Share of Income Gains by Quintile - Great Depression til Now • Hacker News Board

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

#191

Post by monopede » Sat, Sep 10, 2011, 1:05 AM UTC

jholman wrote: post #122

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…

There is an interesting book, "The Spirit Level: Why Equality is Better for Everyone" by Richard Wilkinson and Kate Pickett, that makes a very strong argument that in developed countries inequality is correlated pretty much every "bad" metric (health, crime, teenage pregnancy, etc.) of a society.

Now, of course, correlation does not mean causation and it's perhaps more interesting what the true underlying causes are. But if inequality is such a strong indicator, it is worth wondering whether inequality isn't a bad thing in itself.

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

#192

Post by marshray » Sat, Sep 10, 2011, 1:21 AM UTC

InclinedPlane wrote: post #187

_delirium wrote: post #167

Earlier quoted context omitted.

In what world can someone making $25k/yr (according to your graph of the 20th percentile) afford rent, cell phones, internet access, large screen tvs, dvrs, cars, refrigerators, dish and clothes washers, etc.? In most metropolitan areas just rent will eat up half of that, health insurance much of the rest, and a car all the rest. And don't even think about trying to buy a family with kids health insurance -- the aver…

Outside of a metropolitan area, it's easy (I've done it, and had plenty of money to spare). Inside of a metropolitan area it's a lot harder and probably requires roommates or living in the suburbs or finding a particularly cheap area to live.

... and you're willing to forfeit your position in the gene pool by not having any kids.

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

#193

Post by yummyfajitas » Sat, Sep 10, 2011, 1:22 AM UTC

nhaehnle wrote: post #138

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…

On some level, income inequality is intrinsically problematic even if you don't care about social issues at all, or don't think it's a zero sum game. Rich people have higher savings ratios than poor people. As a larger amount of income goes to those who have more than enough money than enough already, the average savings ratio increases. This is a drag on aggregate demand that hurts the economy. Supply side economist…

This is pretty much the situation we're in right now, where there is no shortage of capital, but rather a shortage of possibilities for profitable investments because consumers have become more careful with their spending.

This is simply not true - personal consumption is at an all time high. It is even higher now than it was before our recently ended recession.

http://research.stlouisfed.org/fred2/series/PCEC96

http://research.stlouisfed.org/fred2/series/PCEC

[Edit: added graph of real expenditures, didn't notice my first graph was nominal.]

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

#194

Post by marshray » Sat, Sep 10, 2011, 1:23 AM UTC

darrenkopp wrote: post #178

william42 wrote: post #144

Earlier quoted context omitted.

It's kind of hard to A/B test an economy.

We're pretty good at it now. A=Republicans, B=Democrats. We switch every couple of election cycles and see how it goes.

It's interesting how the low point on the graph is 1976, but they put the categorical divide at 1980.

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

#195

Post by msutherl » Sat, Sep 10, 2011, 1:31 AM UTC

learc83 wrote: post #90

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…

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…

The reason that the government should take care of the poor and the sick is not because it is the most efficient and moral way to do so. Indeed, given appropriate conditions, I concede that "the market" and the goodwill of "the people" would be capable of ensuring that their needs are met in a more efficient and, according to libertarian logic, more ethical manner.

The reason that the government should provide this welfare service, however, is that it results in an incredibly desirable situation where any citizen of the United States would know that, no matter what the state of the (semi-)unregulated economy, it is guaranteed that they will be taken care of.

Were welfare left to the emergent logic of the market, somebody who, say, depends on medication to fight a chronic condition or somebody who cannot for some reason hold a job reliably (like my pan-handler friend who can't get a job because of his face tattoo and rotting teeth) would not be able to count on being able to survive should there be a severe economic depression or a war.

To live in a society where somebody who depends on an external institution to them to keep them alive cannot absolutely depend on that regardless of the economic climate is, in my opinion, uncivilized, and for such a person, downright hellish.

If you could convince me that the market is more reliable over time than the US government, then by all means, I might consider the dismantling of the welfare state a viable option.

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

#196

Post by yummyfajitas » Sat, Sep 10, 2011, 1:35 AM UTC

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…

So many false dilemmas. Proposition (a) only demands a non-zero level of redistribution (call this X). One might believe (a), but also believe that our current level of redistribution is greater than X.

Assuming one does believe (a), and also believes that our current level of redistribution is lower than X, it still does not follow that we need to redistribute from the rich. We could also redistribute from politically connected insiders (e.g., teachers unions, the military, real estate speculators) to the poor.

Your dichotomy of helping the poor also excludes a third possibility:

(c) Some of the poor are deserving of assistance, and some are undeserving. It is morally right to redistribute to the deserving poor, and morally wrong to redistribute to the undeserving.

(I tend to favor policies which automatically make the deserving/undeserving distinction. E.g., eliminate welfare/unemployment and replace them with unpleasant, low skill government jobs that pay welfare-like wages. Poor people willing to work get the benefits and those unwilling to work do not.)

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

#197

Post by doki_pen » Sat, Sep 10, 2011, 1:37 AM UTC

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…

Maybe that is why, maybe it isn't. The problem is, when most of the population doesn't have disposable income, it makes it much harder to go out and make money in a productive way. Of course, there is always scamming. That works in any economy.

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

#198

Post by forensic » Sat, Sep 10, 2011, 1:40 AM UTC

william42 wrote: post #130

anamax wrote: post #74

Earlier quoted context omitted.

> 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.

This is exactly the point that HN seems to be oblivious toward.

HN people live in a bubble and seemingly have never met anyone who is in real poverty -- they think because in college they had to eat Ramen they were poor. They are clueless.

Real poverty is being illiterate, being malnourished in the womb, being raised in a crime-zone, growing up without dental care.

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

#199

Post by dogwelder » Sat, Sep 10, 2011, 1:43 AM UTC

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?

I think because, there's no reason to assume they would be - labor costs are still (mostly) driven by supply and demand. If gizmos and computers and internets increase a worker's productivity, the gains go to the business owners, while the worker still gets paid at whatever the labor market decides. (During the 60's era wage earners had some natural advantages: booming demand for labor, restricted supply since single-income households were the norm, less ability to send manufacturing or service jobs offshore.)

Higher top rates in the 60's era also meant some of that productivity gain in wealth went back to the average worker. The whole economy gained wealth from public investment in infrastructure, funding for education, healthcare research and so on. But around the late 70's, the tide started to turn towards lower taxes at the top. A few more trends got rolling at the same time: technology that made big productivity gains possible; entire manufacturing industries being sent overseas; the financial industry getting really interested in ways to move existing wealth from where it was, to their own pockets.

That makes it sound entirely bad, which it wasn't... those trends also led to a slew of innovative new companies, disruptions to established business practices, stock options as a way to share in the risk and reward, and lots of cool gadgets. It's more interesting now than in 1960. But there are a lot of workers getting the shaft, and don't necessarily need to be.

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

#200

Post by yummyfajitas » Sat, Sep 10, 2011, 1:56 AM UTC

babblefrog wrote: post #163

danmaz74 wrote: post #77

Earlier quoted context omitted.

It is impossible not to notice that this trend started when Reagan took power and neo-liberalism was adopted as the reference in economic policy. The theory: More wealth produced, better for everybody. The practice: More wealth produced, better only for the top earners.

To the contrary, Reagan was inaugurated in January 1981. The trend had already changed before that. There were major changes to our economy in the late 60s and 70s, including the "great society" programs of Johnson and Nixon, and the stagflation of the Nixon and Carter (and into the Reagan) years. I'd look into those things for a root cause, if I were looking. Which is not to say that Reagan's policies didn't possibl…

Well, Reagan does get some of the blame. He made changes to tax policy in 1986 which caused companies to replace non-wage compensation (e.g., company cars) with taxable income.

Since taxable income is included in inequality statistics, but company cars are excluded, this caused a big spike in inequality in 1986.

http://www.scottwinship.com/1/post/2011/03/what-would-it-mea...