Editore"s Note
Tilting at Windmills

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May 25, 2007
By: Kevin Drum

THE END OF THE DREAM....Everyone knows that income inequality has been widening dramatically in the past three decades, as the rich get (lots) richer and the working class mostly stagnates. But hey — this is America! At least we still have lots of social mobility, right? People here go from rags to riches all the time, unlike those stagnant European hellholes where.....um....what? Oh:

There is little available evidence that the United States has more relative mobility than other advanced nations. If anything, the data seem to suggest the opposite. Using the relationship between parents' and children's incomes as an indicator of relative mobility, data show that a number of countries, including Denmark, Norway, Finland, Canada, Sweden, Germany, and France have more relative mobility than does the United States (see Figure 3).

Well, Horatio Alger died a long time ago, I guess. Still, at least things are getting better. Maybe middle class kids aren't becoming CEOs, but at least they're doing better than their fathers. Right?

In a word, no. American kids used to do better than their fathers, but not anymore. The economy might be growing at a healthy clip, but men today actually make less than their dads did in 1974:

The story changes for a younger cohort. Those in their thirties in 2004 had a median income of about $35,000 a year. Men in their fathers' cohort, those who are now in their sixties, had a median income of about $40,000 when they were the same age in 1974....This suggests the up-escalator that has historically ensured that each generation would do better than the last may not be working very well.

Bummer. No more up-escalator. And it's not just individuals. If you look at families it turns that they're doing a smidge better than in the past, but only because more families have two earners these days. However, even that small improvement has gone away in the Bush era. Income used to increase along with productivity growth, but that slowed down starting in 1974 and then disappeared entirely starting in 2001. Just a coincidence, I'm sure.

All these charts come from the Economic Mobility Project, a joint effort of the The American Enterprise Institute, The Brookings Institution, The Heritage Foundation and The Urban Institute. The full report is here.

Kevin Drum 2:30 PM Permalink | Trackbacks | Comments (61)

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Conservatives like to explain that the natural standard is living under a bridge and fighting a rat over the carcass of a dead rat and if you're doing better than that you're doing better than the average guy in the whole history of man so what right do you have to complain?

Posted by: cld on May 25, 2007 at 2:32 PM | PERMALINK

Personally, I don't blame the Republicans as much as I blame the economists for this phenomenon.

While Republicans exacerbate the trend of increasing the gap between the rich and everyone else, the phenomenon also took place under Democratic administrations, and was certainly never reversed when Democrats took office. I think it's pretty fair to say that Democrats in large measure followed the recommendations of relatively "liberal" economists while in office. The willy-nilly adoption of almost forms of globalization under Democrats would be a good example.

Clearly, on any rational reckoning, the increasing income gap must be accounted as among the most fundamentally important features of an economy.

Yet where was the economist who predicted this fact? Where is the economist who can even understand it after its occurrence?

I don't know what to conclude other than that economists as part of their current discipline, simply build into their paradigm of understanding what amounts to Republican assumptions. And the deep problem is that they have been simply too arrogant and hide-bound to change them. Really, this phenomenon has been going on for decades now -- who but the most recalcitrant of pompous blowhards would not have recognized far earlier that they had a major anomaly on their hands?

Posted by: frankly0 on May 25, 2007 at 2:46 PM | PERMALINK

What else did you expect. The rich always want to control wealth. They will never back off on it until they have it all. This is part of the American capitalist system which has become aligned with a right wing evangelical base.

In college, I did a paper for American Studies on the myth of the west. The research included congressional hearings and government reports on social conditions and policy during the Robber Baron era. It was amazing to see a common theme with what we see today. First, there was a belief that God ordained those in his favor with wealth. Second, those who were poor were actually those who were inferior. We have seen the same positions taken in the current administration. Bush and his cronies speak of the proverb of the talents to justify unbridled greed and accumulation of wealth. The conservative elite have continually pushed self reliance with the clear suggestion that those who failed were at fault for their own results. One of the leaders of the National Association of Manufacturers recently responded to complaints of the rich and corporations influencing national policy through donations by emphasizing the equivalence of money and morality. He suggested that those who had such wealth should have more voice. After all, they were successful and should have more voice since they had proven themselves. He suggested that others were drug addicts, welfare bums, criminals and those who abandoned their children. Remember, there are only winners and losers in the Republican "winner take all" system.

Note that the greatest reduction and economic growth in the US came when communism posed a threat and the economic elite realized that it was necessary to reduce income inequality and provide a social safety net to avoid socialism and strong restrictions on capitalism. The Wall Street Journal editorial page had numerous editorials from outside contributors after the fall of the Soviet Union. There was a common theme to these guest editorials: It was time to limit worker's rights, de-regulate business and disassemble the welfare net. The contributors were quite vociferous in noting that the respect for labor, restriction on unbridled competition and social welfare had only been necessary to thwart the spred of communism. The threat was over and it was time to extract as much as possible.

The Republican elite and corporate interests believe in Social Darwinism. It would be easy to note the dangers to our economy and the welfare of our citizens by following their self interested, short term interests. It does not matter. They want all the marbles. They also want to re-affirm their superiorty by seeing the masses living in poverty.

Posted by: JMOHR on May 25, 2007 at 2:49 PM | PERMALINK

To quote a comedian from Letterman last night:

"I'm such a loser..
..no wait. I Tried!!

-which would make me a failure.?" :)

Posted by: absent observer on May 25, 2007 at 2:52 PM | PERMALINK

So, at what point to we start calling those folks who keep acquiring yet more billions of dollars in personal wealth what they are: mentally ill?

Addiction to wealth and power are addictions even if they make people wealthy and powerful. And those of us who crave the same substances and live our lives accordingly also suffer from the narcotics of false hope and illusion.

Posted by: Carol on May 25, 2007 at 2:55 PM | PERMALINK

Too many Americans apparently now believe that someone owes them a living by the mere fact of their birth. It doesn't work that way.

Why not? It worked for George W. Bush.

Posted by: Stefan on May 25, 2007 at 3:08 PM | PERMALINK
Personally, I don't blame the Republicans as much as I blame the economists for this phenomenon.

It is not the economists: you can find economists to support any policy you want, and the politicians look to economists more for justification than for direction. What it is, though, is politicians—of both parties but the Republicans moreso than the Democrats—listening preferentially to major holders of capital advocating their own interest as the national interest, and ignoring other voices. Adam Smith warned against it, of course.

But its also the voters. If putting corporate interests first had a political cost, politicians would stop doing it.


Posted by: cmdicely on May 25, 2007 at 3:09 PM | PERMALINK

Old news.
Anybody with a brain knew this years ago.

But I guess Kevin feels obligated to keep piling on the facts to convince the "left-behind" 28% that:

1) Iraq is a losing bet
2) American health care sucks
3) We need to tax the rich a little more

Keep up the good work Kevin!
You will convince them someday.
I am sure of it.


Like the name says:

Posted by: ROTFLMLiberalAO on May 25, 2007 at 3:09 PM | PERMALINK

With a routine like that mhr should try to get on Fex Laugh-In, or whatever it's called.

Posted by: cld on May 25, 2007 at 3:12 PM | PERMALINK
Too many Americans apparently now believe that someone owes them a living by the mere fact of their birth.

You mean, the people that are born rich and don't need to work, and then argue for shifting the tax burden more to those who do work? Yeah, I agree, they are the main problem, here.

Posted by: cmdicely on May 25, 2007 at 3:14 PM | PERMALINK

Wasn't there an article in USAToday (I think) yesterday about an epidemic of workaholism?

Posted by: cld on May 25, 2007 at 3:24 PM | PERMALINK

This is not surprising given how much better the education systems are in the other industrialized nations mentioned.

Social mobility depends on what and who you know. In the US, that information is passed down through families and friends. I'm afraid we are a society run more on privilege, than egalitarian principles. We're too individually ambitious to care about giving "others" a fair shake.

Posted by: Poéthique on May 25, 2007 at 3:29 PM | PERMALINK

Damn straight, mhr - Why, Paris Hilton worked her little rear end off to get a GED.

Posted by: thethirdPaul on May 25, 2007 at 3:32 PM | PERMALINK

Has anyone calculated what the data would look like if the country hadn't brought in more than 30 million immigrants since 1974, legal and mostly illegal, who are going to fall disproportionately into the lower half of the income scale?

Posted by: Yancey Ward on May 25, 2007 at 3:34 PM | PERMALINK

That's the kind of marxist hyperbole that Lenin and Stalin loved

I love it when the Bush Cultists on this board prove that the John Birch wing of the Republican Party is alive and well. Their ridiculous obsession with communism is so quaint -- but it reminds us that the Soviet Union was far, far more important to these conservatives than it ever was to liberals.

Posted by: Gregory on May 25, 2007 at 3:36 PM | PERMALINK

How can you write a longish post on the rising income inequality of recent decades without once typing the word "immigration"?

Posted by: Orkon on May 25, 2007 at 3:53 PM | PERMALINK

mhr: That's the kind of marxist hyperbole that Lenin and Stalin loved and demonstrates the low level of political discourse that many liberals have sunk to.

Kevin: All these charts come from the Economic Mobility Project, a joint effort of the The American Enterprise Institute, The Brookings Institution, The Heritage Foundation and The Urban Institute.

Hmmm... The AEI, and Heritage... Brookings... yeah, mhr, real liberal. Also, I think making a comparison between the American left and Lenin and Stalin would in itself be a hyperbolic statement. I know, I know, it hurts.

Posted by: Everblue Stater on May 25, 2007 at 3:57 PM | PERMALINK

In the minds of many liberals, mostly in Europe, the Soviet Union was the only force powerful enough to face down the fascist menace in the 1930's and '40's (Franklin Roosevelt knew better). The fascists were so despised liberals were prepared to forgive Stalin many sins. Even Churchill has prepared to look the other way. By the '50's the romance had ended. But a caricature of communism really scarred the minds of now aging conservatives. You could even say communism formed the minds of conservatives as they became anti-communists in all things. They even denounced such ancient classical ideals like the national common wealth and Christian community of brotherhood as so many communisms. Most people under 30, or even 40, wonder what they are talking about.

Posted by: bellumregio on May 25, 2007 at 4:00 PM | PERMALINK

mhr, pity about the way Lenin and Stalin treated your Saint Trotski, patron saint of the neocons.

Get over it - Move on - so many more countries to invade and subjugate - so little time for you Trotskiites.

Oh, and mhr, be sure not to travel to Mexico City anytime soon.

Posted by: thethirdPaul on May 25, 2007 at 4:04 PM | PERMALINK

The truth is that many of us Americans are children of immigrants who came to the US in search of the opportunity to work.

And isn't it ironic that now you children will have to migrate again to China or India or Vietnam to chase those jobs that have been shipped over there?

Posted by: tomeck on May 25, 2007 at 4:06 PM | PERMALINK

I see an opportunity for conservatives. They can sell free trade by insisting jobs relocated overseas keep immigrants out of the US since they don't need to leave home. Free trade is actually an anti-immigrant program.

Posted by: bellumregio on May 25, 2007 at 4:18 PM | PERMALINK

The chart showing European countries with far greater social mobility than the US is seriously misleading. In 1964, European economies were in the early stages of recovery from WW2, and of course current Europeans are vastly better off than then, whereas the US had enjoyed its much smaller recovery from the wars much earlier. Moreover, as several others have pointed out, the US had a tremendous population growth during the period in question, both from immigration and births, while many European countries were stagnating or beginning to decline in population. Hence wealth per capita had to grow much more in Europe during this period than in the US. Pick another starting date and find a very different outcome.
The disparity of incomes is less misleading. Still, globalization has been devastating for unskilled labor at an accelerating rate since the 1980s in all the developed economies. The impact has shown up through low wages in the US, and high unemployment in Europe. The reason Europe looks better on this measure is that it does more to reduce the disparity through welfare measures. Nonetheless, as many people recognize, the rapid and enormous growth of inequality (and it's probably even worse if you measure wealth) is extremely troubling in its implications both for democracy and for the future of the economy. The rich may want all the wealth, as one poster said, but if they get it, they won't stay rich for long.

Posted by: Keith on May 25, 2007 at 4:23 PM | PERMALINK

It is not the economists: you can find economists to support any policy you want, and the politicians look to economists more for justification than for direction.

I have no doubt but that you could find SOME economist who supports any position you might want. But I'm talking about the mainstream of economists -- mainstream "liberal" economists, as well as of course mainstream "conservative" economists.

Even mainstream "liberal" economists have recommended what amounts to completely unfettered globalization, for example, which clearly has played an important role in the stagnant fortunes of the middle class, and the fine payoffs for the truly rich. These "liberal" economists talk a good game about somehow addressing the displacements caused by globalization, but, if it is in fact a political reality that those policies addressing the displacements are never going to come to pass, or will be immediately subverted by any incoming Republican administration, then how can they make the recommendation for unfettered globalization in the first place?

And with respect to globalization, it seems to be far worse. The "liberal" economists who advocate unfettered free trade simply got their predictions far, far wrong about the impact it would have on American jobs. My sense of it is that their predictions were in the millions of jobs lost, but in fact it looks to be in the tens of millions. At any rate, they appear to have been off by a large multiple. You can't get around being so very wrong on such a fundamental issue in your own discipline, and expect to be genuinely entitled to the honorific of the word "scientist".

And while you mention the political realities that supposedly force a politician to push for globalization, for example, you fail to acknowledge that there are enormous political pressures in the opposite direction in the Democratic party -- pressures that would push a politician to do everything in his power to staunch the bleeding of jobs to other countries.

In fact, if you look at the behavior of Democratic politicians in the past, you'll see that they were VERY unhappy from a political point of view to push for globalization policies, given the needs and desires of their constituents, and typically used as their explicit justification for bowing abjectly to globalization that it was the only correct economic thing to do, given what they had been advised. It's very hard to believe that these same Democratic politicians would not have very gladly embraced policies that saw globalization as on balance an evil for American workers, and therefore something to be forestalled, or very strongly managed. Such a policy would have great political payoff for Democrats in votes -- but I think it's fair to say that virtually all their economic advisors stood up and said that simply could not endorse anything but unfettered globalization.

Really, when economists blame politicians instead of their own recommendations and shabby "science", they are only engaging in the worst sort of revisionist history to make it seem plausible.

I'm certainly not an economist myself, so I am hardly in a position to determine the precise locus of error in the current paradigm of economics. But what I do know is that, in the end, economists, insofar as they are scientists and worthy of the authority of that name, must be judged by their predictions and recommendations -- predictions and recommendations we are all in a position to judge, because they show up in unmistakable numbers, such as those in the charts Kevin displayed.

It's obvious to all I should think that economists have been wrong -- egregiously, rather disgracefully wrong -- in many of their predictions and recommendations.

These days, economists seem to be saying to us all, "Who do you believe, my spectacular, brilliantly conceived mathematical models and perfectly reasonable and well informed assumptions, or your own eyes?"

Sorry, fellas, I've got to go with my own eyes.

Posted by: frankly0 on May 25, 2007 at 4:24 PM | PERMALINK

What does AIE and Heritage have to say about this?

Posted by: David N. Triche on May 25, 2007 at 4:30 PM | PERMALINK

Actually, frankly0, there was a slight upward blip in middle incomes through the 90s, whoever's mistake that might have been.

Can't blame the economists for policy implementation. The movement of income and wealth was steady and continuous from 1980 despite the gradual recovery from the stagflation of the 70s, and regained momentum after the turn of the century, as did health care costs.

As to immigration, as most of this is at the bottom income levels, you'd expect the sons to easily outstrip their fathers' incomes. But no! So specious argument.

Social Darwinism? Well no again. If mobility is low and heriditary wealth increasing it is the reverse -- gene pool stagnation. Maybe some culling of that top herd might help.

Posted by: notthere on May 25, 2007 at 4:36 PM | PERMALINK

Yancey Ward on May 25, 2007 at 3:34 PM:

Has anyone calculated what the data would look like if the country...

First point: The country didn't bring in 30 million immigrants since 1974. Immigrants come here for the opportunity to make money working for the businesses that hire them.

Second point: According to the report Kev linked to, income data comes from reported income information. Not too many illegal immigrants report their earnings to the government, so the current income data stated on this report wouldn't be drawn down by a large number of low-income illegal immigrants.

Third point: You could argue that the availability of cheap illegal immigrant labor in the US is depressing wages, particularly at the low end, but you might want to really think about doing so.

Posted by: grape_crush on May 25, 2007 at 4:36 PM | PERMALINK

stephan nails it!

Posted by: bobbywally on May 25, 2007 at 4:51 PM | PERMALINK

This study and so many like it coupled with Stephen Roach's comments below paint a very said picture for the American worker.

Back in 2004 Stephen Roach, chief economist at Morgan Stanley, told us:

Consequently, from three different vantage points - employment breakdowns by industry, by occupation and by degree of attachment - the same basic picture emerges: While there has been an increase in job creation over the past four months - an unusually belated and anemic spurt by historical standards - the bulk of the activity has been at the low end of the quality spectrum. The Great American Job Machine is not even close to generating the surge of the high-powered jobs that is typically the driving force behind greater incomes and consumer demand.

This puts households under enormous pressure. Desperate to maintain lifestyles, they have turned to far riskier sources of support. Reliance on tax cuts has led to record budget deficits, and borrowing against homes has led to record household debt. These trends are dangerous and unsustainable, and they pose a serious risk to economic recovery.

We hear repeatedly that the employment disconnect is all about productivity - that America needs to hire fewer workers because the ones already working are more efficient. This may well be true, but there is a more compelling explanation: global labor arbitrage. Under unrelenting pressure to cut costs, American companies are now replacing high-wage workers here with like-quality, low-wage workers abroad. With new information technologies allowing products and now knowledge-based services to flow more easily across borders, global labor arbitrage is likely to be an enduring feature of the economy

Posted by: bellumregio on May 25, 2007 at 4:59 PM | PERMALINK

I had thought this stuff about mobility was known for years; I know I first saw it about three years ago. I must say, though, that it's un-American to point out things like this. Patriotism consists of shutting one's eyes to inconvenient data, or even lying about them. We have a lot of patriots in this country.

Posted by: Martin Gale on May 25, 2007 at 5:00 PM | PERMALINK

Those in their thirties in 2004 had a median income of about $35,000 a year. Men in their fathers' cohort, those who are now in their sixties, had a median income of about $40,000 when they were the same age in 1974.

I wonder if they'll live shorter lives as well.

My older son is as old as I was in 1977 (bringing these figures forward) and he earns more than I did (in purchasing power parity). Perhaps we are anomalous, or counter the basic trend.

Of course, there is whole inflation-adjustment issue.

Posted by: MatthewRmarler on May 25, 2007 at 5:49 PM | PERMALINK

Yancey Ward: Has anyone calculated what the data would look like if the country hadn't brought in more than 30 million immigrants since 1974, legal and mostly illegal, who are going to fall disproportionately into the lower half of the income scale?

The other curiosity is that the net migration of trained engineers, scientists, doctors, nurses, entrepreneurs is from those countries to the U.S. Waiting lists of people in those countries in all skilled occupations wanting to get into the U.S. is one of the reasons that the recent immigration law doubled the number of immigrants permitted annually. Those I have talked to (that is, the ones who got here and don't have to wait anymore) believe that we have a more open system than those countries have.

Clearly, the whole report is worth reading.

One further comment: if productivity increases without wage rates increasing, then goods become cheaper; that means that everyone else's purchasing power has increased. By itself, that's not bad. It counteracts other sources of inflation.

Posted by: MatthewRmarler on May 25, 2007 at 5:59 PM | PERMALINK

Much of what is happening is the result of illegal immigration. I don't fault the illegals for coming here. Considering the fact that the minimum wage in Mexico is less than five dollars a day it's a sensible move well worth the risk involved. Unfortunately, they aren't concerned with the U S economy and gladly undercut prevailing wages in whatever sector of the economy they enter. I'm a retired military officer now working in a second career as a construction electrician (union). Well over half the workers on every job I go on are illegal immigrants who do nothing to conceal their illegal status. They work for less money; they receive no benefits; some of their employers do not allow them to take breaks or even provide water for them to drink. Still they come because the worst job they can find in the U S is much better than what they have back home. They're being exploited and being used to exploit the entire working class in this country because anyone who expects an occassional raise in pay can be replaced with an illegal who will take the jobs regardless of what its pay. If the trend isn't reversed we'll have a third world economy in another generation.

Posted by: sparky on May 25, 2007 at 6:05 PM | PERMALINK

So, there wasn't illegal immigration before 1974?

Posted by: JefferyK on May 25, 2007 at 6:12 PM | PERMALINK
Has anyone calculated what the data would look like if the country hadn't brought in more than 30 million immigrants since 1974, legal and mostly illegal, who are going to fall disproportionately into the lower half of the income scale?

I'm sure lots of people have produced speculations rationalized with a lot of formulas. Since the actual root numbers aren't known with any confidence, and since there is no consensus model of how they effect outcomes, none of them are probably worth anything.

One further comment: if productivity increases without wage rates increasing, then goods become cheaper; that means that everyone else's purchasing power has increased.

Since these are inflation-adjusted wages that haven't increased, the "everyone else" here excludes workers.

I don't think you'll find public benefits per recipient have increased faster than inflation, either.

So, who does that leave? Capitalists. Yeah, capitalists get richer, everyone else gets poorer. That's kind of the problem.

By itself, that's not bad.

If your primary source of income is capital, it is, indeed, not bad for you.

Posted by: cmdicely on May 25, 2007 at 6:19 PM | PERMALINK

Well, mhr, al, and the other trolls (well-chosen image, that "live under bridges" thing, mhr) because they are doing at least as well as their fathers--by living with their mothers!

Posted by: Kenji on May 25, 2007 at 8:24 PM | PERMALINK

Has anyone calculated what the data would look like if the country hadn't brought in more than 30 million immigrants since 1974, legal and mostly illegal, who are going to fall disproportionately into the lower half of the income scale?

Yancy, I'll just note that three of the more socially mobile countries (Canada, Sweden and Germany) have also taken in substantially more immigrants on a per capita basis than has the U.S. over that period.

Posted by: snicker-snack on May 25, 2007 at 9:03 PM | PERMALINK

cmdicely:Since these are inflation-adjusted wages that haven't increased, the "everyone else" here excludes workers.

The "everyone else" does in fact include workers.

I already expressed skepticism toward the inflation adjustment. If everybody's wages stayed the same, and everybody's productivity increased, then total prices of all products and services would fall. Characteristically a fraction of workers get pay increases proportional to their productivity, and so prices of their goods and services do not decline. With more money, they bid up the prices of stuff, and bring inflation. In a complex economy with uncountable goods and services, the total mix brings price increases for some goods, and price decreases for others.

Getting back to my anecdote, my 28 year old son can buy much better merchandise for an hour of his labor than I could.

The problem with inflation adjustment is that measures of inflation are based on tiny samples of the goods and services that are available. The belief that they are in some sense representative is a religious mystery.

Posted by: MatthewRmarler on May 25, 2007 at 9:39 PM | PERMALINK

American kids used to do better than their fathers, but not anymore.

True, so true. My father was able to provide a middle-class lifestyle for his family with only his income. I am middle class, IF you overlook having to sell a house to avoid foreclosure, using credit cards to buy food (not for convenience), using a food pantry, turning to my rabbi for a loan so I can pay the rent, and on and on.

I read somewhere that my generation is the first to experience downward mobility, and I can believe it.

Posted by: Kathy on May 25, 2007 at 10:50 PM | PERMALINK

I'm shocked, shocked to learn that mhr is a right-wing troll. Who could possibly have ever guessed?

Posted by: Donald from Hawaii on May 25, 2007 at 11:09 PM | PERMALINK

Well, the thing is, DfH, he finally realized that he could move to a lower tax bracket by declaring hinself in that category. And if there's one thing a troll loves more killing anonymous foreigners (especially the ones who "might" someday harm some Americans--unless they are "liberals" and then it doesn't matter), it's saving money on taxes.

Is this a great country or what?

Posted by: Kenji on May 25, 2007 at 11:38 PM | PERMALINK

Kathy: My father was able to provide a middle-class lifestyle for his family with only his income....I read somewhere that my generation is the first to experience downward mobility, and I can believe it.

Following up on MatthewRMarler's point, the inflation adjustment doesn't give enough credit for innovations. If one looks at how people actually live, it's clear that there's a substantial improvement from a generation ago.

I bet Kathy has a bigger, sharper TV set than her father did. And, I'm sure that she has a better computer. A computer like Kathy's wasn't available at all a generation ago. It would have cost a fortune to buy anything remotely comparable.

Thanks to medical innovation, we are healthier today, so that the average life span continues to rise. Older people are more active than they were a generation ago. It's common to see people playing tennis in their 80's and some play into their 90's. Hunger used to be a real problem. Now it's almost gone, although obesity is a growing problem. Today [2006], nearly 70 percent of American families own their own homes, up from 62 percent in 1960. And, houses are better built due to improvements in construction techniques.

Today's automobiles are much more efficient and reliable. Other applicances have improved as well: cameras, faxes, radios, etc.

Posted by: ex-liberal on May 25, 2007 at 11:44 PM | PERMALINK

even gasoline isn't the same as 30 years ago. It has less lead so millions of people are healthier, and cars can get you farther, in miles, on one gallon.

Posted by: MatthewRmarler on May 25, 2007 at 11:59 PM | PERMALINK

Yes, ex-lib, these innovations are great. Now the bank can clearly fax you your foreclosure notice.

Posted by: Kenji on May 26, 2007 at 12:12 AM | PERMALINK

Several people have asked about the impact of immigration on inequality. The issue has been studied, and some of the conclusions are given in this paper from 1992. (Yes, that's pretty old, but it's the best I could do by Googling.)

To quote from the paper:

Empirical studies suggest that immigration’s wage impact can account for at most a quarter of the rise in inequality during the 1980s, but the true effect is probably much smaller (Friedberg and Hunt, 1995; Topel, 1997)

...Recent studies find that one-half to two-thirds of the recent rise in inequality is due to increased inequality within the groups defined by age, education, and experience.

So, yes immigration increases the size of the low-end of the wage scale by increasing the number of unskilled workers, but inequality has been increasing among groups with the same skill and educational levels, as well.

Posted by: Daryl McCullough on May 26, 2007 at 12:28 AM | PERMALINK

Gee, Kathy, what you got to whine about? You have a better tv and a computer, so suck it up!

The conservatrolls have explained it to you that the offset gives you more than you have a right to ask for! Ingrate! Be happy with better toys and stop being an inconvenient data point!

Posted by: Isle of Lucy on May 26, 2007 at 2:22 AM | PERMALINK

Could someone here recommend a free RSS aggregator that takes out all the trollish comments?

Posted by: astrid on May 26, 2007 at 6:12 AM | PERMALINK

"I bet Kathy has a bigger, sharper TV set than her father did."

I bet Kathy could give two shits since she appears to be more worried about getting food to eat and having a place to stay. Last time I checked, you can't eat or live in your TV, nor does it spit out a paycheck every week.

Posted by: OhNoNotAgain on May 26, 2007 at 9:39 AM | PERMALINK

>"If one looks at how people actually live, it's clear that there's a substantial improvement from a generation ago... bigger, sharper TV set than her father did..."

This is a joke... right? Please tell me it's a joke.

Posted by: Buford on May 26, 2007 at 9:44 AM | PERMALINK

Gee. All those socialist countries ahead of us. Go figure.

Posted by: PW on May 26, 2007 at 10:26 AM | PERMALINK

Men in their 30's earning less than dad did...outsourcing, disappearance of manufacturing employment, among other issues. This study finds itself on page one of the local paper, above the fold, along with pre-war reports warning of pitfalls, significant risk of Iraqi sectarian strife, further encouragement of al-Qaida attacks, problems with Iran....the report released by the Senate Intelligence Committee.
There has been so little attention to domestic issues or employment by this administration.
War, war, all war, all the time. Sad.

Posted by: consider wisely on May 26, 2007 at 10:27 AM | PERMALINK

Keith: The chart showing European countries with far greater social mobility than the US is seriously misleading. ... wealth per capita [grew] much more in Europe during this period than in the US.

Social mobility is not the same as GNP-per-capita.

Keith: The rich may want all the wealth, as one poster said, but if they get it, they won't stay rich for long.

Says who? Not according to The American Enterprise Institute, The Brookings Institution, The Heritage Foundation and The Urban Institute, if "stay rich for long" is equivalent to social mobility.

Posted by: binky on May 26, 2007 at 10:43 AM | PERMALINK

Buford, I fear that comment was real. And that crass dismissal of very real and all-too-common life experience is another reason why I refuse to acknowledge the person who posted that crass, heartless bullshit.

Posted by: Blue Girl, Red State (aka G.C.) on May 26, 2007 at 11:20 AM | PERMALINK
If everybody's wages stayed the same, and everybody's productivity increased, then total prices of all products and services would fall.

No it wouldn't necessarily fall at all.

Economics isn't like physics. In physics when a variable like volume changes temperature and pressure necessarily change.

Economists like to think they deal with a physics, but the connection between prices and productivity is a choice that human beings make or choose not to make.

If productivity goes up managers have to choose to raise wages. They have clearly not done so.

And similarly, managers have to choose to lower prices too. They have not done so because it means higher profits.

Posted by: Dr. Morpheus on May 26, 2007 at 1:23 PM | PERMALINK

Those that think Economics is a real science should explain to us what fundamental forces govern the market? What kind of particle or string governs this force? Where are the tried and true applications of these theories? We've all seen the experimentation, none of which can be judged as being accordance with scientific method, and we've all seen these theories become obvious lies. Where's the evidence economics even works?

Posted by: soullite on May 26, 2007 at 2:29 PM | PERMALINK

"...Note that the greatest reduction and economic growth in the US came when communism posed a threat and the economic elite realized that it was necessary to reduce income inequality and provide a social safety net to avoid socialism and strong restrictions on capitalism. The Wall Street Journal editorial page had numerous editorials from outside contributors after the fall of the Soviet Union. There was a common theme to these guest editorials: It was time to limit worker's rights, de-regulate business and disassemble the welfare net. The contributors were quite vociferous in noting that the respect for labor, restriction on unbridled competition and social welfare had only been necessary to thwart the spred of communism. The threat was over and it was time to extract as much as possible..."
Posted by: JMOHR on May 25, 2007 at 2:49 PM

I think this is the best explanation for the big divergence seen between wages and productivity. If you look at the center graph you will notice that it really comes apart around 1990. Just when the Soviet Union and Eastern Europe crumbled. Before that time the economies of the "1st world" and the Communist bloc were not linked. Ideologically, the classical capitalists were vindicated in their minds-they had won!-we were right all along! They developed a "markets never fail" cred and the hubris really took over. You are quite correct when you note that Communism posed a "threat". We had *competition* ideologically (despite the flaws) with respect to political economy. Government policy was framed partly in response to the competition's criticisms of market failure, economic inequality, etc., and the average worker benefited from that. Now the protections are all gone because the classicist Social Darwinists believe they have been proved right by history. But those same people have been proved horribly wrong this time around with respect to Iraq and democracy. Fukuyama's recent change of philosophy is illustrative of this ideological failure.

Posted by: Doc at the Radar Station on May 26, 2007 at 3:27 PM | PERMALINK

Dr. Morpheus: Economics isn't like physics. In physics when a variable like volume changes temperature and pressure necessarily change.

that's true, and I grant your other points. In one place I wrote that in a complex economy a mixture of things happens: some wages increases without price changes, some price decreases without wage changes, some increases in profits without either wage or price changes.

there isn't anything intrinsically healthier about wages increasing with productivity, compared to falling prices, rising profits, or mixtures of all three. consumers like to see the falling prices, owners like to see the rising profits, and employees like to see rising wages in their own industries combined with falling prices of the goods that they buy.

Posted by: MatthewRmarler on May 26, 2007 at 4:09 PM | PERMALINK

"The chart showing European countries with far greater social mobility than the US is seriously misleading."

It's not misleading at all. Different rates of economic growth don't change the fact that European nations saw more mobility between classes than the US.

Similar studies have actually shown this trend has been growing, as the Nordics become even more mobile and the US continues to be more class-static.

In fact, it's quite clear why the UK and the US have the lowest mobility rates... they have the most similar economic systems and opportunities are not uniform. The most mobile nations provide progressive taxation, wide security nets, and high subsidies to universal education. It's not surprising that would increase mobility.

Posted by: Nietz1950 on May 26, 2007 at 6:59 PM | PERMALINK

I don't know if this comment board is still active, but... I just came back and saw the comment about my having a better, sharper tv than my father did, and a better computer.

Nobody had computers when I was growing up. I was born in 1950. So yeah, I have a computer and my father didn't. The computer I have is almost two years old, and the only reason I got it is because my previous one died. I do not buy new computer systems, or hard drives, or peripherals, or monitors, or anything else unless what I have breaks or dies.

Now on to my tv: I do have a used tv, which I got at a neighbor's yard sale about 7 years ago. I don't remember now how much it cost, but it was minimal.

Someone else here commented that food and a roof over my head are probably more important to me than my tv or computer. That commenter was 100% correct.

Posted by: Kathy on May 27, 2007 at 1:49 AM | PERMALINK

Those who horde all political power in a nation are, unbeknownst to themselves, calling for a civil war.

Those who horde all wealth in a nation are just as stupid.

We share power and wealth because that makes it possible for us to continue together as a people and a nation and a civilization.

Don't share at your own risk (see also French Revolution).

Posted by: MarkH on May 28, 2007 at 1:23 PM | PERMALINK

Lets see,

In the real world, my father never made mover 25K a year, ever. My part time job last year got me better than that.

My husbands father raised his family on about 25K a year finishing his career at 60 years old with 50K. My husband's first civilian job got him 32K and he is now making the same as his father did at the end of his career.

We are both very much middle class people.

My first job at a McDonalds got me about 3.25 per hour in 1981. Three years ago I took a short job at Wendys and was paid 7.60 per hour.

I'm sorry but from personal experience the lower wages thing just doesn't hold water.

Now if you want to talk buying power then some of what I am reading makes sence because the cost of living is still and always has been just about everything you make. Our buying power hasn't increased at all in the last 8 years even though our income has nearly doubled. Feul prices, mortgages, insurance rates, whatever, always seem to take whatever increase in pay we get.

Now as to who is to blame, those money grubbing Republicans or the do nothing Democrats that were in power in Congress for nearly forever. A plague on both their houses. Neither party (one pushing for a welfare socialist state with national health care, and the other who want the capitalist system to pull everyone up by their boot straps and personal sweat) has done anything but fight with each other no matter who has the highest office.

I'm over 40 and remember the poor getting poorer and rich getting richer stuff coming from politicians when Nixon was president and Ford and Carter and Reagan and Bush and Clinton and Bush Jr. It is a very time honored bit of reteric that doesn't help anyone, but does get the mouth talking it plenty of air time on
TV.

To date,
welfare states perpetuate poverty, nothing else.
Unbridled capitalizm unleashes a feeding frenzy of buy outs and the loss of competition, insuring that start up businesses don't get anywhere.
Globalization is good only for he who has the cheapest labor, hence China and India are doing great right now.

Am I frustrated with this debate? Yes.
Do I see any good coming out of it? No.

Do I think politicians and economists are one day going to join hands and work cooperatively with one another and fix the problem?

Do you?

Posted by: sherry on May 30, 2007 at 10:47 PM | PERMALINK

secretary of treasury is worth 700million ,one year he made 37 mill. at Goldilocksman and sachs 5th ave. they are financing Barack Obama to split the vote between him and Hillary re :Blacks " Paulson and Goldman took a big hit in the subprime loans : so guess who will set the policies re:bailouts, :"but bush said ,We are not bailing out speculators like my father bailed out Savings and Loans in ' 89 and my brother Neil .please i am not a crook Nixon is back BIG TIME and worse /// joe bell 2 ellis st woburn ma 01801 781-932-1640

Posted by: joseph bell on September 2, 2007 at 5:05 PM | PERMALINK




 

 

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