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Tilting at Windmills

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December 18, 2007
By: Kevin Drum

OUTSOURCED CHART WONKERY....No, not outsourced to India, just to another blog. Afferent Input tries to chart the CBO's latest figures for increased income inequality but hits a snag: all the poor schmoes at the bottom have done so badly that their lines all get squashed together. His solution: make the chart really tall and skinny.

The numbers in this chart are all normalized to zero in 1979, and what they show is that the total share of national income going to the super-rich has more than doubled over that time. The merely well off have also gotten a slightly bigger piece of the pie, while everyone else has funded this free-for-all. "Everyone else," in this case, means 90% of the country. Our share of national income has gone down in order to make sure that virtually all the fruits of economic growth over the past four decades could go to the well-off, the rich, and the super-duper-rich.

One of the reasons it's important to see charts like this, even if you've seen them before, is that it gives the lie to the endlessly recycled myth that growing income inequality is mainly due to increased returns to education and technical skills. But it ain't so. The returns to education might be growing a bit — though even that's debatable — but by far the biggest beneficiaries of skyrocketing income inequality have been the top 1%, the top 0.1%, and the top 0.01%. Not even Republicans will try to make the case that the top 1% have become better educated over the past 40 years compared to the top 10%, so if that's where income inequality is concentrated then education just can't be a huge factor. If you're interested in the truth, you have to look elsewhere.

Kevin Drum 1:18 PM Permalink | Trackbacks | Comments (68)

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Comments

Estate tax, baybee!

Posted by: Disputo on December 18, 2007 at 1:27 PM | PERMALINK

This is just giving aid and comfort to our enemies. Why do you all hate America?

Posted by: Wingnut on December 18, 2007 at 1:29 PM | PERMALINK

So much for class warfare being the specialty of the left. Looks like the war has been in high gear for some time now, and one side is winning. The remaining 90% have just been cowed into thinking fighting back, or even noticing, is somehow wrong.

Btw, on a related subject, THANK YOU for sending Conrad Black to jail! Thank you! Did I say thank you? Now all that has to happen is for the british to take his peerage back, and he can have a nice long lonely rot in an american prison to think about what an arrogant, anti-democratic, snobbish ass he's been his whole life.

Posted by: Bruce the Canuck on December 18, 2007 at 1:31 PM | PERMALINK

THANK YOU for sending Conrad Black to jail!

You're welcome. Now how about returning the favor and sending some of our criminals to jail. You can start with Bush and Cheney.

Posted by: Disputo on December 18, 2007 at 1:34 PM | PERMALINK

Why aren't the Democrats using this info??? Class inequality is the perfect issue for them, but only Edwards attempts to make anything resembling a populist economic argument for voting Democratic.

Posted by: mfw13 on December 18, 2007 at 1:39 PM | PERMALINK

The French almost caught Rumsfeld.

Posted by: absent observer on December 18, 2007 at 1:41 PM | PERMALINK

No, Kevin, the Republicans will make some other argument about the top 1 percent. Huck will probably claim they've been gifted by God, Rudy that it's a side effect of 9/11, Romney that this shows how he can be our next CEO Preznit, McCain will say he knew that in Keating Five days, and Thompson will wake up, say "Huh" and go back to sleep.

Posted by: SocraticGadfly on December 18, 2007 at 1:44 PM | PERMALINK

Class warfare!

If the rich can't eat the poor, the terrorists win!

Jesus said it is difficult for rich people to get into heaven, so BushCo are just trying to save the majority's souls.

Posted by: Gore/Edwards 08 on December 18, 2007 at 1:53 PM | PERMALINK

Very interesting graph. The big drop off starts about 1995-1997 just about the time of NAFTA effects and the first big bubble that was created by the LCM hedge fund bailout. The later "bounce" comes from the second real estate bubble. The negative aspects of job exports and job churning were unsuccessfully camouflaged with easy credit.

Posted by: Doc at the Radar Station on December 18, 2007 at 1:57 PM | PERMALINK

>"Why aren't the Democrats using this info??? Class inequality is the perfect issue for them..."

If you seek money and power via the established political system you have to patronize those who have it already.

Other news at 11.

Posted by: Buford on December 18, 2007 at 1:57 PM | PERMALINK

Whuh? Nope. Looks the same with the glasses off.
Huh?

Could some of you lovely people have a look at that graph - there's this funny negative slope on the top curve between 1988 and 1992.
Does not compute.

Posted by: kenga on December 18, 2007 at 2:02 PM | PERMALINK

kenga, Stock market had a big time crash in 1987.

Posted by: Doc at the Radar Station on December 18, 2007 at 2:10 PM | PERMALINK

"Whuh? Nope. Looks the same with the glasses off.
Huh?

Could some of you lovely people have a look at that graph - there's this funny negative slope on the top curve between 1988 and 1992.
Does not compute."

That would be the 1990-91 recession. If you look carefully, you will see another negative slope in 2001 that was caused by the 2001 recession. The 1987 decline was due to the stock market crash. The greatest levelling event in U.S. history was the Great Depression.

Posted by: Jose Padilla on December 18, 2007 at 2:12 PM | PERMALINK

Patronize those with money?
So we have moved on from the ancient Romans and Greeks in many ways.

Posted by: medvedev on December 18, 2007 at 2:28 PM | PERMALINK

Patronize those with money?
So we have moved on from the ancient Romans and Greeks in many ways.

Posted by: Medvedev on December 18, 2007 at 2:32 PM | PERMALINK

Can't have the media revealing such facts to the 'public'. If they realized Bush actually did things to benefit his Base, then they might begin to realize his administration isn't full of innocent dummies. They are guilty (of many things) and proud of it.

Posted by: MarkH on December 18, 2007 at 2:35 PM | PERMALINK

I don't think any equitable, dynamic society has a future with trend lines like this. All of us need to believe that, given enough education, initiative, smarts, good ideas, etc., we can succeed, prosper, do better. But, if we realize the deck is almost completely stacked against us, what's the motivation to try?

And the country needs the contributions of everyone if we're going to make it. Who knows where the next inventor, entrepeneur, bio-chemist, risk-taker, or whatever is? He or she may be poor, brown and rural, not the privileged offspring of the financial and political elite.

These are the trend lines of a collapsing society.

Posted by: jrw on December 18, 2007 at 2:37 PM | PERMALINK

This should be the flag of the Conservative Revolution. Their motto: Mission Accomplished.

Culture war, terror war, war on welfare, war on Christmas, Republican war on "collectivism", DLC war on "collectivism" all in service of this.

Posted by: bellumregio on December 18, 2007 at 2:38 PM | PERMALINK

The negative slope of the top people does not mean they lost money necessarily (though they probably did in stock market crashes), but that they lost ground as a percentage of the total US income.

Posted by: luci on December 18, 2007 at 2:39 PM | PERMALINK

An excellent demonstration of why, despite his whining, people don't credit Bush with improving the economy. Even the top 5-10% group has been declining over the last couple data points.

Posted by: PaminBB on December 18, 2007 at 2:39 PM | PERMALINK

Kevin,

I think in some of the debate about education/technology versus other explanations people are really talking past each other. Education and technology do go a long way in explaning trends in the 90/10 wage ratio (which has also moved a lot) as well as the male/female earnings ratio for individuals. This chart is for household income (from all sources) inequality with tax information on the very upper tail which isn't available in standard datasets that get analyzed in those studies.

Posted by: j on December 18, 2007 at 2:55 PM | PERMALINK

Could somebody explain to ignorant me what exactly is meant by "national income?" Based on what--GNP? Tax returns?

Kevin, how about it?
Thanks

Posted by: claire on December 18, 2007 at 2:58 PM | PERMALINK

claire, that hypertext in the summary will transport you through teh tubes to a whole other person's computer, which has the answer to the question you're asking.

Or, alternately stated: RTFA.

Posted by: absent observer on December 18, 2007 at 3:11 PM | PERMALINK

AO, If you're talking about Afferent Input, there is a reference to household income, but not to how it was calculated. On to the CBO website, I guess. Thanks for your gracious reply.

Posted by: Claire on December 18, 2007 at 3:17 PM | PERMALINK

Hi Claire-

I guess I'm not exactly sure what you're asking. I used the data available on the CBO website. I didn't calculate national income or anything like that. Instead, I used the numbers CBO has in their spreadsheet for share of national income on page 1C. For the breakdown of the quintiles, I needed to subtract out the various groups because the CBO uses an inclusive breakdown of the top quintile. This is a problem because in their spreadsheet, the "Top 5%" includes the Top 5%-1% and the Top 1%. Those are the only calculations I needed to make, as far as the raw data goes.

I get a little sloppy in my post, intechanging "per person" and "per household". This is mostly because I try to use a simplified example of the total income in the US is only $100 and the total population is only 100 people. The CBO data refers to "per household", so that's probably more accurate.

Posted by: Afferent Input on December 18, 2007 at 3:41 PM | PERMALINK

Income inequality will drive the new politics. Someday. Hopefully it will not be as violent as Rwanda's new politics.

Posted by: Brojo on December 18, 2007 at 3:42 PM | PERMALINK

Interesting data set.

One hypothesis though:
Growing income inequality is politically neutral as long as the pie itself is expanding enough to mask at a retail level a declining individual share.

Most people won't care if another person is now getting a a larger percentage of the whole, as long as they perceive themselves as getting better year by year.

I am not sure, though ,of either the current perception - or the reality - of gains/losses of those around the 40-60th percentiles.

Posted by: Kolohe on December 18, 2007 at 3:52 PM | PERMALINK

"everyone else has funded this free-for-all"

Whoa! HUUUUUUUUUUGE lie! Well done, Kevin - one of your best ever!

zero-sum fallacy, anyone?

Posted by: am on December 18, 2007 at 3:58 PM | PERMALINK

Thanks, AI. What I really wanted to know was the database used by the CBO to estimate income. At http://www.cbpp.org/1-23-07inc.htm
it is explained that the CBO reports after-tax household income, including employer benefits like health insurance and possibly government benefits like Medicare as well, though govt benefits don't affect the point of the graph, of course. They clearly use tax returns and W2 forms, but I'd be curious as to what else they look at.

Posted by: Claire on December 18, 2007 at 3:58 PM | PERMALINK

So if everyone's income doubles, but the top 1% triples, income inequality increases, but EVERYONE ends up more wealthy.

These % of national incomes make that scenario look bad which is why it's the wrong way to look at the data.

Posted by: dennisBoz on December 18, 2007 at 3:59 PM | PERMALINK

No, Kevin. "Increased returns to education" does not imply "better educated".

What a complete crock of a posting. Amazing, even for you.

Posted by: am on December 18, 2007 at 3:59 PM | PERMALINK

Of course another problem with longitudenel data is that a line doen't represent the same group of people over time. I've probably been in almost all those categories in the last 25 years...now shooting for the last one.

meet ya at the top

Posted by: dennisBoz on December 18, 2007 at 4:03 PM | PERMALINK

You make a very good point, Kohole. This is a focus on share of the pie across the population. It doesn't take into account growth of the pie itself, which is obviously a factor. I am wadding through the CBO data to best represent that issue.

I wouldn't want to pretend that the data represent anything more than they do.

Posted by: Afferent Input on December 18, 2007 at 4:13 PM | PERMALINK

dennisBoz-

The CBO data say nothing about movement across quintiles over time. Certainly, there are people that move up and down the income ladder, though. CfAP released a study last year looking at this issue.

http://www.americanprogress.org/issues/2006/04/b1579981.html

They note that:

By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.

More at the link.

Posted by: Afferent Input on December 18, 2007 at 4:24 PM | PERMALINK

Aff,

that's not what i was speaking of. I was speaking of inter-lifetime mobility, not intergenerational.

So long as people can move up the ladder as they age and acquire skills, then we're doing fine.

Posted by: dennisBoz on December 18, 2007 at 4:32 PM | PERMALINK

I am not sure, though,of either the current perception - or the reality - of gains/losses of those around the 40-60th percentiles.
Posted by: Kolohe on December 18, 2007 at 3:52 PM

I've got some personal experience with those percentiles. I'm now being "retrained" so that I can find a job that pays (hopefully!) $15/hr instead of $12/hr to replace my $20/hr job that went to China. It matches what is happening on that chart quite well. You should see the people that are going through this that have a chronic health condition. A lot of them are tapping out their retirements. Dark days ahead my friends.

Posted by: Doc at the Radar Station on December 18, 2007 at 4:35 PM | PERMALINK

dennisBoz-

Yup, you're right. The CfAP says this, among other things about short-term income mobility:

Households whose adult members all worked more than 40 hours per week for two years in a row were more upwardly mobile in 1990-91 and 1997-98 than households who worked fewer hours. Yet this was not true in 2003-04, suggesting that people who work long hours on a consistent basis no longer appear to be able to generate much upward mobility for their families.

Posted by: Afferent Input on December 18, 2007 at 4:41 PM | PERMALINK

The article I cited earlier contains these data on actual household income:

[in 2004] The average after-tax income of the richest one percent of households rose from $722,000 in 2003 to $868,000 in 2004, after adjusting for inflation, a one-year increase of nearly $146,000, or 20 percent. This increase was the largest increase in 15 years, measured both in percentage terms and in real dollars.[2]

In contrast, the income of the middle fifth of the population rose $1,700, or 3.6 percent, to $48,400 in 2004. The income of the bottom fifth rose a scant $200 (or 1.4 percent) to $14,700.

Posted by: Claire on December 18, 2007 at 4:44 PM | PERMALINK

If you made the y-axis a log scale, it would not squash down the lower incomes. Further, it would have the benefit of making the various plots more proportional. (e.g., a factor of 2 difference would have the same vertical height everywhere on the graph) On the other hand, a log scale would make the top percentile look a less dramatic. A log scale, would require that everything be normalized, perhaps to a value of 100 in 1979, since a log of zero won't work.

Posted by: ftkyte on December 18, 2007 at 5:39 PM | PERMALINK

How the hell can Walter Williams even try to get away with saying, it's mostly the other way around? Is he just deluded, dishonest, both?

Posted by: Neil B. on December 18, 2007 at 6:14 PM | PERMALINK

ftkyte-

The very first thing I thought when looking a the raw data was that I would need a log scale. Yet I think it is harder for most people to wrap their mind around a log scale versus a linear scale.

If my goal is to cram data into as small a space as possible, then log scale would be fine. But I think the linear scale better sends the message the data are telling: growth of share of income is really high for the top 1% of the country. As for the rest of the country, share of income is flat or decreasing.

Posted by: Afferent Input on December 18, 2007 at 6:27 PM | PERMALINK

Because this is income share change I don't think a log scale is appropriate.

You use a log scale when a quantity tends to grow (or shrink) exponentially over time. The size of the economy, or the population of a country to name two examples. That share of income growth rate curve for the top 1% is kind of exponential looking, but because all the shares of income have to always sum up to 100% no share can change very exponentially for long.

It is quite amazing to see how well the various stock market dips show up in the top 1%. It looks like the next four percent break even in income share terms, and bottom 95% see up-ticks in their income shares (I would hypothesize that total income drops more than their income so their shares pop up).

Posted by: jefff on December 18, 2007 at 6:54 PM | PERMALINK

Why am I not up in arms, why don't I endorse Democratic cries for wealth redistribution even though I'm not in the top 1% or even top 5% and my 'share' of the national income apparently isn't rising?

That's easy -- because I don't measure my prosperity by my 'share'. My family has done quite well throughout the 90's and 00's, I don't waste energy begrudging Page, Brin, et al their billions, but I *do* worry about a bunch of lefty populists screwing up the economy.

Hence, my position on the presidential election is anybody but Edwards. And also anybody but Huckabee (and if they end up running against each other, just shoot me).

Posted by: Slocum on December 18, 2007 at 7:16 PM | PERMALINK

Slocum
Notice your post sort of contradicts itself? You say that your not upset even though your not in the top 1 or 5% but that you and your family are 'doing fine' in the next paragraph. This isn't about you and your 'doing fine'. This is about other people. Compared to what is happening now, 'lefty populists' (whatever those are) are the least of your worries. Anyway, moving on.
What the nice people here are trying to say is that there are a large number of people in America who are doing essential jobs and yet are getting paid less and less each year as they lose ground to inflation. They are, in fact, losing so much ground that they are sliding into poverty, a class previously reserved for illegal immigrants, disabled and welfare queens, not to mention those working jobs that aren't intended to be living wage providers (mcdonalds etc). There are the people with axes to grind, myself included. What we are seeing is the same model that has precluded revolutions and depressions in the past. You simply can't turn your entire country's working class into wage slaves and not see some kind of upheaval in return for it.
People who post here have repeatedly sounded the alarm that what is being done via the politically sanctioned pillaging of the American economy via the top 1% is having severe consequences for the rest of us. This is the endpoint of the tax concept of the Reagonomic trickle-down theory. Supposedly the cuts were to facilitate wage increases and industrial/economic growth via faster capital increase, thus creating more jobs. What we have seen is that the rich instead decided to start lending to everyone in sight so that now most people pay more in interest to their debtors then they do in federal taxes.
You can wallow in apathy and disinterest in your neighbor's welfare, but there is another endpoint around the bend. Mass poverty breeds violence. That is an eternal truth that will come home to roost if we don't turn our country around. There aren't really that many of us that can say we remember well what real civil disorder looks like aside from images on the TV from other countries. We as a collective whole are/were more then wealthy enough to pay and pay well our hewers of wood and drawers of water.

Posted by: Aaron on December 18, 2007 at 8:01 PM | PERMALINK

This sort of graph, by the way, is an answer to a whole host of other Republican economic claims. And the fact that it's relative rather than absolute is exactly the point.

That is, it's hard to argue whether the wealthy are more "deserving" than others in some sense. But it's ridiculous to argue that the wealthy have magically become, in the last fifty years, many times as deserving vis-a-vis the rest of us. You'd expect them to be swept off to heaven like Elijah or Jonathan Livingston Seagull or something.

Posted by: ask2 on December 18, 2007 at 8:07 PM | PERMALINK

Hence, my position on the presidential election is anybody but Edwards. And also anybody but Huckabee

You're sure hard to please.

Posted by: AJ on December 18, 2007 at 8:10 PM | PERMALINK

Most people won't care if another person is now getting a a larger percentage of the whole, as long as they perceive themselves as getting better year by year.

That's not human nature. Also, that's not what the chart is showing and neither are other data measures, that show families falling behind.

Posted by: anon on December 18, 2007 at 8:27 PM | PERMALINK

Claire-

There was an interesting article in the NYT the other day to that same effect.

http://www.nytimes.com/2007/12/15/business/15rich.html?ex=1355374800&en=10a3f3696a68ec00&ei=5090&partner=rssuserland&emc=rss

"The poorest fifth of households had total income of $383.4 billion in 2005, while just the increase in income for the top 1 percent came to $524.8 billion, a figure 37 percent higher."

Posted by: bryan waage on December 18, 2007 at 8:28 PM | PERMALINK

Hey Claire:

Most of the time when people mention "national income" they *are* referring to GDP - total dollar amount of goods sold.

But here, it looks like pooled data from the Census Bureau, or the IRS, and it's income from families. The difference would be "income from families" leaves out that share that businesses report as profits (and don't redistribute as dividends).

But you might've already known that.

Posted by: luci on December 18, 2007 at 9:49 PM | PERMALINK

I have what may be a really stupid question: Is there some place I can find out what the actual dollar figures are that correspond to the percentages? For instance, what are the actual incomes for someone in the top 1%, the top 0.1%, and the top 0.01% for a given year?

I ask because I'm curious where I fall on that graph. (And, no, I'm not in any of the above-mentioned brackets, thanks for asking.)

Posted by: JBLIII on December 18, 2007 at 10:32 PM | PERMALINK

Take a look at Scott Horton's blog today. The US financial exposure has increased from $20 trillion to $53 trillion since W took office. Where did all that money go? Who's going to pay it back?

Posted by: nene on December 18, 2007 at 10:42 PM | PERMALINK

Slocum: That's easy -- because I don't measure my prosperity by my 'share'.

(I don't think your comment is genuine but will respond to it as though it were).

Um, the thing is, most people do especially those who perceive themselves to be in a 'have' position. I recall an article in the Economist a few years back looking at research in the field of pyschological economics. The crux was the well-off as a group would opt for an overall decline in their incomes (!!) if it meant an increase in the difference between them and those 'below' them and would choose this over an increase that led to a closing of the gap.

We are a status-seeking animal (to a fault) and money has become the primary status measure in modern society. With status it is primarily difference in accrued money that counts. Of course it's the focus of a lot of people - especially those who have.

And from a basic fairness point of view... it utterly burns me that too many of those who have made use of the commons in the form of input (the infrastructure of the country, the education, the level of trust engendered by a civil society...) in order to earn their riches (or at least the rent on the riches they've inherited) want to scam out of paying for this input (as I've stated over and over and over again on threads like this wealth is not created in a vacuum - the Walmarts could never have made their fortune in Somalia or Mozambique; kudos to them for the foresight and savvy that led to their success, kudos to their fellow citizens who created the input in the way of the background conditions that contributed in part to their success - the contributed share of which is paid back through taxes). The top tax bracket has dropped from 90 to 28% over the past fifty years. It's time to bring back the notion of soaking the rich (ie. getting those fuckers to pay their fair share!).

Posted by: snicker-snack on December 19, 2007 at 12:57 AM | PERMALINK

I think the graph pin points the beginning of the Reagan era and how his counterrevolution succeeded. As the bottom four quintiles continue to lose earning power in the economy, they will have to resort to alternatives to make their way in our society. The blackmarket will grow. Many people will give up on the rat race, which has already happened with the increase of the hardcore homeless, who have learned to camp out permanently in our urban wilderness. As earnings diminish, so do incentives. Why work when all it earns is enough calories to use for working.

Posted by: Brojo on December 19, 2007 at 1:05 AM | PERMALINK

"Why work when all it earns is enough calories to use for working."

Hit the nail on the head there, didn't ya. Wage slavery is what it is. I don't understand why the supply sider apologists never get that. Not only is it the ultimate endpoint for this kind of imbalance, but it ignores the fact that for an economy to be successful, you need to have a wealthy enough masses to buy the products necessary to turn a profit.
If not, it becomes something similar to the 3rd world, in which infrastructure providers become the proverbial slave owners. Land lords, power/phone companies and food retail end up as supergiants, each attempting to collect money from what few people who can earn enough to pay for their services.
It would be nice if people would remember that capitalism is a means to an end, not the end itself. Our found fathers knew enough to separate church from state, now if only they had known to do the same with big money. I guess Omniscience is a bit much to expect though.

Posted by: Aaron on December 19, 2007 at 6:46 AM | PERMALINK

Doc, Jose, thanks for reminding me.
I saw that slope correlated with GHWB's term in the White House and it didn't make much sense - it's the blinders, I think.

Posted by: kenga on December 19, 2007 at 8:54 AM | PERMALINK

(I don't think your comment is genuine but will respond to it as though it were).

Um, the thing is, most people do especially those who perceive themselves to be in a 'have' position. I recall an article in the Economist a few years back looking at research in the field of pyschological economics. The crux was the well-off as a group would opt for an overall decline in their incomes (!!) if it meant an increase in the difference between them and those 'below' them and would choose this over an increase that led to a closing of the gap.

Lefties are always amazed by anyone who isn't completely obsessed by relative status and status displays. And I'm continually surprised that they're amazed.

But, sorry, no -- I just don't care much about relative status or the trappings thereof. If more people "below" us could close the gap and live a lifestyle more like ours, that would be great. Seriously.

We live in a lovely neighborhood in a very nice city (Ann Arbor). We also have a nice (but not expensive) little cabin in the woods in northern Michigan. Our house isn't very large, it's older, and doesn't have a Viking range, or granite counter tops, or a master bathroom the size of a New York apartment. We drive ordinary cars (which, like most modern cars, are amazing feats of engineering -- safe, reliable, comfortable. But ours are not status symbols, which suits us fine). If we wanted granite counter tops or a Viking range or his and hers Lexuses, we could afford them, but that would seem like a silly waste of money. We take interesting vacations, but manage to do so without spending a fortune. My wife and I both attended public schools and state universities, and our kids will too (and when they go, we'll pay cash -- the money is already set aside). In short, we live well, but also well below our means.

We're not millionaires (at least I don't think so), but otherwise we're in this category of people. Did you think that people who avoid conspicuous consumption and live below their means don't exist?

Now does it makes sense to you why the politics of envy and class-resentment just do not appeal?

Posted by: Slocum on December 19, 2007 at 9:08 AM | PERMALINK

1. I'm not a 'lefty'
2. I gave you the results of research not an opinion and you went off on some bizarre discursive about your own life..
3. And - not rudely but frankly - the circumstances of your own life are immaterial to this discussion.
4. Similarly utterly immaterial but I'm not concerned about trappings myself.
5. You sound like a third grade PR guy.
6. There is a sore need to teach logic in your country's school system.

Posted by: snicker-snack on December 19, 2007 at 9:51 AM | PERMALINK

1. I'm not a 'lefty'
2. I gave you the results of research not an opinion and you went off on some bizarre discursive about your own life..
3. And - not rudely but frankly - the circumstances of your own life are immaterial to this discussion.

The reason that I want off on 'some bizarre discursive' was to challenge the idea that my comment was genuine -- e.g. that I genuinely don't care about status. Would you have believed it had I not mentioned particulars? And I mentioned 'The Millionaire Next Door' to point out that I was hardly the only well-off person who lives below my means, avoids conspicuous consumption, and--therefore--demonstrably doesn't care much about 'positional goods' or status displays.

4. Similarly utterly immaterial but I'm not concerned about trappings myself.

So you too wouldn't give up some of your income if the poor could be made poorer? Excellent. The plural of anecdote being data, perhaps those results indicating we're all status-obsessed aren't really so solid? Seriously, the research you cite is hardly conclusive.

5. You sound like a third grade PR guy.
6. There is a sore need to teach logic in your country's school system.

Hmmm -- the 'frankly but not rudely' didn't last long, did it? I'm not surprised--I've noticed that it never does on left-leaning blog sites. Your rudeness is fairly moderate, though -- possibly because you're not actually a lefty.

The problem with the 'share of national income' analysis is this. It assumes the growth in national income is a given and all that's at issue is how to divvy it up. That's BS. One of the reasons that the income of the top 1% grew so fast here (but not, say in Europe) is that huge new businesses springing up from nothing happens here but not in Europe. There are just no European equivalents of Google, Yahoo, Amazon, or Ebay -- companies that didn't exist a decade ago, give or take, but now have some of the largest market caps (and founders who are among the richest billionaires in the world). It certainly skews the numbers, but I think that phenomenon, that product of a dynamic economy, is a good thing (no, not just a good thing, a great thing).

And keep in mind these changes were strongest during the Clinton years and apply to pre-tax earnings. That is, the idea that Bush's tax cuts are mainly responsible is just wrong.

Why have the incomes of the top fraction of a percent grown so fast? Tech billionaires and hedge fund managers. Do I want a populist, protectionist Democrat in the White House to 'fix' this 'problem'. God help us, no.

Posted by: Slocum on December 19, 2007 at 11:51 AM | PERMALINK

I found a NYT article that comments on the trend. It has the additional piece of data that while in the past the top 1% got their income mostly from investments, it now comes mostly from salaries. So it's CEOs, not investors.

Why CEO pay has risen is guesswork, but they note that CEO pay is lower in Europe and that CEOs who sit on each other's boards get paid more.

Defenders of current CEO pay levels seem to think that high CEO pay, and especially lots of stock options, aligns the CEO's interest with the company, so the company ultimately does better. There isn't much evidence to test this, but what there is points in the opposite direction.

http://query.nytimes.com/gst/fullpage.html?res=9C00EEDE1E3AF937A35757C0A9649C8B63

Posted by: Dave on December 19, 2007 at 12:11 PM | PERMALINK

Microsoft, Intel, Yahoo, Amazon, and Ebay created their billionators during the higher tax structure regimes of the Eighties and Nineties, before W. Bush lowered their taxes. What new markets have achieved as much since W. Bush's tax cuts?

Posted by: Brojo on December 19, 2007 at 12:15 PM | PERMALINK

There are just no European equivalents

Nokia kicked Motorola's ass.

Posted by: Brojo on December 19, 2007 at 12:18 PM | PERMALINK

"SAP is the world's largest business software company and the world's third-largest independent software provider overall."

SAP is a German company.

Posted by: Brojo on December 19, 2007 at 12:23 PM | PERMALINK

What new markets have achieved as much since W. Bush's tax cuts?

"Citigroup Inc is selling up to 4.9 percent of itself for $7.5 billion to the Gulf Arab emirate of Abu Dhabi, giving the largest U.S. bank fresh capital as it wrestles with the subprime mortgage crisis and the resignation of its chief executive."

"China agreed to pump $5 billion into Morgan Stanley as the US investment bank reported a stunning fourth-quarter loss fueled by a bigger-than-expected $9.4"

Posted by: Brojo on December 19, 2007 at 12:31 PM | PERMALINK

Why CEO pay has risen is guesswork, but they note that CEO pay is lower in Europe and that CEOs who sit on each other's boards get paid more.

Yes, that is a mystery that economists have no certain answer for at this point. But the cause sure as hell isn't "Bush's Tax Cuts".

Nokia kicked Motorola's ass.

But is Nokia a new company? I was not arguing that there are no successful European tech firms -- obviously there are. But Nokia and SAP (and Siemens and Thompson and Phillips, etc) have been around a long time (some since the 19th century). None of these are companies that came out of nothing in the last decade to become behemoths like Google where the (now billionaire) founders are still running the show.

Microsoft, Intel, Yahoo, Amazon, and Ebay created their billionators during the higher tax structure regimes of the Eighties and Nineties, before W. Bush lowered their taxes. What new markets have achieved as much since W. Bush's tax cuts?

Oh, I'm definitely not arguing that Bush's tax cuts are responsible. In fact, I'd be happy to see a return to the tax and free trade policies of the Clinton administration. I voted for Clinton twice. Give me another Democratic candidate running on Clinton's platform and I'll vote for him (or her) too.

But unfortunately that's not what we have on offer in 2008. The viable candidates on the Democratic side run from the full-on populist, protectionist Edwards to Hillary (not Bill) Clinton who has called for a free trade 'time out' and expressed doubts that comparative advantage actually applies to the 21st century.

Posted by: Slocum on December 19, 2007 at 2:25 PM | PERMALINK

I've got a new post up that looks at plain ol' income. None of this touchy-feely "share of income" crap that sounds like something a secular IslamoCommunist would say.

The problem is, the raw income picture paints an even uglier picture. The Top 1% have seen an increase 228% in their income since 1979. The bottom 20% have seen a whopping increase of 6.25%.

http://afferentinput.blogspot.com/2007/12/change-in-income-over-time.html

Posted by: Afferent Input on December 19, 2007 at 4:29 PM | PERMALINK

5. You sound like a third grade PR guy.
6. There is a sore need to teach logic in your country's school system.

Hmmm -- the 'frankly but not rudely' didn't last long, did it? I'm not surprised

Only insofar as telling the truth is rude. You still come across as a complete phony. Still need to hone your act methinks.

Posted by: snicker-snack on December 19, 2007 at 6:46 PM | PERMALINK

There's a lot of talk here about people who are struggling must just be jealous, lazy, or living beyond their means. All I can say is ten dollars an hour is not enough to live comfortably, 15 is getting better, but 20 is really what everyone in this country needs to be making, and a lot of people aren't. Their jobs are just as important as the kid who inherited shit loads of money and opportunities, and thinks he or she is entitled to it, and the rest of us just aren't smart enough or work don't work hard enough. It's sad really, but I don't know many people who want 3 luxury cars, and huge house, they just want enough to live modestly and be able to put money away, and they can't.

P.S. Yes, I'm currently attending college to better myself, so fuck off. I just don't see why a person working a job that is essential to the economy can't make enough for a modest living because the people at the top of the company think they're entitled to a disproportionately large percentage, even know they're likely less important to the operation as the people at the bottom. That is what it currently wrong with the country.

Posted by: Jake on December 30, 2007 at 12:59 PM | PERMALINK

My friend, a hard working person who has been in retail for 12 years, 4 of them managing for Wallmart and another 4 for Books A Million, is loosing her home of 13 years because her pitiful increases in pay don't keep up with the cost of life.
Her 15 year old daughter, who was previously an all A's and B's student is now working after school instead of studying.
The difference between her wage and her daughters staring wage, scooping ice cream, is a dollar, and the daughter makes tips.
For most Americans at the bottom, being honest, working hard and paying your taxes now gets you nothing but a homeless early grave.

Posted by: JM on December 31, 2007 at 2:58 PM | PERMALINK




 

 

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