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Share of Income Gains by Quintile - Great Depression til Now

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Re: Share of Income Gains by Quintile - Great Depression til Now

#121

Post by kevinpet »

forensic wrote: post #80
pg wrote: post #72

Earlier quoted context omitted.

I don't automatically assume it's a problem, as so many people seem to. I don't assume that all economic inequality is the medieval type, where the rich are the winners of a zero sum game. At the high end of the scale it doesn't seem to be a problem. I've seen a lot of people go from middle class to rich when their startups succeeded. Most live pretty quietly. I would guess most of the damage done by economic inequal…

>I don't think there is much debate that societies should try to mitigate that. You haven't been reading HN then, and you haven't met the Tea Party. There are a lot of people here who believe that poor people deserve their lot and should wallow in it. In my opinion society needs to use tax dollars to ensure a basic standard of living for all citizens. This idea (the welfare state) is deeply unpopular in contemporary…

The first half of your comment is idiotic and unworthy of HN. Find me someone who has actually stated that the poor deserve their lot. The Tea Party's primary gripe is that the government is picking winners and losers and the best way to get rich is now to lobby rather than to work hard. Even Reagan, the godlike idol of the small-government right, never thought the poor deserved it, he just thought that the best way to help them was to grow the economy as a whole (through policies that ultimately sucked).

The second half I also disagree with, but it's just a failure of logic and a disconnect of values, not flat out idiotic.

Re: Share of Income Gains by Quintile - Great Depression til Now

#122

Post by jholman »

pg wrote: post #36

Technological progress should cause increasing economic inequality, because the bottom end of the scale is firmly anchored at zero (someone taking a vacation), while technology gives the top end ever more powerful levers. So the interesting question is not why economic inequality is increasing, but why for a few decades in the mid twentieth century the trend was reversed. There are probably several factors at work he…

It saddens me that you introduce the straw man of the zeroth percentile, "firmly anchored at zero". It wasn't in the linked article, which only talked about quintiles, none of which are anchored at zero. And with respect to these statistics, clearly someone taking an unpaid vacation is not in the class "production and non-supervisory workers".

I have little problem with inequality. I do think there are some downsides, like the threat of violent revolution, but my point is that I'm not making some hobgoblin of wealth or income inequality. I don't really care whether 20% of U.S. wealth is controlled by the top 1% or the top 10%.

But it does strike me as a little troubling to see -4% gains for the bottom percentile over a period of 80% increased productivity (taking those stats at face value).

Re: Share of Income Gains by Quintile - Great Depression til Now

#123

Post by cperciva »

AlexC04 wrote: post #6

I don't know if I saw this on HackerNews or Reddit, but this one has a graph that goes well with the link in the parent post. Left behind in America: Who's to blame for the wealth divide? http://www.cbsnews.com/8301-503544_162-20102289-503544.html

The 'what people want' on that page shows that people are confused between wealth and income; nothing more. The simple fact of saving money for retirement creates more wealth concentration than that.

Re: Share of Income Gains by Quintile - Great Depression til Now

#124

Post by nhaehnle »

pg wrote: post #36

Technological progress should cause increasing economic inequality, because the bottom end of the scale is firmly anchored at zero (someone taking a vacation), while technology gives the top end ever more powerful levers. So the interesting question is not why economic inequality is increasing, but why for a few decades in the mid twentieth century the trend was reversed. There are probably several factors at work he…

As a US citizen you may not be aware of this, but the time between 1970 and 1980 was also when full employment was effectively abandoned as a policy goal in most Western countries.

In countries like France, Germany and Australia, unemployment was constantly below 4% for many decades after WWII, even below 1% in many cases. What's more, rises in the unemployment rate due to recessions were quickly and successfully fought using fiscal policy. In fact, such policies where quite consciously implemented after WWII even in countries that did not see large scale destruction, because the consensus was that returning soldiers needed to be given employment to avoid social problems.

Unfortunately, low unemployment meant better bargaining positions for workers, and so getting rid of this "problem" was quite openly discussed for some time (this was documented in a PhD thesis, http://bilbo.economicoutlook.net/blog/?p=11941). Economic troubles in the 1970s helped convince people that something needed to change and made it easier for attitudes towards economic policy to be changed, i.e. the shock doctrine. Thatcher in the UK was probably the most memorable driver of this change with her very open fight against unions.

It seems to me that a nice test of which of the two explanations fits the bill better is to compare the development to countries in which those measures of inequality, unemployment, and decoupling of real wage from productivity increases did not change at the same time as in the US.

Was it because the large corporation developed differently, or was it because those political shifts happened at a different time?

Re: Share of Income Gains by Quintile - Great Depression til Now

#125

Post by startupcomment »

RyanMcGreal wrote: post #73
pg wrote: post #36

Technological progress should cause increasing economic inequality, because the bottom end of the scale is firmly anchored at zero (someone taking a vacation), while technology gives the top end ever more powerful levers. So the interesting question is not why economic inequality is increasing, but why for a few decades in the mid twentieth century the trend was reversed. There are probably several factors at work he…

The more interesting question for me is: why are the dividends of increasing productivity no longer being shared with employees?

Just conjecture: senior management in established corporations have stacked the payscales in their favor. I know senior managers in established corporations who have received ridiculously large bonuses and stock option grants for doing nothing other than what should ordinarily be expected of them for the benefit of the corporation, and their level of risk is so small relative to their reward. In some cases, the benefit to the corporation is of questionable value, yet excessively lavish compensation is granted. I suspect that some of these senior managers are greedier and more short-term oriented (I'll milk this baby as much as I can for my personal gain here and now) than their pre-yuppie predecessors. Maybe there was a greater sense of self-restraint and balance in depression and WWII-reared generations (or maybe just lower expectations and objectives)?

Re: Share of Income Gains by Quintile - Great Depression til Now

#126

Post by jgesture »

forensic wrote: post #100
learc83 wrote: post #90

Earlier quoted context omitted.

Just because I might disagree with your methods of equalizing income, doesn't mean I "believe poor people deserve their lot and should wallow in it." You've turned a political disagreement about the methods to accomplish some desirable goal do so into a moral argument. You've decided that if I think there is a better way to elevate the poor than your way, I must want them to stay poor and thus must be evil. Why do yo…

Politics and morality are intimately related. There are SOME free market ideologues who believe that unrestrained corporations will enrich the poor, however I believe they are in the minority. You may be one of them. The majority of libertarians believe that individual property rights are sacrosanct and that it is wrong to forcibly redistribute wealth to prevent poverty, hunger, suffering. This is the argument of the…

It is good to take care not to create a false dilemma.

Of course the government is not the only actor that can, or should, address moral problems.

As I understand libertarianism, they are not at all against solving issues of poverty or hunger. But they do believe that the government is not necessarily the best solution to every problem. Of course that statement should be obvious, as government tends to be less efficient and more watered down than other organizations. So the question is in the details.

Re: Share of Income Gains by Quintile - Great Depression til Now

#127

Post by cjy »

portman wrote: post #47
pg wrote: post #36

Technological progress should cause increasing economic inequality, because the bottom end of the scale is firmly anchored at zero (someone taking a vacation), while technology gives the top end ever more powerful levers. So the interesting question is not why economic inequality is increasing, but why for a few decades in the mid twentieth century the trend was reversed. There are probably several factors at work he…

"Technological progress should cause increasing economic inequality " Does that mean you are unfazed by growing inequality, and view it as an unavoidable byproduct of progress? Or do you believe economic inequality is a negative externality (like pollution) that needs to be remedied?

Inequality can be a bad thing without being an externality. Externality has a precise economic meaning. Pollution is a negative externality because the byproduct of my voluntary transaction to buy gas and burn it in my car is that you have to breathe the exhaust. You are an external third party that is hurt without compensation. What external third party is being harmed when one person produces a lot and gets rich and another person doesn't?

One economic argument against inequality is that it results in people spending a lot of resources on guard labor. If I live in neighborhood with lots of inequality I have to spend lots of resources keeping the poor people from stealing my things. Therefore, reducing inequality via income distribution can create a public good in the form of less crime (and less resources wasted on protecting property). Thus, you can argue that redistributing income makes sense on the same grounds that having public police makes sense. That is an efficiency argument for reducing inequality.

Re: Share of Income Gains by Quintile - Great Depression til Now

#128

Post by forensic »

kevinpet wrote: post #121
forensic wrote: post #80

Earlier quoted context omitted.

>I don't think there is much debate that societies should try to mitigate that. You haven't been reading HN then, and you haven't met the Tea Party. There are a lot of people here who believe that poor people deserve their lot and should wallow in it. In my opinion society needs to use tax dollars to ensure a basic standard of living for all citizens. This idea (the welfare state) is deeply unpopular in contemporary…

The first half of your comment is idiotic and unworthy of HN. Find me someone who has actually stated that the poor deserve their lot. The Tea Party's primary gripe is that the government is picking winners and losers and the best way to get rich is now to lobby rather than to work hard. Even Reagan, the godlike idol of the small-government right, never thought the poor deserved it, he just thought that the best way…

The Tea Party has millions of people, so there may be a few different views in there.

However my impression was that the bulk of the Tea Party harbors a lot of hate for welfare recipients and social services in general.

They believe the poor should pull themselves up via bootstraps and should not receive direct help from the government.

Am I wrong about this?

Re: Share of Income Gains by Quintile - Great Depression til Now

#129

Post by Steko »

pg wrote: post #36

Technological progress should cause increasing economic inequality, because the bottom end of the scale is firmly anchored at zero (someone taking a vacation), while technology gives the top end ever more powerful levers. So the interesting question is not why economic inequality is increasing, but why for a few decades in the mid twentieth century the trend was reversed. There are probably several factors at work he…

"So the interesting question is not why economic inequality is increasing, but why for a few decades in the mid twentieth century the trend was reversed."

Or maybe why even today, other countries have reversed that tendency.

And the answer to that question is pretty simple, progressive taxation.

Re: Share of Income Gains by Quintile - Great Depression til Now

#130

Post by william42 »

anamax wrote: post #74
portman wrote: post #47

Earlier quoted context omitted.

"Technological progress should cause increasing economic inequality " Does that mean you are unfazed by growing inequality, and view it as an unavoidable byproduct of progress? Or do you believe economic inequality is a negative externality (like pollution) that needs to be remedied?

> Or do you believe economic inequality is a negative externality (like pollution) that needs to be remedied? I'm pretty sure that you're not measuring inequality in a reasonable fashion. Larry Ellison has a lot more resources than I do, but the net worth ratio is far greater than the opportunities ratio. Yes, he could afford his own space program, but we both can afford to go diving. He can't drive his (much more ex…

The gap between what you can do and what Larry Ellison can do isn't as relevant as the gap between what you and Larry Ellison can do and what your average single mom living in welfare in Durham can do.
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