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Tilting at Windmills

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September 1, 2006
By: Kevin Drum

RICH GETTING RICHER....NEWS AT 11....Good news, comrades! Revisions to last quarter's economic data show that wages and salaries grew faster than initially estimated:

As a result, wages and salaries no longer make up the smallest share of the gross domestic product since World War II. They accounted for 46.1 percent of all economic output in the second quarter, down from a high of 53.6 percent in 1970 but up from 45.4 percent in the spring of 2005.

Boo yah! Sure, compensation is down seven percentage points over the past three decades, but it's no longer the lowest on record. Go team!

Of course, there's always a skunk at the garden party, isn't there?

Joshua Shapiro, chief United States economist at MFR, said that much of the income increase probably went to people who work on Wall Street or for hedge funds. The biggest spike occurred in the first quarter, when financial companies typically pay bonuses. Other data, including Labor Department figures on wage growth and private-sector surveys on consumer confidence, suggested that most families were not receiving pay increases that outpaced inflation.

If this were more widely spread around, Mr. Shapiro said, we would be seeing it in readings on confidence and sentiment. It tends to indicate this is pretty concentrated on the upper end.

As Andrew Tobias is fond of saying, it's a grand time to be rich in America. For the rest of us, at least we get to watch.

Kevin Drum 12:02 AM Permalink | Trackbacks | Comments (185)

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Comments

Oh bullshit, Kev. GOP has already convinced me that everyone in America is a millionaire.

Except, I bet, him.

Posted by: craigie on September 1, 2006 at 12:05 AM | PERMALINK

So? The market distributes wealth to those who work the hardest. The guy taking hamburger orders at mcdonalds doesn't make as much as a corporate CEO, who routinely pulls a 90 hour week.

Posted by: American Hawk on September 1, 2006 at 12:20 AM | PERMALINK

The market distributes wealth to those who work the hardest.

Then moms and ditch diggers should be gazillionaires.

Posted by: Windhorse on September 1, 2006 at 12:22 AM | PERMALINK

It is well known that America's poor are actually very rich. They all have 52" plasma TVs, drive tricked out Escalades, and have diamond encrusted cell phones. But people like Kevin want to engage in class warfare. All but 11 poor people voted for Bush because they know his capital gains tax cut will have them all in mansions with butlers in a few years. Minimum wage is a lot of money, and the poor have wisely engaged in real estate speculation and buy big internet start-up IPOs. America's poor are rich thanks to the Repubs. Demo-loser talk of poor housing and nutrition, lack of access to healthcare, and social dysfuntion is total BS--that only happens in Africa.

Posted by: Al on September 1, 2006 at 12:23 AM | PERMALINK

The guy taking hamburger orders at mcdonalds doesn't make as much as a corporate CEO, who routinely pulls a 90 hour week.

Well yeah, but 60 of them are on the golf course.

Posted by: craigie on September 1, 2006 at 12:27 AM | PERMALINK

Does anyone know where I can find a quality indentured servant? I have become bored buring my own money so I would like to outsource that task.
He must be well groomed, discreet and a eunuch.

Posted by: McDuck on September 1, 2006 at 12:35 AM | PERMALINK

When one includes fringe benefits, the picture changes. Current wages+fringe benefits is a reasonably high percentage of total income by historical standards. The New York Times admits:

Total compensation including employee health benefits, which have risen in value in recent years equaled 57.1 percent of the economy, down from 59.8 percent in 1970. Still, compensation makes up a larger share of the economy than it did throughout the 1950s and early 60s, as well as during parts of the mid-1990s and the last couple of years.

Posted by: ex-liberal on September 1, 2006 at 12:39 AM | PERMALINK

You know, instead of demonizing the rich, how about you jackass liberals start workikng harder and maybe you could make some money and drop the jealousy.

Does Kevin have a quota on how many "bad rich people" entries he has to post? Good grief, the standard of living in America is at a historical high. It is a simple irrefutable fact.

Posted by: Rock on September 1, 2006 at 12:54 AM | PERMALINK

As America ages, and more people retire early, wouldn't we expect to see a shift in GNP from wages to things like dividends and investment returns and pension payments, none of which is in wages. Also, since a far greater percentage of americans are self-employed, wouldn't we again expect capital returns and business profits (which is how independent business people take much of their income) to outstrip wages? And the problem with this is, what?

Posted by: Coyote on September 1, 2006 at 1:00 AM | PERMALINK

Hey "ex-liberal" - or whatever - unpack that. Don't fewer folks have health benefits ? And pensions ? Does your "total compensation" include the 401K matching funds showing up as annual compensation as opposed to deferred - and increasingly defaulted - pension promises of yore. And what about stock options? If this "total comensation" includes excecutive stock options, you are sending signals from Mars. How about a link that details your "facts" so I can tell if you're merely brainwashed, (inadvertantly?) lying or monumentally stupid. I'll lay serious odds against your argument holding any water.

Posted by: brucds on September 1, 2006 at 1:05 AM | PERMALINK

There are countries where everybody works very hard, and nobody is rich. True equality. Try living in one for a few years.

Posted by: harmony on September 1, 2006 at 1:05 AM | PERMALINK

"You know, instead of demonizing the rich, how about you jackass liberals start workikng harder and maybe you could make some money and drop the jealousy."

Wait, I thought all Liberals were rich, elite, and effete...

I don't care how high the standard of living is in America, when upward mobility is nill, it doesn't matter when your on the bottom.

The market distributes wealth to those who work the hardest.

If you think checking stock quotes on your BlackBerry is hard work, I have some beach front property in New Orleans I'd like to sell you...

Posted by: Fred on September 1, 2006 at 1:07 AM | PERMALINK

It looks like the GOPers all got their fax at the same time.

Posted by: brucds on September 1, 2006 at 1:08 AM | PERMALINK

I'm Retired. I noticed back in June that there was a small increase in my pension check and the same in July. I thought I knew what it was so I checked and I was right. Because of the tax cut in May I now get .83 more a month. .83X12=$9.96 a year more for my share of The American Dream.If you make between 50-70,000 that's what you're going to get(around 20.00 for a family of 4). GOD BLESS Bush and the Rethugs!

Posted by: R.L. on September 1, 2006 at 1:13 AM | PERMALINK

A.H. obviously has never worked with a CEO. Having worked with a couple I can say that 35 to 40 hours is normal. In fact I wouldn't expect them to work more as this would lead to burnout and is in general bad for a company.

Asshat.

Posted by: qingl78 on September 1, 2006 at 1:14 AM | PERMALINK

Methinks the "good news" our wingnut friends are spreading is, upon examination, the story of insanely spiralling health care costs...

Booh Rah! (To quote Kevin/) Party like it's NineteenNinetyNine!!!!!!

Posted by: reg on September 1, 2006 at 1:14 AM | PERMALINK

NOBODY in corporate America works 40 hour weeks anymore. My wife takes calls and answers messages all fucking weekend. The corporate "hookup" has gotten totally psychotic. But you can bet your ass nobody send their panic attacks to the fucking CEO on Sunday afternoon.


These GOPers are just total shitheads. They'll say anything and float any derangement or delusion in order to defend their ideology against attacks from the Real World. Asshats indeed.

Posted by: reg on September 1, 2006 at 1:17 AM | PERMALINK

Wages and salaries as a percent of GDP is not a very good measurement of their distribution.

Posted by: Hostile on September 1, 2006 at 1:32 AM | PERMALINK

"with the tax rate increasing as income increases"

Dream on...

And it's good to know that you've factored in alimony payments and child support. That would mean , of course, that there are dollars (predominantly wages) that get counted TWICE. Your list is one of the stupides bits of ineffectual propaganda I've ever seen.

Posted by: reg on September 1, 2006 at 1:35 AM | PERMALINK

I teach at the college level with a terminal degree for less than 60K a year. My average work week is 60 hours. With my wife's combined income we may be able to buy a house, maybe.

Posted by: nuttylittlenutnut on September 1, 2006 at 1:39 AM | PERMALINK

Rather than temporize with GOPer flatulence, let's consider what the hell we do about this.

Thomas Frank, offered here in full (because of TimeSelect.)

September 1, 2006
Guest Columnist/New York Times
RENDEZVOUS WITH OBLIVION

Over the last month I have tried to describe conservative power in Washington, but with a small change of emphasis I could just as well have been describing the failure of liberalism: the center-lefts inability to comprehend the current political situation or to draw upon what is most vital in its own history.

What we have watched unfold for a few decades, I have argued, is a broad reversion to 19th-century political form, with free-market economics understood as the state of nature, plutocracy as the default social condition, and, enthroned as the nations necessary vice, an institutionalized corruption surpassing anything we have seen for 80 years. All that is missing is a return to the gold standard and a war to Christianize the Philippines.

Historically, liberalism was a fighting response to precisely these conditions. Look through the foundational texts of American liberalism and you can find everything you need to derail the conservative juggernaut. But dont expect liberal leaders in Washington to use those things. They are New Democrats now, enlightened and entrepreneurial and barely able to get out of bed in the morning, let alone muster the strength to deliver some Rooseveltian stemwinder against economic royalists.

Mounting a campaign against plutocracy makes as much sense to the typical Washington liberal as would circulating a petition against gravity. What our modernized liberal leaders offer that is, when theyre not gushing about the glory of it all at Davos is not confrontation but a kind of therapy for those flattened by the free-market hurricane: they counsel us to accept the inevitability of the situation and to try to understand how we might retrain or re-educate ourselves so we will fit in better next time.

This last point was a priority for the Clinton administration. But in The Disposable American, a disturbing history of job security, Louis Uchitelle points out that the New Democrats emphasis on retraining (as opposed to broader solutions that Old Democrats used to favor) is merely a kinder version of the 19th-century view of unemployment, in which economic dislocation always boils down to the fitness of the unemployed person himself.

Or take the inevitability of recent economic changes, a word that the centrist liberals of the Washington school like to pair with globalization. We are told to regard the free-trade deals that have hammered the working class almost as acts of nature. As the economist Dean Baker points out, however, we could just as easily have crafted free-trade agreements that protected manufacturing while exposing professions like law, journalism and even medicine to ruinous foreign competition, losing nothing in quality but saving consumers far more than Nafta did.

When you view the world from the satisfied environs of Washington a place where lawyers outnumber machinists 27 to 1 and where five suburban counties rank among the seven wealthiest in the nation the fantasies of postindustrial liberalism make perfect sense. The reign of the knowledge workers seems noble.

Seen from almost anywhere else, however, these are lousy times. The latest data confirms that as the productivity of workers has increased, the ones reaping the benefits are stockholders. Census data tells us that the only reason family income is keeping up with inflation is that more family members are working.

Everything I have written about in this space points to the same conclusion: Democratic leaders must learn to talk about class issues again. But they wont on their own. So pressure must come from traditional liberal constituencies and the grass roots, like the much-vilified bloggers. Liberalism also needs strong, well-funded institutions fighting the rhetorical battle. Laying out policy objectives is all well and good, but the reason the right has prevailed is its army of journalists and public intellectuals. Moving the economic debate to the right are dozens if not hundreds of well-funded Washington think tanks, lobbying outfits and news media outlets. Pushing the other way are perhaps 10.

The more comfortable option for Democrats is to maintain their present course, gaming out each election with political science and a little triangulation magic, their relevance slowly ebbing as memories of the middle-class republic fade.

Thomas Frank, a guest columnist, is the author, most recently, of Whats the Matter With Kansas?

Posted by: reg on September 1, 2006 at 1:39 AM | PERMALINK

Where the fuck do alimony and child support payments come from ? Corporate taxes ? If you can't figure that one out, you need to go back and get your GED. And thanks for the "estates and trusts" line item. With the end of the "death tax" that one must be spiralling. You guys are clueless. At least, if you're gonna spoonfeed propaganda, be prepared to defend it in all of it's glory.

Posted by: reg on September 1, 2006 at 1:44 AM | PERMALINK

Posted by: GOP on September 1, 2006 at 1:27 AM

I'm surprised to see GOP agreeing with liberals, that Government programs do make peoples lives better.

Posted by: AkaDad on September 1, 2006 at 1:46 AM | PERMALINK

"Right. Those IRS tax rate tables are just a figment of your imagination."

Is that response a joke ???? Do you really believe that the rich pay taxes at the same rate as the middle class. Have you ever heard of payroll taxes ??? Or the percentage of sales tax working people pay on their incomes as opposed to the wealthy ? What planet are you sending signals from ?


Posted by: reg on September 1, 2006 at 1:47 AM | PERMALINK

Money received from estates and trusts is obviously a form of income. For some people, it is a significant source of income. That is why the Census Bureau includes it in its definition of income. Again, if you think there is something wrong with this, you need to explain what the problem is.
Posted by: GOP

then why are little bitches like you against taxing it like income?

Posted by: Nads on September 1, 2006 at 1:53 AM | PERMALINK

"I see. So you think there's a problem, you just can't explain what that problem is. Good one."


It's so obvious, I didn't think I'd need to spell it out further. (I thought I was joking about the GED!)

Pleeeze sir, think for just a minute who pays the alimony and child support you included in your list of reasons "total compensation" has grown. It's wage-earners - which means, of course, that those dollars get doubled if one uses your list and simple addition. Get it? Please don't ask me to explain it again.

Posted by: reg on September 1, 2006 at 1:56 AM | PERMALINK

Google "Bureau of Labor Statistics."

According to the Bureau of Labor Statistics:

July unemployment: 4.8%
July job growth: 113,000 net gain

And Dems think we believe them when they tell us the sky is falling!

Posted by: Frequency Kenneth on September 1, 2006 at 1:56 AM | PERMALINK

So you really are just fucking stupid...

Posted by: reg on September 1, 2006 at 2:06 AM | PERMALINK

Posted by: GOP on September 1, 2006 at 1:55 AM

The point you were making had to be justified by Government programs added in, to say that poor people arent really that bad off. So you therefore agreed by default.

Posted by: AkaDad on September 1, 2006 at 2:07 AM | PERMALINK

Since the problem is that you're stupid beyond belief, I'll take pity on you and explain it again. If a couple weren't divorced - in which case, incidentally, their expenses would be less - the money included in your list, purporting to explain how "total compensation" is skyrocketing, would be counted ONCE as family income. Because it's alimony and/or child support, by your "lights" it's counted once as wages to the payer and again as alimony or child support payments to the payee. It's "family" income - albeit a "broken" family - that is doubled up in your figures. Which is so elementary I can't believe I'm typing this shit about four of my own comment down from first noting it.

Posted by: reg on September 1, 2006 at 2:11 AM | PERMALINK

I'm not, whatever the fevered imagination of little whores like you wants to believe.
Posted by: GOP

you're right, actually ... there is nothing you've posted here today (or, offhand, in the recent past I can recall) supporting the repeal of the estate tax.

my bad. ...

it's just that you're just such a fucking whore for this administration and its policies, and so clearly hold working people in contempt, that I assumed something which wasn't in evidence.

apparently, despite being a fat white guy in missouri, you don't suck repub dick in ALL circumstances.

Posted by: Nads on September 1, 2006 at 2:14 AM | PERMALINK

Excerpted from Ezra

"... It's not entirely clear why technological advance enters this picture. Indeed, it would seem that if the American worker had made more money, they'd even be able to buy more cool technology, allowing them to further enjoy 2006's fruits. So here's a counter-thought experiment. Call it Klein's Anti-Stagnation Device. Let's imagine two worlds, one in which you live in 2004 on the median salary of $46,000 a year, and the other in which you live in 2006, but median wages had kept pace with productivity post-1973 (as they did between 1947 and 1973) and you make this world's median salary: $60,000.

Which would you prefer?

That's the point. Boudreaux's argument that technology has improved our lives is indisputably true (I would rather make my lowly salary in the age of the internet than cash it in in the age of the telegram), but it's really neither here nor there so far as concerns over middle class wage stagnation go. The question isn't now or then, but now or better now."

Or is the difference explained by the much higher alimony that people get in 2006?

Posted by: craigie on September 1, 2006 at 2:16 AM | PERMALINK

"You don't understand what you're talking about and you don't read. You're not worth bothering with."

That's humorous after your losing battle with the elementary issue of why an increase in alimony and child support transfers isn't enriching the middle working class.

Posted by: reg on September 1, 2006 at 2:18 AM | PERMALINK

surprisingly well, actually ... you'd be surprised how easy it is to oppose the deluded pretensions of white fanatical christofascists and their corporate masters.

and how much fun it is to slap around their apologists like the worthless little bitches they are. ...

slow night.

Posted by: Nads on September 1, 2006 at 2:26 AM | PERMALINK

GOP: What's "down" is only wages and salaries as a share of GDP. That decline has been offset by a rise in employee benefits as a share of GDP.

As a % of NDI (haven't run the numbers for GDP), salary & wages, salary & wages + benefits, and compensation are all down significantly from 30 years ago; as a % of NDI, salary & wages peaked in the late 60's; salary & wages + benefits and compensation peaked in the late 70's.

Posted by: has407 on September 1, 2006 at 2:27 AM | PERMALINK

Posted by: GOP on September 1, 2006 at 2:19 AM

So Government programs don't make peoples lives better?

Posted by: AkaDad on September 1, 2006 at 2:27 AM | PERMALINK

Truth be known - and this is not hyperbole - the Republican economic model is medieval serfdom, whereby the wealthy landowners pass down their estates in perpetuity while at the same time avoiding almost all forms of taxation (cf. the GOP desire to end estate and capital gains taxes).

The typical Republican reaction to clear and simple apples-to-apples historical data on economic indicators like wage income is to throw an entire fruit basket of irrelevant data at you.

You have to love snowjobs like this:

Focusing on wages and salaries alone ignores all other kinds of income. The Census Bureau counts 17 other types of income in addition to wages and salaries ("earnings"). Those are: Unemployment compensation, Workers compensation, Social security, Supplemental security income, Public assistance, Veterans payments, Survivor benefits, Disability benefits, Pension or retirement income, Interest, Dividends, Rents, royalties, estates & trusts, Educational assistance, Alimony, Child support, Financial assistance from outside of the household, and Other income.

This is on par with Rush Limbaugh blaming the poorest of New Orleans Katrina victims for not packing up their SUVs and leaving the city: it shows the kind of mind numbing disconnect from reality that could only come from a Bush supporter.

Basically, the implied argument here is that unemployed people - people who receive unemployment compensation, workers comp, public assistance, disability benefits and such are somehow doing better than your average gainfully employed worker.

Oh sure, the list also contains things like dividends, rents, and royalties types of income that apply primarily to just a small percentage of (mostly wealthy) Americans.

Pension and retirement income obviously are not relevant to a discussion about today's workers failing to keep up with inflation.

At best what GOP is left with is the argument that 'if you consider all the divorced, single moms, widows, and vets', this economy barely manages to escape being the worst since WWII. Bravo.

Talk about the soft bigotry of NO expectations.

Posted by: Augustus on September 1, 2006 at 2:33 AM | PERMALINK

I'm putting together this thread with the one from the other day, where you and republicrat were telling us that because we have cool laptops that let me read this crap wirelessly, it doesn't matter that jobs are being exported to India.

Actually, what I find intriguing is that you guys are now doing what you've long accused us liberal elitists of doing - arguing against people's actual experiences. Every time Kevin brings this stuff up, it's an avalanche of factoids from you guys to try to tell people that everything is fabulous - despite the fact that people don't feel that way at all. Wages have stagnated, stuff is more expensive (not important stuff like TVs, but trivial things like health care), jobs are less secure, even among educated professionals, and people feel that, they really do.

But go on, keep telling them they are wrong.

Posted by: craigie on September 1, 2006 at 2:41 AM | PERMALINK

slightly more optimistic take here:

http://www.businessandmedia.org/articles/2006/20060831113629.aspx


Kevin, you need to consider cognitive behavior therapy for your depression: accentuate the positive and eliminate the negative.

Posted by: republicrat on September 1, 2006 at 2:41 AM | PERMALINK

Though I will grant you that income inequality has been rising for decades. But that's a bad thing, and present policies are certainly making it worse.

Posted by: craigie on September 1, 2006 at 2:43 AM | PERMALINK

craigie:

And as if on cue, republicrat just did.

Apparently we need cognitive therapy to fight this delusional depression from being less able to assimilate their nifty factoids than the experiences of our own daily lives ...

Sigh ... sign me up :(

Bob

Posted by: rmck1 on September 1, 2006 at 2:45 AM | PERMALINK

For the rest of us, at least we get to watch.

I enjoy watching other people who sing and play football better than I do. Why shouldn't I enjoy watching other people who make money better than I do?

Posted by: republicrat on September 1, 2006 at 2:46 AM | PERMALINK

republicrat:

That's really kind of pathetic when you think about it.

Football and singing are activities that have intrinsic value.

Bob

Posted by: rmck1 on September 1, 2006 at 2:48 AM | PERMALINK

Let's look at the facts. Here are the number of poor Americans under the last six presidents.
Nixon (R) 34,593
Carter (D) 22,898,012
Reagan (R) 1,755
Bush I (R) 3,390
Clinton (D) 121,777,054
Bush II (R) 46
Obviously liberal welfare policies push more people into poverty while Republican tax cuts for the wealthy lift all boats. When will you whining libs face the pure truth and stop the class warfare rhetoric!

Posted by: Al on September 1, 2006 at 2:53 AM | PERMALINK

GOP:

Then why do recent opinion polls show a majority of people surveyed feeling uncertain about the economic future?

Bob

Posted by: rmck1 on September 1, 2006 at 3:01 AM | PERMALINK

Wages have stagnated. In the last few years, in real terms, they've declined, even taking benefits into account (and note that benefits have not improved in that period, of course, they've simply become more expensive).

Not that the cheap labor advocates will pay attention. They think it's wonderful that our country, like most of its citizens, is running in the red, deeply in debt.

"We have the fattest poor people in the world. That proves that America is great!"

It might be a problem that even well-to-do white American males are only as healthy as poor Britons, or that northern Europeans are taller and live longer.

It's clear that we could be doing better than we are, and the countries with better health are also those with less inequality. Countries with more inequality than the U.S. tend to do much worse.

Posted by: bad Jim on September 1, 2006 at 3:23 AM | PERMALINK

It's far from clear that the CEO's who appear to be reaping nearly all the return from rising productivity are in any sense responsible for it. Too many of them collect vast sums even as their companies are tanking.

Stocks of American companies aren't significantly outperforming those of all other countries. Our country as a whole is running a loss. Surely this isn't evidence of our superiority.

Posted by: bad Jim on September 1, 2006 at 3:33 AM | PERMALINK

GOP:

You know you really are totally exasperating, nonstop spinning propaganda machine. Black really is white to you -- which is why you continue to debate points after you've been thoroughly smacked down. Forget "facts" -- you're impervious to common *language*.

I mean, it's completely insufferable. I hope you understand why you become such an object of ridicule around here sometimes ...

You will defend to the very death the proposition that "people are getting richer." Even if it flies in the face of common experience. I cite a poll (it was in the NYT a few days ago) that says people are increasingly worried about their economic future. Now if people are worried about the future, that means that they don't feel better off than during times where they worried less -- like, say, in the 90s (and I'm talking about the average working stiff, not folks who who were playing the tech market). So *whatever* their rate of compensation (and I'm not going to split hairs with you over wages, salaries, investment income, government bennies, etc. etc.), if they're *worried* about the future, what they're doing is *amortizing their income on the fly*. See, because if the newly "dynamic" (Orwell-speak for insecure) labor market means they have an appreciable chance of losing their job, then projecting down the road, they don't *feel* as "rich" as they did say a decade ago.

Or in plain English, that people are skating by today with less cushion than they previously had. And that's reflected in the cooling housing markets, the price of fuel, healthcare, and the negative rate of savings. More families are one crisis away from bankruptcy than ever before.

And yet, you know, the raw numbers tell us that we're "richer" than we were a few years ago.

Well, you can eat your raw numbers, GOP. The overall economic context has changed, and hardly for the better.

Bob

Posted by: rmck1 on September 1, 2006 at 3:58 AM | PERMALINK

The market distributes wealth to those who work the hardest.

American Hawk, I had no idea you were a Communist. This idea is straight out of the first chapter of Marx's Capital, the labor theory of value. Our non-Communist American economy is based on the idea that the value of a commodity (be it a banana or a management function) is properly determined by demand, not by how much labor someone put into it. But if you want to advocate the overthrow of our economy in favor of Soviet-style state-monopolistic socialism, go right ahead, comrade.

The guy taking hamburger orders at mcdonalds doesn't make as much as a corporate CEO, who routinely pulls a 90 hour week.

I have a (legal) immigrant friend who, when he is not studying to finish his college degree (he's 32 with a family to support), routinely works 80-hour weeks, split between a parking garage and a Burger King. And yet he fails to make as much as the CEO of Halliurton. Why is that?

You stinking piece of Republican shit.

Posted by: brooksfoe on September 1, 2006 at 3:58 AM | PERMALINK

Atrios serves up a bit of a NYTimes op-ed by Thomas Franks which is precisely on point:

What we have watched unfold for a few decades, I have argued, is a broad reversion to 19th-century political form, with free-market economics understood as the state of nature, plutocracy as the default social condition, and, enthroned as the nation’s necessary vice, an institutionalized corruption surpassing anything we have seen for 80 years. All that is missing is a return to the gold standard and a war to Christianize the Philippines.

Historically, liberalism was a fighting response to precisely these conditions. Look through the foundational texts of American liberalism and you can find everything you need to derail the conservative juggernaut. But don’t expect liberal leaders in Washington to use those things. They are “New Democrats” now, enlightened and entrepreneurial and barely able to get out of bed in the morning, let alone muster the strength to deliver some Rooseveltian stemwinder against “economic royalists.”

Mounting a campaign against plutocracy makes as much sense to the typical Washington liberal as would circulating a petition against gravity. What our modernized liberal leaders offer — that is, when they’re not gushing about the glory of it all at Davos — is not confrontation but a kind of therapy for those flattened by the free-market hurricane: they counsel us to accept the inevitability of the situation and to try to understand how we might retrain or re-educate ourselves so we will fit in better next time.


Posted by: bad Jim on September 1, 2006 at 4:21 AM | PERMALINK

The complete column's been posted here up at "1:39 am"

Posted by: brucds on September 1, 2006 at 4:49 AM | PERMALINK

brooksfoe:

Well, in all fairness, that was Ricardo's idea first.

Bob

Posted by: rmck1 on September 1, 2006 at 6:26 AM | PERMALINK

The rich might be amassing piles of wealth now, but it never lasts. The One Who is Judge over all hears the cries of the poor. While the "Christian" Republican Right hurls epithets at others calling them Sodomites, they may find themselves committing biggest offenders against the real Sin of Sodom.

The Actual Sin of Sodom:
"This was the iniquity of your sister Sodom: she and her daughters had pride of wealth and food in plenty, comfort and ease, and yet she never helped the poor and the wretched." -- Ezekiel 16:49

Posted by: Monk-in-Training on September 1, 2006 at 6:38 AM | PERMALINK

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Posted by: qq on September 1, 2006 at 6:50 AM | PERMALINK

Among other problems with his ignorant arguments, GOP ignores feedback loops.

Several government compensation programs, like food stamps and unemployment benefits, are driven by poor economic performance. Others, like alimony and disaster assistance, are driven by human misery and suffering.

Non-wage compensation wouldn't bolster the economy if the economy was performing better or if we didn't have disasters like Katrina.

I guess we can expect the economy to weaken this year with no Cat 5 hurricanes (so far). All the money we save from rebuilding New Orleans can go into more tax cuts for the rich.

God forbid the divorce rate should decline -- think of the economic dislocation reduced alimony payments would cause.

By the way, the states of Wyoming and Texas are among the country's leaders in shares of the population who are divorced (Massachusetts has the lowest percentage of divorced population). Shouldn't we thank red state residents for the disporportionately strong contribution they make to the non-wage portion of our national economy?

The point, of course, is that we should be implementing policies to create the jobs America wants and needs, not simply pursue data gimmicks to make economic performance look good during an election year.

I liked the idea in an earlier posting of opening up the US legal profession to globalization. US law schools in Bangalore -- now there's a goal worth pursuing. Subjecting $450 per hour legal fees to real international competition would be a great, free-market strategy for reducing the gap between the rich and the poor.

Cutting agricultural subsidies would be another way to subject the salaries of food conglomerate executives to the same kinds of competition the rest of us are facing.

While we're at it, let's outsource Congress. When they're not playing golf or attending fundraisers our representatives & senators mostly just do help desk stuff & constituent service -- the private sector has been outsourcing that for years.

Posted by: pj in jesusland on September 1, 2006 at 7:37 AM | PERMALINK

Nads: surprisingly well, actually ... you'd be surprised how easy it is to oppose the deluded pretensions of white fanatical christofascists and their corporate masters.

Well, let's parse that, given what we know about Don P/GOP.

Deluded and pretentious? Check. Fanatical? Double check.

Christofascist? Well, cmdicely's got a theory that Don's atheist gig might be a pose from which he attempts to dismantle liberal Christianity, and that Donny's actually a right-wing fundamentalist. Could be; don't care.

White? Maybe. Donny frequently forgets to use American spellings and instead lapses into the preferred usage of his childhood, which was evidently spent in the U.K., Canada, Australia, New Zealand or a former British colony. I'm betting on the last for reasons that have to do with some of his other cultural tics.

Has corporate masters? Oh, fuck, yes.

I'll just go ahead and post Don's stock response to a female detractor: "shortshop is an ugly shrew harpy bitch," and save Don P the trouble, shall I?

Posted by: shortstop on September 1, 2006 at 7:47 AM | PERMALINK

What I said is that most economists believe that scientific and technological advances are one of the primary causes of the long-term trend of slowly rising economic inequality.

Hold on there, Gopper. (1.) Provide evidence that "most" economists believe any such thing; and (2.) The claim would seem to imply economic inequality has been steadily increasing since the birth of the Industrial Revolution. Is this in fact the case?

Shit. Maybe Marx was right after all!

Posted by: bobbyp on September 1, 2006 at 8:17 AM | PERMALINK

I agree its unfortunate citizens cant make more money and elevate their standard of living. Congress needs to step in and raise the minimum wage. Gone are the days a person could deliberately set out to learn a skill or trade paying a higher wage than the current job they hold. What good is an economy that wont allow you to accrue ever increasing pay for performing the very same job year after year? If only the federal government and various state or local municipalities offered free or subsidized job training, educational assistance and tax breaks for relocation and retraining to other jobs would the underpaid workers plight improve. Oh, wait

Posted by: steve duncan on September 1, 2006 at 8:25 AM | PERMALINK


R.L.: (way upthread) Because of the tax cut in May I now get .83 more a month. .83X12=$9.96 a year more for my share of The American Dream.If you make between 50-70,000 that's what you're going to get(around 20.00 for a family of 4). GOD BLESS Bush and the Rethugs!

and that's not all...

meanwhile....

the national debt rose to $8.5-trillion

Posted by: thisspaceavailable on September 1, 2006 at 9:04 AM | PERMALINK

I don't think that alimony and child support payments are included in personal income. There are quite a few imputed items relating to benefits,barter,insurance payments etc. but I couldn't find anything in the methodology papers from the BEA that shows alimony or child support for the likely reasons,they're not income from services as defined.

Posted by: TJM on September 1, 2006 at 9:08 AM | PERMALINK

Does anyone know where I can find a quality indentured servant? I have become bored buring my own money so I would like to outsource that task.
He must be well groomed, discreet and a eunuch.

Posted by: McDuck

W. will be out of work in a couple of years, McDuck.

Posted by: Ace Franze on September 1, 2006 at 9:11 AM | PERMALINK


ah: The market distributes wealth to those who work the hardest.


MS. MORNIN: That's good, because I work three jobs and I feel like I contribute.

THE PRESIDENT: You work three jobs?

MS. MORNIN: Three jobs, yes.

THE PRESIDENT: Uniquely American, isn't it? I mean, that is fantastic that you're doing that. (Applause.) Get any sleep? (Laughter.)

02-08-2005


Posted by: thisspaceavailable on September 1, 2006 at 9:22 AM | PERMALINK

W. will be out of work in a couple of years, McDuck.

McDuck said quality, Acer.

Posted by: shortstop on September 1, 2006 at 9:23 AM | PERMALINK

Kevin writes: it's a grand time to be rich in America. For the rest of us, at least we get to watch.

Yes, Kevin, at long last you have (inadvertantly, I think), written the truth: You are insanely jealous of those of us who have done better than yourself and you wish, you wish, you wish the government would step in and take some of our money and hand it over to you.

Poor Kevin ... so angry and so undervalued by the world. YOU DESERVE TO BE RICH! (at least in your fevered dreams).

Of course, you spent two years as a stoner at Cal Tech (because you couldn't do the math) and ended up in marketing (until you were canned) and then lived off your wife's earnings until you finally got this paying gig (which I expect isn't particularly remunerative). None of this was YOUR FAULT (by your lights). THE MAN was mean to you! (Your lack of ability and unwillingness to break a sweat notwithstaning.)

Poor Kevin, doomed to watch life's unfairness and to carp incessantly about how much better he would fare if the communists came to power.

And, of course these remarks are equally relevant to the morons who applaud your rantings (the denizens of this board).

Posted by: Norman Rogers on September 1, 2006 at 9:28 AM | PERMALINK

The growth of the American economy, in spite of incredibly bad public policy, is a testament to how resilient and dynamice it really is. Most Americans are hard-working diligent people, who get up in the morning, pack their lunch box and go put in a hard eight to ten hours of work. They work harder than their peers in most foreign countries and take fewer vacation days. If it weren't for the slugs in the leisure class, like the Bushes, du Ponts and Cheney's, who produce nothing and earn interest on government debt rung up during the fits of profligate spending when Republicans control the government, this country's economy could really boom! We really need a French Revolution and storm the gated communities and take back the wealth that has been immorally and illegally seized and withheld by the worthless slugs in the leisure class...

Posted by: The Liberal Avenger on September 1, 2006 at 9:40 AM | PERMALINK

Well, let's parse that, given what we know about Don P/GOP.

My first experience with Don P/GOP came a couple of years ago, IIRC, and he was joining cmdicely and I in beating up on Will Allen's infantile libertarianism. How'z about that?

In my opinion, GOP is here for emotional, not intellectual, reasons. He is fanatically anti-Christian and has had the shit kicked out of him repeatedly by our brilliant Catholic friend, cmdicely. He is fanatically anti-extrasensoryperception, and has been devastatingly exposed as a fraud by SecularAnimist in debates on that subject.

He is here for payback against his betters: those who have humiliated him in the art of debate. I don't think the substance really matters to him. He just resents liberals in general because in general they're smarter and more humane than he is. I'd bet a nickel the poor guy doesn't have a single friend.

Posted by: obscure on September 1, 2006 at 9:42 AM | PERMALINK

What I want to know is why, after 5 years of Bush's miracle economy, our Roths, standard IRAs, and 401-ks have hardly moved? 1 is UNDER where it was when Bush arrived on the scene. 5 years later!

Posted by: Jeffrey Davis on September 1, 2006 at 10:10 AM | PERMALINK

Yes, someday all you losers could be as rich and successful as me, cleaning the floors of a male bath house in Danbury, and working innternet pyramid schemes on the side.

Posted by: Norman Rogers on September 1, 2006 at 10:12 AM | PERMALINK

Don't forget the complete ass he made of himself in the various torture-related debates. He's definitely a lonely virgin. Maybe he should get together with Norman.

Posted by: haha on September 1, 2006 at 10:14 AM | PERMALINK

You got the joke wrong - it's not "news at 11," it's "film at 11." C'mon, don't you remember when Chevy Chase was doing Weekend Update on SNL? They once broke to him before his actual Weekend Update skit and had him say, "Nothing happened today - film at 11."

Posted by: mroberts on September 1, 2006 at 10:18 AM | PERMALINK

As a % of NDI (haven't run the numbers for GDP), salary & wages, salary & wages + benefits, and compensation are all down significantly from 30 years ago; as a % of NDI, salary & wages peaked in the late 60's; salary & wages + benefits and compensation peaked in the late 70's.

Posted by: has407

And since someone already beat me Thomas Franks:


September 1, 2006
Op-Ed Columnist
The Big Disconnect

By PAUL KRUGMAN
There are still some pundits out there lecturing people about how great the economy is. But most analysts seem to finally realize that Americans have good reasons to be unhappy with the state of the economy: although G.D.P. growth has been pretty good for the last few years, most workers have seen their wages lag behind inflation and their benefits deteriorate.

The disconnect between overall economic growth and the growing squeeze on many working Americans will probably play a big role this November, partly because President Bush seems so out of touch: the more he insists that its a great economy, the angrier voters seem to get. But the disconnect didnt begin with Mr. Bush, and it wont end with him, unless we have a major change in policies.

The stagnation of real wages wages adjusted for inflation actually goes back more than 30 years. The real wage of nonsupervisory workers reached a peak in the early 1970s, at the end of the postwar boom. Since then workers have sometimes gained ground, sometimes lost it, but they have never earned as much per hour as they did in 1973.

Meanwhile, the decline of employer benefits began in the Reagan years, although there was a temporary improvement during the Clinton-era boom. The most crucial benefit, employment-based health insurance, has been in rapid decline since 2000.

Ordinary American workers seem to understand the long-term disconnect between economic growth and their own fortunes better than most political analysts. Consider, for example, the results of a new poll of American workers by the Pew Research Center.

The center finds that workers perceive a long-term downward trend in their economic status. A majority say that its harder to earn a decent living than it was 20 or 30 years ago, and a plurality say that job benefits are worse too.

Are workers simply viewing the past through rose-colored glasses? The report seems to imply that they are: a section pointing out that workers surveyed in 1997 also said that it had gotten harder to make a decent living is titled, As usual, people say things were better in the good old days.

But as weve seen, real wages have been declining since the 1970s, so it makes sense that workers have consistently said that its harder to make a living today than it was a generation ago.

On the other side, workers concern about worsening benefits is new. In 1997, a plurality of workers said that employment benefits were better than they used to be. That made sense: in 1997, the health care crisis, which had been a big political issue a few years earlier, seemed to have gone into remission. Medical costs were relatively stable, and in a tight labor market, employers were competing to offer improved benefits. Workers felt, rightly, that benefits were pretty good by historical standards.

But now the health care crisis is back, both because medical costs are rising rapidly and because were living in an increasingly Wal-Martized economy, in which even big, highly profitable employers offer minimal benefits. Employment-based insurance began a steep decline with the 2001 recession, and the decline has continued in spite of economic recovery.

The latest Census report on incomes, poverty and health insurance, released this week, shows that in 2005, four years into the economic expansion, the percentage of Americans with private insurance of any kind reached its lowest level since 1987. And Americans feel, again correctly, that benefits are worse than they used to be.

Why have workers done so badly in a rich nation that keeps getting richer? Thats a matter of dispute, although I believe theres a large political component: what we see today is the result of a quarter-century of policies that have systematically reduced workers bargaining power.

The important question now, however, is whether were finally going to try to do something about the big disconnect. Wages may be difficult to raise, but we wont know until we try. And as for declining benefits well, every other advanced country manages to provide everyone with health insurance, while spending less on health care than we do.

The big disconnect, in other words, provides as good an argument as you could possibly want for a smart, bold populism. All we need now are some smart, bold populist politicians.

Copyright 2006 The New York Times Company
.....

And still this focus on wages takes your eye off the real issue: the concentration of WEALTH. Although the messy unravelling of the debt bubble is probably going to once again demonstrate that a lot of that is imaginary, too.

Posted by: CFShep on September 1, 2006 at 10:30 AM | PERMALINK

brucds - the link to the good economic news is the New York Times http://www.nytimes.com/2006/08/31/business/31econ.html?_r=1&oref=slogin

Here's a longer excerpt for context:

Perhaps the biggest surprise in yesterdays report was new evidence of a surge in wage-and-salary income in the first half of this year. Between the fourth quarter of last year and the second quarter of 2006, pay grew at an annual pace around 7 percent after adjusting for inflation, up from an earlier estimate of 4 percent, according to an economic consulting firm, MFR.

As a result, wages and salaries no longer make up the smallest share of the gross domestic product since World War II. They accounted for 46.1 percent of all economic output in the second quarter, down from a high of 53.6 percent in 1970 but up from 45.4 percent in the spring of 2005.

Total compensation including employee health benefits, which have risen in cost in recent years equaled 57.1 percent of the economy, down from 59.8 percent in 1970. Still, compensation makes up a larger share of the economy than it did through the 1950s and early 60s, as well as during parts of the mid-1990s and the last couple of years.

Economists said this increase in income reduced the risk that the recent economic slowdown would turn into something more dangerous, because households might have more money to spend than earlier estimated.

Posted by: ex-liberal on September 1, 2006 at 10:39 AM | PERMALINK

And something else to consider:

The Statistical Discrepancy: A Source of Phony Wage Growth

A New York Times article today commented on the extraordinary jump in wages over the last two quarters. Before anyone breaks out the champagne, take a look at the statistical discrepancy in the GDP accounts.

This might be is a bit nerdy, but there is an important story here. In principle, it is possible to add up GDP on either the income side (e.g. wages, interest, profits) or the output side (e.g. consumption, investment, government) and get the same number. Of course, they never end up exactly the same you dont get perfect accounting in a $13 trillion economy.

Typically, the output side comes up slightly higher than the income side. (The conventional wisdom is that people might hide income in order to avoid taxes.) This gap between output side GDP and income side GDP is the statistical discrepancy.

The big story on the statistical discrepancy is that it fell by $150.8 billion over the last two quarters. The most obvious explanation is that the income side of GDP is currently overstated. My favorite explanation for overstated income is that capital gains income (e.g. exercises of stock options) is showing up as labor compensation.

Suppose this is right. The $150.8 billion shift in the statistical discrepancy accounts for more than half of the nominal wage growth over the last two quarters. If this change in the statistical discrepancy is subtracted from wage growth, then the extraordinary 7 percent annual rate of real wage growth over the last two quarters falls to a modest 1 percent. Of course, it is unlikely that the full shift in the statistical discrepancy is the result of misattributed labor income, but such an error can explain much of this gain.

Lest anyone think this is a backdoor effort to deny the Bush administration credit for some good economic news, let me point out that the magic of shifting statistical discrepancies worked the other way earlier in his administration. Between 2000 and 2003, the statistical discrepancy increased by $176 billion (almost 3 percent of labor compensation). This increase implies a potential accounting loss of labor income of this magnitude, which did not correspond to an actual decline in labor income.

The moral of this story is that labor compensation is poorly measured in the national income accounts. While the accounts give us a general picture of movements in wages and profits, the data must be assessed with caution. When the data in the national accounts diverge sharply from other data on compensation (e.g. the average hourly wage series and the employment cost index), it is best to look at it more carefully for errors before assuming that we are getting new information on the economy.

--Dean Baker
http://www.prospect.org/deanbaker/

Posted by: CFShep on September 1, 2006 at 10:59 AM | PERMALINK

It has been common for many of the media to disparage good economic news throughout Bush's Presidency. Here's how the New York Times spun this good news.

The big rise in total compensation is a fact, verified by government statistics. But, the allegation that "much of the income increase probably went to people who work on Wall Street or for hedge funds" is a vague opinion from one non-governmental economist, Joshua Shapiro, and with no statistical basis. The guess could be wrong.

Those of us who don't work on Wall St. are most interested in how much of the increase went to the rest of us, but the Times didn't include Shapiro's opinion on that matter. Chances are this large compensation increase was widely spread, because there aren't that many Wall St. workers. The Times simply threw in the Wall St. guess to make the news look less good.

Posted by: ex-liberal on September 1, 2006 at 11:10 AM | PERMALINK

By the way GOP and others . . .

If an employee's non-wage compensation rises because his or her health care costs are higher, is that a good thing because they get more compensation or a bad thing because they're sick?

Furthermore, who benefits when health care costs are driven up? The patient??? Riiiight.

One of the key drivers of the increase in non-wage compensation is the high cost of crisis-response health care -- all the miraculous, super-expensive treatments for accidents, cancer and heart disease that improve the quality of patients' lives and help them live longer and more productively.

But healthy people who don't smoke, abuse substances and who watch their weight unfortunately don't get the "benefit" of higher health care compensation. Yet we are told to shut up and focus on the positives -- our non-wage income is growing!

Can I fix the gutters with this growth in my non-wage compensation? Can I take an extra week in Florida with it?

Posted by: pj in jesusland on September 1, 2006 at 11:16 AM | PERMALINK

Furthermore, who benefits when health care costs are driven up? The patient??? Riiiight.

Yes, the patient benefits.

pj in jesusland, if you look around you will see that Americans are healthier and living longer than ever. Go out on a tennis court and see how many people in their 60's, 70's and 80's are playing. Or, fixing their own gutters.

One big reason in new and improved prescription drugs to control or cure many problems. Another is surgeries like hip replacements or knee replacements that cure many who would otherwise be lame.

Posted by: ex-liberal on September 1, 2006 at 11:35 AM | PERMALINK

if you look around you will see that Americans are healthier and living longer than ever.

if you "look around you", or better yet, actually look at the statistics, you'll find that more people are morbidly obese than ever before--especially in jesusland--with all the bad health effects that go with such weight gain.
Then of course there are all the people who lose their life savings due to excessive healthcare cost and inadequate insurance. But those people deserve to get sick and die.

good thing you're an ex-liberal, it would be disappointing to know that someone so stupid was on our side.

meanwhile, the real ticking timebomb--


There was plenty more going on behind the scenes they didn't know about, either: that their broker was paid more to sell option ARMs than other mortgages; that their lender is allowed to claim the full monthly payment as revenue on its books even when borrowers choose to pay much less; that the loan's interest rates and up-front fees might not have been set by their bank but rather by a hedge fund; and that they'll soon be confronted with the choice of coughing up higher payments or coughing up their home. The option ARM is "like the neutron bomb," says George McCarthy, a housing economist at New York's Ford Foundation. "It's going to kill all the people but leave the houses standing."

Because banks don't have to report how many option ARMs they underwrite, few choose to do so. But the best available estimates show that option ARMs have soared in popularity. They accounted for as little as 0.5% of all mortgages written in 2003, but that shot up to at least 12.3% through the first five months of this year, according to FirstAmerican LoanPerformance, an industry tracker. And while they made up at least 40% of mortgages in Salinas, Calif., and 26% in Naples, Fla., they're not just found in overheated coastal markets: Through Mar. 31 of this year, at least 51% of mortgages in West Virginia and 26% in Wyoming were option ARMs. Stock and bond analysts estimate that as many as 1.3 million borrowers took out as much as $389 billion in option ARMs in 2004 and 2005. And it's not letting up. Despite the housing slump, option ARMs totaling $77.2 billion were written in the second quarter of this year, according to investment bank Keefe, Bruyette & Woods Inc.

Posted by: haha on September 1, 2006 at 11:43 AM | PERMALINK

Not sure what to make of this, but I have a feeling Kevin is probably not going to write a blog post commenting on this anytime soon. So does this mean no Fritzmas this year? :(

Posted by: Freedom Fighter on September 1, 2006 at 11:47 AM | PERMALINK

Augustus: the Republican economic model is medieval serfdom

Sorry, but you don't undertsand serfdom. It involved reciprocal obligations between the landowner and the serf. When the population increased, serfdom was abandoned. Far better for the landowner to tell the surplus workers to go starve somewhere else, than to have to pay up on obligations to serfs.

Posted by: alex on September 1, 2006 at 12:01 PM | PERMALINK

ex-liberal:

Here's where I'm coming from:

I run a small business. All my employees are covered by our health plan. One of my employees was diagnosed with life-threatening cancer earlier this year. She had surgery and weeks of chemo. Excellent, top of the line care. She's in remission, thank goodness.

Her care (so far!) has amounted to hundreds of thousands of dollars (Yay! Growth for the GDP! Let's here it for cancer!). When my company's premiums go up next year (assuming our insurer renews our policy), all my employees' non-wage income goes up. As a result, by your rosy calculation, every employee's average compensation will rise, in large part because of the misery suffered by my one sick employee.

For this you give President Bush credit for rising employee compensation??? Please.

Posted by: pj in jesusland on September 1, 2006 at 12:02 PM | PERMALINK

Hey everybody, join Amway and you can become a multimillionaire! Endorsed by numerous Republicans and Fundies! It's NOT a cult, no matter what those bad liberals say.

Posted by: Wingnut Cult on September 1, 2006 at 12:05 PM | PERMALINK

I'd like to thank all my defnders here who recognize that we have grown this here econoomy more than any administration in this century. There are more Americans in America than at any other time in our country's histroy, and soon everyone will have their own personal Wal Mart store. You must all have faith and believe in me and Dick, and you will all be millonares.

Posted by: George W. Bush on September 1, 2006 at 12:10 PM | PERMALINK

pj - you're missing the point on this particular story. The "compensation" being touted isn't the actual payments by insurance companies to hospitals and doctors for health care services rendered. It's the cost to employers for (declining, in terms of access, but rapidly rising in terms of cost) health insurance coverage, (which of course includes not just the cost of health care but administration and profits of insurers). This is undoubtedly the area of greatest inflation of "total compensation". Another is, more than likely, stock options - where major benefits are confined to upper echelons - and, of course, co-payments into 401Ks, which didn't exist all that many years ago and where an effectively deferred "compensation" gets tallied during one's working life, as opposed to, say, 1970 where a pension existed as a promise, not an add-on factored in to annual compensation. I haven't unpacked these statistics completely, but there's far less here than "meets the eye". Basically we're being treated to several sleights of hand. And I don't think anyone's mentioned increases in wages vs. increases in productivity either, which have been lagging.

Posted by: reg on September 1, 2006 at 12:11 PM | PERMALINK

pj - just read your last comment and it hits the mark. Your first discussion of this was confusing because it was couched in terms of patient care, not insurance premiums.

Posted by: reg on September 1, 2006 at 12:13 PM | PERMALINK

pj in jesusland,

You're in dangerous territory. Someone who actually runs a business, talking about the economics of it? I wonder how many of our "pro-business" pundits in the MSM could put that on their resumes. Even if they can, I wonder how many went into punditry due to their lack of real success or contribution in the business world.

Posted by: alex on September 1, 2006 at 12:20 PM | PERMALINK

Joshua Shapiro of MFR? Well since he's listed 144 times on a google search of the NYT I'm guessing he's the NYT go to guy for negative economic quotes.

Any reason I should trust him?

P.S. Any thoughts on the WaPo stepping down from the Valerie Wilson scandal?

Posted by: Birkel on September 1, 2006 at 12:23 PM | PERMALINK

rmck1 wrote to Don P (posting as "GOP" today): You know you really are totally exasperating, nonstop spinning propaganda machine.

Don P is a bullshit artist. When his deliberate lies are exposed as lies, he simply repeats them. When other commenters ask that he present evidence to support his sweeping dogmatic pronouncements, he sneeringly refuses to provide it. When other commenters present evidence in support of their own assertions, he pretends that they haven't done so and lies that he is "still waiting for it". He's a fraud and a phony and everyone who has ever engaged with him on any subject knows that.

obscure wrote: In my opinion, GOP is here for emotional, not intellectual, reasons.

Don P is driven by the insatiable demands of his diseased, bloated ego to prove to himself over and over and over and over again that he is superior to others, which he does by impressing himself with his ability to waste people's time with bullshit.

As to the subject matter of this thread, the real measure of the success of the so-called "economy" is the well-being of human beings.

Posted by: SecularAnimist on September 1, 2006 at 12:26 PM | PERMALINK
The trend of slowly rising inequality over time has been present for decades and is independent of the political party in control of Congress or the White House. You can see this quite easily by looking at the time series data for the share of household income by income quintile in the Census Bureau report Kevin linked to yesterday. Most economists seem to think that the primary causes of this trend are the effects of scientific and technological advances and globalization.

Some of the major mechanisms for this are fairly obvious: all things being equal, technological advances increase the relative importance of capital, and reinforce the degree to which inequitis in the distribution of capital are reflected in the distribution of new wealth generated (they should naturally, also, reduce the degree to which inequities due to differing labor capacities are reflected in the distribution of wealth, but to the extent that labor capacity distribution doesn't follow capital distribution, it tends to be less extreme because capital inequities compound generationally), whereas globalization is simply a form of deregulation which removes controls that serve (among other things) to reduce the inequality of wealth in the internal market.

This doesn't make increasing inequality inevitable or desirable, though, it just means that if it isn't desired, but increasing globalization and technological advances are desired, other policies (that is, other than the controls removed as "globalization") which mitigate income inequity will need to become more robust over time, rather than being static or rolled back.

Posted by: cmdicely on September 1, 2006 at 12:30 PM | PERMALINK


ex-lib: Chances are this large compensation increase was widely spread, because there aren't that many Wall St. workers.

.

chances....as opposed to actual facts


Street Bonuses Dwarf Some Economies
[Baltimore Sun]- last january


172k wall streeters received bonuses worth 21.5-billion dollars...

widespread?

fyi....$21.5 billion is more money than the GDP of each of two-thirds of the world's countries.

source: CIA's ranking of gross domestic products around the world

Posted by: thisspaceavailable on September 1, 2006 at 12:33 PM | PERMALINK

And 21.5 billion is also about 1.5/1000ths of the US economy. A blip, if you will.

Who gives a damn about the size of the ROW's countries?

Posted by: Birkel on September 1, 2006 at 12:37 PM | PERMALINK

birkel..

ex-lib...could have provided evidence of widespread..

but as usual...

he didn't..

and neither did you

lol


Street Bonuses Dwarf Some Economies [Baltimore Sun]- jan, 2006

172k wall streeters received bonuses worth 21.5-billion dollars...

birk....clap harder

Posted by: thisspaceavailable on September 1, 2006 at 12:42 PM | PERMALINK
Why is it a bad thing?

Rising income inequality is a bad thing because income inequality is well-established as a major source of disutility; income measures and other economic statistics, i should be remembered, exist as convenient proxy measures for utility (this sometimes gets forgotten, and they are treated as if money, or at least the goods and serviced purchased with it, had some kind of mystical universal "value" independent of the experienced utility they provide actual human beings), but the disutility associated with inequality is not included within them, so increasing inequality means that the economy is, in fact, doing worse than the other aggregate statistics suggest.

Posted by: cmdicely on September 1, 2006 at 12:43 PM | PERMALINK

Don't listen to this cmdicely idiot! Money is the most desireable thing in the world (and cmdicely probably doesn't even speak Greek - a barbarian!).

Posted by: King Midas on September 1, 2006 at 12:49 PM | PERMALINK

ex-lib and birkel....f.y.i.

Why Wall Street had a record year and you didn't


By Justin Fox, FORTUNE editor-at-large
January 25, 2006: 12:39 PM EST


NEW YORK (FORTUNE) - It was, as you may have already heard, a record year for Wall Street pay. Securities firms in New York gave out $21.5 billion in end-of-year bonuses, according to the state comptroller's office. That's $125,500 per employee (although of course the money wasn't distributed anywhere near evenly).

http://money.cnn.com/2006/01/25/magazines/fortune/pluggedin_fortune/index.htm


the last paragraph....

Finally, there are those bonuses. Yeah, they seem absurd. They're certain to come crashing to earth. At least, that's what FORTUNE predicted in a cover story in 1986--when the average bonus was $13,950. We're not going to make that mistake again.

Posted by: thisspaceavailable on September 1, 2006 at 12:57 PM | PERMALINK

thisspaceavailable,

And that answered my numbers, how, exactly?

Also, you'll be glad to know that both Wall Street and I had record years. Sleep tight.

Posted by: Birkel on September 1, 2006 at 12:59 PM | PERMALINK

a small number racking it up and in the process making the overall average look good...

is not new:


The top one percent of households (those with annual incomes above about $315,000 in 2004) garnered 41 percent of the income gains in 2004.

This disparity produced an exceptional jump in income concentration in 2004. The share of
the pre-tax income in the nation that goes to the top one percent of households increased from 17.5 percent in 2003 to 19.5 percent in 2004. Only five times since 1913 (the first year that this data set covers), and only twice since World War II has the top one percents share risen by as much in a single year (in percentage point terms). Each percentage point of income is equivalent to $68 billion in 2004.


source: Revised July 25, 2006

NEW DATA SHOW EXTRAORDINARY JUMP IN INCOME CONCENTRATION IN 2004

Aviva Aron-Dine and Isaac Shapiro

Economists Thomas Piketty and Emmanuel Saez have recently made available an updated version of their groundbreaking data series on U.S. income inequality.1 The data are unique because of the detailed information they provide regarding income gains at the top of the income spectrum, and also because they extend back to 1913.

http://www.cbpp.org/7-10-06inc.pdf

Posted by: thisspaceavailable on September 1, 2006 at 1:09 PM | PERMALINK

cmdicely,

Rising income inequality is a bad thing because income inequality is well-established as a major source of disutility; income measures and other economic statistics, i should be remembered, exist as convenient proxy measures for utility (this sometimes gets forgotten, and they are treated as if money, or at least the goods and serviced purchased with it, had some kind of mystical universal "value" independent of the experienced utility they provide actual human beings), but the disutility associated with inequality is not included within them, so increasing inequality means that the economy is, in fact, doing worse than the other aggregate statistics suggest.

Typical cmdicely gibberish. What's "disutility" supposed to mean? "Disutility" of what? How does increasing inequality cause increasing "disutility?" How does increasing "disutility" cause the economy to do worse?

Assuming you believe that the optimum level of income inequality is neither the minimum possible (everyone has the same income) nor the maximum possible (one person has all the income), but is somewhere in between, the issue is where that optimum point is. How do you decide? How have you determined that the current level of income inequality is above, rather than below, the optimum and that further increases in inequality are therefore bad, rather than good?

Posted by: GOP on September 1, 2006 at 1:16 PM | PERMALINK


so what we have learned is...in reality:


Chances are the large compensation increase was

NOT

widely spread, because the small number of Wall St. workers made -bonuses-

that were nearly triple the median wage...

Posted by: thisspaceavailable on September 1, 2006 at 1:17 PM | PERMALINK
What's "disutility" supposed to mean?

Negative marginal utility.

"Disutility" of what?

The question seems ill-formed: the only sense in which "Disutility (or utility) of X" makes sense in where X is the cause of the disutility (or utility) experienced, and you are clearly not unclear on what the suggested cause of disutility is.

How does increasing inequality cause increasing "disutility?"

Largely, its generally accepted, by creating unmet expectations; but the mechanism is less clear than the fact that increasing inequality produces disutility.

How does increasing "disutility" cause the economy to do worse?

Increasing disutility is the definition of the economy doing worse; economic measures are proxy measures of (either the aggregate or distribution of) experienced utility.

Assuming you believe that the optimum level of income inequality is neither the minimum possible (everyone has the same income) nor the maximum possible (one person has all the income

Why would you assume that?

Posted by: cmdicely on September 1, 2006 at 1:34 PM | PERMALINK

rmck1,

Even if it flies in the face of common experience. I cite a poll (it was in the NYT a few days ago) that says people are increasingly worried about their economic future. Now if people are worried about the future, that means that they don't feel better off than during times where they worried less -- like, say, in the 90s (and I'm talking about the average working stiff, not folks who who were playing the tech market).

How many times do I have to explain this to you? Increasing "worry" does not mean decreasing or stagnant wealth. People are much richer than they used to be, but at the same time jobs are less secure than they used to be. People are more likely to have to change jobs over the course of their career to maintain or increase their standard of living. Scientific and technological advances have made the labor market much more dynamic and fluid than it used to be. People are more likely to have to learn new skills to maintain or increase their value in the labor market. This may be a significant source of anxiety for many workers. But it doesn't mean they're not getting richer. Try to understand the difference.

Or in plain English, that people are skating by today with less cushion than they previously had. And that's reflected in the cooling housing markets, the price of fuel, healthcare, and the negative rate of savings. More families are one crisis away from bankruptcy than ever before.

Do you have the slightest shred of evidence to support this claim? Of course, even if it's true, it doesn't alter the fact that all income groups have become much richer over the past few decades.

Posted by: GOP on September 1, 2006 at 1:35 PM | PERMALINK

Don P posting as "GOP" wrote: How many times do I have to explain this to you?

Until you've satisfied the demands of your diseased and bloated ego to prove to yourself over and over and over again that you are superior to others by impressing yourself with your ability to waste their time with bullshit.

In other words, forever.

Posted by: SecularAnimist on September 1, 2006 at 1:45 PM | PERMALINK

GOP: Wages and salaries are down significantly as a share of GDP (or NDI), but wages and salaries plus benefits (that is, total employment compensation) is not. As I said, it's fluctuated within a small range since around 1970. I have no idea where you're getting your information from, but it's false. ...see the Brad DeLong post I pointed you to...

As DeLong's chart indicates, as % NDI, both Wages & Salaries and Compensation have fallen: Wages & Salaries peaked in 1970 at about 60%; Compensation peaked in 1980 at about 70%. As of 2006/Q2, Wages & Salaries are about 52% and Compensation is about 64%.

Both are quite volatile and show a downward trend. Since 1970: the range for Wages & Salaries is 8.1%; the range for Compensation is 5.5%; a simple linear regression shows a fall in Compensation about 2.8%, and Wage & Salary about 6.3%. Feel free to do your own analysis; much more available for anyone interested in crunching the data...

The data is from the BEA, specifically: Table 1.7.5 Relation of Gross Domestic Product, Gross National Product, Net National Product, National Income, and Personal Income; and Table 2.1. Personal Income and Its Disposition. I assume DeLong used the same or equivalent data, because the data I'm using also generates a chart identical to the chart in Delong's post you previously referenced.

Posted by: has407 on September 1, 2006 at 1:54 PM | PERMALINK
How many times do I have to explain this to you?

False statements do not become true by repeated assertion.


Increasing "worry" does not mean decreasing or stagnant wealth.

Increased risk is, all other things being equal, a decrease in real wealth, even if it isn't something that is easily accounted for in economic statistics, either through the disutility of increased anxiety, or through the costs of mitigating the risk.


Posted by: cmdicely on September 1, 2006 at 1:55 PM | PERMALINK

cmdicely,

The question seems ill-formed: the only sense in which "Disutility (or utility) of X" makes sense in where X is the cause of the disutility (or utility) experienced, and you are clearly not unclear on what the suggested cause of disutility is.

Not only are you unclear, I have no idea what you're talking about. I doubt you do either. Here's a typical definition of "disutility:"

1. The state or fact of being useless or counterproductive.
2. Something that is inefficient or counterproductive: an analysis of the relative disutilities of the two plans.

Show me your evidence that an increase in income inequality causes an increase in "the state or fact of being useless, counterproductive, or inefficient?" And what is the thing that you are claiming becomes more useless, counterproductive or inefficient? People? Income? Labor? The economy? Or what? Do you even clue what you're talking about?

Largely, its generally accepted, by creating unmet expectations;

Show me your evidence that increasing inequality causes increasing "disutility" largely by "creating unmet expectations." Since you assure me that this is "generally accepted," you should have no trouble producing such evidence.

Increasing disutility is the definition of the economy doing worse;

No it isn't. But if that's how you are defining utility in this context your claim is clearly empirically false. Income inequality (and therefore, according to you, "disutility") has been slowly rising, and at the same time the economy has been growing dramatically.

Why would you assume that?

Because the idea that the optimum level of income inequality is either the maximum possible (one person has all the income) or the minimum possible (everyone has the same income) is absurd. Do you believe that the optimum level of income inequality is either the maximum or minimum possible?

Posted by: GOP on September 1, 2006 at 1:57 PM | PERMALINK

Hey GOP... I'm doing a lot worse despite all the factoids that keep coming from your posts. I make 40% less in compensation and pay 30-100% more for basic needs like medical and utilities. But I am just one of the middle class rich, so let me ask a question that cuts thru all the bullshit."Are you better off now than you were 6 years ago?"

Posted by: American Idiot on September 1, 2006 at 2:02 PM | PERMALINK

Don P posting as "GOP" wrote: I have no idea what you're talking about.

That didn't stop you from responding with your usual barrage of bullshit.

Posted by: SecularAnimist on September 1, 2006 at 2:05 PM | PERMALINK

has407.

As DeLong's chart indicates, as % NDI, .... Compensation peaked in 1980 at about 70%.

I think you need reading glasses. The compensation "peak" in 1980 was an anomaly. It was a single large spike in a time series that has generally fluctuated within a range of about 2 percentage points, from about 65% to about 67%, since about 1970. The chart shows no clear up or down trend in employee compensation as a share of NDI over the past 35 years. The share in 2004 was about 66%, which is just about the average of the last three and a half decades.

You claimed "compensation [is] down significantly from 30 years ago; as a % of NDI." But 30 years ago, the figure was about 66%, and in 2004, the figure was about 66%. Look at the chart. Where the hell is this "significant" decline?

Posted by: GOP on September 1, 2006 at 2:17 PM | PERMALINK

"So? The market distributes wealth to those who work the hardest. The guy taking hamburger orders at mcdonalds doesn't make as much as a corporate CEO, who routinely pulls a 90 hour week."

You're a giant idiot. Good lord, you're like a gestalt entity created by right-wing madness floating in the ether.

It's either burger flippers or CEO's to you, isn't it?

You stupid, giant piece of human idiocy.

Posted by: The Tim on September 1, 2006 at 2:17 PM | PERMALINK

"What I said is that most economists believe that scientific and technological advances are one of the primary causes of the long-term trend of slowly rising economic inequality.

Hold on there, Gopper. (1.) Provide evidence that "most" economists believe any such thing; and (2.) The claim would seem to imply economic inequality has been steadily increasing since the birth of the Industrial Revolution. Is this in fact the case?"

Read Wealth and Democracy. Most assuredly most economic historians see a correlation between technological advances and increases in the wage gap. Goes way, way back. And real wages have regressed down since the indutrial revolution pretty much without fail except from the 40s and 60s in the US- the great compression. Culturally this gets excused because "poor people have TVs" and shit like that.

Posted by: The Tim on September 1, 2006 at 2:23 PM | PERMALINK

GOP: No research required for an answer...I suspect the majority of Americans will answer that question this November the same way I do. Kevin: watching oil companies make billons while cutting sweet deals on tax breaks is no fun to watch when it takes $70 to fill your tank.

Posted by: American Idiot on September 1, 2006 at 2:24 PM | PERMALINK

cmdicely,

Increased risk is, all other things being equal, a decrease in real wealth,

No, increased risk is not "a decrease in real wealth." You don't know what you're talking about, as usual. Wealth is the value of goods and services. The total amount of wealth created by the economy in a year is measured by the total value of goods and services produced by the economy in that year, represented by Gross Domestic Product. It has nothing to do with "risk."

Posted by: GOP on September 1, 2006 at 2:25 PM | PERMALINK

has407,

The data is from the BEA, specifically: Table 1.7.5 Relation of Gross Domestic Product, Gross National Product, Net National Product, National Income, and Personal Income; and Table 2.1. Personal Income and Its Disposition.

You seem to be very confused. Table 1.7.5 contains no information on either wages and salaries as a share of domestic national income/product, or total employment compensation as a share of income/product. You're looking at the wrong table.

Information on the shares of income/product may be found in Table 1.11., Percentage Shares of Gross Domestic Income. As you can see from that table, "compensation of employees, paid" as a share of GDI has fluctuated between about 57% and about 59% for the past 30 years. So, again I ask, where is the evidence supporting your claim that "compensation [is] down significantly from 30 years ago; as a % of NDI." The BEA data clearly contradicts what you said, just like Brad DeLong's chart.

Posted by: GOP on September 1, 2006 at 2:42 PM | PERMALINK
Here's a typical definition of "disutility:"

A "typical" general definition perhaps, but are you seriously claiming to be so ignorant of the fundamentals of economics, political science, etc., as to not understand what "utility" means in this context? If so, that would explain why while your frequent quoting without comprehension of economic research. I have neither the time nor the inclination to provide you a basic general education in the underpinnings of the social sciences... The beginning of this Wikipedia article, particularly the beginning, isn't a bad start on an understanding of the concept in economics (its a little too narrow, I'd say, though.)

Show me your evidence that increasing inequality causes increasing "disutility" largely by "creating unmet expectations."

The evidence strongly supports that experienced disutility (including concrete harms like increased mortality across the income distribution) result from income inequality; generally, unmet expectations are held as part of the chain of causality by which the disutility and harms are produced (as in Relative Deprivation Theory (exceedingly brief and informal, but useful, summary of the theory in the context of aggression available
here
).

But if that's how you are defining utility in this context your claim is clearly empirically false.

Your failure to understanding the underpinnings of economics in terms of utility seems to be causing you to mistake measures that are important in economics as convenient proxies for utility (which, while it can be studied, is very hard to systematically and more directly measure in a way which would provide ongoing monitoring the way economic statistics due) with end goals in themselves, making exactly the error I referred to parenthetically in my 12:43pm post.


Why would you assume that?

Because the idea that the optimum level of income inequality is either the maximum possible (one person has all the income) or the minimum possible (everyone has the same income) is absurd.

That something seems absurd to you is reason to assume that someone else doesn't believe it.

Do you believe that the optimum level of income inequality is either the maximum or minimum possible?

I think that it would be consistent with the research on income inequality and its disutilities to say that all other things being equal the ideal level, from a utilitarian point of view, of income inequality is the minimum possible.

Of course, practical means of controlling income inequality may have their own disutilities which may outweigh the utility they provide by reducing income inequality.

So why the ideal state, all other things being equal, may be absolute income and wealth, the best practical policy may sacrifice that ideal to avoid some other source of disutility.

In any case, though, all other things being equal, increased inequality is a worse condition.

Posted by: cmdicely on September 1, 2006 at 2:51 PM | PERMALINK
Wealth is the value of goods and services.

Yes, and all other things being equal, increased risk decreases the value of those goods.

The total amount of wealth created by the economy in a year is measured by the total value of goods and services produced by the economy in that year, represented by Gross Domestic Product.

You are confusing (proxy) measures of an underlying phenomenon the underlying phenomenon itself, again.

Posted by: cmdicely on September 1, 2006 at 2:54 PM | PERMALINK

CFShep, quoting Krugman:

The stagnation of real wages wages adjusted for inflation actually goes back more than 30 years. The real wage of nonsupervisory workers reached a peak in the early 1970s, at the end of the postwar boom. Since then workers have sometimes gained ground, sometimes lost it, but they have never earned as much per hour as they did in 1973.

Nice try, but the only reason Krugman's claim above is technically correct is because he has limited it to "nonsupervisory workers" and cherry-picked a single anomalous year, 1973, for his comparison. The fact remains that real wages and salaries, without Krugman's qualifications and cherry-picked dates, have increased significantly since the 1970s, and real employment compensation (wages, salaries and benefits) and real income have both increased even more. And standard of living (all income plus all benefits) has increased even more than that. The relative contribution of wages and salaries to people's standard of living has declined, but increases in non-wage employment benefits, non-wage income, and noncash government benefits have more than offset the decline in the contribution from wages.

Posted by: GOP on September 1, 2006 at 3:11 PM | PERMALINK

cmdicely:

Fantastic smackdown of GOP via Economics 101. "Proxy measures," indeed.

Apparently to GOP, wealth has no psychological component. If one feels economically insecure, this is entirely irrelevant if a few economic stats can be jiggered to make it look like s/he is making/earning/receiving a little more now than at other times when they felt less secure.

Tell that one to the markets.

Bob

Posted by: rmck1 on September 1, 2006 at 3:24 PM | PERMALINK

cmdicely,

I have neither the time nor the inclination to provide you a basic general education in the underpinnings of the social sciences

I don't expect you to do that. I do expect you to explain, in clear language, what the hell you mean by "disutility," as you have been using the word in this discussion. Do you have a clear, concise definition of the word, or don't you? One minute, you're claiming it means "the economy doing worse," and the next you're claiming that it means "concrete harms like increased mortality."

The evidence strongly supports that experienced disutility (including concrete harms like increased mortality across the income distribution) result from income inequality;

I'm afraid the evidence does not strongly support any such claim. The evidence of the relationship between inequality and health is mixed. This was discussed in a recent thread, which you apparently missed. See, for example, this piece from the British Medical Journal

Quote:

Evidence favouring a negative correlation between income inequality and life expectancy has disappeared

Of course, even if it did turn out that there is a negative correlation between inequality and life expectancy, that finding alone would not support the claim that inequality increases "disutility," if the word is intended to denote some kind of net socioeconomic harm. I'm still waiting for your evidence of any such harm.

generally, unmet expectations are held as part of the chain of causality by which the disutility and harms are produced (as in Relative Deprivation Theory (exceedingly brief and informal, but useful, summary of the theory in the context of aggression available
here).

Whatever "unmet expectations" are "generally held" to be (and you haven't produced a shred of evidence regarding what they are generally held to be), you would need to produce evidence of a causal relationship between inequality and "unmet expectations" for them to have any relevance whatsoever to your "disutility" claim. You haven't done that.

Posted by: GOP on September 1, 2006 at 3:37 PM | PERMALINK

GOP: I think you need reading glasses.

You need to stop making statements based on eyeballing a chart or picking a couple numbers out of a table.

The claim I made is based on regressions that show a decline of Compensation ~2% and Wages & Salaries ~3%. Those are significant, and they are not simply fluctuations, but a demonstrable trend. Use a moving average and the numbers get worse. Go back 35 years, and the numbers improve a bit, but not much.


You claimed "Wages and salaries are down significantly as a share of GDP (or NDI), but wages and salaries plus benefits (that is, total employment compensation) is not."

False. Compensation has simply declined more slowly than Wages & Salaries.


You seem to be very confused. Table 1.7.5 contains no information on either wages and salaries as a share of domestic national income/product, or total employment compensation as a share of income/product. You're looking at the wrong table.

No, I'm not confused. I'm using data from multiple tables because the data isn't provided pre-digested in one table from BEA. Table 1.11 uses GDI, not NDI. I based my statements on NDI, which is not the same as GDI. NB: Brad DeLong's chart also uses NDI.


The BEA data clearly contradicts what you said, just like Brad DeLong's chart.

Wrong. See above.

Posted by: has407 on September 1, 2006 at 3:44 PM | PERMALINK

over the last couple decades the cost of taxol and anti-retroviral medications has declined dramatically, which makes care for cancer and HIV much more affordable than it was. Whatever your income, you and your family and friends can afford much more cancer treatment, HIV treatment, HepC treatment than was available abck then, and it will all work better. The fact that it works better means that the cost of a cure (or of an extra year of life) is about 1/100th - 1/10th what it was back then. Even at a constant median income, therefore, median wage-earners have greater purchasing power for this kind of health care than before. They are in fact richer than equally paid workers back then.

We can say the same for the cost of cures (or lives spared by vaccines) from TB, typhoid, thyphus, scarlet fever, smallpox, herpes simplex virus, and tetanus.

This does not even take into account the increased purchasing power for "toys" such as home entertainment systems, computers, and internet access.

Even with a constant annual income, median earners are getting richer year by year (or at least it is clear over 5 year periods.)

A similar statement can be made for the bottom 10% of wage-earners, but the range is narrower. Anti-retrovirals may still be out of the question for the bottom 10%, but extremely poor people (often drug addicted) are cured of tetanus every day at very low cost to themselves, and the vaccine and boosters are also very cheap.

These increases in actual wealth and purchasing power of population classes with constant earnings should not be ignored or casually dismissed.

Posted by: republicrat on September 1, 2006 at 3:45 PM | PERMALINK

of all the times in American history, and of all the places, America now is the best time and place to be poor.

Not just a good time to be rich.

Posted by: republicrat on September 1, 2006 at 3:46 PM | PERMALINK

cmdicely,

Your failure to understanding the underpinnings of economics in terms of utility seems to be causing you to mistake measures that are important in economics as convenient proxies for utility (which, while it can be studied, is very hard to systematically and more directly measure in a way which would provide ongoing monitoring the way economic statistics due) with end goals in themselves, making exactly the error I referred to parenthetically in my 12:43pm post.

You're hilarious. You just defined "the economy doing worse" as "disutility." I then pointed out to you that increasing inequality has been accompanied by the economy doing better. Much better. The economy has grown dramatically as inequality has been rising slowly. This obviously contradicts your claim that increasing inequality causes increasing "disutility," defined to be "the economy doing worse."

Of course, you've also stated that "disutility" means other things ("concrete harms like increasing mortality") so who knows what you really mean. You obviously don't really know what you mean yourself, which is why your claims and arguments are so scattershot and incoherent.

I think that it would be consistent with the research on income inequality and its disutilities to say that all other things being equal the ideal level, from a utilitarian point of view, of income inequality is the minimum possible.

Ha ha ha ha ha! Please show me the "research on income inequality" that is consistent with the claim that the ideal level of income inequality is the minimum possible (i.e., everyone has the same income).

Of course, practical means of controlling income inequality may have their own disutilities which may outweigh the utility they provide by reducing income inequality.

Congratulations. You've just destroyed your own idiotic "increasing inequality causes increasing disutility" claim. If the "practical means" required to "control" inequality cause more harm than good, then we're better off without them, which means we may be better off with rising inequality, which contradicts your "disutility" claim.

Posted by: GOP on September 1, 2006 at 4:00 PM | PERMALINK

GOP:

>> Even if it flies in the face of common experience. I cite a
>> poll (it was in the NYT a few days ago) that says people are
>> increasingly worried about their economic future. Now if people
>> are worried about the future, that means that they don't feel
>> better off than during times where they worried less -- like,
>> say, in the 90s (and I'm talking about the average working
>> stiff, not folks who who were playing the tech market).

> How many times do I have to explain this to you?

"Explain." Heh, that's adorable.

> Increasing "worry" does not mean decreasing or stagnant wealth.

Sure it does. Can "wealth" be defined objectively? Of course not.
You think economists define wealth objectively? If you do, then
you know even less about economics than I do. Back during the
Marginalist Revolution (google it) they came up with the concept
of "subjective utility" because you can't decide for a particular
individual the objective value of the things they do. Yes, even
sitting in Mom's basement eating Cheetos and exasperating an entire
community has some ineffible degree of marginal utility for you, GOP.

Elsewise you wouldn't be doing it :)

Sure, this is Panglossian. It's the best of all possible worlds,
because the only thing that matters to express what one finds
useful is what one does. It leads to the old joke of two economists
walking past a Porche dealership and one goes, "Damn, you know
I really which I had bought that car when I cashed in my stock
options" and the other economist going "No. You actually don't."

I expect that joke flew over your head, GOP -- because I suspect
that you really understand less than jack squat about economics.

> People are much richer than they used to be, but at the
> same time jobs are less secure than they used to be.

That's a contradiction in terms. "Wealth" has a security component.
You know, there's this awful racist expression (and please forgive
me for posting it here; I know no other term for this) for folks
who live for the moment and think they're wealthy because they
have a few bills in their pocket today: "Nigger rich."

That's not genuine wealth, GOP. This expression acidly mocks
the foundation of your argument that what you have in your
pocket today compared to yesterday is a valid measure of anything.

> People are more likely to have to change jobs over the course of
> their career to maintain or increase their standard of living.

Check out the multitude of sins *this* covers. "Maintain or
increase?" How about the legions who've been let go for various
reasons unrelated to their performance and have to take work at
a fraction of their former incomes? Don't try to spin economic
insecurity as some sort of free-market *voluntarism*, GOP.

> Scientific and technological advances have made the labor
> market much more dynamic and fluid than it used to be.

And, as others have perceptively noted, this has been going in
since the Industrial Revolution. But something happened by the mid
20th century to ameliorate all that Gilded Age weaith inequity and
create, contrary to all the pressures that technological advance puts
on wage differentials -- can you guess what that was? Give you a
hint, you can express it with three initials and / or two words.

> People are more likely to have to learn new skills to
> maintain or increase their value in the labor market.

The key phrase there is "have to." Exactly. Sink or swim, adapt
or die. You can adopt a radical individualist outlook if you like --
just don't try to pretend that it's an expression of anything socially
healthy -- and economic stats measure the fiscal health of society.

> This may be a significant source of anxiety for many
> workers. But it doesn't mean they're not getting
> richer. Try to understand the difference.

If you don't understand how economic anxiety reflects the
*opposite* of rich, then you simply don't understand economics.

>> Or in plain English, that people are skating by today
>> with less cushion than they previously had. And that's
>> reflected in the cooling housing markets, the price of
>> fuel, healthcare, and the negative rate of savings. More
>> families are one crisis away from bankruptcy than ever before.

> Do you have the slightest shred of evidence to support this claim?

Blow me :)

> Of course, even if it's true,

"Even if it's true." You're a pip, GOP.

> it doesn't alter the fact that all income groups
> have become much richer over the past few decades.

Not if you go by the standard definition of "rich."

Bob

Posted by: rmck1 on September 1, 2006 at 4:07 PM | PERMALINK

The Boskin Comission concluded that the CPI overstates inflation by as much as 1%.

That means, that the wealthy don't really enjoy their wealth, because they tend to obsess over poor people trying to steal it.

So poor people are actually far better off. They should be thankful.

And the middle class should be striving to become poor. (which means, they should continue to vote Republican).

Posted by: Gallons Of Poop on September 1, 2006 at 4:11 PM | PERMALINK

has407,

The claim I made is based on regressions that show a decline of Compensation ~2%

What regressions? Look at Brad DeLong's chart. Compensation as a share of NDI is now almost exactly the same as it was in 1973, about 66%. Since 1973, that share has fluctuated, but it has rarely exceeded 67% and rarely fallen below 65%. And there is no significant trend either up or down over the 35 year period since 1970. So where is this "significant" decline?

Ditto for the BEA data. Employment compensation as a share of GDI averaged about 59% in the decade of the 1970s, about 58% in the 1980s, about 58% in the 1990s, and about 58% in the 2000s. Where the hell is the "significant" decline? You're talking about, at most, a change of a fraction of a percentage point over a period of decades. This is what you're so upset about? And, of course, even if employment compensation as a share of GDI had fallen significantly, that wouldn't mean "working Americans" were getting a smaller share of the economy, anyway, because of the effect of other types of income and benefit.

I'm using data from multiple tables because the data isn't provided pre-digested in one table from BEA. Table 1.11 uses GDI, not NDI. I based my statements on NDI, which is not the same as GDI. NB: Brad DeLong's chart also uses NDI.

The table you mentioned has no data at all about either wages or compensation as a share of NDI or GDI. And it doesn't matter whether the comparison is to NDI, as in Brad's chart, or GDI as in the BEA data I cited. There is no significant trend on either measure.

Posted by: GOP on September 1, 2006 at 4:30 PM | PERMALINK

rmck1,

When it comes to any kind of empirical discussion, I think you're now definitely in the same "Too Stupid To Bother With" category as Reg. If you ever manage to come up with an actual argument, using actual facts and actual evidence, for your social and economic claims, let me know.

Posted by: GOP on September 1, 2006 at 4:37 PM | PERMALINK

cmdicely,

You are confusing (proxy) measures of an underlying phenomenon the underlying phenomenon itself,

What is "the underlying phenomenon itself?" How does it differ from the "(proxy) measures?" What superior alternative measures to the standard ones I am citing (income, benefits, GDP, NDP, etc.) do you propose?

Apparently, the "(proxy) measures" are valid when you think they support your position, but somehow become invalid when it's shown to you that they don't.

Posted by: GOP on September 1, 2006 at 4:47 PM | PERMALINK

GOP:

You don't argue with "facts and evidence." You're a cherry-picker whose distored "facts and evidence" have been relentlessly debunked this entire thread by a host of people.

You're sitting there having an inane pissing match with cmidicely over basic economic principles. If you don't understand why "proxy measures" don't equate to what is measured -- whether one feels one is "rich" -- then you understand nothing about economics or the social theory that supports it.

I'm not a detail guy. But on the bigger picture, my friend, I eat your lunch.

And since you can't debate with me on those grounds, knowing full well that economics is a measure of what society deems to be valuable, you obfuscate because I won't get down in the statistical mud with you.

And guess what -- everybody else on this thread sees this but you.

Bob

Posted by: rmck1 on September 1, 2006 at 4:57 PM | PERMALINK

GOP: What regressions?

The ones you can do in a couple minutes using a spreadsheet or statistical analysis program.

You're talking about, at most, a change of a fraction of a percentage point over a period of decades.

Wrong; 2-3% (different regressions will produce minor variations) is hardly a "fraction of a percentage point". And those are absolute; the relative change is obviously greater.

The table you mentioned has no data at all about either wages or compensation as a share of NDI or GDI.

No shit. And I referenced two tables. The math is quite simple, c.f. Table 2.1 lines 2 and 3, and Table 1.7.5 line 32.


You keep referring to Brad DeLong's chart as if it vindicates your assertions. It does not. To you it seems to appear as no more than fluctiations around a relative constant. It is not.

Posted by: has407 on September 1, 2006 at 5:03 PM | PERMALINK

has407,

decline of Compensation ~2% ... [That is] significant

So if you got a pay raise of 2%, you'd call that a "significant" increase in pay, would you?

In any case, as I said, it's not 2%. If it's anything, it's more like 1% or less. Over a period of 30 years.

So, as the economy has grown dramatically, the share of that economy going to wages and benefits for American workers has declined by, at most, about one percent. Over a period of 30 years. And since the economy has grown vastly more than one percent over the past three decades, the real employment compensation of American workers has increased dramatically, regardless of any small fluctuations in compensation as a share of GDI or NDI.

Posted by: GOP on September 1, 2006 at 5:03 PM | PERMALINK

has407,

The ones you can do in a couple minutes using a spreadsheet or statistical analysis program.

Show me these alleged "regressions." Stop just claiming they exist and produce them.

Wrong; 2-3% (different regressions will produce minor variations) is hardly a "fraction of a percentage point".

As I just told you, the BEA data clearly shows that employment compensation as a share of GDI averaged about 59% in the 1970s, and has averaged about 58% in each of the three subsequent decades, through 2005. Where is this alleged "2-3%" decline?

Posted by: GOP on September 1, 2006 at 5:09 PM | PERMALINK
What is "the underlying phenomenon itself?"

The actual subjective utility experienced by the participants in the economy. Again, this is basic, first semester (macro- or micro-) economics stuff.

How does it differ from the "(proxy) measures?

The proxies are readily measurable quantities that economic theory holds as being generally linked to subjective utility experienced in various ways.

What superior alternative measures to the standard ones I am citing (income, benefits, GDP, NDP, etc.) do you propose?

I'm suggesting using different proxies (here, at least). I'm suggesting recognizing the specific limitations in the ones you do use.

Apparently, the "(proxy) measures" are valid when you think they support your position, but somehow become invalid when it's shown to you that they don't.

You've got that reversed, there. My position agrees with any given proxy measure where that proxy measure is applicable, but differs from it where the limitations of that proxy measure make it inapplicable.

This is what comes from having some kind of understanding the underlying concepts, rather than just having heard of a measure and managed to gather that it is in some way considered "important" without understanding why.


Posted by: cmdicely on September 1, 2006 at 5:18 PM | PERMALINK

Look everyone. I cite the evidence I want to cite. The other evidence, I don't cite.

If it undermines my position, I don't cite it. Not only that, I don't see it, I don't understand it. At that point, I say something like:

I have no idea what why you think that data bears any relationship to what I'm saying...

All clear now?

Good. On with the discussion!

Posted by: GOP on September 1, 2006 at 5:32 PM | PERMALINK

rmck1 rote to Don P (posting today as "GOP"): You don't argue with "facts and evidence." You're a cherry-picker whose distored "facts and evidence" have been relentlessly debunked this entire thread by a host of people.

Don P's cherry-picked, bogus, distorted "facts and evidence" have been "relentlessly debunked by a host of people" on every thread on which he's ever commented, on every subject on which he's ever commented, whether it's economics, religion, terrorism, global warming or parapsychology. He's been shown over and over again to be a fraud and a phony.

Don P doesn't care. He's a deliberate liar. He's a bullshit artist. His only real goal is to waste people's time with bullshit. His idea of "victory" is not to "win" an argument, but to get someone to waste a lot of their precious time responding to arrogant ignorance and his deliberately, maliciously dishonest crap.

That's how he seeks to satisfy the insatiable demands of his diseased, bloated ego to prove to himself over and over and over and over again that he is superior to others, by impressing himself with his ability to waste their time with bullshit.

Posted by: SecularAnimist on September 1, 2006 at 5:33 PM | PERMALINK
You're hilarious.

I live to entertain.

You just defined "the economy doing worse" as "disutility."

Yes, increased disutility is the same thing as the economy doing worse.

Its not the same thing as (e.g.) GDP per capita declining.

I then pointed out to you that increasing inequality has been accompanied by the economy doing better.

Well, you claimed that, and demonstrated that you didn't understand at all what I was saying. What I was saying is that the numbers you want to point to to say the economy is doing better do not in fact mean that, they are proxies for utility, and only mean that so far as they accurately represent the experienced subjective utility. Unfortunately, the numbers you like to point to generally don't take any account of the disutility produced by income inequality.

Of course, you've also stated that "disutility" means other things

Yes, "the economy doing better" means "more experienced utility" means "people getting more satisfaction" which includes things that are very concrete and tangible and absolute ("I got a new pony!") and things that are less tangible and relative ("Looking at what everyone else around me is getting, what I'm getting now seems more fair than what I was getting before.")

Ha ha ha ha ha! Please show me the "research on income inequality" that is consistent with the claim that the ideal level of income inequality is the minimum possible (i.e., everyone has the same income).

You are leaving out, interestingly, the emphasized part of my original statement ("all other things being equal"). Are you deliberately changing the subject, or do you genuinely not grasp the significance of that limitation?

If you do understand the difference that makes, What research are you aware of that conflicts with the claim I actually made rather than your misrepresentation?

You've just destroyed your own idiotic "increasing inequality causes increasing disutility" claim.

No, I didn't. And not just because the claim isn't idiotic, either. Again, you seem to fail to understand the whole concept of ceteris paribus; the difference between considering just the effects of one variable, and considering the effects of the means necessary to effect change in that variable.


Posted by: cmdicely on September 1, 2006 at 5:37 PM | PERMALINK

cmdicely,

The actual subjective utility experienced by the participants in the economy. Again, this is basic, first semester (macro- or micro-) economics stuff.

No, it's not. Once again, you don't know what you're talking about. Wealth isn't defined as "the actual subjective utility experienced by the participants in the economy" in either everyday usage or in technical economic usage. In economics, the term "wealth" fundamentally refers to the value of goods and services. Stop pretending your made-up psychobabble is economics.

I'm suggesting using different proxies (here, at least).

Yes, I know. What different, and superior, "proxies" to the standard ones are you suggesting should be used to measure wealth? If you have no superior alternatives to offer to standard measures of wealth, then you have no basis for disputing the conclusions reached using standard measures of wealth.

And I'm still waiting for you to explain how have you determined that the current level of income inequality is above, rather than below, the optimum level and that further increases in inequality are therefore bad, rather than good?

Posted by: GOP on September 1, 2006 at 5:45 PM | PERMALINK

GOP -- For 1976/Q1-2006/Q2:
y = -0.0002x + 0.6712 (r=0.58)
y = 2e-6x^2 - 0.0004x + 0.6752 (r=0.60)
y = 5e-12x^5 - 5e-9x^4 + 1e-6x^3 - 8e-05x^2 + 0.0021x + 0.658 (r=0.71)

Posted by: has407 on September 1, 2006 at 5:52 PM | PERMALINK

Don P posting as "GOP" wrote: And I'm still waiting for you to explain ...

You are a liar. You are not "still waiting" for anything. That's what you always say when someone has completely shot you down as the fraud you are -- as cmdicely has amply done today -- and you want to ignore what they've posted by pretending that they haven't posted it. Anyone who wants to go back and read over this thread can see what a preposterous phony you are and that there's nothing you are "still waiting for" from cmdicely.

But you don't care since you are really only interested in wasting people's time with bullshit to prove to yourself that you are superior to them.

Posted by: SecularAnimist on September 1, 2006 at 5:57 PM | PERMALINK

And guess what -- everybody else on this thread sees this but you.

Word.

Posted by: Edo on September 1, 2006 at 5:59 PM | PERMALINK

Don P posting as "GOP" wrote: Wealth isn't defined as "the actual subjective utility experienced by the participants in the economy" [...] the term "wealth" fundamentally refers to the value of goods and services.

"Value" = "actual subjective utility"

Idiot.

Posted by: SecularAnimist on September 1, 2006 at 6:00 PM | PERMALINK

rmck1 to Don P: And guess what -- everybody else on this thread sees this but you.

Edo: Word.

Oh, Don P sees it, alright. He just doesn't care. He's a deliberate liar and an incorrigible fraud. He delights in wasting people's time with bullshit.

Posted by: SecularAnimist on September 1, 2006 at 6:02 PM | PERMALINK
Wealth isn't defined as "the actual subjective utility experienced by the participants in the economy" in either everyday usage or in technical economic usage. In economics, the term "wealth" fundamentally refers to the value of goods and services.

WTF do you think "value" is? Yes, yes, its operationalized in terms of what other goods and services you would exchange for the thing whose value is in question, but what is beign operationalized? What is the thing that is conceived as being "equal" between the things exchanged? The subjective utility that the person choosing to make the exchange experiences.

Again, you demonstrate that you don't understand the concepts underlying economics at all.

I'm suggesting using different proxies (here, at least).

Yes, I know.

Well, actually, you don't know that, because it is an (inadvertent) untruth; the word "not" was supposed to be between "I'm" and "suggesting".

And I'm still waiting for you to explain how have you determined that the current level of income inequality is above, rather than below, the optimum level

The optimum level of inequality is, as best as I can tell, "none". The current levels are above that.

and that further increases in inequality are therefore bad, rather than good?

I've yet to see any evidence that there is a range in which increases in inequality, all other things being equal, don't produce net disutility.

If you mean to question whether income inequality is currently within the range in which it can be reduced with out greater disutility from the action necessary to reduce it than from the inequality itself, well, once you accept that increased inequality is, all other things being equal, undesirable (the position I have been advocating against your earlier contrary position), we can discuss the pragmatics where the practical means of reducing inequality mean that all other things will not be equal.

Posted by: cmdicely on September 1, 2006 at 6:05 PM | PERMALINK

cmdicely,

Yes, increased disutility is the same thing as the economy doing worse.

Is this now your final answer? Or is it going to change again? Because you previously claimed that "disutility" is, or includes, "concrete harms like increased mortality." Obviously, "increased mortality" is not the same thing as "the economy doing worse." It's not even necessarily a cause or effect of "the economy doing worse."

I suggest you take a breath, figure out once and for all what you mean by "disutility," and then state your meaning in clear and concise language. Can you do that?

What I was saying is that the numbers you want to point to to say the economy is doing better do not in fact mean that, they are proxies for utility, and only mean that so far as they accurately represent the experienced subjective utility. Unfortunately, the numbers you like to point to generally don't take any account of the disutility produced by income inequality.

No, the numbers I cited are the standard measures of the size of the economy. By these measures, the economy has not been "doing worse," it has been "doing better." Much, much better. It has grown dramatically while income inequality has declined slowly. If you think you have alternative measures of the economy that show that it has been "doing worse" as income inequality has increased, then produce them.

Or perhaps you shouldn't even bother trying, since your own argument contradicts itself. If "wealth" is "the actual subjective utility experienced by the participants in the economy," and standard "proxies" for wealth do not measure it reliably, then income is not a reliable measure of wealth. And if income is not a reliable measure of wealth, then income inequality is not a reliable measure of wealth inequality. And if income inequality is not a reliable measure of wealth inequality, then you have no justification for claiming, on the basis of income inequality data, or wage data, or any other standard economic data, that some people have been getting wealthier than others. QED. Your entire ridiculous "argument" collapses in a heap of self-contradiction.

Posted by: GOP on September 1, 2006 at 6:12 PM | PERMALINK

has407,

GOP -- For 1976/Q1-2006/Q2:
y = -0.0002x + 0.6712 (r=0.58)
y = 2e-6x^2 - 0.0004x + 0.6752 (r=0.60)
y = 5e-12x^5 - 5e-9x^4 + 1e-6x^3 - 8e-05x^2 + 0.0021x + 0.658 (r=0.71)

Your claim in dispute is "regressions that show a decline of Compensation ~2%."

Where do your numbers above show "a decline of Compensation ~2%?"

Posted by: GOP on September 1, 2006 at 6:18 PM | PERMALINK

cmdicely,

The optimum level of inequality is, as best as I can tell, "none". The current levels are above that.

Ha ha ha ha ha! So you think the optimum income distribution would be equal incomes for everyone, do you? Optimally, Bill Gates, a brain surgeon, an unemployed factory worker, and a homeless alcoholic would all receive exactly the same income. Anyone agree with him? Let's get y'all on record.

How have you determined that this is the optimum income distribution?

Posted by: GOP on September 1, 2006 at 6:28 PM | PERMALINK
Is this now your final answer?

Its been my position from the outset.

Or is it going to change again?

For it to change "again", it would have had to have changed before.

Because you previously claimed that "disutility" is, or includes, "concrete harms like increased mortality."

Yes, disutility includes both concrete and less concrete sources of disatisfaction, among the former of would be inreased risk and incidence of early death.

Obviously, "increased mortality" is not the same thing as "the economy doing worse."

Really? Its an outcome with a clear negative value, in that people would gladly exchange good and services to avoid the outcome. Its certainly a factor of the economy doing worse for people, just as it is a component of increased disutility.

It's not even necessarily a cause or effect of "the economy doing worse."

Sure, it can occur with the economy overall doing better or worse, but all other things being equal it means the economy is doing worse.

I suggest you take a breath, figure out once and for all what you mean by "disutility," and then state your meaning in clear and concise language. Can you do that?

Been there, done that. In response to your earlier request (phrased more succinctly) with the same gist.

To wit:

Don GOP: What's "disutility" supposed to mean?
Me: Negative marginal utility.

I've also pointed you to places to begin to learn about the fundamental concept of "utility" which underlies economics. That's pretty much all I can do on that.

No, the numbers I cited are the standard measures of the size of the economy.

I never said they weren't (though more properly they are among the standard measures; so is, for instance, the Gini coefficient. But there is no standard way to weigh the one getting worse against the others getting better), so why do you lead this with a "no"? Just a way to mask its irrelevance?

If you think you have alternative measures of the economy that show that it has been "doing worse" as income inequality has increased, then produce them.

As I said, I'm not proposing using alternative measures, I'm proposing understanding the known limitations of the existing measures as proxies what they serve to measure.


Or perhaps you shouldn't even bother trying, since your own argument contradicts itself.

It does not contradict itself. But since you've already made a big point of how you don't understand the concept of "utility" or "disutility", I don't understand how you can claim to even understand my argument, much less know that it contradicts itself (or how you can claim to understand anything about modern economics.)

If "wealth" is "the actual subjective utility experienced by the participants in the economy," and standard "proxies" for wealth do not measure it reliably, then income is not a reliable measure of wealth.

Standard measures are useful, with specific limitations. They aren't reliable in all situations, but that doesn't mean they are unqualifiedly "not reliable" either.

But income isn't a measure, its a phenomenon of which there are several standard measures. And its not the same as wealth, but the change in wealth.

And if income is not a reliable measure of wealth, then income inequality is not a reliable measure of wealth inequality.

I've never claimed that income inequality (which isn't a measure, but a thing for which there are measures) was a measure of (or the same thing as) wealth inequality.

if income inequality is not a reliable measure of wealth inequality, then you have no justification for claiming, on the basis of income inequality data, or wage data, or any other standard economic data, that some people have been getting wealthier than others.

But that wasn't my argument.

My claim was that income inequality is a form of relative deprivation which, in and of itself, is demonstrably linked to experienced disutility.

QED.

No. QED means, roughly translated, "What was to be proven." But, you've proven (or even "concluded", however invalidly) nothing relevant to the debate we were having. You've taken a bunch of false assumptions (equating imperfect measures with useless ones) and used them to "reason" to a refutation of a point that wasn't the one in debate.

Your entire ridiculous "argument" collapses in a heap of self-contradiction.

Except, again, that your premises (express and implied) aren't justified, your "logic" is flawed, and your "conclusion" has nothing to do with my argument.

Aside from that, spot on. Good job.

Posted by: cmdicely on September 1, 2006 at 6:36 PM | PERMALINK
So you think the optimum income distribution would be equal incomes for everyone, do you?

Considering only the effects of income distribution on utility, yes.

Pragmatics are distinct from ideals.


Posted by: cmdicely on September 1, 2006 at 6:40 PM | PERMALINK

GOP: Show me these alleged "regressions." Stop just claiming they exist and produce them. ... Your claim in dispute is "regressions that show a decline of Compensation ~2%."

The first- and second-order shows a bit over -2%; the fifth-order shows about -1.2%, but is obviously much more sensitive the particular range.

If you want to dispute it further, knock yourself out; you have access to the same data.

Posted by: has407 on September 1, 2006 at 6:46 PM | PERMALINK

but extremely poor people (often drug addicted)

I did not write that extremely poor people are often drug addicted. I wrote that extremely poor people treated for tetanus are often drug addicted. That is because addicts are less likely than non-addicts to have vaccines, and addicts are more likely than non-addicts to get tetanus.

It is true that rich drug addicts also can get treated for tetanus, but I was pointing out one of the ways that today's poor are better off than the poor of decades past. Real improvements in medical care have spread real wealth downward from the rich. John Roebling, who designed the Brooklyn Bridge and supervised most of its constructions, died of tetanus; nowadays, even most poor people who contract tetanus do not die from it.

Posted by: republicrat on September 1, 2006 at 6:56 PM | PERMALINK

cmdicely,

Been there, done that.

No, you haven't done it. You've now offered (at least) three incompatible definitions of "disutility." First, you defined it as "the economy doing worse." Then, you defined it as, or to include, "concrete harms like higher mortality," and now you're defining it as "Negative marginal utility."

For goodness' sake, figure out what you mean by "disutility" once and for all and state your definition in clear and concise language.

My claim was that income inequality is a form of relative deprivation which, in and of itself, is demonstrably linked to experienced disutility.

You're just determined to tie yourself in ever-tighter knots, aren't you? Income inequality cannot be a deprivation of wealth, whether defined as "actual experienced subjective utility" or in any other way, unless income is a measure of wealth. But you just denied that income is a measure of wealth. And if income inequality is "demonstrably linked to experienced disutility," then income must demonstrably measure wealth, since you defined wealth as "actual experienced subjective utility." That also contradicts your claim that income isn't a measure of wealth.

Posted by: GOP on September 1, 2006 at 7:00 PM | PERMALINK

cmdicely,

Considering only the effects of income distribution on utility, yes.

I didn't impose any qualifications or conditions on the question. I asked you what you consider to be the optimum level of income inequality. I assume you know what "optimum" means. Your answer was "none." Where the level of income inequality is "none," everyone has the same income. So, according to you, the optimum income distribution would be equal incomes for everyone.

Do you now wish to change your answer?

Posted by: GOP on September 1, 2006 at 7:06 PM | PERMALINK

GOP: No, increased risk is not "a decrease in real wealth." You don't know what you're talking about, as usual. Wealth is the value of goods and services. The total amount of wealth created by the economy in a year is measured by the total value of goods and services produced by the economy in that year, represented by Gross Domestic Product. It has nothing to do with "risk."

you are wrong about that. The "wealth" consists of the results of the goods and services that are paid for; money is a poor proxy. Driving down the costs of medical treatments, or decreasing the risks of lethal and crippling diseases, does in fact increase the wealth of poor people. Whatever increses the risks in a group of people, decreaes their aggregate wealth; this is true especially if they have to spend increased amounts of money on treatments that do not work.

In the early 50s, plenty of poor people suffered and died from typhoid, typhus, pertussis, measles, mumps, diphtheria, polio, tetanus, TB. Now equally poor people are richer, while paying less for cures, due to the increased survivorship of their children and medical savings.

And as I mentioned, you can get more music for $1000 now than 30 years ago: this is an increase in the wealth despite equal dollar costs.

Posted by: republicrat on September 1, 2006 at 7:07 PM | PERMALINK

cmdicely, Don P is deliberately wasting your time.

Again.

Posted by: SecularAnimist on September 1, 2006 at 7:08 PM | PERMALINK

pj: I run a small business. All my employees are covered by our health plan. One of my employees was diagnosed with life-threatening cancer earlier this year. She had surgery and weeks of chemo. Excellent, top of the line care. She's in remission, thank goodness.

50 years ago she would have died in short order. Now, we as a society spend great sums of money in order to provide this care. We spend the extra money because we beleive that the extra years of life are worth the cost and the effort. If anybody really thinks that we are worse off because of rising health care costs, remember that we could save enormous sums of money if we let people like that die as they used to.

Posted by: republicrat on September 1, 2006 at 7:16 PM | PERMALINK

has407,

The first- and second-order shows a bit over -2%; the fifth-order shows about -1.2%, but is obviously much more sensitive the particular range.

I can only assume your continued evasions and cryptic responses means that you don't have an answer to my question. Where are you getting your "2% decline" claim from? 2% decline from what?

If you want to dispute it further, knock yourself out; you have access to the same data.

I don't know what data you're using. You told me you're combining numbers from different tables on the BEA website, but I have no idea what actual data you're plugging in to your analysis, or whether the data you're using is valid. The specific table you identified does not contain any data on compensation as a share of GDI or NDI. As I already told you, the BEA data shows that employment compensation as a share of GDI averaged about 59% in the decade of the 1970s, about 58% in the 1980s, about 58% in the 1990s, and about 58% in the 2000s. Where the hell is the "significant" decline?

But I guess the fact that you're quibbling over differences on the order of a percentage point means that you accept the basic fact that employment compensation (wages plus benefits) as a share of GDI is almost exactly the same now as it was thirty years ago. Which is one reason why this "the rich are getting richer and everyone else is getting screwed" trope is such bullshit.

Posted by: GOP on September 1, 2006 at 7:20 PM | PERMALINK

Truth be known - and this is not hyperbole - the Republican economic model is medieval serfdom,

that is a perfect example of hyperbole.

Posted by: republicrat on September 1, 2006 at 7:21 PM | PERMALINK

craigie: I'm putting together this thread with the one from the other day, where you and republicrat were telling us that because we have cool laptops that let me read this crap wirelessly, it doesn't matter that jobs are being exported to India.

That isn't what I wrote. What I wrote, complete with many people's actual purchasing experiences, is that there are areas of the economy where a dollar (or $1000) has more purchasing power than ever before. As the medical examples show, they are not all toys. If you really do not value your internet connection, then you should not renew your subscription; as long as you stay connected, you demonstrate that you think it is valuable.

Posted by: republicrat on September 1, 2006 at 7:26 PM | PERMALINK

secularanimist,

Do you agree with cmdicely that the optimum level of income inequality is zero. That is, do you think it would be best if everyone received the same income, regardless of whether they work, or how much they work, or how much they contribute to the economy, or how skilled or talented they are, or how much other people are willing to pay them, or any of the other things that influence incomes in the real world?

Does anyone agree with him?

Posted by: GOP on September 1, 2006 at 7:28 PM | PERMALINK

Krugman: The stagnation of real wages wages adjusted for inflation actually goes back more than 30 years. The real wage of nonsupervisory workers reached a peak in the early 1970s, at the end of the postwar boom. Since then workers have sometimes gained ground, sometimes lost it, but they have never earned as much per hour as they did in 1973.

This illustrates nicely Krugman's bias. He ignores every example in the economy where $1000 can buy more now than it bought in 1970 or 1950. Not everything is cheaper, a good example right now being fuel. But health is cheaper, and that is something tha most people value.

Posted by: republicrat on September 1, 2006 at 7:32 PM | PERMALINK

I think the trolls (and quasi-trolls) on this thread really need to review the concept of relative deprivation.

Comparisons from the 50s to now are not hugely relavent.

Comparisons from the 90s to now are much moreso.

The most salient question remains Ronnie's: Are you better off today than you were four years ago?

If people feel more economically insecure today than they felt four years ago -- factoring everything into the equation -- then the answer to that question is no.

Bob

Posted by: rmck1 on September 1, 2006 at 7:42 PM | PERMALINK
You've now offered (at least) three incompatible definitions of "disutility."

No, I've offered zero incompatible definitions.

First, you defined it as "the economy doing worse."

No, I defined "the economy doing worse" as "increasing disutility."

You falsely interpreted that as defining disutility as "the (most prominent measures of) the econonmy doing worse."

Then, you defined it as, or to include, "concrete harms like higher mortality,"

This is a distortion. I expressly mentioned that concrete harms were included, but said nothing that could be reasonably read as suggesting that such concrete harms were the definition of disutility. What I said with that is in no way inconsistent with anything I said before or since.

and now you're defining it as "Negative marginal utility."

Actually, no, that was the first of the three statements, adn the only one which purported to define disutility; it was first made in the same post and preceding my definition of poor economic performance that you mistook for a definition of disutility.

And its completely consistent with the inclusion of concrete harms, and with what I said about the meaning of the economy doing worse.

For goodness' sake, figure out what you mean by "disutility" once and for all and state your definition in clear and concise language.

I've given one definition in this thread, it hasn't changed, and you have yet to tell me what part of it is unclear to you. I can't imagine how it could be any more concise than the three words it is.

You're just determined to tie yourself in ever-tighter knots, aren't you? Income inequality cannot be a deprivation of wealth, whether defined as "actual experienced subjective utility" or in any other way, unless income is a measure of wealth.

This is wrong and irrelevant: wrong because for income inequality to be a deprivation of wealth, income would have to be identical to wealth, not a "measure of" wealth. Of course, neither is the case, income is simply one source of change in wealth, it is neither wealth itself nor a measure of wealth; irrelevant because I never said income inequality was a deprivation of wealth—I said it was a form of (perhaps source of, or condition which necessarily implies, would be better) relative deprivation, Which it is as income is an axis on which relative deprivation can exist as well as wealth is.

And if income inequality is "demonstrably linked to experienced disutility," then income must demonstrably measure wealth, since you defined wealth as "actual experienced subjective utility."

Wrong again; a correct statement would be "if income inequality is demonstrably linked to experience disutility, then income inequality must affect wealth, if wealth is defined as actual subjective utility." Which, of course, is true; income inequality reduces actual wealth, though most conventional measures of wealth do not reflect this. (Of course, income itself, being a change in wealth, also affects wealth, but in a way fairly well reflected in conventional measures.)

didn't impose any qualifications or conditions on the question.

So? The question was ambiguous, as different answers were possible if it was taken in terms of ceteris paribus ideals, or pragmatically acheivable results in the current condition. I therefore was clear in my answer to address it in the terms that underlie my entire objection to your position in the thread (and in the sense matching that of my earlier, more detailed, statements on the subject) and therefore the whole argument we've been having, rather than the sense that would divert the conversation into a different argument. As was clear from context in the thread.

If you want something answered in a particular sense, phrase the question unambiguously.

So, according to you, the optimum income distribution would be equal incomes for everyone.

Yes, it would.

Acheiving that, however, might require suboptimal results in some other areas, and the optimal practically acheivable state of the world might involve accepting suboptimal income distribution to be less suboptimal in some other area(s).


Do you now wish to change your answer?

No. Do you wish to make an argument that I should change my answer?

Posted by: cmdicely on September 1, 2006 at 7:43 PM | PERMALINK

How does increasing inequality cause increasing "disutility?"
...
Largely, its generally accepted, by creating unmet expectations; but the mechanism is less clear than the fact that increasing inequality produces disutility.

I don't know whether this is generally accepted or not. There is great variation among people, and it is clear that on this thread increasing inequality produces disutility for some but not for others. However, people who say things like "Count your blessings" certainly recognize the risk that inequality may cause disutility, and also recognize it as something to strive against.

I am happy that my children suffered fewer childhood diseases than I did, even though I paid more for vaccinations than was paid for mine. I am happy that their generation suffered in the aggregate fewer deaths and debilities than mine did (I grew up with newsreels of people in iron lungs, and polio hysteria every summer). I do not perceive any disutility in these blessings just because the chairman of Exxon/Mobil received a bonus of $65,000,000.

Posted by: republicrat on September 1, 2006 at 7:44 PM | PERMALINK

GOP:

All other things being equal -- sure. Let's make everybody equally rich, why not.

I'd also like a rocket pack, a personal fusion reactor in my basement and a pony.

No, make that a whole herd of ponies.

Thanks,

Bob

Posted by: rmck1 on September 1, 2006 at 7:45 PM | PERMALINK
I think the trolls (and quasi-trolls) on this thread really need to review the concept of relative deprivation.

Where is your evidence that "the trolls (and quasi-trolls) on this thread" had previously understood the concept of "relative deprivation"? Would you like to retract your statement?

Posted by: cmdicely in the style of Don GOP on September 1, 2006 at 7:47 PM | PERMALINK

cmdicely:

"Review" used in the sardonically euphemistic sense of a professor warning a student to crack the books hard three days before finals -- because it's obvious up to this point, he hadn't "reviewed" squat :)

Bob

Posted by: rmck1 on September 1, 2006 at 7:54 PM | PERMALINK

cmdicely: "I live to entertain."

For my money the best sardonic line on this blog in a while.

Posted by: Windhorse on September 1, 2006 at 8:08 PM | PERMALINK

I think the trolls (and quasi-trolls) on this thread really need to review the concept of relative deprivation.

That is a concept that should be killed.

Comparisons from the 50s to now are not hugely relavent.
...
Comparisons from the 90s to now are much moreso.

Some of the comparisons to the 50s to now are indeed hugely relevant. Ignoring the wealth effects of all the vaccines is a mistake.

comparisons from the 90s to now are more relevant. With that I agree, and that is why I repeat the examples of progress in antiretroviral medication. It's something "hugely" important that is cheaper now than before. I have provided lists of other such things: taxol, fluoxetine, arthroscopic surgery, breast cancer treatment, music recording and playing equipment, electronic communication, high-speed scientific computing, high-performance statistical software, high-performance CAD/CAM software, desktop publishing software.

mathematics and physics books are more expensive, unless you buy the Dover reprint series. Technical journals are less expensive if you get them online.

"health insurance" is more expensive, but it covers much more, which makes an "apples-to-apples" comparison difficult.

Posted by: republicrat on September 1, 2006 at 8:13 PM | PERMALINK

republicrat:

Wby would you dismiss relative depriviation out of hand?

What, you think you can walk up to a bunch of gangbangers in their Tommy Hilfigers, Timberlands, grillz on their front teef and $180 sneakers on their feet -- most of it purchased from small-time drug dealing -- and say, hey, you boyos are sure doin' better than if you lived in Nigeria?

Of course, these kidz don't vote. It's when you deal in the hard-pressed starter suburbs of the working poor that you start to see the attendent pessimism reflected in these surveys. Or even the McMansions where the refi well is running dry, and their SUV has to get them a 40mi round trip each day to the office park. There's not nearly the kind of cushion out there that there was even a few short years ago.

And that kind of relative position -- which Reagan so brilliantly harnessed in his '84 reelection campaign -- that people feel and respond to in the voting booth.

All the finagled figures and sales jobs on the economy are meaningless compared to how secure people feel, in relative terms, compared to a recent benchmark in the past.

Bob

Posted by: rmck1 on September 1, 2006 at 8:43 PM | PERMALINK

GOP: I can only assume your continued evasions and cryptic responses means that you don't have an answer to my question. Where are you getting your "2% decline" claim from? 2% decline from what?

The answer to your question is articulated in my previous posts. But here's the short-bus form:

  1. Compenstation = Table 2.1 Line 2 Compensation of employees, received
  2. NDI = Table 1.7.5 Line 31 Net domestic income
  3. "CP" = Compensation percentage of NDI = Compensation / NDI.
  4. Compute CP for the range of interest.
  5. Perform regression on the results of step 4 to generate equation "F".
  6. Compute "Y1"= F(CP) for beginning of range.
  7. Compute "Y2" = F(CP) for end of range.
  8. Compute "CPC" = CP Change = Y2-Y1
(CPC for first- second- and fifth-order F ~= -2%, -2%, and -1.2% using the range 1976/Q1-2006/Q2).

But I guess the fact that you're quibbling over differences...

You guess wrong. Your substituting guesses for lack of reasoning or comprehension doesn't change the facts.

Posted by: has407 on September 1, 2006 at 8:45 PM | PERMALINK

Wby would you dismiss relative depriviation out of hand?

"relative deprivation" is about as useful as a "principle of prostitution". Sure it happens, but it isn't universal, it varies quantitatively from place to place, it isn't a norm, and it is an expression of human weakness.

What, you think you can walk up to a bunch of gangbangers in their Tommy Hilfigers, Timberlands, grillz on their front teef and $180 sneakers on their feet -- most of it purchased from small-time drug dealing -- and say, hey, you boyos are sure doin' better than if you lived in Nigeria? In the Cleveland Heights High School with which I was familiar, some African Americans did indeed teach their children to be thankful and make the best of the opportunities presented in the US today (a la Powell and Rice); whereas other parents did indeed encourage their children to feel sorry for themselves (a la Toni Morrison and Al Sharpton.)

I did not become poorer when "Fast" Willy Parker signed a $13.7 million dollar contract. I am still richer, and have more purchasing power, than last year. And I am just about a median earner.

You maybe do not care about music, but music is cheaper than ever before, and more easily available. All kinds of music.

Posted by: republicrat on September 1, 2006 at 10:15 PM | PERMALINK

More nonsense. Income inequality is a state, not a process. It doesn't "do" anything.

Income inequality appears to have measurable effects on the health of a nation:

Recent research suggests that the degree of income inequality in society may be related to the health status of a population. Greater income inequality has been linked to lower life expectancy in cross-national comparisons (Wilkinson, 1996); higher mortality rates (Kaplan et al. 1996; Kennedy et al. 1996) and worse self-rated health (Kennedy et al. 1998) at the U.S. state level; higher mortality at the U.S. metropolitan level (Lynch et al. 1998); as well as higher rates of obesity at the U.S. state level (Kahn et al. 1998). The mechanisms linking income inequality to health are still debated (Kawachi et al., 1999), but the association appears robust with respect to age, race, sex, and adjustment for individual socioeconomic characteristics (Kennedy et al, 1998; Soobader and LeClere, 1999).
Posted by: Windhorse on September 1, 2006 at 10:16 PM | PERMALINK

We've been over that issue. Your link is out of date.

That link addressed only health outcomes and not other potential negative factors arising from income inequality such as crime and societal instability. Even then, researchers who have conducted more recent studies admit that there is yet no consensus[1] on whether a correlation exists between income inequality and health, and your own cite suggests that one does appear to exist in the U.S.

[1] Do more unequal countries have worse health outcomes? More than 100 articles on this question have been published over the past two decades, but no consensus has emerged (Lynch et al, 2004a).
Posted by: Windhorse on September 1, 2006 at 10:58 PM | PERMALINK

OK.

The problem here is that DonGOP doesn't want knowledge or understanding. What he wants is an argument. And republicrat appears to want to change the subject from whether or not we have any right as a society to collective decision making.

Increasing income inequality is deleterious to us all (society) because it divides us into groups that have less and less in common with each other and less and less ability to understand and empathize with each other. That is not good. If it was good, George "W"orst-president-ever Bush would not have campaigned on words like,

I'm a uniter, not a divider

That being said, if DonGOP's brain was just a little bit more functional it might just dawn on him that he's naked in the middle of the room and his ass is covered with pimples.

Not a pretty sight.

Posted by: obscure on September 1, 2006 at 11:14 PM | PERMALINK

And my link indicates that there is no clear evidence of a relationship between income inequality and health outcomes. You haven't presented any evidence of a link between income inequality and crime or societal instability.

And my link is more recent, and in it the authors discuss this very point and observe that there is no consensus on this matter precisely because so many studies in the past decade have fallen on either side of the issue.

and your own cite suggests that [a consensus] does appear to exist in the U.S.

Pronoun trouble. Not a consensus but a correlation. Your own cite says that the data shows that a correlation DOES exist between income inequality and negative health outcomes in the U.S., but may perhaps be explained away by curvilinear individual level relationships one day.

Posted by: Windhorse on September 1, 2006 at 11:38 PM | PERMALINK

Republicrat states: 50 years ago she would have died in short order. Now, we as a society spend great sums of money in order to provide this care. We spend the extra money because we beleive that the extra years of life are worth the cost and the effort. If anybody really thinks that we are worse off because of rising health care costs, remember that we could save enormous sums of money if we let people like that die as they used to.

My points are:

1. Americans don't have to spend so much on health care to maintain a high standard of living -- most developed western economies spend less and have better overall health. So the fact that health care is such a large part of our GDP is not necessarily a healthy economic trend. It could signify inefficiency, waste, protective trade policies, a sick population, all of the above.

2. Claiming that my healthy employees' rising insurance premiums are a sign of a strong economy is simply ludicrous. Their premiums are going up because one employee got seriously ill -- incapacitated for several months. You can't be suggesting that the sicker we get the better we will all be fincially?

3. The employee whose cancer is in remission remains worse off financially than before she was diagnosed with cancer. Her accumulated vacation and sick days along with donated staff vacation days covered two months of salary, but she still missed another two months of work and continues to have a lot of expenses for medicines and treatments.

Contracting cancer (or heart disease, or diabetes . . .) is a poor strategy for growing employee compensation. Yes, my employee will live longer, but no, the cancer has not made her financially more well off.

Posted by: pj in jesusland on September 1, 2006 at 11:48 PM | PERMALINK

You haven't presented any evidence of a link between income inequality and crime or societal instability.

Here's one of many studies that shows a causation from income inequality to rates of violent crime.

http://ideas.repec.org/a/ucp/jlawec/v45y2002i1p1-40.html

Posted by: Windhorse on September 1, 2006 at 11:49 PM | PERMALINK

GOP: The point is that any such decline, if it exists at all, is very small and has occurred only over a very long period of time.

While the aggregate is relatively low over a very long period of time, the cycles of rise and fall have occurred over considerably shorter periods. Those cycles tell a much more interesting story, better told by Larry Bartels.

But you're still seriously claiming that a 2% decline (or is it now 1.2%?) is a "significant" decline, are you?

Yes. And if you really look at the data, I think you'll see that -2% is artificially optimistic. (And I already expained -1.2%.)

If you switched jobs and your new job paid 2% more than your old job, would you consider yourself to be making a "significantly" higher salary?

No. However, my individual salary is no indication of a macro-economic trend. In any case, if over a succession of jobs over a number of years, I thought that my compensation should be rising, and nominal indications were that it was rising--but I discovered instead that it was in reality falling, or even flat--that I would consider it significant, and would want to know why.

Posted by: has407 on September 2, 2006 at 12:10 AM | PERMALINK

1. Americans don't have to spend so much on health care to maintain a high standard of living -- most developed western economies spend less and have better overall health.

I don't deny that, but it is independent of whether net health and wealth and purchasing power are getting worse.

2. Claiming that my healthy employees' rising insurance premiums are a sign of a strong economy is simply ludicrous.

That was not my claim. My claim was that equal insurance premiums long ago would have bought much less medical care because effective treatments did not exist.

3. The employee whose cancer is in remission remains worse off financially than before she was diagnosed with cancer.

She is better off than she would have been before the invention of treatments for cancer. To be exactly equivalent to a similar case of 50 years ago she'd have simply had to forego treatment and die. Instead, like everybody else, she chose to spend money, work harder, and live longer.

Health insurance is not simply more expensive than before and equivalent (which would be inflation, loss of purchasing power) it is simultaneously more expensive and more effective. What has come down dramatically is what everyone is in fact paying to achieve: extra years of life by fixing each kind of problem.

And if you think things are really headed in the wrong direction, which is Kevin Drum's main claim (and apparently yours), people can easily undo the damage: skip the medical payments, forego the new treatments, and give up the longer healthier life.

Posted by: republicrat on September 2, 2006 at 12:38 AM | PERMALINK

The burden is on those who seek to show that a relationship between inequality and health exists, not on those who doubt it.

Restoring the context you've stripped from this discussion, the claim was made upthread that income inequality leads to negative societal factors.

You disputed that claim, stating that it doesn't "do anything."

Studies were brought forward that, in fact, support that claim. Studies have shown that income inequality does contribute to higher crime rates, without question.

So cmdicely was correct.

Studies have also shown income inequality leading to worse health outcomes.

The study you cited countered some data in some of the studies on health outcomes, but there are still many studies that do show correlations. In particular, the data does show a correlation in the U.S. When you attempted to claim otherwise with your "convincingly demonstrated" quote, you left out the qualifying sentence that preceded it. Allow me to restore that as well. From the link you provided:

There is very little confirmation of such a relation outside the United States.

In other words, there is confirmation of such a relation [between income inequality and negative health outcomes] in the United States, but little [not "no"] confirmation of such a relationship outside of the U.S.

The link you provided is even more clear that evidence yet exists of such a correlation:

Now that good data on income inequality have become available for 16 western industrialised countries, the association between income inequality and life expectancy has disappeared.

This reduces the evidence favouring the correlation of income inequality and mortality almost entirely to analyses of geographical units within the United States.

In other words, evidence favoring the correlation of income inequality and mortality in the United States exists.

An interesting comparison between the United States and Canada had already shown that this correlation at the level of states exists only in the former, and on the basis of the available evidence we can conclude that the United States is the exception.12 But even within the United States it is not certain that the association reflects a contextual effect of income inequality on everyone's mortality. It has been shown that the association between income inequality and mortality at the aggregate level could theoretically be the result of a curvilinear relation between the two at the individual level, a finding which would remove the need to postulate a contextual effect.

Most importantly, perhaps, the powerful impact of individual income on mortality has been rediscovered and still demands the urgent attention of policymakers and politicians around the world.

To sum up: income inequality can and does have negative effects on society.

That's all, my patience has run out.

Posted by: Windhorse on September 2, 2006 at 12:42 AM | PERMALINK

GOP: Huh? What "nominal indications" have you or anyone else offered that employment compensation as a share of GDP has been rising?

None. Where did you get that idea? I'm using "nominal" as in "current". i.e., not adjusted for inflation. The context, as is clear from my post, was of an individual wage-earner, as in "Gee, my check is larger! That must mean I'm making more money!" Only to find later that "Shit! I'm not really making more money!".

As Windhorse said, "That's all, my patience has run out." Sionara.

Posted by: has407 on September 2, 2006 at 1:04 AM | PERMALINK

Republicrat,

We are in agreement that my cancer-surviving employee is alive because of state-of-the-art diagnoses and treatments.

But in a few months economic figures will reflect a little upward blip in the GDP's measure of non-wage compensation because my firm will be paying higher insurance premiums for all employees -- healthy and sick -- on account of the expensive treatment received by my one employee.

My healthy employees receive no benefit from higher premiums that they would not have had if my employee had not gotten sick and premiums stayed level.

So, the extent to which higher insurance premiums for healthy workers make GDP measures of non-wage compensation appear to rise is a cause of overstatement in claims that worker compensation is growing, particularly when the rise is attributed to President Bush's economic policies.

Furthermore, my employee could save hundreds of dollars a year if she was able to buy her prescription drugs from Canadian firms. This FDA monopolistic, anti-free trade drug policy not only artificially bloats the US GDP, it makes my employee less well off financially.

In your opinion, is the FDA's monopoly on drug purchases a good or bad thing? It forces my employee to involuntarily transfer her wealth to the owners of US pharmaceutical firms. Why have free trade on some goods and not on others?


Posted by: pj in jesusland on September 2, 2006 at 1:40 AM | PERMALINK

republicrat:

>> Wby would you dismiss relative depriviation out of hand?

> "relative deprivation" is about as useful as a "principle
> of prostitution". Sure it happens, but it isn't universal,
> it varies quantitatively from place to place, it isn't a
> norm, and it is an expression of human weakness.

I am truly puzzled just what you think relative deprivation
could mean. Because the common sociological understanding
*is* a norm. Okay, after a quick glance at Wikipedia, I see
what you seem to think this means. Revolutionary stirrings of
the underclass and all of that. But that's not the only meaning.

Relative deprivation (or relative satisfaction) is simply the
observation that people define their financial circumstances by their
surroundings and their experience. It means that objective dollar-
value definitions of wealth and poverty don't tell the whole story.
A person is financially well-off if they *feel* well-off. Likewise,
a person is struggling if they *feel like* they're struggling.

Tom Wolfe, the 60s New Journalist and 80s conservative novelist,
is quite astute about this from both ends. Have you ever read
Bonfire of the Vanities? There's Sherman, a Wall Street "Master
of the Universe" living in a million-dollar Manhattan penthouse
(which would doubtless be 9 figures or more in today's market), who
is "hemhorraging money." Part of the comedy of the first few scenes
of this book is what a powerless deadbeat this guy feels like. He
lives beyond his means; however much he makes, it's never enough.

That's relative deprivation. The guy doesn't *feel* wealthy at all.

In his essay on the 70s, The Me Generation, Wolfe spoke about this
from the other side. He said that the average American workingman
lives a life of freedom and self-indulgence only rivaled historically
by a Renaissance prince. And that's doubtless true. But it's also
kind of meaningless, unless Joe down at the plant happens to be a
scholar of medieval history. What matters to Joe down at the plant
is whether his union will protect his wages and bennies. Or at
least it did when Wolfe wrote that essay. In other words, it's
completely acadamic to tell people how marvelous they have it today
compared to eras past -- even the relatively recent past like the
50s. They'll make comparisons to eras they remember. Like the 90s.

> I did not become poorer when "Fast" Willy
> Parker signed a $13.7 million dollar contract.

I don't think Democrats incline themselves to an orgy of class
resentment when they see A-rod signed for some ridiculous 10-figure
contract. Some might argue it's bad for the sport of baseball (citing
the salary cap and revenue sharing that's leveled pro football's
playing field and made each season genuinely competitive) -- but
we all know Steinbrenner's got gazillions. No skin off our noses.

> I am still richer, and have more purchasing power,
> than last year. And I am just about a median earner.

Mazel tov. That's your experience, and nobody can take that away
from you. If you feel more wealthy this year than last, more power
to you. What the polls reflect, though, is that many people don't.

> You maybe do not care about music, but music is cheaper than
> ever before, and more easily available. All kinds of music.

Wow, republicrat, you really are innocent to my posts, aren't you.
I'm kind of notorious in these parts for being a rather insufferable
music fanatic. I compose, I'm a progressive rock freak, I quote
Frank Zappa lyrics incessantly. I can discourse at length about
virtually any period of music history including jazz and rock -- and
I can analyze the shit out of any musical structure you could name.

I would argue that American musical culture today is extermely
impoverished compared to the past. Music appreciation classes
are always the first to go. While there's more music available
in virtually any style, the really insteresting stuff is highly
obscure and has no impact on the wider culture, the way it did
when I was growing up in the early 70s and innovation was prized.

I would further argue that American musical culture was healthiest
in the days before the phonograph, when there was a piano in every
middle-class parlor, brass bands and choral societies in every town,
when the neat thing to do on Friday afternoon was to hang around the
drugstore until the new sheet music came in. People participated in
music in a way that was vastly healthy for both music and communities.

Nowadays, with music as an object of passive consumption, not so much.

Bob

Posted by: rmck1 on September 2, 2006 at 2:27 AM | PERMALINK

People participated in
music in a way that was vastly healthy for both music and communities.

that could well be true, but I am not sure how it reflects on the purchasing power of money. I was observing that certain stuff, practically identical across some decades, is cheaper now than before. Wagner's music is among that stuff. Lots of people, for a relatively modest price, have recently heard the opening music of "Das Rheingold" in the movie "The New World", probably more people than heard it from the time it was composed until the first full length recording became available in about 1965.

That's relative deprivation. The guy doesn't *feel* wealthy at all.

He's a fictional character to start with. Lots of people do not feel that way at all. One of my points is that people who "feel" that way are in fact overlooking important improvements in wealth compared with what they used to be.

Because the common sociological understanding
*is* a norm.

do you accept common sociological understandings? to me this is like the standard way of discounting future earnings, something that should not be done. It's an excuse for discounting present savings, a bad policy.


people define their financial circumstances by their surroundings and their experience. People are not all the same, and they do not do this the same way. A part of "surrounding" that I am urging readers to take more account of is the histories of health and wealth down through the generations. My mother's generation had lots of their children die of polio, measles, whooping cough, etc., and my generation had lots fewer of those deaths. That's a part of your surroundings and experience to incorporate into your definitions. my father and my grandfather both died of cancer, but taxol prolonged my father's life about 2 years beyond what he would have experienced with the medical care availabe to his father. generational comparisons like this are not rare, they are prevalent, though not universal.

George McGovern tried to make relative deprivation a campaign issue. He told workers to feel sorry for themselves because their bosses had expensive three-martini lunches whereas all they had was baloney sandwiches. Now as then, I do not think that it appeals to the middle and aspiring classes. In plenty of churches, working against susceptibility to the snares of relative deprivation is strongly advocated. There it is called "covetousness".

All things considered, median income classes are better off now than 20, 40, and 60 years ago.

My grandfather broke his foot and limped his whole life because nobody knew how to repair it. I broke my hand in a similar fashion and it was repaired. As I visit houses that I can't afford to by, look at consumer electronics that I can't afford to buy, look at shoes and clothes that I can't afford to buy, cars and boats and vacations and so on, it doesn't make me feel relatively deprived at all. maybe Democrats are people who feel relatively deprived by this sort of comparison, and Republicans are not. That would go a ways toward explaining why it is commonly accepted among sociologists.

Posted by: republicrat on September 2, 2006 at 3:25 AM | PERMALINK

Republicrat,

If we as a society have the ability to make life-saving drugs vastly more affordable by using free trade to lower costs then it is reasonable to criticize pharmaceutical fat cats who pay tens of thousands of dollars at fancy catered dinners to largely GOP candidates who promise to maintain the FDA's monopoly on American-only drug buying.

You liken criticism of the rich to covetousness. We call it fairness -- liberty and justice FOR ALL.

Posted by: pj in jesusland on September 2, 2006 at 10:19 AM | PERMALINK

pj: If we as a society have the ability to make life-saving drugs vastly more affordable by using free trade to lower costs then it is reasonable to criticize pharmaceutical fat cats who pay tens of thousands of dollars at fancy catered dinners to largely GOP candidates who promise to maintain the FDA's monopoly on American-only drug buying.

Those are the people who have been the leaders in making the drugs that I have been talking about. It is certainly reasonable to criticize people to make donations of thousands of dollars to the party that you dislike, but it its the relatively free market is drugs that has allowed the pharms to make all those drugs that are continuously getting cheaper over time. Paroxatine HCl is a slight improvement over fluoxetine HCl, but both were invented by the Big Pharmas you criticise, and fluoxetine, now that it is off patent, is really cheap. In a few years paroxatine will be cheap. In fact, generic drugs are cheaper in the US than in Canada.

"Fairness" includes freedom and opportunity.

Posted by: republicrat on September 2, 2006 at 12:47 PM | PERMALINK

Republicrat,

Liberals and Democrats also believe strongly in freedom and opportunity. This is precisely why we oppose the administration's policies, which have restricted both the freedom to buy prescription drugs from whichever supplier we want and the opportunity to save as much as we can on our purchases.

If you defend monopolies you cannot be in favor of the ideals you espouse. Freedom and opportunity belong to consumers as well as to company owners.

Posted by: pj in jesusland on September 2, 2006 at 6:52 PM | PERMALINK




 

 

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