are completely false. Finance is perhaps a quarter of the “1%” by income. (By “wealth”, ref. #1 above, it’ll be even lower, since family trusts and the like which make up most of the “wealth control”, aren’t really related to active finance income.)
And there was, it turns out, very, very little actual wrongdoing, let alone felonious wrongdoing, in the whole debacle. Which is why a Government desperate for scapegoats hasn’t indicted anyone.
Turns out that being horribly, disastrously wrong about the worth of a security instrument is not a crime.
That they were far more “wrong” than “criminal” is also shown by how many of them destroyed their own companies and their personal investments by investing in those very securities. By all available evidence, especially that of their own actions in investing their own companies and personal fortunes directly and indirectly in those securities, they really – and very plausibly – thought they were sound, at least before the cascade of failure started (and by that time it was far too late to divest or fix anything).
The implicit “they were crooks” narrative doesn’t hold up under its own assumptions, let alone the available, contradicting facts.
The only actual deception I’ve even heard convincingly alleged in the whole mess was at the ratings agencies, and it’s not like the guys at Moody’s and S&P all made a million dollars a year Ruining America. I’m not even sure their CEO-level execs made that kind of money. (Relatedly, it looks like the SEC might be getting around to poking S&P over their CDO ratings…)
If (as is possible!) my inference is wrong and “the 1%” who were “felonious” in your view are not the people who securitized all those mortgages, then you should tell us who they are and what crime you’re accusing them of – lacking an explanation of what you meant, we’re forced to infer, with all its risks.
Why, besides petty jealousy, does anyone care about income “inequality”? If I double my salary tomorrow, that’s good for me. It doesn’t become less good if a richer person triples her salary. Likewise, if I’m struggling financially, I don’t really feel better if everyone else is struggling, too.
To answer your question. There are two parties responsible for the creation of wealth. There are the people who actually add value, and there are the people who own the enterprise. In an equitable arrangement these two groups both receive an equal share of the value created. As the value of the enterprise rises the owners get returns on investment and the people who make the business successful get increased salaries. In an inequitable arrangement one group or the other gets all the benefits at the expense of the other.
Here Business Day can give you the latest on how things are working out in the good old USA.
Or just think about the profits announced by the oil industry in the last 2-3 years and then see what the typical income for an oil field worker is.
Sure but who can afford to pay more in a recession?
“Exxon Mobil reported a first-quarter profit Thursday of $10.7 billion, a 69 percent jump from the year before as higher crude oil prices, fatter U.S. oil refining and marketing margins, and a revival in global demand for petrochemicals boosted earnings.”
Oil Field Workers Average Income
MEDIAN ANNUAL WAGE: $40,600
MEDIAN HOURLY WAGE: $19.52
@Degrance: Incorrect on two counts. First, those who own enterprise don’t create wealth unless they are actually adding value. Otherwise it is simply their existing wealth that is creating more wealth. Second, the share wouldn’t be equal in an equitable arrangement. An equitable arrangement means that the compensation is equitable for all parties relative to the value of the work that is put in. And I have no idea what the part in red is supposed to indicate…you’d have to include data on profits, workers, and execs for multiple years in order to make any sort of analysis.
But to answer the original question, it is not so much jealousy as a feeling of fairness. The issue is that the top 1% have seen their income rise by 275% over the last 3 decades while the rest have seen much more modest gains, and the bottom 20 are barely keeping up with inflation. Are the top 1% working 250% harder, or contributing 250% more value relative to the bottom 20% than they were 30 years ago? I think not.
Another factor is that the bottom quintile tends to spend more than their reported income. Some of this is consumption via student loans or dissavings from other sources but it also includes income from off-the-books employment and casual sales which are believed to constitute a higher portion of this quintile’s income than that of wealthier households.
I’m not an economist or a political scientist. But I am a computer scientist and I’m to the point where I don’t assign any value to any chart or graphic or so-called “info graphic” if the underlying data isn’t published with it. Did CBO do that? Not completely. Their published PDFs have some numbers. Not all.
Seeing a snapshot always forces me to ask: Who picked the start and stop time? How and why (really)? What happens in the numbers before and after the selected period? Even if/when the source is trustworthy and motives unimpeachable, the before/after question is still valid and valuable. When publishers withhold data, they take this question off the table and keep the answer unknown. Snapshots are inferior to moving analysis when truth is a constraint.
In this case, CBOs Figure 2 is much more interesting to me than Summary Figure 1 because it shows the income data year by year.
Figure 2 adds weight to my hunch when I first saw this CBO report discussed on TV yesterday… Stock market. JP, publish an augmented version of Figure 2 that overlays the DJIA &/or S&P lines for the same time period and you’ll immediately have a more meaningful story to tell (but be prepared to add servers to the website to handle the traffic!). That’s step 1.
Step 2 (this is much more difficult) would be to identify for the same time period the percentage of the US population invested in the stock market ( not at all, occasionally, long-term ).
Step 3 (this might be the toughest of all) would be to show debt per quintile, per year over the same period. (probably not on the same figure – can’t slam too many lines in there)
Step 4 (later) Show the kinds of decisions that move people up or down from group to group. This might require custom surveys.
One hypothesis is.. If you want to be in a higher income group: (1) have less debt, (2) long-term invest in the stock market (not short term ‘trade’) and (3) run your own business. Guaranteed? Nope. Wealth requires success (or birth luck). Success requires accomplishment. Expecting wealth from other’s accomplishments is a fool’s dream.
THESE are all positive messages congruent with the important traditions that made the USA a great country (at least they are far superior to “Give us your wealth or you’ll never enjoy your parks or communities again, ever”) . If the data supports positive messages, why would any of good conscience go on TV & pretend the data supports the cause of social unrest? Perhaps social unrest is their true objective and income equality is the ruse de jour to suit their desire for more power and control over those tricked by them and those not. Why not? It’s worked so many times throughout history – a history apparently unfamiliar to most of the tricked who think this is all brand new and innovative.
How about it, JP? Ready to need more servers?!
@DanFarfan
The cost of prosperity for all is that some people will become rich. Deal with it!!
Conversely, there will always be a bottom 10% of people who will never succeed– often because of a toxic mix of drug problems, personality problems, lack of motivation, and bad luck. There is NO social or economic order that would allow such people to keep pace with the most gifted, most motivated, most successful money-makers in the country.
It’s like saying that there is a problem because the world record for the 100 yard dash keeps getting faster, but people in wheelchairs are not making similar gains.
Not true!
Increasing income inequality is a mathematical identity–it is a given. It would be impossible for everybody making $20K/year to maintain the difference between their income and those making $100K/year. The $20K’ers would need an average raise of 20 percent to keep up with the $100K’ers who got 4 percent raises.
The whole premise is idiotic.
Uhh…Figure 1 is talking % changes, not change to median income. Your assertion is only valid if the complaint was “the median income of the top 1% went up by X %, while the median income of the 99% only went up by Y %.” If the gap people were complaining about was a fixed dollar amount, and not a percentage, then you’re right. And, by the way, that kind of math/statistics often is misused to make a point. But in this case, I think they’re using the numbers right.
One other issue, recently brought to light by Dick Morris is that the lowest quintiles representing the poverty level are constantly changing. According to Morris, only 16% at the poverty level were there in the prior study. So that the lowest levels look like they haven’t changed (the actual number of people in poverty), but what we see, if Morris is correct, is that people are moving “up and out” to be replaced by new members in the lowest economic levles. Thus not only do the lowest quintiles have more spending power than they did earlier, many of them have moved into higher quintiles indicating a possible exponential rise in their real income.
The point is that this is NOT a static system but a dynamic one.
One other thing: divorce and single parenthood rates skyrocketed during this period, while marriage rates declined. It is much harder for your children to earn more than you did when there is only one parent investing in them–not just monetarily, but also in terms of emotional support, time, etc. Two parent households logically should produce children who have enjoyed these kinds of investments from two parents, thus making it more likely they will be better off than the last generation. If you look at marriage rates across income groups, higher-earning groups tend to get married more often and stay married, while lower-earning groups tend to have higher divorce rates and higher single parenthood rates. The Pew Study on Inequality had an article about exactly this phenomenon, which in my opinion drives a substantial part of the skewing of income inequality for households below the top 10% (the top 10% are perhaps even better explained by changes in technology, emergence of education-heavy industries, etc.).
I also think that re: #2, that just using a quintiles share of income is not appropriate. In a period of extensive immigration, where literally millions of new, very low income workers arrive in a country, the lowest quintile CANT show any growth.
And yet, amazingly, even it</b does.
Why not?
“You cannot make the poor rich by making the rich poor”
Abraham Lincoln
It would be great to plot these out in relation to inflation or to make the relation to inflation explicit. It seems like, since consumption rates have been rising for everyone, that there are real gains for everyone. On fault I’d find with the article is that there isn’t quantification of the response arguments. When the growth rate differences is 275 vs 18 people are going to feel like the poor have been treated ‘felonously’- even if that is just sentimentalism and shoddy thinking since it isnt distinguishing between rent seeking and the fruit of true innovation that makes everyone more wealthy or well off. There are two major questions that need to be agreed upon: what is the real differences in wealth earning when all these variables are taken into account in competing equations that we can look at? And 2. Is income difference inherently immoral or is it immoral if achieved through certain means that are illegal, rent seeking, or discriminatory? It seems to me that the latter is the more reasonable opinion- but the harder to enforce and not be a hypocrite about since all classes engage in rent seeking.
Allow me to add an 8th reason – all five quintiles saw their real after-tax income increase. For those of you who are a bit slow on the uptake, that means that, in general, every group of Americans had more money to spend after the effects of both inflation and taxes in 2007 than they did in 1979.
I know the enterprise blog does a lot of sensationalism with its title but if your post is going to be named “7 Reasons Why Obama is wrong on income inequality” wouldn’t you want to – at some point – state the thesis you are seeking to refute. What is it exactly that Obama is claiming?
Perhaps, I’m old fashioned about these things.
On an annualized basis, the income of the top 1% went up 4.8% per year; that of the bottom quintile went up 0.6% per year. I have no idea why that would be either good or bad. Were we supposed to expect they would be the same?
Your refutation is wrong. The rich frequently like to dampen the appearance of wealth by using household income. Individual income of the wage earners (not zeroing in the non-working members of thehousehold) is the right way to do the math.
The richest 1% control the largest percent of wealth in recent history. Had they been less felonius towards the rest of society, they might not be on the hot-seat.
Did you read (or are you capable of understanding) what you just wrote? It’s household income that shows the large differences against which you rail, while individual income of wage earners (which you advocate as the proper method of analysis) is exactly what the author suggests as a more appropriate way to view things, and which shows substantially smaller differences between the richest and the poorest.
If the plight of the poorest continues to improve (and improve more rapidly and substantially than it has over any time in human history) why should the situation in which the wealthiest find themselves be such a source of discontent? Is there any rational basis for believing that pulling them down would in any real way improve the lot of the poor, or is it simply envy? Do you have any real basis for your bald assertion that the rich have actually been “felonious”, or do you consider anyone being better off than you to be wrong in and of itself?
The reason for MT’s “bald assertion” is that he/she/it never learned real economics and has been pounded with Marxist nonsense since Kindergarten. As difficult as this is to believe I’ve had to combat it while my kids were going through school. What the kids are taught explicitly and implicitly assumes that wealth is a finite pie that simply gets distributed and redistributed around. The inanity of this — yeah, the materials to make ipads might have been “wealth” in the middle ages but… WHY? Who would pay for it? and we’ve all read Marco Polo’s account of the odd black stuff that bubbles up from the Earth and is used to cure spots, right? — should be obvious, but they’re so indoctrinated they can’t see it. I recommend, as an introductory text to economics P.J. O’Rourke’s Eat The Rich. I’ll advise MT that wherever Marxist economics has been applied it has failed to work, due to having no contact whatsoever with reality. And I will further clarify that Marx was already wrong when he wrote his theory and most creditable economists knew this. Among other things, the man had issues with concepts like “distribution” — which probably explains all the size 36 shoes for the left foot that were often to be had in soviet shoe stores.
(1) If the 99% would like to stop the 1% from dampening the appearance of wealth by using household income statistics, they should not use the household income data to demonize them.
(2) Original wealth is created by work and investment. If one creates wealth, shouldn’t one be able to keep it and control it? If I have less than you, do I have a right to some of yours? I fail to see the felony under the scenario of wealth creation.
(3) Wealth acquired by any other means than creation or inheritance of created wealth, is collected by theft, coersion, deception, or law. Corrupt people, corporations, and governments are allowed to flourish (take other people’s created wealth) at our expense as long as we re-elect the politicians that perpetuate laws and enforcement that allow corruption. You may be confusing corruption with wealth. Corrupt people are either in jail, not successfully corrupt, or wealthy. The corrupt we see, are generally wealthy. So, you may be assuming that wealthy people are corrupt. The logic is invalid: Corrupt people are wealthy. Therefore, wealthy people are corrupt.
Felonies are being committed daily by our government, a government that arrogantly spends other people’s money (ours) for their own gain and political security under the guise of noble public service and self-sacrifice, at the expense of our personal freedom and at the risk of losing our sovereignty as a free people.
Don’t blame people for having things – I’m sure you have some. Blame the corrupt ones for how they got them. The universal disdain for injustice will re-unite our country, but let’s not mis-understand where the injustice resides.
I love how everyone here jumps on MT with ignorant cheap shots and rhetorical nonsense. But I can explain where he is right and you all are wrong.
Ken: the suggestion the author makes looks at quintiles, but if you break out the 1% that MT is talking about, or the top .1% and you’ll see something quite different. Number of individual income earners fall, and % increase in income skyrockets. Then look at it over time. More households in the bottom 99% with multiple income earners than in the past. They’re having to work harder to make those gains. It’s not about envy, or pulling anyone down…and it’s not even about the 1%. It’s about people doing things that were at best immoral and at worst illegal, and bringing the entire economy to its knees, and getting rewarded with taxpayer bailouts and multimillion dollar bonuses for their efforts. B of A is STILL getting bailed out by the Fed behind closed doors (it may take a while, but you’ll probably hear about it eventually), and the Attorneys General in DE and NY have finally started filing charges, against MERS for instance.
Sarah: While it is true that Marxism failed in practice, it was never practiced the way it was intended. It was practiced to the benefit of the ruling class, not the benefit of everyone. Just like what we are seeing now is what happens when Capitalism is distorted to benefit the few at the expense of the rest.
SK: 1) you sort of have a point, but even the household data points to the increasing wealth disparity. 2) Rhetorical, but no one is disagreeing 3) No one is confusing corruption with wealth or saying all wealthy people are corrupt. And no one is blaming people for having things. I find it interesting that MK did not mention government, but you saw fit to bring it up. I don’t deny the government shares the blame here (my guess is MK wouldn’t either); I’ve been saying for years that the root of many of our problems is the corruptive influence of money in politics. But where does the money come from? You see, there is a form of collusion between wall street and big corporations and the government, and they feed off each other. So I agree, let’s not mis-understand where the injustice resides.