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

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

#161

Post by jgesture » Fri, Sep 09, 2011, 11:38 PM UTC

polshaw wrote: post #154

csomar wrote: post #99

Earlier quoted context omitted.

You don't seem to be serious, but I'm making this reply for other people in HN. I might be wrong, so judge and reply. Large corporations decrease inequality? Yes. All (most) software developers in a large corporation are paid the same wage. Well, there are persons that can make millions not working in a company (ie. Indie game developer, iphone app developer...). But when you work for a large corporation, you might t…

Income equality has a broader meaning than just people doing the same job having similar wages. It most definitely includes the difference between the boss and the workers.

But, if, for each class of worker, there is income equalization, you will find that large companies tend to have an equalizing affect rather than an unequalizing affect. In this example, it's not interesting that bosses get paid more than workers, it is interesting that all bosses tend to get paid the same amount.

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

#162

Post by solutionyogi » Fri, Sep 09, 2011, 11:41 PM UTC

shithead wrote: post #103

""" Another thing to consider in terms of whether the rich “deserve” their money, or whether those rewards belong to the society that bestows them is the consolidation of labor. Consider Oprah Winfrey. She s probably only marginally better than the next best candidate for talk show queen. Yet she has amassed 100′s of millions while the next bes candidate for her job has no such job at alll. So we have two people, one…

Wow. Obviously, if you are not Oprah, you would want to think that she is only 5% better than the next best candidate. I am sure others disagree. What if you apply this to other fields e.g. Steve Jobs is only 5% better than next CEO? Does it make sense? I think this is a nonsense approach to decide how to tax someone.

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

#163

Post by babblefrog » Fri, Sep 09, 2011, 11:53 PM UTC

danmaz74 wrote: post #77

pg wrote: post #46

Earlier quoted context omitted.

Less than people think. Back when taxes were so high, the rich were really good at tax avoidance. So the rate doesn't tell you the whole story. As one of the people whose opinion about working for a large company changed during the 1970s, I know I didn't consciously think about tax rates. (It's possible they affected me unconsciously though, via the examples of people who'd cleared more after tax due to lower rates.)

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 possibly make things worse, too ;-)

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

#164

Post by nfriedly » Fri, Sep 09, 2011, 11:54 PM UTC

learc83 wrote: post #65

hans00 wrote: post #49

Earlier quoted context omitted.

Man, what fantasy world do you live in? Large corporations decrease inequality? [citation needed] Ambitious people started to lose interest? I can't even dignify that with a [citation needed]. Ambitious people have what to do with anything on a national scale? Ambitious people somehow caused, or were party to, the decimation of the middle class, which somehow never once gets mentioned by the actual economists and pol…

Since you're unaware he's also "pg" who created ycombinator. Edit: I'd like to point out that this wasn't some kind of appeal to authority to support pg's arguments, so kindly explain the down mods.

I wasn't one of the downvoters, but my guess is that the logic is something along the lines of "don't feed the trolls."

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

#165

Post by babblefrog » Sat, Sep 10, 2011, 12:00 AM UTC

lukesandberg wrote: post #139

michaelochurch wrote: post #116

Short story of American inequality: The economic growth since 1978 was, for the most part, produced by the efforts of 10% of the population. It's true. I'm a leftist and I must admit that. That's not to say that the other 90% aren't working hard and don't deserve to share in the gains-- they obviously do-- but those gains are coming from a small percentage of people. Many, many people work hard and deserve to have go…

>The economic growth since 1978 was, for the most part, produced by the efforts of 10% of the population I don't see how that could be true. productivity gains have been experienced across all levels of the income scale so surely that growth is attributable to more than just the top 10%. Just because that's where the most income growth has been doesn't mean that that is where the growth has been produced, its just wh…

I suspect that supply and demand have a lot to do with it. Capital and innovation is scarcer than labor, especially unskilled or lower skilled labor.

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

#166

Post by Steko » Sat, Sep 10, 2011, 12:02 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…

"I think the key to the answer is the large corporation. The period of flattening coincides with the heyday of the large corporation.

Large corporations tend to decrease economic inequality. "

I think this is off the mark. This time period corresponds directly to the rise of the financial industry which is mostly independent of firm size.

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

#167

Post by _delirium » Sat, Sep 10, 2011, 12:03 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…

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 average family health-insurance policy costs $13k/yr, and even a bare-bones policy costs around $5k.

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

#168

Post by vacri » Sat, Sep 10, 2011, 12:06 AM UTC

nicholasjbs wrote: post #71

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?

pg's thoughts on inequality: http://paulgraham.com/inequality.html

From that link, it's clear that pg likes inequality because otherwise it's 'taking money from the rich and giving it to the poor, which adversely affects VC'

But the main article talks about 30 years where money has been taken from the poor and given to the rich - that is, everyone has not increased together, and the poorest have lost ground. This article doesn't really answer that.

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

#169

Post by Hyena » Sat, Sep 10, 2011, 12:06 AM UTC

First, it doesn't control for increasing health costs. Employer-provided health plans have seen large amounts of cost growth and this depresses wages, for which they substitute. This is better than the raw story.

Second, much of the top quintile gains have come out of the financial sector. You can see this in evidence by looking at the huge volatility in income through boom/bust cycles. This is bad.

Third, we're in a lopsided labor period where lots of low-end labor is available but labor capital production is actually quite low. This puts upward pressure on the price of higher value labor capital but downward pressure on raw labor capital. This won't continue as it's a byproduct of peculiar historic issues (namely communism, etc.).

Fourth, the information technology revolution has so far failed, I suspect for generational reasons. We've automated lots of low-end clerical jobs at large firms but that's pretty much where IT stalled.

In technology companies themselves, this doesn't appear to be an issue and technology seems to increase employment. It also tends to encourage additional technical fluency, which is then rewarded. But outside of technology itself, this pattern doesn't seem to hold. I suspect culture play a role here.

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

#170

Post by Hyena » Sat, Sep 10, 2011, 12:08 AM UTC

scarmig wrote: post #51

The first graph is the most interesting. Productivity has increased substantially while wages have remained relatively stagnant. More of the surplus value of labor has been accumulating to capital. This means that people who get their income primarily from labor have lost a great deal of power vis a vis those whose income comes disproportionately from ownership of capital. Questions and some guesses: 1) Why is this?…

The main problem statistically is how we account income. Generally the employer-paid health insurance and other benefits are not included, even though these can often vastly increase total compensation. Scott Winship did a good job following this but tends to shade into triumphalism.