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Economic Inequality: It’s Far Worse Than You Think

scientificamerican.com

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Re: Economic Inequality: It’s Far Worse Than You Think

#11

Post by fullwedgewhale »

The point of the article is that the meritocratic system in this country is broken. In part this is because we have systematically transferred wealth out of the bottom to the top. For example, focusing on tax cuts that benefit high income individuals while cutting support for public colleges. These two things are usually done at different times with tax cuts usually to stimulate the economy and spending cuts coming to reign in budget imbalances. The result is that you could work your way through college in the 1960's by working about 20 hours a week. Now you'd have to work 40+ hours a week to pay tuition at a public university. The difference income throughout someone's working life between a college degree and no college degree is about 1,000,000 dollars. So the middle and lower middle income people don't see the benefits of tax cuts but they bear the burden of college tuition increases. And their long term earning potential suffers. And the country as a whole suffers because we have a less well educated work force.

You can repeat this pattern with a whole host of other programs and issues. For example, the minimum wage is still behind where it needs to be if it were adjusted for inflation. We're becoming a casino culture where people keep playing the game because they believe they're going to be the ones that turn out okay. For the most part, your ability to leave your social class is pretty close to zero, with the rich staying rich because their wealth can insulate them against bad decisions. The only real mobility for most people has been down.

Re: Economic Inequality: It’s Far Worse Than You Think

#12

Post by kjjw »

brador wrote: post #7
ryandrake wrote: post #2

And, it's only going to get worse while [1] 39% of Americans either believe they are already among the top 1% or believe that they one day will be. If your mentality is one of "Don't tax the top because that's me (or will be)", you're going to constantly vote against your own economic self-interest, and continue to support policies that help the real rich get ultra-rich. 1. http://www.nytimes.com/2003/01/12/opinion/t…

You honestly believe that people think "Don't tax the top because that's me (or will be)"? I suggest people believe their jobs and technological innovations we all enjoy are on the line if the rich are taxed more. If that is true or not is a separate conversation, but I don't think it's 39% of Americans think they will reach the 1%. That's absurd and the kind of thing you hear in mass media sound bites.

I'm quite sure it is completely true. In aggregate it is an absurd view for so many people to hold, but that doesn't mean it isn't held.

Look at where we are! Hacker News - 10,000s of people talking around start ups! Pretty much none of us will "make it." Yet here we are.

Re: Economic Inequality: It’s Far Worse Than You Think

#13

Post by Retric »

blfr wrote: post #3
ryandrake wrote: post #2

And, it's only going to get worse while [1] 39% of Americans either believe they are already among the top 1% or believe that they one day will be. If your mentality is one of "Don't tax the top because that's me (or will be)", you're going to constantly vote against your own economic self-interest, and continue to support policies that help the real rich get ultra-rich. 1. http://www.nytimes.com/2003/01/12/opinion/t…

39% of Americans either believe they are already among the top 1% or believe that they one day will be And how many people will actually be in the top 1% of earners at least once? EDIT: 12% http://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-t... What’s more, 39 percent of Americans will spend a year in the top 5 percent of the income distribution Not that far off.

Lots of things can temporarily boost your income by consolidating several years’ income into one big payment. Sell a flower shop you built up over 40 years for 150k and you are clearly not doing that well. Gamboling can be a net loss over someone’s lifetime and give them one very good year. Even just swapping jobs and seeing getting a few months of saved vacation in one big chunk.

The point is for the 88% of Americans never see the top 1% even after their biggest windfall that's a vast gap. And nothing says 1% is defined by their annual tax returns lifetime earnings adjusted for age are a much better link to someones finances than what they made last year.

PS: Sure, in theory Bill Gates was not in the top 1% while at Harvard, but his nominal income had little to do with his status. Don't forget his Mother was friends with the CEO of IBM that's serious connections.

Re: Economic Inequality: It’s Far Worse Than You Think

#14

Post by ghouse »

dandare wrote: post #4

The fact that someone is rich does not mean he took anything from you, no matter how poor you are. Statements like "If poor people knew how rich rich people are, there would be riots in the streets" are not only stupid but also dangerous.

Well, but it also does not mean that he didn't take anything from me.

Generally, the US tax code is designed in such a way that capital begets capital. Put differently, if you make money passively from the money you already have, you pay a lower tax rate then if you haul brick on your back, or teach children.

Is this taking? No, not directly, but indirectly, sure.

Re: Economic Inequality: It’s Far Worse Than You Think

#15

Post by spuz »

Is it just me, or does the article contradict its own conclusion?

> They asked about 55,000 people from 40 countries to estimate how much corporate CEOs and unskilled workers earned ... the patterns were the same for all subgroups, regardless of age, education, political affiliation, or opinion on inequality and pay

> One likely reason for this is identified by a third study, ... that suggests that our indifference lies in a distinctly American cultural optimism

If 55,000 people from 40 countries make the same poor estimate of the reality of inequality then surely the affect of American cultural optimism is insignificant?

Re: Economic Inequality: It’s Far Worse Than You Think

#17

Post by johnchristopher »

kokey wrote: post #5

I always feel a number of important metrics are left out, either by accident or on purpose, when people talk about inequality. Most importantly when it comes to wealth itself, by most measures there is a very, very long tail of people with no wealth. 'No wealth' ranges from the most poor, to those living from paycheck to paycheck all the way to those who have as much debt as their assets. Many of these people are fin…

> Most importantly when it comes to wealth itself, by most measures there is a very, very long tail of people with no wealth. 'No wealth' ranges from the most poor, to those living from paycheck to paycheck all the way to those who have as much debt as their assets. Many of these people are fine because, for example, their earnings potential over the next 40 years is good. They are wealthy in things like skills, social connections, etc. and they are certainly not comparable to someone with few skills, bad health and no money.

No, they won't get rich later.

Re: Economic Inequality: It’s Far Worse Than You Think

#18

Post by netrus »

blfr wrote: post #3
ryandrake wrote: post #2

And, it's only going to get worse while [1] 39% of Americans either believe they are already among the top 1% or believe that they one day will be. If your mentality is one of "Don't tax the top because that's me (or will be)", you're going to constantly vote against your own economic self-interest, and continue to support policies that help the real rich get ultra-rich. 1. http://www.nytimes.com/2003/01/12/opinion/t…

39% of Americans either believe they are already among the top 1% or believe that they one day will be And how many people will actually be in the top 1% of earners at least once? EDIT: 12% http://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-t... What’s more, 39 percent of Americans will spend a year in the top 5 percent of the income distribution Not that far off.

The only way I can explain myself these numbers is heritage: Many people will at some point in their life have a heritage above typical yearly salaries. That information doesn't help much. We should find a mid-way between income, wealth and earning potential. Maybe "currently-expected-lifetime-earnings"?

Re: Economic Inequality: It’s Far Worse Than You Think

#19

Post by anon1385 »

dandare wrote: post #4

The fact that someone is rich does not mean he took anything from you, no matter how poor you are. Statements like "If poor people knew how rich rich people are, there would be riots in the streets" are not only stupid but also dangerous.

>The fact that someone is rich does not mean he took anything from you

Of course it does. That's the definition of private property - if they claim to own it then you can't freely use it anymore. The creation of private property involves taking land that nobody owned and anybody could use, and using force to prevent anybody except the owner using it.

Re: Economic Inequality: It’s Far Worse Than You Think

#20

Post by kjjw »

dandare wrote: post #4

The fact that someone is rich does not mean he took anything from you, no matter how poor you are. Statements like "If poor people knew how rich rich people are, there would be riots in the streets" are not only stupid but also dangerous.

The fact that someone is rich does not mean they took anything from 'you'. But the fact that there is such a disparity between their income and your income means they claim a much larger part of the economic output of the planet, and a much larger part of any increase in that output.
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