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Tilting at Windmills

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August 13, 2008
By: Kevin Drum

THE BEST OF TIMES....John McCain may think it's 1938, but in reality it's 1928:

Average pre-tax incomes in 2006 jumped by about $60,000 (5.8 percent) for the top 1 percent of households, but just $430 (1.4 percent) for the bottom 90 percent, after adjusting for inflation, according to a new update in the groundbreaking series on income inequality by economists Thomas Piketty and Emmanuel Saez. Their analysis of newly released IRS data shows that in 2006, the shares of the nation's income flowing to the top 1 percent and top 0.1 percent of households were higher than in any year since 1928.

It is indeed a grand and glorious time to be rich in the United States. And why shouldn't it be? They've certainly done a fine job of shepherding the economy for the other 90% of us, haven't they?

Kevin Drum 1:26 PM Permalink | Trackbacks | Comments (88)

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Comments

To see what life would be like under a McCain administration, all you really have to do is research the Grant presidency. Another "hero" elected strictly on his war record and who was also utterly unfit for the job.

Posted by: Joshua Norton on August 13, 2008 at 1:30 PM | PERMALINK

Mission Accomplished!

Posted by: bellumregio on August 13, 2008 at 1:38 PM | PERMALINK

I waaaaaaant a gooooood ecaaaaaaahnomeeeey.

Posted by: dennisS on August 13, 2008 at 1:38 PM | PERMALINK

It is indeed a grand and glorious time to be rich in the United States. And why shouldn't it be? They've certainly done a fine job of shepherding the economy for the other 90% of us, haven't they?

Attempting to brandish your Marxist or socialist credentials with such claptrap Kevin?

When hasn't it been a "grand and glorious time to be rich in the United States"? I think the more interesting question would be where the bottom 90% would prefer to be, if only they could escape the chains of oppression that this country's top 1% places upon them. LOL

Posted by: Chicounsel on August 13, 2008 at 1:55 PM | PERMALINK

I'd organize a pitchfork riot and loot their homes, but I have no idea what I'd do with the robodogs, miniature ponies, diamond encrusted ipods, and ice sculptures that piss vodka.

Posted by: B on August 13, 2008 at 1:56 PM | PERMALINK

I kick myself everyday for choosing to be born to such poor parents...

Posted by: rusrus on August 13, 2008 at 1:57 PM | PERMALINK

You've got your "trickle", what's the problem? Gusher up, trickle down, isn't that what we voted for?

Posted by: dr2chase on August 13, 2008 at 1:59 PM | PERMALINK

Is this what they mean when they talk about redistribution of wealth?

Posted by: Dr. J on August 13, 2008 at 2:02 PM | PERMALINK

It is indeed a grand and glorious time to be rich in the United States. And why shouldn't it be? They've certainly done a fine job of shepherding the economy for the other 90% of us, haven't they?

Shut your mouth. You'll take what we give you and like it!

Posted by: Stefan on August 13, 2008 at 2:05 PM | PERMALINK

So pointing out that the rich are getting a disproportionate share of income gains, and that those gains are eerily similar to what happened before the U.S. economy spent a decade in the crapper, is now "Marxist" ... ?

Methinks you don't know what Marxism actually is.

Please show us all where Kevin -- or anyone else on this site, or even in the Democratic party, for that matter -- have proposed we take all private money and distribute it equally among everyone, followed by a government takeover of all private businesses.

Or you can just keep showing your abject ignorance by tossing out labels you obviously don't understand and applying them to posts you obviously didn't read.

Your call.

Posted by: Mark D on August 13, 2008 at 2:10 PM | PERMALINK

I am not sure I follow what you are trying to say here. Everybody got wealthier. Why do I care if someone got even wealthier than I did? Is your implication that the richer folks are somehow taking money from the poorer ones, that we are living in a zero sum world? Because if that is your hypothesis, you need to explain why everyone is wealthier in a zero sum world.

Further, as you must know, looking at changes in income brackets is always misleading. In the US, most folks are migrating up the brackets as they age and gain experience. So most folks benefit not just from the increase in their bracket but a migration to the next bracket.

To this last point, the bottom end of the bracket is being flooded with new immigrants (legal or not) with poor skills and often no English. They drag down the averages, again understating how well the typical person is doing.

Posted by: coyote on August 13, 2008 at 2:12 PM | PERMALINK

Not to go all Swan on everyone and post a reply to my own post, but ... my comment at 2:10 was directed toward Chicounsel. The blockquote tag got goofed, apparently.

Posted by: Mark D on August 13, 2008 at 2:13 PM | PERMALINK

"where the bottom 90% would prefer to be, if only they could escape the chains of oppression that this country's top 1% places upon them"

Probably one of these would do. (Top nations ranked by formally defined 'standard of living').

Iceland
Norway
Australia
Canada
Ireland
Sweden
Switzerland
Japan
Netherlands
France
Finland

Or maybe ranked by mental health and general well-being of the population.

1. Denmark
2. Switzerland
3. Austria
4. Iceland
5. The Bahamas
6. Finland
7. Sweden
8. Bhutan
9. Brunei
10. Canada
11. Ireland
12. Luxembourg
13. Costa Rica
14. Malta
15. The Netherlands
16. Antigua and Barbuda
17. Malaysia
18. New Zealand
19. Norway
20. The Seychelles
Other notable results include:

23. USA

Yes, it could be worse.

The three least desirable countries were:

176. Democratic Republic of the Congo
177. Zimbabwe
178. Burundi

Posted by: Buford on August 13, 2008 at 2:13 PM | PERMALINK

I am not sure I follow what you are trying to say here. Everybody got wealthier. Posted by: coyote

Are you Chicousel' even stupider brother and/or sister? Everybody didn't get wealthier. In fact, for most people wages have stagnated or fallen. The pie has not gotten "higher," as your idiot president once said. The pie has stayed pretty much the same size over the last 8 years with the wealthiest 1% getting a much, much larger piece of it than they were in 2000.

Posted by: Jeff II on August 13, 2008 at 2:17 PM | PERMALINK

You continue to use the category "households" without disclosing that you are comparing apples to oranges when you use that term. The most fundemental change in economic affairs of the last 3 decades has been that we no longer live in a nuclear family dominated society... many, many people are using their increased incomes and labor-saving improvements to opt out of bad relationships and live alone or without the parent of their children. This has been turbo-charged by govt support/subsidies that do not show up on your charts, policies that encourage this movement. I'm sure if you compared traditional family units over time, or accounted for the increased benefits accorded those with lower cash incomes, the graphs wouldn't be nearly as dramatic. I still support a more equitable income distribution, but I think we should try to be more honest than our competitors when discussing these issues.

Posted by: loki on August 13, 2008 at 2:24 PM | PERMALINK

Before everyone goes off half cocked with their pitchforks and torches raised high ...

It would be worthwhile to read the "easy to understand version" of the Piketty and Saez work -
http://elsa.berkeley.edu/~saez/saez-UStopincomes-2006prel.pdf
and understand what they mean by income. Interesting to note that they do not include social security or unemployment insurance. Also it appears that contributions to 401K's don't appear to be counted as income (even though it is earned income, it serves to reduce our reported income). So given this, it would seem to make the 90 percentile appear poorer than they are.

From the data on Saez's page you can see spikes in the top 1% share of "income" that correlate with A) the 1920's stock market bubble, the late 90's tech bubble and the just receding real estate bubble. For most of the rest of the time, the top 1% don't appear to do so well. So it doesn't really appear that the top 1% are shepherding the economy, more like they are reaping the benefits when the general public undergoes fits of irrational exuberance.

And since I know that shortstop will weigh in on this post, I a priori tell her to eff off.

Posted by: optical weenie on August 13, 2008 at 2:33 PM | PERMALINK

Please show us all where Kevin -- or anyone else on this site, or even in the Democratic party, for that matter -- have proposed we take all private money and distribute it equally among everyone, followed by a government takeover of all private businesses.

Posted by: Mark D on August 13, 2008 at 2:10 PM

Isn't it obvious from Kevin wrote: "after adjusting for inflation, according to a new update in the groundbreaking series on income inequality by economists Thomas Piketty and Emmanuel Saez."

If you believe that it's the government job to correct this "income inequality", then how else can it be done other than by having the government take income from those you believe who have too much in order to give to those you believe who have too little?

Posted by: Chicounsel on August 13, 2008 at 2:34 PM | PERMALINK
Everybody didn't get wealthier. In fact, for most people wages have stagnated or fallen. The pie has not gotten "higher," as your idiot president once said.

Based on Kevin's chart, it looks to me like the pie got bigger by 5.458%, after correcting for inflation, and that everybody got more pie.

Posted by: Jody on August 13, 2008 at 2:48 PM | PERMALINK

I was going to mock the inevitable cries of "class warfare!" from movement conservatives, only to see Chicounsel -- predictably enough -- rendered such an act redundant.

I never cease to be amused by conservatives' ridiculous obsession with Communism.

Posted by: Gregory on August 13, 2008 at 2:54 PM | PERMALINK

Based on Kevin's chart, it looks to me like the pie got bigger by 5.458%, after correcting for inflation, and that everybody got more pie.

Unfortunately, even if that's true, the amount of "pie" hardworking american families have to pay for food, fuel, housing, health care, etc. got even bigger.

But please, Republicans, in a time when middle class Americans are struggling to make ends meet, please do run on a platform of how the Republicans' Golden Age Redux economic policies brought prosperity to everyone.

If you believe that it's the government job to correct this "income inequality", then how else can it be done other than by having the government take income from those you believe who have too much in order to give to those you believe who have too little?

Easy -- torch-and-pitchfork mobs could do it instead.

Posted by: Gregory on August 13, 2008 at 3:01 PM | PERMALINK

Er, for "Golden," above, please substitute "Gilded." Sorry.

Posted by: Gregory on August 13, 2008 at 3:04 PM | PERMALINK

Unfortunately, even if that's true, the amount of "pie" hardworking american families have to pay for food, fuel, housing, health care, etc. got even bigger.

Read the table. Second line: "Average Income gains, Adjusted for Inflation, 2002-2006" [emphasis mine]

You can argue that the increases in the cost of food and fuel and what not since 2006 have negated the gains shown in the chart, but not that the chart does not adjust for inflation.

Posted by: Jody on August 13, 2008 at 3:09 PM | PERMALINK

If you believe that it's the government job to correct this "income inequality".

Heck, I'd be happy if our government would simply STOP actively working to exacerbate the income inequality.

Posted by: ckelly on August 13, 2008 at 3:13 PM | PERMALINK

When exactly was it ever not a grand and glorious time to be rich, anywhere?

Posted by: thersites on August 13, 2008 at 3:35 PM | PERMALINK

According to Nobel Prize winner Douglas C. North's "Structure and Change in Economic History" this is the kind of policies that did in the western Roman Empire and ushered in a 500 year dark age in Europe.

Leafing through history these kinds of policies also caused the collapse of ancient Egypt's New Kingdom, Pre-Islamic Mecca (Islam is, in part, a reaction to concentrated wealth), Byzantium prior to 1071 (triggered the crusades), Medieval Japan (two hundred year dark age), the collapse of Hapsburg Spain, Bourbon France, Romanov Russia, Coolidge/Hoover America. The last one triggered the rise of Hitler, WWII and the Holocaust (and as Churchill suggested in his 'Finest Hour' speech, nearly caused a new Dark Age in the west).

Yes, I blame Republican policies for paving the way for the Nazi's WWII and the Holocaust.

Why isn't this stuff taught as common knowledge to every person in high school civics class?

Money is the oxygen that provides life to the economy. When it concentrates in rich people's hands, you basically take the money out of circulation, and that triggers epic collapse.

Ironically, when wealth is broadly distributed, you get histories golden ages. In his "Finest Hour" speech, Churchill promises his people one if they can manage to hold off the Germans. True to form, 1945-1975 is history's greatest golden age - an age where wealth was broadly distributed.

We are self imploding, thanks to Republicans. History is repeating itself.

Posted by: Bub on August 13, 2008 at 3:39 PM | PERMALINK

We should eat the rich.

Posted by: The Conservative Deflator on August 13, 2008 at 3:41 PM | PERMALINK

TCD: We should eat the rich.

No, thanks. They're all skinny, these days.

Posted by: thersites on August 13, 2008 at 3:56 PM | PERMALINK

If you believe that it's the government job to correct this "income inequality", then how else can it be done other than by having the government take income from those you believe who have too much in order to give to those you believe who have too little?

If that's your criteria for a definition of Marxism, then the Bush administration -- and every single American government ever -- is Marxist, since this is something they do every single day -- or perhaps you've never heard of such things as taxes, tax credits, and federal subsidies?

Posted by: Stefan on August 13, 2008 at 4:09 PM | PERMALINK

If you believe that it's the government job to correct this "income inequality", then how else can it be done other than by having the government take income from those you believe who have too much in order to give to those you believe who have too little?

So when Republican Senator Ted Stevens took my taxpayer money to build a bridge to nowhere for his constituents in Alaska, that was Marxism? So Ted Stevens is a Marxist?

Posted by: Stefan on August 13, 2008 at 4:11 PM | PERMALINK

In the future, anyone who labels someone else a Marxist should be required to read Das Kapital cover to cover, without a bathroom break.

Posted by: thersites on August 13, 2008 at 4:18 PM | PERMALINK

Medieval Japan (two hundred year dark age), . . . Posted by: Bub

WTF? Japan's never had a "dark age." Japan was essentially closed to the rest of the world for a couple hundred years, but the income equality that existed during this time was present prior to the "closing" and didn't change all that much until the 1920s. It returned again during the Depression and lasted up until the early 1970s.

Take a look at the arts during Japan's feudal period, the time from which most of Japan's classical art and architecture date, and only someone unfamiliar with Japanese history would call this a "dark age."

I now return this thread to your own personal obsessions.

Posted by: Jeff II on August 13, 2008 at 4:18 PM | PERMALINK

If this is class warfare, would somebody point me to the recruiting station?

Posted by: Quaker in a Basement on August 13, 2008 at 4:23 PM | PERMALINK

In the US, most folks are migrating up the brackets as they age and gain experience.

Lies, lies, lies.

Posted by: anne on August 13, 2008 at 4:25 PM | PERMALINK

Why do you socialist use the language that you use?

the shares of the nation's income flowing to the top 1 percent and top 0.1 percent of households were higher than in any year since 1928.

I notice you always use words like "income received" "income distributed" Income Flowing to".

I am one of your top 1 percent and I never received income, was distributed income, or found the sweet under-tow of flowing income. All of it, every last penny, was earned.

You want money? Work harder, think harder, try harder, or don't, see what I care. Just don't get all jelous for your shortcomings. All I know is that I haven't kept any of you down.

Posted by: Esox Lucius on August 13, 2008 at 4:33 PM | PERMALINK

If you believe that it's the government job to correct this "income inequality", then how else can it be done other than by having the government take income from those you believe who have too much in order to give to those you believe who have too little?

Guess Eisenhower was a Marxist with that 90 percent tax rate on corporate profits and all...

Posted by: lou on August 13, 2008 at 4:40 PM | PERMALINK

I am one of your top 1 percent and I never received income, was distributed income, or found the sweet under-tow of flowing income. All of it, every last penny, was earned.

I'm in the top 1 percent too, but you don't see me whining about all those poor people who don't appreciate me. And really, all of it was earned? So you never, say, got a tax credit for your mortgage, never received a federally subsidized education or business loan, your business and/or industry never got any federal or state tax breaks or contracts, your industry doesn't engage in lobbying, the research underlying your industry isn't supported by federal grants? Unless you're a drug dealer, I'm curious as to just how you're managing to make so much money, then.....

Posted by: Stefan on August 13, 2008 at 4:42 PM | PERMALINK

The problem is the recovery which the press was doing the wee-wee of joy over (h/t Dave Barry) basically didn't happen to the bottom 90%. That's like working in the fields all spring, summer and fall, and staring down a winter with nothing but turnips.

Here's one vote to return to the rapacious rates the mustache-twirling rich were suffering under during the '90s. (For the idiots out there--you don't know who you are--the rich got plenty richer in the '90s.)

Oh, and Esox Lucius: Better trolling, please. Yep, all those jobs that disappeared, that just naturally without anyone's intervention, would have stayed if Americans weren't so lazy.

Posted by: ThresherK on August 13, 2008 at 4:58 PM | PERMALINK

I am one of your top 1 percent and I never received income, was distributed income, or found the sweet under-tow of flowing income. All of it, every last penny, was earned.Posted by: Esox Lucius

Congratulations! If yours spiel is to be believed, you are different from the wealthiest of Americans, the overwhelming majority of which inherited their money and/or are men or women with great connections.

However, unless you grew-up poor, paid for your own college education, never received any help (material or otherwise) from family, have never received unearned income, etc., you have no business getting so pissy about the issue because your lot isn't pulling it's tax weight though reaping the enjoying most of the advantages in our increasingly impoverished nation.

Posted by: Jeff II on August 13, 2008 at 4:59 PM | PERMALINK

Per Kevin, "Average pre-tax incomes in 2006 jumped by about $60,000 (5.8 percent) for the top 1 percent of households"

Per the chart, the same Top 1 Percent having an income gain (gain) of $320,000 over five years. I believe that is 2002-2006 inclusive. That would be $64,000 gain annually.

But Kevin and his carefully-chosen source forgot to mention that.

Good point, XX. I, too, would like to know if Kevin's source can explain how that segment of the rich suffered that year, gaining a mere $60K instead of their segment average of $64K in the other years.

I'd like some of that cratering in my wallet.

Posted by: ThresherK on August 13, 2008 at 5:18 PM | PERMALINK

Oh, where to begin...

Yes, I am in the top 1% and I am not pissy at all Jeffry, I am quite happy about it. And I am not whining either Stefan.

To all that think I got something from Mortgage deductions, government contracts, yadda-yadda. No, I got no special perks, not a drug dealer. I sell software and I am good at it.

I also never said Americans were lazy, far from it. I did imply that *you* people are whining though. Most Americans don't go in for your Jelousy politics or we would already be Finland, France, Sweeden. The fact is, they think you are trying to scam something that you haven't worked for and god bless them for it.

Last thought, If those of us in the top 1% get to "Sheppard" the economy, why has no one asked me to do some of the shepparding? The economy exists in spite of the government, not because of it.

Posted by: Esox Lucius on August 13, 2008 at 5:29 PM | PERMALINK

Not at all, weenie. I was reading along, finding this thread fascinating, and I hadn't planned to add anything. Since you started swinging wildly at shadows, though, I'm compelled to remind thersites of his disappointing double standard in delivering fatuous lectures about learning to love each other like god's own children.

I for one am lovin' you, ween, while hating all your sins, of course.

Unless you're a drug dealer, I'm curious as to just how you're managing to make so much money, then.....

Mmmm, the sweet, sweet opiate of fervently believing that one is benefiting from an untrammeled meritocracy. I'm wealthy solely because I work hard. Other people aren't because they don't work hard enough. LalalalalalaIdontwanttohearanythingelse.

Posted by: shortstop on August 13, 2008 at 5:34 PM | PERMALINK

In truth, shortstop, I was talking to both you and weenie (and everyone else that engages in pointless fighting.) No double standard was intended. I thought that was clear.

You both choose to disregard my fatuous attempts to make peace. It happens. I don't take it personally.

Posted by: thersites on August 13, 2008 at 5:48 PM | PERMALINK

I sell software and I am good at it.

Ah, so you are a drug dealer.

Posted by: Stefan on August 13, 2008 at 5:54 PM | PERMALINK

And this brings us back to the age old joke, what do you call someone that can't pass a high school stats exam?

A democrat of course. There are lies, damn lies and statistics.

I'm not sure where I want to start on the laundry list of assumptions that one needs to make to reach any rational conclusions based on this data. Hell there are less assumptions in the Bible than I have to choose from here. First there is the differing sampling size. Comparing 0.1% of households to 90% of households is not statistically sound analysis. Second, while we're talking about households there is no mention of the average household size of the top 0.1% compared to the bottom 90%. Next lets talk about mobility. I'm not completely familiar with the IRS data, but I'm guessing they don't reveal enough information that one could calculate P(A is in the top 0.1% | A was in the top 0.1% last year). The underlying assumption one has to make for this data to be of use is that this probability is near 1. We also need to talk about inflation. Last time I checked inflation of good A is not necessarily equal to inflation of good B and household C and household D do not necessarily consume the same mix of goods. The DCF analysis done here is amateurish to put it nicely.

Posted by: Jay on August 13, 2008 at 5:55 PM | PERMALINK

Most Americans don't go in for your Jelousy [sic] politics or we would already be Finland, France, Sweeden.

Well thank god for that, or we might actually have a higher standard of living. Take a look at Buford's list from above (reproduced below with bolding) of the highest-ranked countries standard of living. See the US anywhere there? (Hint: we're not number 1).

Iceland
Norway
Australia
Canada
Ireland
Sweden
Switzerland
Japan
Netherlands
France
Finland

Posted by: Stefan on August 13, 2008 at 5:59 PM | PERMALINK

"Mmmm, the sweet, sweet opiate of fervently believing that one is benefiting from an untrammeled meritocracy. I'm wealthy solely because I work hard. Other people aren't because they don't work hard enough. LalalalalalaIdontwanttohearanythingelse."

There are three types of people in the world. Those for which taxes paid exceed government benefits. Those for which government benefits exceed taxes paid. And those for which government benefits equal taxes paid. The first group is roughly the top 10%. The second group is the bottom 90%. And the third group is at most 1 random household every year.

Posted by: Jay on August 13, 2008 at 6:03 PM | PERMALINK

I always laugh when I see Iceland on that list. Starkly beautiful country, lovely and charming people, but the winter I spent there made me want to slit my wrists. Four hours of daylight a day at one point! Yeoooow!

Posted by: shortstop on August 13, 2008 at 6:04 PM | PERMALINK

umm, that's because they had cratered in the previous couple of years. Posted by: xx

Hardly. If you look at the numbers from 1998 or so through 2006, you'll find that the income of the upper 1% increased at a higher rate than all other income brackets. From 2002 through 2006 the obscenely well-paid weren't just getting back to where they were previous to 2002, they were merely increasing the already substantial difference between themselves and most American wage earners, in great part helped by the new lower top end tax rate and reduced rates on capital gains (aka, unearned income).

Finland, France, Sweeden. Posted by: Esox Lucius

Interesting that you mention these three countries since they all have better health care, better education systems and are considered to have equal to or better overall standards of living than the U.S.

Also, no one who is "selling software" gets there on a GED. So while you may enjoy your wealth (as would I) my question is whether you believe you've achieved your success without any of the prerequisites necessary to make really good money in this country - good family, good education, good connections.

Posted by: Jeff II on August 13, 2008 at 6:05 PM | PERMALINK

"Take a look at Buford's list from above (reproduced below with bolding) of the highest-ranked countries standard of living."

There was a mistake. Buford switched his lists. This is really a list of the countries with the most homogenous populations, where everyone is your second cousin.

Posted by: on August 13, 2008 at 6:14 PM | PERMALINK

I sell software

Esox Lucius earns what Esox Lucius earns soley because of the efforts of Esox Lucius.

Esox Lucius does not write software, the major value added part, nor invented the digital binary system, another huge value added component, yet seems to think selling the stuff others created means earning. Without giving any credit to all the things society had to accomplish before digital computing could even occur, Esox Lucius dismisses the reasons some people are able to earn a good living within our society.

Posted by: Brojo on August 13, 2008 at 6:15 PM | PERMALINK

Who are these 300,000 (0.1%)? We should all know their names since they are all great and are our role models. Anyone want to host a website with their 300,000 names? The world is waiting with baited breath.

Posted by: slanted tom on August 13, 2008 at 6:21 PM | PERMALINK

Brojo is exempted from my proposed requirement for people to read Das Kapital.

Since my chances of extracting obedience from anyone here are very close to zero, I'm sure you're breathing a huge sigh of relief.

Posted by: thersites on August 13, 2008 at 6:35 PM | PERMALINK

>"This is really a list of the countries with the most homogenous populations, where everyone is your second cousin."

ROFL: By that logic Appalachia should be a shining basion of economic wealth.

Posted by: Buford on August 13, 2008 at 6:38 PM | PERMALINK

I just reread Lenin's Imperialism the Highest Stage of Capitalsim, don't I earn some extra income for that from Uncle Joe?

Posted by: Brojo on August 13, 2008 at 6:49 PM | PERMALINK

Brojo: I just reread Lenin's Imperialism the Highest Stage of Capitalsim

Warning: that book was not intended as a guide for wannabee neocons.

Posted by: alex on August 13, 2008 at 6:56 PM | PERMALINK

First there is the differing sampling size. Comparing 0.1% of households to 90% of households is not statistically sound analysis. Second, while we're talking about households there is no mention of the average household size of the top 0.1% compared to the bottom 90%. Posted by: Jay

Jay,

There would be no statistically significant difference in this study if you could quantify households. The income and wealth disparity is so great that it wouldn't matter if the "average" household in the bottom 90% was comprised of a four person nukular family and the top 1% were all DINKs or individuals. Even if you threw out the Forbes/Fortune 500 from the study, you'd still have hundreds of thousands of multi-millionaires at the top and perhaps a hundred million households who aren't close to being worth half a million even on paper.

Posted by: Jeff II on August 13, 2008 at 7:01 PM | PERMALINK

"ROFL: By that logic Appalachia should be a shining basion of economic wealth."

IIF correlation proves causation.

Posted by: Jay on August 13, 2008 at 7:26 PM | PERMALINK

Listen to General Wes Clark

This year, we're facing the most important election in a generation. As Americans, we must ask ourselves which candidate will bring about the change our country so desperately needs. In my opinion, Barack Obama is the only candidate with the judgment to move our country forward.

The disastrous consequences of George W. Bush's poor judgment over these last 7 1/2 years are all too apparent. Now, John McCain is offering 4 more years of Bush -- while Barack Obama offers the change in direction our country so desperately needs.

Barack had the judgment to oppose the war in Iraq before it began, and he is ready to bring our troops home and end the occupation of Iraq in a responsible way. John McCain has said that American troops should be willing to stay in Iraq for 100 years.


Barack will engage in the diplomacy that is necessary to bring stability to the Middle East. Just like George Bush, John McCain repeatedly resorts to saber-rattling and threats about invading Iran while revealing a startling ignorance of the basic issues that define the politics of the region.
Barack knows we have to invest in renewable energy to end America's dependence on foreign oil and fight global warming. And like George Bush, John McCain is in the pocket of big oil.

It's about judgment -- and I think the answer is clear.

While I respect John McCain's service, I know exactly what he stands for -- Bush's third term. And in national security terms, John McCain is largely untested and untried. He's never been responsible for policy formulation. John McCain is calculating that he will use the national security debate to his advantage. He's wrong.

Like Bush, McCain has always been for the use of force, force, and more force. In my experience, the only time to use force is as a last resort. When John McCain talks about throwing Russia out of the G8 and makes irresponsible comments about bombing Iran, he reveals his own disrespect for the office of the presidency.

And while he's all too willing to continue putting our troops in harm's way, John McCain initially refused to support providing benefits like the new GI Bill to our veterans because he believes that providing good education opportunities to our troops will hurt retention. That's ridiculous.

We need new leadership in the White House -- not George Bush's third term.

Last week I sat down with Barack Obama. I know he's the right person to lead our country forward. Now we need to come together and support his campaign for change.

As I see the sacrifices our troops and their families make every day; as I see Americans buckling under the weight of record high gas prices; and as I see families struggling with sky rocketing health care costs, I know this:

We simply can't afford another 4 years of the McCain-Bush-Cheney agenda.

We must change the course of our country's future. We must elect Barack Obama the next president of the United States.



Posted by: McCain is a war-mongerer on August 13, 2008 at 8:32 PM | PERMALINK

I really can't help myself from continuing to post to this.

France - Do you remember the riots with the burning cars that continued for a month? Why would something like that happen in the socialist Promised Land? Because if you are not lily white and French, socialism, she no-good to you. Yep try being Muslim or black with a 40% unemployment rate in your French Garden of Eden.

I sell software; I paid someone to write the software. The people that wrote the software were happy capitalists too and made out like bandits. I made out like a robber baron but strangely, my clients loved me and kept buying more. Why do you thunk that would be?

Family life and connections? I so, so wish we could all get together in a room for a chat about my life. Father & Mother dead when I turned 16 years old from cancer & heart disease. Lived alone in the family house for last 2 years of high school under the radar of the government that would probably tried to ship me off to a disinterested aunt in another state. Made it to a private catholic college on the kindness of the administration of that college. Spent most of the remaining money from the estate on books and food. Worked 5 days a week delivering pizzas while taking classes. Got a business degree, opened a software company, sold it, opened another.

Question: What is the difference between a socialist gives to charity and a capitalist gives to charity? Answer: When a capitalist gives money to charity it is HIS OWN MONEY.

I fund a scholarship fund for that college every year. I have written them into my will.

All the money you are so cranky about the top 1% making? You want to take it away through confiscatory taxes? Not your money.

Posted by: Esox Lucius on August 13, 2008 at 8:39 PM | PERMALINK

No one in the top 1% would even post here.

That's lie #1.

Posted by: Crissa on August 13, 2008 at 8:41 PM | PERMALINK

It's amazing to me, though I guess it shouldn't really surprise me, the extent to which liberals and other class warriors believe that the only way anyone ever gets rich is by inheritance, a "good family" or some mysterious, nefarious "connections". These assertions are just wildly tossed off without any basis for belief at all. Believe it or not, some rich people come from middle class or lower backgrounds, have talent, work hard, and become successful. And yet they deserve nothing but scorn from some people.

Posted by: Brad on August 13, 2008 at 9:53 PM | PERMALINK

@ Jody

Do you wake up everyday and take stupid pills? There are names for these pills. Wellbutrin, Zyban, Paxil, Prozac, Zoloft. . . etc, etc.

Are you paid to say this stuff?

Geez, I just don’t get it!

Posted by: elouise on August 13, 2008 at 10:59 PM | PERMALINK

"No one in the top 1% would even post here."

You sound like a religious fundamentalist blindly stating that God exists.

Posted by: Jay on August 13, 2008 at 11:05 PM | PERMALINK

@ Esox Lucius

Maybe you take those stupid pills too? eh?

Posted by: elouise on August 13, 2008 at 11:14 PM | PERMALINK

Believe it or not, some rich people come from middle class or lower backgrounds, have talent, work hard, and become successful. Posted by: Brad

Of course some do. But very few. And if these people encounter resentment, it will be from the people they left behind and the old money-types.

Most wealthy people are not self-made men and women. Most started out with all the right ingredients to become or, more likely, remain wealthy.

Moving up in economic class, even in the U.S. is pretty tough still. In particular, you rarely see people move from the lowest socio-economic stratum to the highest. If movement is going to come at all, it's the first kid in a family that has been poor for generations going to college and moving into the middle class. He or she and his or her offspring are likely to remain middle class for several generation as well.

It is far easier to slip than rise in America.

Posted by: Jeff II on August 14, 2008 at 1:42 AM | PERMALINK

@Jeff (http://www.washingtonmonthly.com/archives/individual/2008_08/014290.php#1309625)
and @ anne (http://www.washingtonmonthly.com/archives/individual/2008_08/014290.php#1308938)
[Apologies, I don't know how to quote]

I am an immigrant. When my family arrived in this country, we were three people living on one person's scholarship stipend. We survived on food stamps and odd jobs, and even then my mother periodically skipped meals so that I could eat.

18 years later, we're in that top 1%. We had no connections; we didn't know anyone here. We had no inheritance (if we had, we'd have stayed at home). We were the first of our family to try to come here.

We went to school & grad school, worked hard, gained experience, made good decisions, and hey! We did well. So did a lot of other immigrant families we knew. A lot of them started in the same place or close, and most of them (if not all) are in the top 1% now too.

So yes, it is possible to climb the income ladder in America, and in fact in my experience it is common.

Posted by: SR on August 14, 2008 at 4:59 AM | PERMALINK

P.S. We have never encountered much resentment, either from the people we "left behind", or those we know today with established wealth (including some with NW far, far exceeding our own). In fact, we have usually only encountered support and encouragement, and, in the case of our less advantaged friends, the occasional request for advice.

I like America.

Posted by: SR on August 14, 2008 at 5:06 AM | PERMALINK

"Most wealthy people are not self-made men and women. Most started out with all the right ingredients to become or, more likely, remain wealthy."

"Moving up in economic class, even in the U.S. is pretty tough still. In particular, you rarely see people move from the lowest socio-economic stratum to the highest."

Evidence please? No one is interested in your unfounded religious beliefs.

Posted by: Jay on August 14, 2008 at 6:31 AM | PERMALINK

So yes, it is possible to climb the income ladder in America, and in fact in my experience it is common.

No one ever said it is not possible. It is, however, not common. You cannot deduce a broad social trend from your own singular experience. All the fact that it happened for you proves is that it happened for you, nothing else.

Posted by: Stefan on August 14, 2008 at 9:56 AM | PERMALINK

Stefan, Your lack of belief in yourself makes me sad. I personally know 1, 1% person that came from a background that would have caused someone with your attitude to have killed yourself long ago. I came from a middle class background to hit the 1%. My cousin put himself through college 6 years after traditional students enroll; he is in the top 1%.

Whether or not you make it to the top 1% depends entirely on your attitude and work ethic. It is about leveraging your talents to achieve something with your life. BUT, if that is not your goal and you will be happy with less, then god bless you with your decision. Just don't be jealous of those that are more successful. And don't use the government to take away what is not rightfully yours.

Oh, and I never met anyone that was angry or resentful of my success old money, or less fortunate friends included.

Posted by: Esox Lucius on August 14, 2008 at 11:36 AM | PERMALINK

BUT, if that is not your goal and you will be happy with less, then god bless you with your decision.

ROFL. Esox, you are really barking up the wrong tree.

Posted by: shortstop on August 14, 2008 at 11:40 AM | PERMALINK

Evidence please?

...living on one person's scholarship stipend. We survived on food stamps...

With the decline of wealth transfers like welfare, Pell Grants, etc. it is much more difficult for the lower classes to rise to middle class status than it used to be.

The lower classes spend most of their time working or travelling to and from work. They have do not have the income to pay for higher education, do not have the time to pursue higher education nor have the lower classes been prepared for higher education with the poor public education opportunities available to them. High school drop out rates for the lower classes is around 50% in my city.

Posted by: Brojo on August 14, 2008 at 11:46 AM | PERMALINK

This never-ending crap about wholly self-made success is too fucking tedious for words. Some of you people read "connections" and think, "Well, I'm not a Bush or a Kennedy or a Rockefeller, so I had no connections. I did it all myself."

Do you seriously not get that simply growing up in a reasonably stable environment with access to good education, decent parenting or at least solid adult role models, lack of violence, an ethnic background that doesn't invite mass-scale prejudice, and a network of other resources translates into advantages and connections? I am the child of a public-school teacher and a paralegal and I had connections galore, for fuck's sake.

The person who overcomes every disadvantage to vault into the top income tier is so rare as to be almost a fairy tale. For almost every one of the rest of us, luck and circumstance are an undeniable part of what we earn.

My spouse's and my combined income puts us in the top several percent of earners. We work hard and we're good at what we do. We are also surrounded in our large city by people who work even harder, are smarter than we are and struggle daily to make ends meet. We know damned well that the difference between us and most of them isn't our superior brains, ambition or industry, but the right confluence of circumstances.

It's good to honor hard work, goals and tenacity. It's disgustingly blind, smug and delusional to think that those traits alone are responsible for every bit of someone's financial success. Why do people keep trying to do it? Is it because if you acknowledge that we don't all have infinite control over our economic destinies, you have to start thinking about what that truth implies--and what we need to do about it?

Posted by: on August 14, 2008 at 12:30 PM | PERMALINK

It's disgustingly blind, smug and delusional to think that those traits alone are responsible for every bit of someone's financial success.

Um, those traits alone ARE responsible for my financial success.

I play the guitar too, the last time I checked, my skill with the guitar came from thousands of hours of practice not my "connections" or my "family situation". Tell me, was society responsible for my skill with the guitar?

I assure you, that with music, or sports or business practice makes perfect but when you perfect your business skill you don't need connections of family to make a fortune.

The problem is you are trying to compensate for your own failures in life by projecting them on everyone else. If they are rich, they must have fucked someone or got an unfair advantage.

Just like my ability to play the guitar, I did it myself.

Posted by: Esox Lucius on August 14, 2008 at 1:43 PM | PERMALINK

Er, Esox, it's hard to see how you've arrived at your current financial station with such woeful reading comprehension.

Multiple people with incomes in the top percentages are telling you why they disagree with you. Responding dully with slack-jawed repetitions on the "you're just projecting your own failures" and "you've got to believe in yourself" theme demonstrates an inability to listen, to process simple information and to adjust your arguments to meet changing challenges. People who can't do those things don't succeed in sales.

Posted by: shortstop on August 14, 2008 at 2:49 PM | PERMALINK

My spouse's and my combined income puts us in the top several percent of earners. We work hard and we're good at what we do. We are also surrounded in our large city by people who work even harder, are smarter than we are and struggle daily to make ends meet. We know damned well that the difference between us and most of them isn't our superior brains, ambition or industry, but the right confluence of circumstances.

It's good to honor hard work, goals and tenacity. It's disgustingly blind, smug and delusional to think that those traits alone are responsible for every bit of someone's financial success. Why do people keep trying to do it? Is it because if you acknowledge that we don't all have infinite control over our economic destinies, you have to start thinking about what that truth implies--and what we need to do about it?

Well said.

Just like my ability to play the guitar, I did it myself. Posted by: Esox Lucius

Yes, yes, yes. And, if your hard luck story is to be believed, then you stand as a shining example of "boot-strapism." However, you are delusional to believe that most people who are wealthy did it on their own. The self-made man is just as ridiculous an American myth as the belief than anyone can grow up to be president. Though Shrub proved that you didn't need to grow-up at all and can be a complete fuck-up and accomplish this. And, in spite of this, I bet you voted for him twice.

Bill Gates is a perfect example of being born third even if he doesn't believe he hit a triple.

The richest man in the world didn't grow-up in Yesler Terrace in a broken home. His father is a partner in one of the oldest law firms in Seattle. Gates attended what may be the finest private secondary school in Seattle, and was smart enough and, importantly, wealthy enough to drop out of Harvard. What he did after this is somewhat remarkable, but really only becomes a success story because of a massive IBM fucked-up and because Microsoft was able to avoid prosecution for anti-trust (laws the government apparently forgot existed about fifty years ago). A classic mix of a much better than average start, dumb luck, and hard work. Remove the first two, and Gates is maybe a junior partner in his father's law firm or a low six-figure tech geek somewhere.

Posted by: Jeff II on August 14, 2008 at 2:57 PM | PERMALINK

Well shortstop, looks like we are scraping the bottom of the barrel here. You have added virtually nothing with your posts that would resemble a thought containing actual value. At least the others had posts with substance. Nobody here has changed any minds. Certainly not mine. I suppose the best I can hope for is that people like you don't ever get to run the government.

Maybe I can send you a postcard when I make the forbes 500 someday.

I am so, so glad that I am not like you.

Posted by: Esox Lucius on August 14, 2008 at 3:06 PM | PERMALINK

Stefan, Your lack of belief in yourself makes me sad. I personally know 1, 1% person that came from a background that would have caused someone with your attitude to have killed yourself long ago. I came from a middle class background to hit the 1%. My cousin put himself through college 6 years after traditional students enroll; he is in the top 1%. Whether or not you make it to the top 1% depends entirely on your attitude and work ethic. It is about leveraging your talents to achieve something with your life. BUT, if that is not your goal and you will be happy with less, then god bless you with your decision. Just don't be jealous of those that are more successful. And don't use the government to take away what is not rightfully yours.

Who says I don't believe in myself? I was born into a household in the top 2% of income in America and, after two Ivy League degrees and years of work am now in the top 1%. Who says the American Dream is dead?

Posted by: Stefan on August 14, 2008 at 3:30 PM | PERMALINK

Evidence please

INCOME INEQUALITY HITS RECORD LEVELS, NEW CBO DATA SHOW:
Incomes Rose $180,000 for Top 1 Percent in 2005 But Just $400 for Middle-Income Households
By Arloc Sherman

Real after-tax incomes jumped by an average of nearly $180,000 for the top 1 percent of households in 2005, while rising just $400 for middle-income households and $200 for lower-income households, according to new data from the Congressional Budget Office (CBO).[1]

This starkly uneven growth brought income inequality to its highest level since at least 1979, when CBO began gathering these data. Taken together with prior research, the new data indicate that income is now more concentrated at the top than at any time since 1929. [2]

Other highlights of the CBO data show that as of 2005:

The share of the nation’s total after-tax income going to the top 1 percent of households hit the highest level on record (with data back to 1979).
The share of national after-tax income going to the middle fifth of households (the middle 20 percent) was the smallest on record.
Similarly, the share of national after-income tax going to households in the bottom fifth was the smallest on record.

http://www.cbpp.org/12-14-07inc.htm

Posted by: Stefan on August 14, 2008 at 3:33 PM | PERMALINK

Evidence please?

Sure:

Washington, DC - 02/20/2008 - A major new look at the trends and issues impacting economic opportunity for Americans was released today by the Economic Mobility Project, an initiative of The Pew Charitable Trusts. “Getting Ahead or Losing Ground: Economic Mobility in America,” is authored by three Brookings Institution scholars, Julia B. Isaacs, Isabel V. Sawhill and Ron Haskins.....

Americans are particularly optimistic about their chances of moving up the economic ladder,” said Isaacs. “However, a growing number of studies show that when compared to other industrialized nations, the United States stands out as having less, not more, economic mobility.” In particular, 42 percent of sons born into the bottom income quintile stay there as adults, compared to 25 percent in Denmark, 28 percent in Norway and 30 percent in the United Kingdom. Moreover, it takes an average of six generations for family economic advantages to disappear in the United States, compared to three generations for Canada, signaling higher mobility in Canada. It is important to note when making such cross-country comparisons, that Americans may have farther to climb to get to the next rung on the ladder than their European counterparts due to increasing levels of inequality in the United States.....

www.pewtrusts.org/news_room_detail.aspx

Posted by: Stefan on August 14, 2008 at 3:38 PM | PERMALINK

I play the guitar too, the last time I checked, my skill with the guitar came from thousands of hours of practice not my "connections" or my "family situation". Tell me, was society responsible for my skill with the guitar?

Partly, yes, due to the fact that you can afford to spend thousands of hours practicing the guitar rather than having to spend them working to earn enough money for food and rent. The fact that you chose to spend those hours learning guitar is to your credit, but the fact that you have that free time and security is not entirely your own achievement.

Posted by: Stefan on August 14, 2008 at 4:02 PM | PERMALINK

Just like my ability to play the guitar, I did it myself.

Did you invent the guitar?

Did you invent music?

Did you build the guitar?

Did you make the strings?

Were you self-taught, without listening to any of the music that came before you? Absolutely not.

All guitar playing is based on the hundreds, perhaps thousands, of years of previous human musical development. Same goes for software, which would have no markets without the inputs of Faraday.

Posted by: Brojo on August 14, 2008 at 4:51 PM | PERMALINK

Did you will yourself two arms with one hand each and five fingers each so you could play the guitar, or are you relying on millions of years of evoltution in order to learn, all by yourself, to play?

Did you will yourself ears and the ability to sense music?

What a superman.

Posted by: Brojo on August 14, 2008 at 5:01 PM | PERMALINK

ROFL. Esox, you are really barking up the wrong tree.

Yeah, out of everyone here, I'm probably the last person he could accuse of not being motivated by money......

Posted by: Stefan on August 14, 2008 at 5:59 PM | PERMALINK

Yeah, out of everyone here, I'm probably the last person he could accuse of not being motivated by money......

Well, I was really laughing at his solemn admonition to better leverage your talents to make a little something of yourself and ease your noxious envy. I don't think he reads quickly or well enough to spot the "If person taking opposite view makes more money than you do, skip to talking point 1H" line in his hoary script. Or perhaps they were too dumb to include it.

Posted by: shortstop on August 14, 2008 at 7:06 PM | PERMALINK

No control for demographic changes??? In a time when the percentage of the workforce in their peak earning years (in real terms) is declining and a large percentage of the population is retiring these statistics are meaningless.

Posted by: Jay on August 16, 2008 at 6:46 PM | PERMALINK

A lot of people on this thread are missing the fact that society and government are not the same thing. One may have a debt to society without owing the government.

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