Separate but unequal: Charts show growing rich-poor gap

[yo mama]

Do you see a parallel between the growth in size and power of government and the size of this gap? Do you ever ask yourself if that's what's causing the problem? Maybe only the people with money have enough brains/lawyers/influence to really succeed to the degree that the top tier does, and that's why the gap keeps widening.

 

Let's regulate some more milk spills.

The reasons for the widening gap are multi-faceted. But anyone who thinks the issue isn't worth addressing isn't paying attention to what's going on in Egypt, Tunisia, and Libya. If the gap becomes too wide people will burn things down and start over. There are ways to accomplish equitable arrangements without resorting to actual communism. The practical barrier is that those with power never give it up willingly. And far too many normal folk - who will never actually be rich - defend the status quo in the hopes that they might be one day.

[Yukon Cornelius]

The reasons for the widening gap are multi-faceted. But anyone who thinks the issue isn't worth addressing isn't paying attention to what's going on in Egypt, Tunisia, and Libya. If the gap becomes too wide people will burn things down and start over. There are ways to accomplish equitable arrangements without resorting to actual communism. The practical barrier is that those with power never give it up willingly. And far too many normal folk - who will never actually be rich - defend the status quo in the hopes that they might be one day.

its called history.... it has been repeated many times over last 6000 years since the planet was created.

[WaterMan]

The reasons for the widening gap are multi-faceted. But anyone who thinks the issue isn't worth addressing isn't paying attention to what's going on in Egypt, Tunisia, and Libya. If the gap becomes too wide people will burn things down and start over. There are ways to accomplish equitable arrangements without resorting to actual communism. The practical barrier is that those with power never give it up willingly. And far too many normal folk - who will never actually be rich - defend the status quo in the hopes that they might be one day.

 

That's why Obama is so quick to say these people are asking for democracy instead of asking for a fair paying job. He doesn't want Americans getting any ideas.

[Azazello1313]

The reasons for the widening gap are multi-faceted. But anyone who thinks the issue isn't worth addressing isn't paying attention to what's going on in Egypt, Tunisia, and Libya. If the gap becomes too wide people will burn things down and start over.

 

do you think it's the gap, per se, or the fact that the vast majority of folks have a poor quality of life and not much hope of it getting better? because there is a big difference, at least there is if you can see past the bogus notion of a zero sum game when it comes to economic resources. if "the rich" were all bill gates kazzilionaires, but the middle class and even the ostensible "poor" all have a standard of living that eclipses the global standard, would Egypt and Lybia have the same problems?

[yo mama]

do you think it's the gap, per se, or the fact that the vast majority of folks have a poor quality of life and not much hope of it getting better? because there is a big difference, at least there is if you can see past the bogus notion of a zero sum game when it comes to economic resources. if "the rich" were all bill gates kazzilionaires, but the middle class and even the ostensible "poor" all have a standard of living that eclipses the global standard, would Egypt and Lybia have the same problems?

Who knows. One thing is clear - the wider the gap the harder it is to get ahead. We live in a society where capital - not labor - is the most important component to generating income. If capital is concentrated in the hands of ever-fewer folks that only ensures the gap will continue to widen.

 

I agree that the zero sum game is a bogus notion. But an over-concentration of wealth and income in too few hands is antithetical to wide spread prosperity.

[tazinib1]

Let's regulate some more milk spills.

 

 

What?? Hold on just a minute buddy. Now its getting personal.

[Ursa Majoris]

Can I take a shot?

 

I would think it's sort of a cop-out to assume that anyone who is alarmed by the ever increasing gap between rich and poor wants everyone to end up with exactly as much as the next guy despite what he puts into it.

 

Is it not a rather common sign that things are about to get really ugly somewhere that the gap starts widening. Is that not one thing that basically every third world nation has in common?

 

So, I think that one could still value work-ethic and the rewards that come with it and still realize that everyone benefits from a society where the bottom rungs are not destitute and the top rungs are needlessly wealthy. That basically everyone's quality of life is improved if the gap is not so huge.

This.

 

Screaming "commie" at people who point out this increasing disparity is simply incorrect. The number of people is irrelevant too. The entire point is that:

 

 

• The overall national wealth is no longer being divided in the same proportions as it was pre-1980. Those pre-1980 proportions ensured that the gap would increase but not at the same rate as we are seeing today.

• Policies have been set that exacerbate the difference. Tax rates, whether marginal or actual, have massively benefited the wealthy over everyone else. There's nothing wrong with that in and of itself - you would expect higher paid people to benefit more in absolute dollars - but the disproportion is ridiculous.

 

 

Given the wealth gathered at the top and the near stagnation everywhere else, the idea that more tax cuts at the top end will generate growth through hiring lower down is laughable. The evidence of 30 years indicates that it will do no such thing. The only thing that is going to generate growth is demand. Demand can only be fueled by increased wealth, therefore it makes sense for everyone, especially the rich, to stop this gap widening. Detlef is spot on.

 

Many companies, including mine, know this and make sure the success we have is shared by every single employee, bar none. Even a company like Delta Airlines just gave every one of it's 80,000 employees a bonus. I fail to see why the USS America cannot run the same way.

[bushwacked]

its called history.... it has been repeated many times over last 6000 years since the planet was created.

 

Commie.

[wiegie]

this paper is useful for thinking about this question:

 

http://www.princeton.edu/~joses/wp/InequalityJME.pdf

[WaterMan]

Is that not one thing that basically every third world nation has in common?

 

America is becoming a 3rd world country just 50 years after going to the moon.

[SEC=UGA]

Hey, Waterman, your little quote sounds an awful lot like Union workers paying union dues.

[Ursa Majoris]

do you think it's the gap, per se, or the fact that the vast majority of folks have a poor quality of life and not much hope of it getting better? because there is a big difference, at least there is if you can see past the bogus notion of a zero sum game when it comes to economic resources. if "the rich" were all bill gates kazzilionaires, but the middle class and even the ostensible "poor" all have a standard of living that eclipses the global standard, would Egypt and Lybia have the same problems?

This is a very valid point and it's why the prospect of revolution here is, IMO, out of the question, certainly over this issue. People definitely have too much to lose. Nevertheless, the return to the proportionality of the Gilded Age flies in the face of the whole concept of the "American Dream". I saw an article recently that claimed Europe is now more of a meritocracy than we are, which would be surprising if true but one can certainly see that prospect coming into focus.

 

In any case, as previously posted, it surely makes sense to ensure as many boats rise with the economic tide as possible.

[TimC]

The people that really lived in the Third World would trade places with the poorest American in a second. America doesn't have one single clue what poor is. Poor isn't not having enough money to buy the newest XBox game, momos.

 

Of course, I don't have a clue what poor is either since I'm rich. Suck it poor people.

[SEC=UGA]

The people that really lived in the Third World would trade places with the poorest American in a second. America doesn't have one single clue what poor is. Poor isn't not having enough money to buy the newest XBox game, momos.

 

Of course, I don't have a clue what poor is either since I'm rich. Suck it poor people.

 

But, due to your abusive father and his selling you to grown men while you were but a wee lad, you were raised with a work ethic and know the value of saving a dollar after a hard days work. Things weren't handed to you unlike most of these ungrateful little scamps today.

[TimC]

But, due to your abusive father and his selling you to grown men while you were but a wee lad, you were raised with a work ethic and know the value of saving a dollar after a hard days work. Things weren't handed to you unlike most of these ungrateful little scamps today.

 

I'll never apologize for working as long as I can remember...cutting most of the block's grass since I was like 9 years old, delivering the afternoon newspaper...and when that went out of business, the morning newspaper, working at the little grocery store after school. Then, after High School, I didn't decide to sit around getting stoned and playing video games, but worked my dumb ass through school as hard as I could. Even today, when I want to hit the snooze button all day long, I jump out of bed at 6 AM and get to work. Something my sisters could never do. Yes, it takes a work ethic...something very few people have anymore.

[Yukon Cornelius]

I'll never apologize for working as long as I can remember...cutting most of the block's grass since I was like 9 years old, delivering the afternoon newspaper...and when that went out of business, the morning newspaper, working at the little grocery store after school. Then, after High School, I didn't decide to sit around getting stoned and playing video games, but worked my dumb ass through school as hard as I could. Even today, when I want to hit the snooze button all day long, I jump out of bed at 6 AM and get to work. Something my sisters could never do. Yes, it takes a work ethic...something very few people have anymore.

WOW i did all that + got stoned... you missed out

[WaterMan]

The people that really lived in the Third World would trade places with the poorest American in a second. America doesn't have one single clue what poor is. Poor isn't not having enough money to buy the newest XBox game, momos.

 

Of course, I don't have a clue what poor is either since I'm rich. Suck it poor people.

 

Oh Timmy boy it doesn't matter where you live in the world, if you are starving you are still hungry.

[WaterMan]

Hey, Waterman, your little quote sounds an awful lot like Union workers paying union dues.

 

I'm with you guys on unions. I feel they aren't really needed anymore. They went from helping people to skyrocketing wages to the point that most businesses would rather have asians as employees. And it's not because of their work ethic businesses would rather have these guys as employees, it's the dollar sign each one represents.

[Azazello1313]

Nevertheless, the return to the proportionality of the Gilded Age flies in the face of the whole concept of the "American Dream".

 

I honestly don't get why some perceived appropriate "proportionality" is the measure so many of you are concerned with. the overall living conditions and opportunity for betterment among those in the fat part of the bell curve seems infinitely more relevant and important to me. this obsession with "proportionality" is, at best, a woefully incomplete measure, and at worst, a complete distraction from the real issue.

 

you want to talk about the gilded age? this was the age of American implementation of the industrial revolution. we read in books about the robber barons (who got rich by being robbers and barons), about the massive unprecedented wealth associated with names like carnegie and rockefeller. we read about exploitation of workers, about squalor in growing cities. lest we think all this was only a bad thing, let's remember that this was also a time when real wages were growing rapidly across the board. the american economy was going through the roof, and the US was going from a relatively poor, agrarian nation to an economic powerhouse. the standard of living increased rapidly across the board. yes, the rich increased their economic gains faster, and inequality as measured by things like Gini coefficients exploded. but consider for a moment that at the same time, inequalities as measured by things like life expectancy, height, and leisure time narrowed dramatically.

 

yes, there were growing pains in the transition from a poor, agrarian, malthusian economy into a robust industrial economy. there was exploitation and inequality. but along with it came probably the greatest increase in the living conditions of the poor and middle classes history has ever seen. which is really more important?

 

I am reminded of this powerful bit from milton friedman:

While the nineteenth century was a period of rugged individualism, almost every other feature of the myth [of the robber barons] is false. Far from being a period in which the poor were being ground under the heels of the rich and exploited unmercifully, there is probably no other period in history, in this or any other country, in which the ordinary man had as large an increase in his standard of living as in the period between the Civil War and the First World War, when unrestrained individualism was most rugged. The evidence of this is to be found in the statistics that economists have constructed of what was happening to national income, but it is documented in a much more dramatic way by the numbers of people who came to the United States during that period. That was a time when we had completely unrestricted immigration, when anybody could come to these shores and the motto on the Statue of Liberty had some real meaning. This was a country of hope and of promise for immigrants and their children….Did people come to this country to be ground under the heels of merciless capitalists? Did they come to make their own conditions worse?

 

There is no more dramatic way in which people can vote than with their feet. The fact that East Germany had to build a wall to keep people from going to West Germany is striking evidence of which country had the better conditions of life. In the same way, the fact that year after year hundreds of thousands of people left the countries of Europe to come to this country was persuasive evidence that they were coming to improve their lot, not to worsen it. Far more effective evidence, I believe, than any statistics on per capita real income, which show that real income went up decade after decade at a rate of 2, 2.5, 3 percent per year. They came with empty hands....It was the poor and the miserable who flocked here, and they found a home and the opportunity to improve their lot. And they found it, not despite rugged individualism but because of rugged individualism. It was rugged individualism that induced the developments in industry, in trade, that offered opportunities to people.

[Azazello1313]

also, good editorial from the Economist

 

IN 1904 Willie Vanderbilt hit a thrilling 92.3 mph (147.7 kph) in his new German motorcar, smashing the land-speed record. His older brother's sprawling North Carolina manse, Biltmore, could accommodate up to 500 pounds of meat in its electrical refrigerators. In miserable contrast, the below-average Gilded Age American had to make do with a pair of shoes and a melting block of ice. If he could somehow save enough for an icebox, a day's wage would not have bought a pound of meat to put in it. Paul Krugman, of Princeton University, has recently argued* that contemporary America's widening income gap is ushering in a new age of invidious inequalities. But a peek at the numbers behind the numbers suggests that Mr Krugman has been misled: far from a new Gilded Age, America is experiencing a period of unprecedented material equality.

 

This is not to deny that income inequality is rising: it is. But measures of income inequality are misleading because an individual's income is, at best, a rough proxy for his or her real economic wellbeing. Because we can save, draw down savings, or run up debt, our income may tell us little about how we're faring. Consumption surveys, which track what people actually spend, sketch a more lifelike portrait of the material quality of life. According to one 2006 study**, by Dirk Krueger of the University of Pennsylvania and Fabrizio Perri of New York University, consumption inequality has barely budged for several decades, despite a sharp upswing in income inequality.

 

But consumption numbers, too, conceal as much as they illuminate. They can record only that we have spent, but not the value—the pleasure or health—gained in the spending. A stable trend in nominal consumption inequality can mask a narrowing of real or “utility-adjusted” consumption inequality. Indeed, according to happiness researchers, inequality in self-reported “life satisfaction” has been shrinking in wealthy market democracies, America included, suggesting that the quality of lives across the income scale are becoming more similar, not less.

 

You can see this levelling at work in markets for transport and appliances. You no longer need be a Vanderbilt to own a refrigerator or a car. Refrigerators are now all but universal in America, even though refrigerator inequality continues to grow. The Sub-Zero PRO 48, which the manufacturer calls “a monument to food preservation”, costs about $11,000, compared with a paltry $350 for the IKEA Energisk B18 W. The lived difference, however, is rather smaller than that between having fresh meat and milk and having none. Similarly, more than 70% of Americans under the official poverty line own at least one car. And the distance between driving a used Hyundai Elantra and a new Jaguar XJ is well nigh undetectable compared with the difference between motoring and hiking through the muck. The vast spread of prices often distracts from a narrowing range of experience.

 

This compression is not a thing of the past. To take one recent example, Jerry Hausman of the Massachusetts Institute of Technology and Ephraim Leibtag of the United States Department of Agriculture, show† that Wal-Mart's move into the grocery business has lowered food prices. Because the poorest spend the largest part of their budget on food, lower prices have benefited them most. The official statistics do not capture these gains.

 

As a rule, when the prices of food, clothing and basic modern conveniences drop relative to the price of luxury goods, real consumption inequality drops. But the point is not that in America the relatively poor suffer no painful indignities, which would be absurd. It is that, over time, the everyday experience of consumption among the less fortunate has become in many ways more similar to that of their wealthier compatriots. A widescreen plasma television is lovely, but you do not need one to laugh at “Shrek”.

 

This compression is the predictable consequence of innovations in production and distribution that have improved the quality of goods at the lower range of prices faster than at the top. New technologies and knock-off fashions now spread down the price scale too fast to distinguish the rich from the aspiring for long.

 

This increasing equality in real consumption mirrors a dramatic narrowing of other inequalities between rich and poor, such as the inequalities in height, life expectancy and leisure. William Robert Fogel, a Nobel prize-winning economic historian, argues†† that nominal measures of economic well-being often miss such huge changes in the conditions of life. “In every measure that we have bearing on the standard of living...the gains of the lower classes have been far greater than those experienced by the population as a whole,” Mr Fogel observes.

 

Some worrying inequalities, such as the access to a good education, may indeed be widening, arresting economic mobility for the least fortunate and exacerbating income-inequality trends. Yet even if you care about those aspects of income inequality, the idea can send misleading signals about the underlying trends in real consumption and the real quality of life. Contrary to Mr Krugman's implications, today's Gilded Age income gaps do not imply Gilded Age lifestyle gaps. On the contrary, those intrepid souls who make vast fortunes turning out ever higher-quality goods at ever lower prices widen the income gap while reducing the differences that matter most.

[wiegie]

consumption inequality has barely budged for several decades, despite a sharp upswing in income inequality.

well, I think now it is obviously clear why some people want to move from an income tax to a consumption tax

[wiegie]

this paper is useful for thinking about this question:

 

http://www.princeton.edu/~joses/wp/InequalityJME.pdf

bump

[bpwallace49]

bump

 

Yeah . . . about halfway through the 42 page academic paper now wiegie. Patience.

[Perchoutofwater]

bump

 

You know the only real difference between a weatherman and an economist is that most weathermen have at least been rained on.

[Caveman_Nick]

The reasons for the widening gap are multi-faceted. But anyone who thinks the issue isn't worth addressing isn't paying attention to what's going on in Egypt, Tunisia, and Libya. If the gap becomes too wide people will burn things down and start over. There are ways to accomplish equitable arrangements without resorting to actual communism. The practical barrier is that those with power never give it up willingly. And far too many normal folk - who will never actually be rich - defend the status quo in the hopes that they might be one day.

 

I am not sure if you misread my post or are just quoting it for some other reason, but your response really doesn't have anything to do with the parallel I proposed. I never mentioned communism.

 

What do you think you will find if you compare the proportion of this gap with the proportion of government as a % of GDP?