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

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

#241

Post by kb101 » Sat, Sep 10, 2011, 6:00 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…

"Technological progress should cause increasing economic inequality" is a bold statement. Presumably, increasing productivity for everyone is one of the signal benefits of technological progress. If we accept that as true, then why can we not say that technological progress is agnostic as far as economic inequality is concerned?

Many of the arguments about economic inequality in this thread seem to be predicated on the notion that we are talking about comparing salaries or car brands. Don't be jealous of your neighbor for having a higher salary or a better car, and why should he have to give up more of his money via taxes just to enhance your lifestyle... seems to be the gist.

But income inequality is rooted in the question not of does your neighbor have more goodies, but how do we divide the spoils of our shared enterprise. If you and your neighbor are partners in the same firm, and you are working your ass off so that he can ride around in a Benz, things are a little different.

It is interesting to observe that when this argument is couched in terms immediately relevant to most of the posters here, the response on HN is quite different. I.e. "I have a great business idea, I just need someone to code it for 1% of the business equity". There are markedly fewer posters defending this notion, or condemning the hacker who wants a bigger share as exhibiting some kind of perverse socialist urge toward income redistribution, than there are posters in this thread defending the same notion expanded to society as a whole.

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

#242

Post by nandemo » Sat, Sep 10, 2011, 6:01 AM UTC

yummyfajitas wrote: post #193

nhaehnle wrote: post #138

Earlier quoted context omitted.

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…

After seeing your comment, I was reminded once again of the futility of discussing economics and politics on internet forums, and deleted my comment elsewhere on the thread.

Your parent comment claims that "consumers are spending less", then you provide data that refutes that (and I remember you've done that several times on other threads too). Does that further the discussion? No, nobody changes their mind. They just cherry pick other data that confirm their views, and question the neutrality of any data that doesn't.

I think most time people change their views on politics, it's by reading books, having life experience and thinking. Rarely by being convinced by someone on a forum.

Compare to discussions on other topics: in every HN thread about Javascript or systems security or nutrition or music theory, there's bound to be quite a few readers who actually learn something or even change their minds about some preconceived idea they had.

(now I'll stop rambling cause there's an earthquake here)

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

#243

Post by Roboprog » Sat, Sep 10, 2011, 6:09 AM UTC

nhaehnle wrote: post #124

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 fou…

Was it only 10 or 12 years ago that Alan Greenspan was worried that the national debt might actually be paid off, which worried him? I bet he sleeps soundly now.

God help me if any of my children want to become economists.

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

#244

Post by buff-a » Sat, Sep 10, 2011, 6:30 AM UTC

InclinedPlane wrote: post #110

buff-a wrote: post #102

Earlier quoted context omitted.

I don't believe the problem is economic inequality. It does not matter if the rich get richer. What matters is that the poor are getting poorer in absolute terms: how much they have to work in order to make rent, buy food, enjoy a vacation. I do not believe that the poor would even notice how many private jets the rich have if they had food on the table. A staggering number do not.

The poor are not getting poorer. In absolute terms real income for the bottom quintile has increased. In addition, technological progress has drastically reduced the cost of many luxury items and put them in reach of the poor. Today the "poor" in America not only have clean drinking water and electricity they also have cell phones, internet access, large screen tvs, dvrs, cars, refrigerators, dish and clothes washers…

Sure it sucks to be poor, believe me I know

No, you really don't know. Because being poor for you was temporary. I'm technically "poor" right now, but having a wonderful time because to make that amount of money I only have to work a few hours per week. Whereas some families at my daughters' school have both parents working two jobs to make less than I do. I've visited their home and no dishwasher, no clothes washers. They aren't working on a fucking startup.

let's not kid ourselves into thinking that the developed world is devolving into some dickensian nightmare when nothing of the sort is happening

My brother works in poor communities in the UK. It is happening. If trotting out graphs showing a single metric is all you need to do to convince yourself and voters like you otherwise, then I predict its only going to get worse.

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

#245

Post by WalterBright » Sat, Sep 10, 2011, 6:36 AM UTC

firebones wrote: post #237

bermanoid wrote: post #206

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. The problem I see with growing income inequality is not the "inequality" part, it's the "growing" one. From a purely mathematical point of view, in any economic climate there's some level of income inequality that's going to be eco…

Robert Reich had a piece on NPR's Marketplace the other night [1] that seemed to contribute to this idea: the notion that while some were accepting 9% (rather than 6%) as the "new normal" in terms of unemployment rate, this was a calamitous development. If you imagine a correlation between unemployment and economic inequality, then at one end of the spectrum, high unemployment and economic inequality leads to anarchy…

>Henry Ford allegedly paid well and understood that he needed to create a market for what he made,

Ford paid well because that was the only way he could attract workers to do the relatively boring assembly line work.

The idea of paying people to buy your products is simply not a viable business plan. Ford created the market by making the cars cheap so ordinary folks could afford them.

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

#246

Post by specialist » Sat, Sep 10, 2011, 6:45 AM UTC

pg wrote: post #72

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?

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…

When money is considered free speech, gross inequity is the same as disenfranchisement of all but the richest.

Another word for gross inequity is plutocracy.

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

#247

Post by mckoss » Sat, Sep 10, 2011, 6:48 AM UTC

If you can invest capital to increase productivity, demand for labor goes down, and wages will be kept down.

The only way to increase wages is then to proportionately increase demand for goods and services so that, despite the productivity gains, there is an increasing demand for labor.

We are also seeing automation (capital) and (cheap) overseas labor substituted for domestic labor beginning in the 80s. Consumer demand did not keep pace, so wages stagnated.

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

#248

Post by pyre » Sat, Sep 10, 2011, 6:51 AM UTC

learc83 wrote: post #227

jberryman wrote: post #221

Earlier quoted context omitted.

> Why do you feel you need to frame the argument as such? While it might not be your view, the notion that the poor "deserve their lot" and even that their being poor is the Will of God (evangelical prosperity theology) is literally a mainstream conservative position. If this doesn't ring a bell then you haven't actually been paying attention.

Myself, I'm libertarian, but I grew up in a very conservative household, surrounded by conservatives at church, and I was a conservative until my early twenties. I have never met a conservative who believed that the poor "deserve their lot." And I can't think of one single conservative I know who wouldn't love to see the elimination of poverty. They just disagree with the liberal method. If this were really the case…

How many of those conservative churches accept government money to run their soup kitchens?

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

#249

Post by buff-a » Sat, Sep 10, 2011, 6:53 AM UTC

InclinedPlane wrote: post #110

buff-a wrote: post #102

Earlier quoted context omitted.

I don't believe the problem is economic inequality. It does not matter if the rich get richer. What matters is that the poor are getting poorer in absolute terms: how much they have to work in order to make rent, buy food, enjoy a vacation. I do not believe that the poor would even notice how many private jets the rich have if they had food on the table. A staggering number do not.

The poor are not getting poorer. In absolute terms real income for the bottom quintile has increased. In addition, technological progress has drastically reduced the cost of many luxury items and put them in reach of the poor. Today the "poor" in America not only have clean drinking water and electricity they also have cell phones, internet access, large screen tvs, dvrs, cars, refrigerators, dish and clothes washers…

On the face of it, all thing being equal, your graph supports your point. However, all things are not equal.

Your graph shows no growth in family income between 1970 and 2007.

But in 1970, Dad worked a shift and maybe Mom, while in 2007, to make the same money, Dad works two jobs and so does Mom.

That was rather the whole point of the original article, but you seem to have missed it. People may have the same amount of money, but a) they work every waking hour of the day and b) they have other costs that offset the income, such as health care. But they could have state-paid butlers washing their clothes and cooking their meals and it wouldn't offset the lower quality of life that comes from working multiple jobs, never seeing their kids, and being homeless the moment they get sick.

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

#250

Post by danmaz74 » Sat, Sep 10, 2011, 6:57 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…

To the contrary of the contrary - if you look at the chart, you'll see that in the late seventies and earliest eighties there were stops to the growth of wages, but they coincided with stops to the growth of productivity. It is well after Reagan took office that the two graphs start diverging - the productivity rises steadily, BUT wages don't.

As to the economic woes of the seventies, how much did they depend on policy, and how much did they depend on the oil crises? Anyway, I don't argue that everything was perfect before Reagan. I just argue that wages stopped being tied to productivity after him.