Income Inequality In The United States

"Income inequality" is something you hear or read about constantly, irrespective of what your main source of news or information might be. From USA Today to the Financial Times, income inequality has been among the hottest topics over the past decade or so.

A loaded term that carries quite a bit of shock value by nature, income inequality -- much like gun control, for example -- isn't strictly speaking something that an intellectual, critical conversation can take place over. Everyone has their opinions, which are generally deeply-rooted and related to personal experiences and upbringings, and few are willing to listen for even a second to the other side.

What this means for me is that I generally don't get involved. I'm probably less likely to write about or discuss something like inequality than most other people out there, but I did come across a video recently that was quite interesting...

Although this video has been around for a while, it has only recently reached "viral" status. When I watched it last night and decided it was solid article material, it had a hair over 100K views -- 725K and counting this morning.

The major issue with this video -- certainly part of its "shock" effect -- is the assumption that "more wealth" necessarily implies that a group is "better off". For example, at 2:45-2:50, the wealthiest folks are "ten to twenty times better off than the poorest Americans". Well, okay. What does that mean exactly? If being better off is defined as holding a larger share of the wealth of a society, then yes, certainly the people at the top are, oh roughly 15 times better off than those at the bottom, but what this doesn't take into account is how much better off those people at the bottom are today than they were in the past.

Same deal at 5:05-5:10 -- in 1976, although the richest 1% took home a far smaller share of the total income in the US, that does not necessarily mean that the standard of living for middle- and lower-classes was better in '76 than it is today...anyone who would argue that would be almost certainly be mistaken, or would have to be a hell of a rhetorician.

The CEO earning argument, as usual, is pretty weak...there are 1000 CEOs paired with 1000 Fortune 1000 companies (obviously there are many more CEOs and companies, but these guys and gals are going to be the ones getting paid the most "egregious" compensation packages). Even assuming each makes $10MM per year, that's $10,000,000,000: a completely immaterial percentage of the total $54 trillion. Even assuming there are 100,000 CEOs earning $10MM per year, we're still only at $1,000,000,000,000...1.8% of the total $54 trillion.

Nevertheless, this video is pretty jarring, not for the fact that income distribution is so skewed, but for the fact that our perception of how income is distributed in this country is so off. And, as the video points out at the beginning, the fact that Americans are aware that the "reality" is already far from the "ideal" (although how far exactly, they're not sure, and as the video goes on to say, they're clearly mistaken) is shocking as well.

No matter where you stand on this issue -- and I think I have a rough idea of the stance WSO generally takes -- the facts are definitely eye-opening and somewhat scary.

What do you guys think of this video? More importantly, about the methods used? Is this a problem? How can we fix it? Do we care?

Thanks for reading.

Comments (130)

Mar 4, 2013

Good analysis. I see a political rant coming, but I will try to restrain it. My biggest qualm is that we define equality in this case solely in terms of the percentage of "wealth" held without taking into account any other factors. I am a capitalists, and do believe that the market rewards the best players (albeit I concede that in all cases luck can and does play a major factor).

To often videos like this demonize the successful, without taking account for the positive externalities which these horrible rich people create. Such externalities fall on society which society benefits from, and represent wealth which was created by an individual that was procured by someone else. Because of this, my position is that these individuals are really not paid to their fullest extent (note, I am not saying under-paid, I am just pointing out that they create benefits/externalities that they do not procure.)

On the flip side, while I concede that many poor are poor through no fault of their own, I believe it too often the major news outlets make the poor seem like saints -- I assure you, they all are not.

Mar 4, 2013

I watched the video last night and laughed. It was nice to hear a shout out to ibankers, as you usually do in these kinds of videos. I agree with your analysis.

Mar 4, 2013
Group Therapy:

I watched the video last night and laughed. It was nice to hear a shout out to ibankers, as you usually do in these kinds of videos. I agree with your analysis.

Yeah, I mean one other thing that the video fails to mention is philanthropic endeavors from the top earners. Although I don't have any empirical evidence of this, mostly because I'm lazy, I'd bet that, compared with 1976, the wealthiest Americans donate far more money to philanthropic causes today. I think the Bill and Melinda Gates Foundation has really paved a new road -- hell, a highway -- for philanthropic involvement. Good on you, Bill Gates.

Best Response
Mar 4, 2013

Opportunity equality, not income equality. Very easy to not be poor. Graduate high school, don't get arrested and don't have a kid. Once you do that you add on 2 year community college degree followed by a low cost state school education in accounting and you are making 50K a year. Middle class.

Income Inequality arguments are just veiled justification for bigger government and more tax. Class Warfare 101. Makes the poor angry because it seems like they are being screwed, even though the rich fund this government and fund these transfer payments.

If dirt poor immigrants continue to flock to this country for a better like the people who are born here have plenty of opportunity. Whether they seize it is up to them.

Mar 4, 2013
TNA:

Opportunity equality, not income equality. Very easy to not be poor. Graduate high school, don't get arrested and don't have a kid. Once you do that you add on 2 year community college degree followed by a low cost state school education in accounting and you are making 50K a year. Middle class.

Income Inequality arguments are just veiled justification for bigger government and more tax. Class Warfare 101. Makes the poor angry because it seems like they are being screwed, even though the rich fund this government and fund these transfer payments.

If dirt poor immigrants continue to flock to this country for a better like the people who are born here have plenty of opportunity. Whether they seize it is up to them.

I think you really have to TRY to be poor. Most people bitch about being middle class, because it's not great relative to what Americans call "successful", but in the scheme of things, middle class is very rich compared to everyone else. It really is the person's fault if they're poor and not complacent about it, because it's so easy to make money here even without college.

Mar 4, 2013
BTbanker:
TNA:

Opportunity equality, not income equality. Very easy to not be poor. Graduate high school, don't get arrested and don't have a kid. Once you do that you add on 2 year community college degree followed by a low cost state school education in accounting and you are making 50K a year. Middle class.

Income Inequality arguments are just veiled justification for bigger government and more tax. Class Warfare 101. Makes the poor angry because it seems like they are being screwed, even though the rich fund this government and fund these transfer payments.

If dirt poor immigrants continue to flock to this country for a better like the people who are born here have plenty of opportunity. Whether they seize it is up to them.

I think you really have to TRY to be poor.

Jesus H. Christ I hope this is a joke.

Mar 4, 2013
TNA:

Opportunity equality, not income equality. Very easy to not be poor. Graduate high school, don't get arrested and don't have a kid. Once you do that you add on 2 year community college degree followed by a low cost state school education in accounting and you are making 50K a year. Middle class.

Yeah, I would generally agree here, but I think part of the issue is that equality of opportunity is becoming more and more difficult to maintain. Just look at the proliferation of internships -- very frequently unpaid -- as gateways to careers that do give people the opportunity to lead a middle-class lifestyle.

More and more often, equality of opportunity is synonymous with "knowing how to play the game"...and who knows how to play the game best? I don't think I have to answer that question. The extreme prevalence of SAT prep, college application preparation, and tutoring services speaks to this point as well.

Not that I know how to fix these problems, nor do I think the government is capable of doing so, but just pointing some things out.

Mar 4, 2013
TNA:

Opportunity equality, not income equality. Very easy to not be poor. Graduate high school, don't get arrested and don't have a kid. Once you do that you add on 2 year community college degree followed by a low cost state school education in accounting and you are making 50K a year. Middle class.

Basically this. For all the sociological research on "class barriers", "privilege", and "cultural capital", society is just a collection of individuals. And individuals can do exactly what you just laid out. Class mobility is not magic. There are a lot of very straightforward paths into the middle and upper-middle class.

Is accounting sexy? No. But neither is finance. Nor is corporate law. Nor is becoming a plumber, an x-ray tech, an electrician, a petroleum engineer, a nurse, etc. Decent paying jobs are readily accessible. And it's not like salary data is some secret; it is available online and is regularly published in magazines.

If you are coming from poverty, realize that you do not have a safety net and make sound choices. Don't get arrested, don't get pregnant, don't take out excessive debt, don't major in psychology. It is not that hard.

Mar 4, 2013

As others have mentioned, I think the issue is definitely more one of social mobility than one of income inequality. Income inequality is actually fairly high today (there was a large decrease in inequality from 1930-1970s due to WWII and the subsequent boom) compared to 30-40 years ago. But rather than worry about how income is distributed, poorer people should care about how they personally can change their situation. In other words, is it easier today to get into the middle class than it was 30-40-50 years ago? There are some great papers published by economists at UChicago and Harvard that examine this phenomenon (as well as correlations between income and wealth across generations) and find that the media (as usual) has vastly distorted the facts.

Mar 4, 2013

I love that this video spends the entire time talking about wealth, then flips to income (measured by household AGI) when comparing today versus the 1970s. Whichever definition makes the data appear more sensational, go with that one!

Virtually everyone is in agreement that household AGI is one of the worst metrics on which to base a comparison of the 1970s to today. That's because the average size of households for the wealthy has been increasing since 1970s, while the average size of households for the poor has been decreasing since 1970s. Moreover, the definition of AGI has changed since the 1970s. So too has the tax treatment of various business structures, which has led a great number of high-income Americans to shift their income from capital gains (pre-Regan-era tax cuts) into ordinary income (the latter is included in AGI, while the former is not). Furthermore, AGI doesn't include the value of benefits, transfer payments from the government and charitable giving (all of which has dramatically increased since the 1970s). The 1970s vs. today comparison is intellectually dishonest, at best.

And - seriously - the average American thinks that the top 1% should bring in ~10x what the bottom 1% does? That's just a failure to understand statistics. The bottom 1% brings in less than $2,000 per year in income (i.e. they work less than 2 months in a year). Are we really to contend that the top 1% should bring in ~$20,000 in the "ideal" world? I realize that this is the ideal wealth distribution, but the same concept applies.

Also, of course the bottom 20% of America doesn't show up! That's because the people at the bottom are overwhelmingly young people who don't have any of the assets that fit into the definition of net worth! IB analysts would fall into the bottom 20% part of this graph!

More importantly, the underlying assumption in this video is that wealth inequality is a negative characteristic of a free market society. And that just isn't the case. We all understand that. In a free market system, the only way people obtain great wealth is by providing value for which people are willing to pay.

In a free market system, the people with the most accumulated wealth are those people who have taken far less out of the economy than they have contributed. Wealth is simply a measure of surplus value creation.

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Mar 4, 2013

Well you have to be a little lucky to also be a) healthy and b) not have "non-children" children (parents, siblings, etc) depending on you and c) have parents who are supportive and competent (shockingly few of these in certain social strata...)

It's partly societal but many kids grow up being told they'll never amount to anything, so they don't. It's terrible. I'm not sure how you fix that.

if you like it then you shoulda put a banana on it

Mar 4, 2013

Maybe a serious outreach program for young kids in troubled areas could be helpful - give them a 5 page document and a good 5 minute talk that just lays it out and tells them the differences and give them your email address. But you need to get them in like 5th and 6th grade before they completely f themselves out of any chance of doing well in high school.

Also see The Wire, Season 4, if you haven't. My brother did TFA in the inner city of an NYC borough and said they hit the nail right on the head. Many parents just don't give a shit about their kids' performance and are completely incompetent at parenting - he failed 40% on average for a middle school science class.

if you like it then you shoulda put a banana on it

Mar 4, 2013
frgna:

Maybe a serious outreach program for young kids in troubled areas could be helpful - give them a 5 page document and a good 5 minute talk that just lays it out and tells them the differences and give them your email address. But you need to get them in like 5th and 6th grade before they completely f themselves out of any chance of doing well in high school.

Also see The Wire, Season 4, if you haven't. My brother did TFA in the inner city of an NYC borough and said they hit the nail right on the head. Many parents just don't give a shit about their kids' performance and are completely incompetent at parenting - he failed 40% on average for a middle school science class.

+1 to your posts

It's pretty easy for us to say stuff like "oh it's easy, graduate high school, don't do drugs, don't join a gang etc." and you occasionally see people who are able to break out of poverty to be successful.

But it's not easy because people are fucking stupid. Combine it with parents who don't care, terrible role models, and a whole society that is just shit, and it's far easier said that done. Just getting perspective on what is success is or how to get it is hard.

My dad is one of those people who escaped parents that didn't give a shit and a whole society that didn't. He grew up in cultural revolution china; all his peers were running around in the Red Guard, not going to school, beating up intellectuals and bourgeois, and basically just dicking around. His family was landowning pre-revolution and they lost it all then, and his parents just went into don't-give-a-fuck-anymore mode. His older brothers and sisters couldn't go to school and just worked menial jobs. Fortunately for me, he's a bona-fide genius who legit loved learning, and would bribe kids with small amounts of candy he would get to borrow their locked up books. And even luckier, the revolution ended when he was fairly young, and schools/universities were put back in operation. In 77' the big national college entrance exam reinstated and he took the test at the same time as his teachers. Out of like 6 million he took that exam, he was one of the 300k who got into a college, where he would later ace another exam and go on to get a full ride at Yale for a PHD in physics

Now, cultural revolution China is a bit extreme of a comparison, but it's not far off from the kind of world you get in inner cities. Just read about someone like Derrick Rose and the lengths his brothers went to protect him from getting ripped apart by Chicago.

Because of what he went through, my dad is highly sympathetic to the poor and people who I would call lazy and unmotivated, because he saw how easy it was to be like that, how destructive your environment can be, and how hard it is to get out. Took a while, but I understand his views more now.

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Mar 4, 2013

I agree that a lot of it is parental, but government cannot solve that. Income inequality is also high in countries with a lot of immigration as you have 1st generation citizens first working manual labor and then their children being 1st generation college students and starting the process. We are also an information based society so education is going to be the driver behind income and wealth. Considering only 30% of Americans have a 4 year degree you can already see a gap which will cause inequality.

Mar 4, 2013

This video demonstrates that average Americans have a strong misunderstanding of reality; that, in and of itself, is not a persuasive point. I think it is fairly irrelevant what Americans think the distribution should be (after all, why should they be a better judge of the 'perfect' world when they cannot be bothered to find available information about the real one). What is important is the average Americans' perception of their ability for social mobility. All successful societies harbor inequities in status; insofar as they allow people's varying levels of talent to manifest themselves. The problem occurs when people no longer believe the elites, generally speaking, have arrived at their current position through their own efforts and abilities (or are descendents of those efforts), but through collusion with state power and corruption. Once the people believe that there is an impermeable ceiling between them and the highest echelons, they will be moved to overthrow the regime because it no longer serves their interests. In that scenario, income inequality is a symptom that will cause problems for a society.

Mar 4, 2013
rls:

This video demonstrates that average Americans have a strong misunderstanding of reality; that, in and of itself, is not a persuasive point. I think it is fairly irrelevant what Americans think the distribution should be (after all, why should they be a better judge of the 'perfect' world when they cannot be bothered to find available information about the real one). What is important is the average Americans' perception of their ability for social mobility. All successful societies harbor inequities in status; insofar as they allow people's varying levels of talent to manifest themselves. The problem occurs when people no longer believe the elites, generally speaking, have arrived at their current position through their own efforts and abilities (or are descendents of those efforts), but through collusion with state power and corruption. Once the people believe that there is an impermeable ceiling between them and the highest echelons, they will be moved to overthrow the regime because it no longer serves their interests. In that scenario, income inequality is a symptom that will cause problems for a society.

This reminds me of a point Charles Murray raised. He argued that the wealthy need to basically practice cultural imperialism. To say that, "Yes, the way we behave is better. Marriage is good. Stable jobs are good. Community involvement is good." Social pressure can be a huge force for good.

We saw it a lot in the last election. Opinions on his policies might vary, but Mitt Romney was personally a pretty incredible guy. And he was derided for it. Morally, financially, and personally he is a model citizen. But he was mocked at every turn. The values he exhibits are no longer widely held.

It is socially acceptable to have children out of wedlock. To use drugs (I am pro-legalization btw, but it isn't something you should admit publicly). To be unemployed. The rich need to actively promote their morals and life choices. We all know a few people who just lucked into success. But the upper-middle class is generally hard working and makes good choices.

Mar 4, 2013
West Coast rainmaker:
rls:

This video demonstrates that average Americans have a strong misunderstanding of reality; that, in and of itself, is not a persuasive point. I think it is fairly irrelevant what Americans think the distribution should be (after all, why should they be a better judge of the 'perfect' world when they cannot be bothered to find available information about the real one). What is important is the average Americans' perception of their ability for social mobility. All successful societies harbor inequities in status; insofar as they allow people's varying levels of talent to manifest themselves. The problem occurs when people no longer believe the elites, generally speaking, have arrived at their current position through their own efforts and abilities (or are descendents of those efforts), but through collusion with state power and corruption. Once the people believe that there is an impermeable ceiling between them and the highest echelons, they will be moved to overthrow the regime because it no longer serves their interests. In that scenario, income inequality is a symptom that will cause problems for a society.

This reminds me of a point Charles Murray raised. He argued that the wealthy need to basically practice cultural imperialism. To say that, "Yes, the way we behave is better. Marriage is good. Stable jobs are good. Community involvement is good." Social pressure can be a huge force for good.

We saw it a lot in the last election. Opinions on his policies might vary, but Mitt Romney was personally a pretty incredible guy. And he was derided for it. Morally, financially, and personally he is a model citizen. But he was mocked at every turn. The values he exhibits are no longer widely held.

It is socially acceptable to have children out of wedlock. To use drugs (I am pro-legalization btw, but it isn't something you should admit publicly). To be unemployed. The rich need to actively promote their morals and life choices. We all know a few people who just lucked into success. But the upper-middle class is generally hard working and makes good choices.

Interesting points. Also, very interesting to see that the proponents of all of these things are liberals.

Mar 4, 2013
West Coast rainmaker:

Mitt Romney was personally a pretty incredible guy... Morally, financially, and personally he is a model citizen.

I lol'ed. Really came from nothing and made something of himself, right?

The WSO audience is far too homogeneous for a discussion like "wealth inequality" to be unbiased. I'm shocked this turned into a circle jerk of wealth = hard work, lack of wealth = lazy and uneducated (that was sarcasm btw, of course this would happen).

Mar 4, 2013
West Coast rainmaker:
rls:

This video demonstrates that average Americans have a strong misunderstanding of reality; that, in and of itself, is not a persuasive point. I think it is fairly irrelevant what Americans think the distribution should be (after all, why should they be a better judge of the 'perfect' world when they cannot be bothered to find available information about the real one). What is important is the average Americans' perception of their ability for social mobility. All successful societies harbor inequities in status; insofar as they allow people's varying levels of talent to manifest themselves. The problem occurs when people no longer believe the elites, generally speaking, have arrived at their current position through their own efforts and abilities (or are descendents of those efforts), but through collusion with state power and corruption. Once the people believe that there is an impermeable ceiling between them and the highest echelons, they will be moved to overthrow the regime because it no longer serves their interests. In that scenario, income inequality is a symptom that will cause problems for a society.

This reminds me of a point Charles Murray raised. He argued that the wealthy need to basically practice cultural imperialism. To say that, "Yes, the way we behave is better. Marriage is good. Stable jobs are good. Community involvement is good." Social pressure can be a huge force for good.

We saw it a lot in the last election. Opinions on his policies might vary, but Mitt Romney was personally a pretty incredible guy. And he was derided for it. Morally, financially, and personally he is a model citizen. But he was mocked at every turn. The values he exhibits are no longer widely held.

It is socially acceptable to have children out of wedlock. To use drugs (I am pro-legalization btw, but it isn't something you should admit publicly). To be unemployed. The rich need to actively promote their morals and life choices. We all know a few people who just lucked into success. But the upper-middle class is generally hard working and makes good choices.

The thing about cultural imperialism, as you put it, is that the message is almost always distorted by the messenger (I know it shouldn't be, but to deny that is to deny human nature). You cannot have those at the top wagging a lecturing finger at those below them and besmirching their low moral practices (even if it is true). That will almost certainly antagonize them. The best solution, from the perspective of the successful, is not to necessarily address the issue directly, but to live their lives uprightly and hope their example shines through. That is why the permeability between classes is so important. Because it must indeed be the case that some at the bottom that have adopted suitable habits that will increase their social mobility actually achieve higher status eventually. If a person is self-disciplined, chaste, and responsible at the appropriate times, they should have a better-than-average chance of moving up. The more examples there are of upward mobility, the stronger the belief in the general population that it truly is a matter of character and those who remain in the dregs are not being held there by the nefarious elites, but have yet to find a path to the top; and the whole issue of success is one of personal responsibility and ability.

Mar 4, 2013

It's ridiculous imo to assume that doing certain things will lead to a certain outcome. If you believe that going to college means you will be in the middle class, then you are intuitively saying that if everyone goes to college there will no longer be a lower class- an absolutely absurd thought. The only real result from more people going will be a further decline in its efficacy in getting a job. There's already wayy less college grad level jobs than there are college grads. To think that further adding to this over-supply will solve the wealth inequality problem is asinine. You're not entitled to a job just because you're qualified for it. If that was the case, the argument would make perfect sense. But the truth is that no one is going to hire more people than they need. The only result of an increase in qualified workers will be an increase in the unemployment rate of qualified workers.

Mar 4, 2013

I don't want to make a blanket statement, but, generally, poor people suck.

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Mar 4, 2013
SirTradesaLot:

I don't want to make a blanket statement, but, generally, poor people suck.

Noooooooo Sir I usually love what you write :(

Mar 4, 2013
DonVon:
SirTradesaLot:

I don't want to make a blanket statement, but, generally, poor people suck.

Noooooooo Sir I usually love what you write :(

C'mon man. I said "generally", so that absolves me of any responsibility for what I said.

Mar 4, 2013

I'm not saying the video tells the whole truth but I do find it beyond comical that almost every single one of the posts essentially defends the wealth gap. Saying the standard of living hasn't declined is foolish. Yes as a whole technology has made certain things cheaper; however, if you look at things such as healthcare as a percent of income, fresh groceries as a percent of income, college tuition as a percent of income, rent/utilities etc. the middle class is totally worse of than it was in the past. In the 50's you had the sole bread winner that could support his family and easily put his kids through college debt free. Now you need two people working two jobs to barely be able to live month to month, forget about college for the kids.

This model is unsustainable and will have a breaking point. The wealthy are growing exponentially faster and there will be long term implications.

The whole argument that taxes prevent the top from trying is such BS. Its about winning. Winners want to win. Period.

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Mar 4, 2013
ke18sb:

I'm not saying the video tells the whole truth but I do find it beyond comical that almost every single one of the posts essentially defends the wealth gap. Saying the standard of living hasn't declined is foolish. Yes as a whole technology has made certain things cheaper; however, if you look at things such as healthcare as a percent of income, fresh groceries as a percent of income, college tuition as a percent of income, rent/utilities etc. the middle class is totally worse of than it was in the past. In the 50's you had the sole bread winner that could support his family and easily put his kids through college debt free. Now you need two people working two jobs to barely be able to live month to month, forget about college for the kids.

This model is unsustainable and will have a breaking point. The wealthy are growing exponentially faster and there will be long term implications.

The whole argument that taxes prevent the top from trying is such BS. Its about winning. Winners want to win. Period.

This is a ridiculous, unfounded argument.

1) College costs are rising because of unlimited government subsidies and loans to students to pay for college combined with the decreasing value of having a college degree.

2) The government spends billions of dollars every year on argicultural subsidies that artificially increase the cost of groceries in this country.

3) Wages have steadily increased since the 1950s:

Mar 4, 2013
NorthSider:

3) Wages have steadily increased since the 1950s:

Is this inflation adjusted?

Mar 4, 2013

http://www.cnbc.com/id/100516504

"As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966. In recent years, the shift has accelerated during the slow recovery that followed the financial crisis and ensuing recession of 2008 and 2009, said Dean Maki, chief United States economist at Barclays.

Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, he said, but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation."

The issue is who holds the power. Right now, the working class has very little power, and this manifests in the labor market, and indirectly, to the wealth distributions. Workers are getting a smaller share of the profit pie, while shareholders, and indirectly the wealthy, are getting a larger share.

Mar 4, 2013
freeloader:

http://www.cnbc.com/id/100516504

"As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966. In recent years, the shift has accelerated during the slow recovery that followed the financial crisis and ensuing recession of 2008 and 2009, said Dean Maki, chief United States economist at Barclays.

Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, he said, but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation."

The issue is who holds the power. Right now, the working class has very little power, and this manifests in the labor market, and indirectly, to the wealth distributions. Workers are getting a smaller share of the profit pie, while shareholders, and indirectly the wealthy, are getting a larger share.

Arguments framed this way are just silly.

If money is being paid out to shareholders, it is necessarily being reinvested. There is no such thing as money that is "sitting around".

Mar 4, 2013

Poverty & menial incomes at adulthood stems from shitty decisions at youth, most likely due to shitty parenting. I'm willing to bet here no one here posting was born to parents that consistently made minimum wage or were drug addicts & the like.

Wanna eliminate poverty/poor people. Eliminate free government institutions, food stamps, medicaid, housing & public education completely (its paid via RE taxes anyway, dont tax them let parents pay directly). Eventually the poorest people & their kids will die at the youngest age possible. This limits their ability to procreate and spawn another generation of idiots.

Effectively this raised the bar for what it means to be poor but at least you get a society of people that can take care of themselves.

Mar 4, 2013

I don't think the increasing gap has much to do with government policy or politics. It's simply the effect of skill-biased technological change and the economy's shift from big firm to entrepreneurial capitalism.

Mar 4, 2013

Government is to establish law, national defense and sign treaties with other nations. It is not to take from one party and give to another because someone things XYZ isn't fair. The trash we call media in this country is brainwashing the mouth breathing herd into thinking the rich are some how fucking them, even though they pay nothing to the Federal government while enjoying the benefits that the Fed provides. The rich are continually milked and while they are still living a great life, that isn't moral justification to shake down someone.

It isn't a piece of cake to achieve success in life. You have to work for it. If you do there are plenty of opportunities for you to succeed. Always have been and always will be. Up to you to take advantage of it.

Mar 4, 2013

Guys. Guys. We are debating about what the American people understand. This is like arguing why a 4 year old believes in unicorns. Americans have a 7th grade reading level. Dems manipulate them with class warfare and Republicans manipulate them with religion/gun control/immigration, etc.

I find it hilarious that the people pushing this income inequality agenda are themselves the richest and most intelligent people. They also like to push regressive sin taxes and nanny state controls (ala Bloomberg).

Mar 4, 2013

There are too many "talking points" and personal anecdotes in this thread. There has been a lot of great research on this topic.

Long story short, wealth inequality is a massive failing in America.

Mar 4, 2013
KarateBoy:

There are too many "talking points" and personal anecdotes in this thread. There has been a lot of great research on this topic.

Long story short, wealth inequality is a massive failing in America.

Another wonderful insight. Please, continue.

Income inequality will always exist. I would support more opportunity equality, maybe. But looking towards the government to solve all someones problems is not the answer.

Mar 4, 2013
TNA:
KarateBoy:

There are too many "talking points" and personal anecdotes in this thread. There has been a lot of great research on this topic.

Long story short, wealth inequality is a massive failing in America.

Another wonderful insight. Please, continue.

Income inequality will always exist. I would support more opportunity equality, maybe. But looking towards the government to solve all someones problems is not the answer.

The only way to promote opportunity equality is to eliminate government from every aspect of someone's life. This ranges from providing free public education to free food to free health care. All of these are woefully paid in part through taxes. Usually 1 party pays more to cover someone else's expenses. An example is public schooling. It is usually paid via RE taxes. It would be more effective to eliminate the % of tax that pays for the schools & let parents pay directly. This forces people to get involved in their kids life or second guess having one. Reduces crappy students & teachers in the systems & improves overall welfare over time.

You want to improve oppurtunitiy, eliminate what reduces it - the government (both local, state & federal).

Mar 4, 2013

Look TNA I'm not going to copy and paste the data for you. Try using google.

No one is arguing for equal distribution so don't change this into a straw man argument.

Keeping things simple, if you don't see the problem with

1) decades of falling real income
2) rising wealth inequality
3) etc...

Then no logical argument will get your head out of your ass.

Mar 4, 2013
KarateBoy:

Look TNA I'm not going to copy and paste the data for you. Try using google.

No one is arguing for equal distribution so don't change this into a straw man argumwnt.

Keeping things simple, if you don't see the problem with

1) decades of falling real income
2) rising wealth inequality
3) etc...

Then no logical argument will get your head out of your ass.

1) You claim something, you back it up. I am not going to work to prove YOUR point for yourself.

2) I've read many of the claims for and against. This isn't the first time this topic has come up.

Whenever someone cannot articulate their point intelligently they resort to name calling. Case in point.

Mar 4, 2013
KarateBoy:

Look TNA I'm not going to copy and paste the data for you. Try using google.

No one is arguing for equal distribution so don't change this into a straw man argumwnt.

Keeping things simple, if you don't see the problem with

1) decades of falling real income
2) rising wealth inequality
3) etc...

Then no logical argument will get your head out of your ass.

1) Decades of falling real income - ie: middle class hollowed out by globalization + an influx of low skilled immigrants. Yeah, I'm cool with kicking China out of the WTO and playing hardball with them over intellectual property theft. Oh yeah, kick all illegals out. Watch hospitality, food service, and construction wages jump through the roof.
2) Rising wealth inequality - ie: financialization of our economy over the past 30 years. Get dividends taxed at income rates, get rid of the carried interest loophole, and tax capital gains on secondary market transactions at a higher rate than currently.

The thing that people miss is what is the goal of reducing inequality. Do we want true value generators like Bill Gates, Steve Jobs, & Jeff Bezos to be taxed more? I think that certain entrepreneurs have more value to the US economy than others. I'll take 1 Bill Gates over 3 Warren Buffets. One created a company that employs thousands, is an innovator, & added measureably to the US economy growth rate. Another is an investor. I hope everyone can see the difference.

Mar 4, 2013

I don't care about poor people because they clearly don't give a shit about themselves.

They have kids they can't afford, do drugs, commit crimes and didn't study when it counted. What fraction of the 'bottom 20%' hit one of those 4 topics? I'd guess 80%. Lifes too short to worry about people who make bad decisions.

Mar 4, 2013

Legal and Illegal immigrants drive wages down for unskilled workers. The collapse of the housing market added to this. The USA no longer needs to have unskilled manufacturing. All these things drive down wages for those without an education (70% of Americans).

As mentioned above, you restrict unskilled immigration into this country and wages will rise for menial positions. You remove restriction and regulations and the cost to manufacture in this country will decline, bringing home manufacturing jobs. Plenty of places that would love to make things in the market they sell into especially with all the costs associated with doing business in China now (strikes, increasing wages, cost of transoceanic shipping, potential IP theft, etc).

Countries with heavy immigration have higher income inequality (the USA is a perfect example). Countries that have moved towards an information based economy will have higher inequality. Is this bad? Absolutely not. It just shows that labor needs to adjust, retrain and/or relocate.

Mar 4, 2013
TNA:

Legal and Illegal immigrants drive wages down for unskilled workers. The collapse of the housing market added to this. The USA no longer needs to have unskilled manufacturing. All these things drive down wages for those without an education (70% of Americans).

As mentioned above, you restrict unskilled immigration into this country and wages will rise for menial positions. You remove restriction and regulations and the cost to manufacture in this country will decline, bringing home manufacturing jobs. Plenty of places that would love to make things in the market they sell into especially with all the costs associated with doing business in China now (strikes, increasing wages, cost of transoceanic shipping, potential IP theft, etc).

Countries with heavy immigration have higher income inequality (the USA is a perfect example). Countries that have moved towards an information based economy will have higher inequality. Is this bad? Absolutely not. It just shows that labor needs to adjust, retrain and/or relocate.

Honestly, I don't understand why we even let unskilled people into this country. They have nothing to offer & LITERALLY there is nothing they can do that an unemployed Am"rcan or teenager can't. In terms of pure efficiency & economic growth ALL immigration should be limited to skilled individuals. Seeing as this is difficult to define, I would say people that either already have jobs lined up or people with advanced degrees.

Mar 4, 2013
target for life:
TNA:

Legal and Illegal immigrants drive wages down for unskilled workers. The collapse of the housing market added to this. The USA no longer needs to have unskilled manufacturing. All these things drive down wages for those without an education (70% of Americans).

As mentioned above, you restrict unskilled immigration into this country and wages will rise for menial positions. You remove restriction and regulations and the cost to manufacture in this country will decline, bringing home manufacturing jobs. Plenty of places that would love to make things in the market they sell into especially with all the costs associated with doing business in China now (strikes, increasing wages, cost of transoceanic shipping, potential IP theft, etc).

Countries with heavy immigration have higher income inequality (the USA is a perfect example). Countries that have moved towards an information based economy will have higher inequality. Is this bad? Absolutely not. It just shows that labor needs to adjust, retrain and/or relocate.

Honestly, I don't understand why we even let unskilled people into this country. They have nothing to offer & LITERALLY there is nothing they can do that an unemployed Am"rcan or teenager can't. In terms of pure efficiency & economic growth ALL immigration should be limited to skilled individuals. Seeing as this is difficult to define, I would say people that either already have jobs lined up or people with advanced degrees.

Because they vote Democrat and because it is cheap slave labor for companies. Republicans and Democrats support this.

We do not need anymore unskilled labor. Let demand increase the price and you will see plenty of Americans take these jobs. Just like when they say lettuce will cost $5 a head if not for Mexican labor. No it won't. No one will buy it at that price and farmers will invest capex and buy a machine to do it.

Mar 4, 2013

I think an economist named Dean Baker offers a series of good examples to show how inequality is not just a result of cyclical factors but also an outcome of decades of poor legislation from both sides of the aisle.

Some of the issues raised in this thread, such as immigration, only address the fringes of the problem. We are seeing erosion of incomes of skilled positions too, like civil and mechanical engineering.

In addition to all the above, we should add the fact that college is ridicusouly expensive for the middle class.

Mar 4, 2013

http://www.fastcoexist.com/1681502/is-working-on-w...

Well, at least we have the potential to do our part...

"Annual salaries in banking or investment start at $80,000 and grow to over $500,000 if you do well. A lifetime salary of over $10 million is typical. Careers in nonprofits start at about $40,000, and don't typically exceed $100,000, even for executive directors. Over a lifetime, a typical salary is only about $2.5 million. By entering finance and donating 50% of your lifetime earnings, you could pay for two nonprofit workers in your place--while still living on double what you would have if you'd chosen that route."

Mar 4, 2013

College is ridiculously expensive? How is this?

http://www.registrar.illinois.edu/financial/tuitio...

Roughly $40K from a top public school. Get scholarships, work, go to community college and do it in 5 years vs 4 and you will have little or no debt.

http://www.ro.umich.edu/tuition/tuition-fees.php

$6-8K a semester (12-18) credits for U Mich Ann Arbor. Take 18 credit hows and you can get a BS for around $50K from a top school.

http://www.utexas.edu/tuition/costs.html

UT Austin - $5K per semester, roughly $40K for a BS from a top university

http://studentaccounts.buffalo.edu/tuition/fall.php

SUNY Buffalo - $4K per semester, roughly $32K for a BS from a good state school

College isn't expensive. Kids make it expensive. Live at home, commute, go to community college, work part time, get scholarships/grants, work on campus, do it in 5 years vs. 4 years, on and on and on.

Life isn't easy. People should get used to that.

Mar 4, 2013
TNA:

College is ridiculously expensive? How is this?

http://www.registrar.illinois.edu/financial/tuitio...

Roughly $40K from a top public school. Get scholarships, work, go to community college and do it in 5 years vs 4 and you will have little or no debt.

http://www.ro.umich.edu/tuition/tuition-fees.php

$6-8K a semester (12-18) credits for U Mich Ann Arbor. Take 18 credit hows and you can get a BS for around $50K from a top school.

http://www.utexas.edu/tuition/costs.html

UT Austin - $5K per semester, roughly $40K for a BS from a top university

http://studentaccounts.buffalo.edu/tuition/fall.php

SUNY Buffalo - $4K per semester, roughly $32K for a BS from a good state school

College isn't expensive. Kids make it expensive. Live at home, commute, go to community college, work part time, get scholarships/grants, work on campus, do it in 5 years vs. 4 years, on and on and on.

Life isn't easy. People should get used to that.

HaHaHaHaHa!!!!!! I agree that people bitch too much and don't think things through. If college is expensive you attended the wrong school & did't work hard enough inside & outside of school (part-time menial work, internships, saving in HS etc.) Most bitches have their parents pay for a majority of their living expenses such as food, housing, cell phone, & car (let's be serious these are the major expenses for college kids) yet their parents complain.

Thing I don't agree with is your definition of a "good" & "top" school. Michigan, Austin, Buffalo??? If you can't get into a top school (harvard, wharton, columbia, etc.) you might want to reconsider attending college in the first place & what industry you will work in.

Too many people bother attending college when they shouldn't be in the first place. Get a trade job, work at your local micky d's, get vocational training, etc. College is cheap if you merit it, work hard, get a scholarship, be born into an incredibly wealthy family or earn money to pay for it first.

I agree with the community college thing. College rankings are retarded in the sense they place emphasis on shit schools like NYU, Notre Dame, GW, etc.when many of those kids accomplish little relative to what they pay for. Some C.C. schools deserve more love in my opinion. At least those people can get a real return on their capital spent.

Mar 4, 2013
target for life:
TNA:

College is ridiculously expensive? How is this?

http://www.registrar.illinois.edu/financial/tuitio...

Roughly $40K from a top public school. Get scholarships, work, go to community college and do it in 5 years vs 4 and you will have little or no debt.

http://www.ro.umich.edu/tuition/tuition-fees.php

$6-8K a semester (12-18) credits for U Mich Ann Arbor. Take 18 credit hows and you can get a BS for around $50K from a top school.

http://www.utexas.edu/tuition/costs.html

UT Austin - $5K per semester, roughly $40K for a BS from a top university

http://studentaccounts.buffalo.edu/tuition/fall.php

SUNY Buffalo - $4K per semester, roughly $32K for a BS from a good state school

College isn't expensive. Kids make it expensive. Live at home, commute, go to community college, work part time, get scholarships/grants, work on campus, do it in 5 years vs. 4 years, on and on and on.

Life isn't easy. People should get used to that.

HaHaHaHaHa!!!!!! I agree that people bitch too much and don't think things through. If college is expensive you attended the wrong school & did't work hard enough inside & outside of school (part-time menial work, internships, saving in HS etc.) Most bitches have their parents pay for a majority of their living expenses such as food, housing, cell phone, & car (let's be serious these are the major expenses for college kids) yet their parents complain.

Thing I don't agree with is your definition of a "good" & "top" school. Michigan, Austin, Buffalo??? If you can't get into a top school (harvard, wharton, columbia, etc.) you might want to reconsider attending college in the first place & what industry you will work in.

Too many people bother attending college when they shouldn't be in the first place. Get a trade job, work at your local micky d's, get vocational training, etc. College is cheap if you merit it, work hard, get a scholarship, be born into an incredibly wealthy family or earn money to pay for it first.

I agree with the community college thing. College rankings are retarded in the sense they place emphasis on shit schools like NYU, Notre Dame, GW, etc.when many of those kids accomplish little relative to what they pay for. Some C.C. schools deserve more love in my opinion. At least those people can get a real return on their capital spent.

Michigan, NYU, Notre Dame, GW are shit schools? Ok, you lost me.

College, as long as it isn't U Phoenix, will pay off in the long run if you can do it cheaply and with minimum debt. A 4 year degree in accounting, engineering, nursing, etc will also put you about the 50% mark in income. People just get fucked when they take loans out to live and "experience" college when they should be working to pay for it.

Mar 4, 2013
TNA:

And FYI - finance isn't for rocket scientists. It is basic arithmetic and algebra mixed with attention to detail and ability to be personable.

This is something we can both agree on.

Only people who don't work in finance or blindly glorify the profession make such ridiculous claims

target for life:

If you can't get into a top school (harvard, wharton, columbia, etc.) you might want to reconsider attending college in the first place & what industry you will work in.

It's comments like these that remind that that intelligent conversations rarely occur over the internet.

Mar 4, 2013
target for life:

If you can't get into a top school (harvard, wharton, columbia, etc.)

LOL....let me guess who doesn't go to Harvard or Wharton.....

Mar 4, 2013

Folks, you'll be pleased to see that the noble primate Sir Midas Mulligan Magoo beat you all to the punch of this topic...http://www.wallstreetoasis.com/blog/the-wealth-gap...

Metal. Music. Life. www.headofmetal.com

Mar 4, 2013

A good source of facts: http://www.frbsf.org/publications/economics/letter...

Here is a free e-book for Dean Baker, the economist I mentioned earlier. Good writer too.

http://www.cepr.net/index.php/publications/books/t...

Mar 5, 2013

How people argue this is just crazy, or denial.

Mar 5, 2013

The second someone posts something from that trash site Mother Jones I know they have lost an argument.

Mar 5, 2013
TNA:

The second someone posts something from that trash site Mother Jones I know they have lost an argument.

Let me reuse a quote from NorthSider: "Thanks for that penetrating insight TNA."

Mar 5, 2013
andres17:
TNA:

The second someone posts something from that trash site Mother Jones I know they have lost an argument.

Let me reuse a quote from NorthSider: "Thanks for that penetrating insight TNA."

Pretty easy to lob in a few jabs while ignoring posts that respond to your arguments.

    • 1
Mar 5, 2013

Clearly this is gonna be an agree to disagree for whatever reason. Nonetheless here are some charts that show the pain that the middle class has felt. Wages not really growing, costs significantly outpacing earnings, discretionary income as a percent of revenue declining despite adding an additional worker per household.

Honestly, I really don't know how this is an argument. Maybe, maybe, you can argue that its not as "bad" as people say it is but to say there hasn't been a decline isn't really supported by the facts. Back in the day a middle class family had a father that worked and a stay a home mother. College was essentially free for public schools and still cheap for private schools. Health care was a non issue. Families had decent savings rates or often had pensions and didn't really need to save. There is no question that this is not the case anymore. Period.

Image and video hosting by TinyPic
Not a good picture, 1 vs. 2 income and still a huge decline.

Image and video hosting by TinyPic
A break out of the previous chart.

Image and video hosting by TinyPic

Mar 5, 2013

I'll take this one chart at a time.

ke18sb:

Image and video hosting by TinyPic
Not a good picture, 1 vs. 2 income and still a huge decline.

WTF is this? Why would you ever compare a single-income household in 1970 to a dual-income household in 2000 with the objective of determining income stagnation or high fixed costs? There are dozens of reasons that have nothing to do with income distribution that could explain the differences here (children, more likely to own a home, more likely to own two cars, etc.).

Image and video hosting by TinyPic
A break out of the previous chart.

You obviously haven't been listening to anything I have been saying about the flaws of using AGI to group incomes, and the various reasons why wages appear to be increasing for the top 1% more than for the rest of the population. The primary reason is because of changes in the tax code in 1985 and the mid-90s which made it more lucrative to shift income from capital gains into ordinary income (how surprising that there is a big spike in the top 1% during those periods!!). But let's just go over the mountain of other considerations that go into accurate income distributions. I'll use pretty pictures to make it more clear:

Let's start with the scary income distribution figures that you use:

Chart 1

Now we know that the top 20% pay far more taxes and the bottom 20% overwhelming reap the benefit of those transfer payments, so let's adjust for that:

Chart 2

Of course, there are also far more people in the top income quintile than there are in the bottom income quintile in the United States (see here), so we need to adjust for the number of people in each income quintile to accurately compare them:

Chart 3

But most importantly, we know that the top income quintile works far more hours than the bottom income quintile (see here), so we should adjust for the number of hours worked to get an accurate comparison of income equality:

Chart 4

Just to put all of that information in one chart, so we can visualize how skewed the data that are used in sensationalized media portrayals:

Conclusion

Hopefull that clears things up a bit for you.

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Let's start by just pointing out that your own chart refutes one of your points from earlier, when you said:

... however, if you look at things such as ... fresh groceries as a percent of income ... the middle class is totally worse of than it was in the past

Clearly, groceries have remained flat in real terms.

Now, given that even according to your own ridiculously skewed data, wages for the bottom 90% have increased at least 25% (and probably much more than this, after adjusting for the factors I list above), gas, food and rent have likely declined as a percentage of real income. Let's just ignore the "median home" category, since this data comically ends right after the biggest housing boom in the history of the world (seriously?). That leaves health expenditures (which have risen, perhaps, 10% faster than real wages) and college.

It makes complete sense that health expenditures have increased relative to wages: you're paying for a much higher bar of medical technology (and the most advanced technology is the most expensive), while footing the bill for a stupendous (read absurd) increase in Medicaid spending over the same time frame. Adjust for the amount of transfer payments that are made via Medicaid, and you're looking at medical expenditures declining as a percentage of real income.

Finally, we have college. And our lovely government provides unlimited sums of money so that anyone can pay the astronomical tuition prices at some private institutions, so I don't understand what the concern is here. Furthermore, the highest sticker tuition prices aren't the problem: the low-tuition schools like community colleges and some crappy for-profit colleges, which receive >80% of their revenue from the federal government are. This is a non-factor, at best.

At the end of the day, I can cherry-pick 7 broad categories of consumer goods that have increased or decreased in real terms since 1970 in order to make an argument. This still says absolutely nothing about "stagnating wages" or "income inequality".

Mar 5, 2013
NorthSider:

Clearly, groceries have remained flat in real terms.

Why do you think americans are fat as fuck, with things such as diabetes out of control. People can't afford to eat healthy anymore. While in that chart groceries are flat, healthy food such as fruits, veggies, meats are out of reach for the normal family. Do you do you own shopping? These things are crazy expensive, a bag of grapes is like 6 bucks, blueberries are like 5 bucks for the smallest batch ever, mixed greens are like 4-5 bucks for a bag that barely makes one salad. If you are trying to feed a family you can't afford these items. . They are forced to resort to unheatlhy processed crap that is inexpensive (in part because of stupid farm subsidies particularly corn- look we agree on something amazing), and thus the rise in obesity.

I'd love to know more about your personal background and why you are so hell bent on saying that the middle class is better than before. Were you born with a silver spoon? or do you just have a desire to be rich? I don't say that being condescending but just curious to your personal interactions with the real world and what has shaped your borderline hostile opinions towards the middle class, taxes and government. You seem so disconnected from reality it's down right disturbing. Honestly, why are you so angst ridden about this topic. It's kinda bizarre. Please, bring us into your thought process that doesn't involve random facts, I want to know what shaped your beliefs. This is fascinating.

Mar 5, 2013

It makes me sick to even utter her name, but I will reference Liz Warrens paper on the subject:

http://www.yale.edu/law/leo/052005/papers/Warren.pdf

Houses are earning more, but saving less. Why?

1) Housing - Increase costs (thanks Fed and Government) and because people are buying bigger homes.

2) Auto - People are buying two cars instead of one. These cars are more expensive because of all the improvements since 1970.

3) Spending more on being "middle class" aka spending on keeping up with the Jones.

So what is hitting middle class families? Gas prices, housing prices, food prices, etc. Guess what? Don't live in the suburbs. Or live near a place where you can commute. Have fewer kids. Use public transportation. Have a smaller house or an apartment. Plan on your kid partially funding college or if they are too dumb to get scholarships send them to community college. Eat out less. On and on.

Income inequality proponents love selling the sob story as a backdoor way of increased taxation, regulation and government influence. Income inequality is fueled through increased taxation, regulation and government influence. I just read it today in an economy update how consumers are being impacted because of higher gas prices and increased taxes.

Reduce government, reduce taxation and make people responsible for their decision. This will reduce inequality and increase equality of opportunity, the only important measure.

Mar 5, 2013

I guess lower income people should think twice before breeding. Children are expensive. Sorry if I don't care about someone who made the CHOICE to have a kid and then is broke because of it.

Mar 5, 2013

We need to see the distribution based on adjusted income. Adjustments would include taxes paid, amounts given to charities and federal/state benefits collected.

Mar 6, 2013

I love how NorthSide literally destroys every argument with well thought out and documented arguments and others just use BS excuses how "I can't write a thesis". Fine, then don't try and refute someone if you aren't going to put in the effort.

Income inequality is good, a result of capitalism and skewed by a variety of things, including immigration which the US has a lot of.

And even if we suppose income inequality is bad or wrong, how do we fix it? With more government, correct? Government, IMO is the main driver of any inequality and even if it isn't the main driver it sure as hell is a major driver.

Don't have kids, don't commit crime and graduate high school. If you can't do those three basic things then I really don't care about helping you.

Mar 6, 2013

Here is a great article about upward social mobility. I know most people won't read the link, but you really should. It basically, in laymen's terms, lays out that no one is surprised when someone from a foreign country comes here and makes a killing, but then we aren't surprised when certain native born americans (black, white, etc. -- anyone who was born here) doesn't, and then we blame the system for suppressing the later.

He points out that cultural differences and views toward work ethic are the real cause, and not the system. Check it out -- this is a pretty reputable guy that I follow closely. Google him for his background -- I think you'll enjoy following him as well.

http://www.nationalreview.com/articles/342221/how-...

Mar 6, 2013
CountryUnderdog:

Here is a great article about upward social mobility. I know most people won't read the link, but you really should. It basically, in laymen's terms, lays out that no one is surprised when someone from a foreign country comes here and makes a killing, but then we aren't surprised when certain native born americans (black, white, etc. -- anyone who was born here) doesn't, and then we blame the system for suppressing the later.

He points out that cultural differences and views toward work ethic are the real cause, and not the system. Check it out -- this is a pretty reputable guy that I follow closely. Google him for his background -- I think you'll enjoy following him as well.

http://www.nationalreview.com/articles/342221/how-...

Sowell is just fantastic. Probably my favorite academic. I always enjoy his interviews with the Hoover Institution

(actually, that whole youtube channel is great - I often listen to it at work: http://www.youtube.com/user/HooverInstitution)

Mar 6, 2013

I just have one question for the "poor do it to themselves" group (and my apologies if it was already addressed somewhere in NorthSider's dissertation) but if this problem is so cut and dry, are you suggesting that if everyone didn't commit a crime and went to college (not even high school) that the lower class would disappear? On one hand I feel like that's exactly what you're suggesting, yet on the other I feel like you can't possibly believe that. People have this mindset of "lawyers, doctors, bankers, etc., make the most money because they made the best decisions. Since other people didn't make these decisions they deserve their outcomes". Which is an absurd way to look at the situation imho. If you aggregated all these "professional" positions together, it would come to a finite amount, not some floating amount that can absorb everyone going its way. The only result would be more lawyers, doctors, and bankers working cash registers than ever before (you can literally already see this starting). This whole argument reads like something out of an econ 101 book to me (i.e. a bunch of high level non-sense that has 0 real world applicability). How can someone be a product of their decisions, when even if they made the "right" ones there's a huge chance nothing would change?

Obviously this argument is null because I didn't embed graphs and links to studies... my apologies

    • 2
Mar 6, 2013
FrankD'anconia:

Obviously this argument is null because I didn't embed graphs and links to studies... my apologies

Don't forget excessive use of bold, italics and underline.

Mar 6, 2013

Don't forget excessive use of bold, italics and underline.

My apologies for trying to make my posts more readable and easy to consume. Glad you could stop by and lob in a few empty jabs as well.

FrankD'anconia:

I just have one question for the "poor do it to themselves" group (and my apologies if it was already addressed somewhere in NorthSider's dissertation)

For the record, I haven't made any of these arguments, and I think the reality is much more complex than this generalization.

This whole argument reads like something out of an econ 101 book to me (i.e. a bunch of high level non-sense that has 0 real world applicability). How can someone be a product of their decisions, when even if they made the "right" ones there's a huge chance nothing would change?

It's hard to argue that something has "0 real world applicability" when all of my arguments are substantiated by 100% real world data.

Obviously this argument is null because I didn't embed graphs and links to studies... my apologies

No, it's just ironic coming from someone who is criticizing others about practicality to make a wholly conceptual argument.

but if this problem is so cut and dry, are you suggesting that if everyone didn't commit a crime and went to college (not even high school) that the lower class would disappear? On one hand I feel like that's exactly what you're suggesting, yet on the other I feel like you can't possibly believe that. People have this mindset of "lawyers, doctors, bankers, etc., make the most money because they made the best decisions. Since other people didn't make these decisions they deserve their outcomes". Which is an absurd way to look at the situation imho. If you aggregated all these "professional" positions together, it would come to a finite amount, not some floating amount that can absorb everyone going its way. The only result would be more lawyers, doctors, and bankers working cash registers than ever before (you can literally already see this starting).

Look, this reads like a passage from the Communist Manifesto - and, in all honestly, I say that without any intention of deriding it. One of the primary reasons Marx and Engels preferred the Communist system was because it tended to engender the same societal stability that had permeated society for thousands of years prior to the advent of capitalism and the ensuing industrial revolution.

Prior to capitalism, life was governed by traditional institutions that subordinated the choices and destinies of individuals to various communal, political, and religious structures. These institutions kept change to a minimum, blocking people from making much progress but also protecting them from many of life's vicissitudes. The advent of capitalism gave individuals more control over and responsibility for their own lives than ever before, which proved both liberating and terrifying.

Ironically, as opportunities become more equal, outcomes often become more unequal. This follows almost intuitively: in a regimented, tyrannical society, outcomes are forcefully kept equal - traditional institutions enforce a caste system that virtually guarantees a small range of possible outcomes for various cross-sections of the population. On the other hand, when people are liberated and given equal opportunity, outcomes are dictated almost entirely based on their individual choices.

These choices can be based on any number of criteria, from hopes of material well-being to the desire to fit into a particular community, from the desire to move into a highly technical field to the desire to chase a dream of going into the arts. More importantly, these choices are heavily influenced by environment and upbringing. It should come as no surprise that a great deal of academic research has shown that pre-college students from low-income households perform better and have a higher rate of success when they are kept out of their homes for greater portions of the year. The most successful schools in low-income areas have 12 hour+ days, substantially curtailed summer breaks and considerably more homework to keep students occupied while at home. Indeed, it's not that these children lack opportunity, it's that their choices are influenced by their surroundings. And it's not the place of government to interfere in individual choices and liberties.

The capitalist system breeds a dynamic, innovative environment where entire industries are built and done away with in incredibly short time-frames. The culture of innovation, the crux of capitalism inherently creates unequal outcomes. There will always be super-rich in a capitalist society. And by definition, there will always (at least, relatively) be super-poor. However, the only societies in which the standard of living of the entire populace have improved dramatically are those that employ the free enterprise system and largely free trade.

Take a look at the data: the poor and rich alike are better off in countries that espouse the free enterprise system. One of the most compelling points argument surrounding your point here is that, since 1970, the global rate of poverty (defined as people subsisting on less than $2 per day, in real terms) has more than halved. Those countries that have participated in the global marketplace by opening their borders to free trade and protecting property rights for corporations (or as the economic-left would say, those that allowed multinational corporations to "exploit" their populations) have experienced the most dramatic reduction in poverty rates. The number of people living in extreme poverty declined even more significantly, from 430 million people in 1970 to 52 million in 1998.

Despite all of the global anti-poverty initiatives, despite all of the foreign aid programs, despite all of the uproar about multinational corporations, what increased the standard of living for the poorest global citizens was the free market, free trade system. And that is the only thing that will allow similar progress in other regions of the world.

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Mar 6, 2013
NorthSider:

Despite all of the global anti-poverty initiatives, despite all of the foreign aid programs, despite all of the uproar about multinational corporations, what increased the standard of living for the poorest global citizens was the free market, free trade system. And that is the only thing that will allow similar progress in other regions of the world.

This point highlights the key issues in your arguments. They are so binary. While, yes, I would never disagree to this up until a certain extent, it is a total over simplification of the system. So many other factors are at play besides just the economic/political system. Geography, climate, natural resources, culture, etc.

Also, a lot of your points hold some validity but they also fall victim to the fallacy of data and statistics. For example you posted charts on rising wages, but when broken out you can see the middle class barely grew. You posted charts on food prices decreasing but what you didn't show is consumer spend broken out showing the percentage of processed foods doubling. There is a reason why things such as diabetes are out of control because cheap processed foods are what people can afford and we can probably blame corn subsidies for that.

The primary problem is all of your arguments is they are too extremest. As I said before, you bring up valid points but the world is so simple. There is a middle ground. Also, regardless of the reason, government overfunding student loans, mortgages, etc. the fact is these prices have risen dramatically and have hurt the middle class.

At the end of the day, 40 years ago someone with a high school degree or even college could be a single breadwinner, support the family, have college be either free or inexpensive and earn a pension. That does not exist anymore. Period. So clearly there is something going on that isn't being picked up in your data.

Mar 6, 2013
FrankD'anconia:

I just have one question for the "poor do it to themselves" group (and my apologies if it was already addressed somewhere in NorthSider's dissertation) but if this problem is so cut and dry, are you suggesting that if everyone didn't commit a crime and went to college (not even high school) that the lower class would disappear? On one hand I feel like that's exactly what you're suggesting, yet on the other I feel like you can't possibly believe that. People have this mindset of "lawyers, doctors, bankers, etc., make the most money because they made the best decisions. Since other people didn't make these decisions they deserve their outcomes". Which is an absurd way to look at the situation imho. If you aggregated all these "professional" positions together, it would come to a finite amount, not some floating amount that can absorb everyone going its way. The only result would be more lawyers, doctors, and bankers working cash registers than ever before (you can literally already see this starting). This whole argument reads like something out of an econ 101 book to me (i.e. a bunch of high level non-sense that has 0 real world applicability). How can someone be a product of their decisions, when even if they made the "right" ones there's a huge chance nothing would change?

Obviously this argument is null because I didn't embed graphs and links to studies... my apologies

We aren't discussing class, we are discussing income. If no one committed crime, had kids before marriage and graduated high school they would still be a "lower class", but people wouldn't be as poor from an income perspective.

And NorthSide uses a perfect amount of bold and graphs to support his argument and illustrate his point.

Mar 6, 2013
TNA:

We aren't discussing class, we are discussing income. If no one committed crime, had kids before marriage and graduated high school they would still be a "lower class", but people wouldn't be as poor from an income perspective.

I obviously disagree. No one is going to pay someone more than they have to. You keep giving this checklist of things someone has to do to increase their income but you overlook the fact that if everyone did that, nothing would change. If all of a sudden no one committed crimes, had kids before marriage, and graduated high school- they would all be absorbed into this infinite size body of higher paying jobs? Or are you saying these lower paying jobs would just increase their salary? Just curious- because neither would happen. The only result would be low income people going from not hitting your checklist to hitting your checklist.

Mar 8, 2013
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