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Economists Are Rethinking the Numbers on Inequality

economist.com

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Re: Economists Are Rethinking the Numbers on Inequality

#281

Post by Merrill »

kakwa_ wrote: post #216
Merrill wrote: post #160

Earlier quoted context omitted.

>that mid-20th-century laws that put brakes on this feedback loop have been removed; I don't believe that the purpose of mid-20th-century laws was to promote equality. Things were more equal then because: a) World Wars I & II destroyed huge amounts of capital, and b) fighting wars requires lots of money which requires raising taxes on people who can pay, since borrowing cannot fully fund general wars. Economics are c…

It's a bit more than cycles. The huge reduction in the XXth century was due to many factors. You start in the XIXth century with the development of Anarchism, which, to oversimplify, spawned various movements such as democratic socialism or communism on the political side, but also syndicalism (anarcho-syndicalism). The appearance of these forces started to change/influence things even before WWI with a few laws regu…

Between the Plague and WW I&II there was the Reformation and following religious wars until the Peace of Augsburg, The Thirty Years War, and the French Revolution/Napoleonic Wars. These were periods of major conflict that leveled European societies. Other wars were limited in geographic scope and/or in their objectives and means used.

Re: Economists Are Rethinking the Numbers on Inequality

#282

Post by cynusx »

beerandt wrote: post #268
BurningFrog wrote: post #124

Earlier quoted context omitted.

Housing is rising in value because of regulatory capture. It's illegal to build competing housing in most major cities. Money is power, and the powerful make the regulations. So maybe regulation is really the positive feedback circuit?

Besides zoning laws and building codes, dodd-frank and similar financial regulation has made speculative building of single family homes nearly impossible, if you are not 100% self-financing. Which itself is a capital feedback loop which requires a not insignificant minimum outlay to enter the market.

can you elaborate on this? I am not familiar with how dodd-frank and other regulations impact building

Re: Economists Are Rethinking the Numbers on Inequality

#283

Post by chipotle_coyote »

Domenic_S wrote: post #243
chipotle_coyote wrote: post #225

Earlier quoted context omitted.

I think "a tiny bit better" underestimates how big the gap is between "median income" and "1% income." The median individual income for the US in 2019, from data I can find (on "Don't Quit Your Day Job," which uses census data rather than Social Security data), is $40,100; the average income is $48,380. The threshold to enter the top 1% is $328,551. I live in one of the most expensive cities in the country (San Jose,…

GP is overstating a bit but not by too much. I have friends in non-coastal states and $50k is a kingly amount of money out there. As in, renting a nice family-sized house for $500/month. At san jose's going rate of roughly $4k/month for the same thing, that would be the equivalent of a $400k/yr salary.

> At san jose's going rate of roughly $4k/month for the same thing, that would be the equivalent of a $400k/yr salary.

No, it wouldn't -- conflating absolute dollars with percentages is a mistake in this kind of comparison, even though it's a very common one. You need to look at the amount of money you actually have left over after expenses. Let's throw in federal taxes based on 2019 rates for a better comparison.

Person A: $50,000 a year - $8200 in taxes - ($500/mo * 12) = $35.8K after housing

Person B: $400,000 - $127,000 in taxes - ($4000/mo * 12) = $225K after housing

Even if we assume everything else costs eight times as much for Person B as it does for Person A, they'll still have several times left over after paying those expenses than Person A had before expenses.

Re: Economists Are Rethinking the Numbers on Inequality

#284

Post by matchbok »

corporate_shi11 wrote: post #247
WhompingWindows wrote: post #65

Earlier quoted context omitted.

Education just isn't a priority for Americans, it's not about partisan anger and vitriol --both sides don't prioritize educations. Polls of both parties' voters show that education is not a top issue, but rather social concerns, the economy, guns, immigration, trade, climate change, these are all given as much if not more political oxygen than education.

The problem with education in America is not government and policy, but individuals, families and culture. Many school districts across the country have horrid graduation rates and median test scores. The amount of money you pour into these districts has very little impact on student outcomes. How different would wage growth and average wages look like if the people in these districts took school seriously? The numbe…

It's hard to take school seriously if you have to work 3 jobs to provide for your child.

Re: Economists Are Rethinking the Numbers on Inequality

#285

Post by beerandt »

Domenic_S wrote: post #259
harryh wrote: post #238

Earlier quoted context omitted.

Is one year of your consumption equivalent to one year of my consumption? Yes. That's why both houses cost the same.

That's a circular explanation, but maybe I'm reading it that way because we aren't aligned on what 'consumption' means. For a durable good like a house or a couch I think it would be something like expected service life / interval * over-or-underuse multiplier. The interval technique makes sense to me on goods that are used over time or taxed over time. You can pay for a house all at once, and if you were only paying…

I believe that in most jurisdictions, the "guts" of property tax millage formulas is based on a 10-year interval (or maybe more accurately, 1/10 of the assessed value). However, that's always seemed arbitrary to me, as: 1) it's never "paid-off" and 2) millage rates are set in conjunction with this known value.

So while it may not be a satisfying answer, in my experience, self-circular is just sort of the way it is.

Also, the consumed / depreciated value comparison doesn't sit right with me, since for business expenses (tax write-off purposes), it's based on zero value at end of life. Any previously depreciated value recovered at sale has to be (re)taxed; you only get to ultimately deduct true depreciated value, albeit (re-)payment is delayed to year of sale.

Regardless, real property (non-movable) is rarely disposed of for zero value, so "depreciated" value isn't a good estimate for "consumed " value.

Re: Economists Are Rethinking the Numbers on Inequality

#288

Post by xyzzyz »

TheOtherHobbes wrote: post #261
dangerlibrary wrote: post #233

Earlier quoted context omitted.

You are mixing up correlation and causation re: married couples.

Over the time period, married couples often had a single income. Now working class married couples are just as likely to have a total of two to six jobs between them, but their real median income is still lower than it was when only one person was working. There are no "nit picks" to debate. Refusing to acknowledge the destruction of financial stability for the working class and lower middle class in the US and certa…

> Now working class married couples are just as likely to have a total of two to six jobs between them, but their real median income is still lower than it was when only one person was working

This is very much false. Look at the data. Real median income of all households had risen by a relatively small amount, because there are many more households today with one adult than in the past. However, real median income of households with two adults had rose very substantially. Similarly, real median household income of households with one adult also rose substantially. The relative stagnation of real median household income is mostly an artifact of changes in the composition of the index.

Re: Economists Are Rethinking the Numbers on Inequality

#289

Post by Thorentis »

airstrike wrote: post #44

Measuring income inequality in the US without looking at outsized wage gains abroad feels remarkably inaccurate. I'll copy-paste my reply to another thread from earlier this year: > But, wages haven't improved in the last 40 years for the average person ...in the US. Growing inequality in the US is driven by the fact that capital gains domestically have improved dramatically alongside wage gains abroad , while wage h…

Neither have they improved in Australia. They have been largely stagnant for the past 5-10 years. Jobs have been evaporating in all sectors except for service sectors that, you guessed it, can't be automated. But most locals see those jobs as things you do in high-school/uni, or if you can't do anything else. Hence they are performed by very young people, or immigrants / those that have no choice. And so the vast majority of the workforce competes for the higher paying "white collar" jobs. This isn't so bad in IT right now, since there is still high demand. But I expect that to change soon as the barrier to entry is made increasingly lower.

Re: Economists Are Rethinking the Numbers on Inequality

#290

Post by dingo_bat »

cjjuice wrote: post #74

Why when we talk about inequality we never talk about the tide of economic progress that capitalism produces. If the rich get richer but the middle class has a better quality of life than what the rich had 200 years ago, is strict inequality still the only thing that matters?

Inequality has never been the thing that matters. And it doesn't change now. Any policies and discussions targeting to reduce inequality will create perverse incentives and lopsided, unjust outcomes at best.
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