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Discussion: (67 comments)

  1. US income Gini indices over time

    Gini indices for the United States at various times, according to the US Census Bureau:

    * 1929: 45.0 (estimated)
    * 1947: 37.6 (estimated)
    * 1967: 39.7 (first year reported)
    * 1968: 38.6 (lowest index reported)
    * 1970: 39.4
    * 1980: 40.3
    * 1990: 42.8
    * 2000: 46.2
    * 2005: 46.9
    * 2006: 47.0 (highest index reported)
    * 2007: 46.3
    * 2008: 46.69
    * 2009: 46.8

  2. They also chose to ignore the massive wealth transfer of public employee retirement benefits.
    From a study on wealth income inequality stats based on Germany data.
    http://www.lisproject.org/conference/papers/frick-grabka.pdf
    Conclusion
    “Entitlements from old-age pension schemes—statutory, occupational, and private—represent a considerable source of wealth. For data-related reasons, however, empirical analyses of wealth inequality in Germany have failed to take this important component adequately into account. ”
    “This extended measure of wealth shows considerably (about 25 percent) less inequality than traditional analyses that refer only to financial and material assets (net worth). “

  3. good work, and, unsurprising, just like global warming “data”…carefully selected. Now here’s the next question…a what if…if it is true as it seems to be that much if not most of the gain for the middle and lower classes was at least “mediated” by the public sector…if not “provided” by government, how would they have done in this same period without those government programs and benefits? One would have to construct an alternate economy without all of those programs and without the tax burdens that make them possible, and see how all of us would have done. Tough one. Be ready.

    1. Jonathan

      My question was quite similar. Doesn’t that seem to feed the rationale for various transfers? That’s exactly what the left argues…we need all these welfare program’s because you would be worse off without them. I guess the missing data here has to do with mobility. Of the bottom 3 quintiles in 1979, how many of them would have still been in their same place in 2007, if not for the transfers?

    2. I think the point is that the Democrats are claiming they’re correcting a perceived injustice that was largely corrected many years ago.

      For example, we are constantly told that the poor have insufficient access to health care, although state and Federal governments already spend something like $450 billion a year on health care for the poor and elderly poor.

      Over two-thirds of Federal spending is checks written to individuals. Wealth redistribution.

      Is two-thirds not enough? How much is enough taxation and spending? How much is too much?

    3. Actually, the value of this study is that it gives the lie to Mr. Obama’s assertions that the policies of his predecessors/opponents created “inequality”, and therefore we must submit to even MORE government-directed wealth redistribution.

      This reminds me of the response some have, to those that back a return to Clinton-era tax levels … “how about we also go back to Clinton-era spending levels?” Those backing higher taxes conveniently forget that item of data in their rush to government-driven “equality”.

      And I’d take you up on that challenge … as long as the alternate economy is part of a society that does not send this message to their people from their school days onward …

      All you need to do is show up for work or go to school; we have experts who have the answers to your housing needs, your health care needs, your financial needs … no need to plan for your future or actively manage your career, since we can do a better job than you can; just trust us to solve those problems FOR you.

      … and instead expects them, from their school days, to be actively engaged in the planning/saving/deferred gratification and other prudent activities that put one in a position to better “roll with the changes”.

      Today, those that bought into the above message, and put their trust in government/union/deep-pocketed business and/or the mere possession of a college degree to assure their future, are the ones worse off.

      Those that didn’t buy into the message, and kept active control of their condition, are the ones better off today … and in many cases, ironically, are the ones who are going to be expected to pick up the slack for the rest, if Mr. Obama gets his way.

  4. Tom Carroll

    While I think Obama’s plans for the economy are wrong and dangerous I cannot see the logic in saying because there are more earners in households today, due to adult wage earning children returning home, middle class families are doing better. It is too easy to argue that the reason those adult children are returning home is because their incomes have not kept up with growing costs. Sure, if in my family with 5 children all of us moved home to live with Mom and Dad the household income would be larger. However, that does not indicate in any way that individual wages increased.

    Including tax, transfer, and medical insurance when comparing wages between quintiles seems reasonable I do not agree that the household rather than the tax unit should be the measure. I would go further and say that the measure should be the individual. A family that typically had 1 wage earner will probably be wealthier if it had 2 or 3 or 4 but that does not mean that the original wage earner is earning more money.

    1. Norman R

      Haven’t read the study, but pretty sure you are misinterpreting how it was conducted. The income of a household of 1 would not be equated to a household of five. What would be considered is the per person income of the household on average. So 100,000/5 or 20,000/1 would be equivalent income.

      The point of this interpretation of the statistics was to show that cost allocations are greatly reduced, thus increasing “income”, when the costs are shared. If the cost of trash service is divided between a family of 5 the individual cost allocation is significantly reduced for each member of the “household” from the total cost allocated onto each “tax unit”. This is the point of “economies of scale” referenced in the article.

      When my son moves out and rents a house/apartment his tax unit suffers from the increased cost of paying the full load for trash service. When he lived at home his proportion of the “households” cost for trash was much lower.

  5. Uruk-hai

    The Dems will just either denounce the sources or selectively pick which part of the facts they want to be true. Never mind all the facts, they’ve made up their minds.

  6. Also, Taxes on the upper income quintile went up during the Bush Administration. Seems like the Obama administration cherry picks economic info to support discredited ideology.

    1. Norman R

      And this surprises you?

      1. Where does it say that that taxes on the upper income quintile went up during the bush Administration ?????

        1. http://www.americanthinker.com/2010/03/lying_about_bushs_tax_cuts.html

          In terms of percentage of taxes paid, and in terms of raw dollars (since tax revenues counter-intuitively increased significantly after the tax cuts), the statement is valid.

  7. There is one other factor to take into consideration: income mobility. We should not assume that the people in the middle quintile in 1979 were the exact same people in the middle quintile in 2007.

    Theoretically, if the people in the bottom 3 quintiles in 1979 ended up in the top 3 quintiles in 2007, and those in the top 2 quintiles moved down to the bottom 2, we might mistakenly conclude that the rich got richer and the poor got poorer when the opposite is true: the poor got richer and the rich got poorer.

    Studies that track individual taxpayers have shown that income mobility is far greater than most people think — shocking even.

    1. On the money, Steve. Income mobility is always very conveniently not mentioned.

    2. Steve in MT

      Bingo! In 1979 I was going to college on $360 a month GI Bill, was married and had one child. I was the 1%, just the bottom 1%. Since then, I have completed two more degrees and am now in the top quintile. This mobility allows anyone to change their station if they want to. My fear is that if the government starts deciding what is fair, the result will be to lock people into their respective strata with no chance at improving.

    3. Commentator

      Great post. Please see mine above. I’d add that that is actual income mobility which does not even slightly capture the opportunity for income mobility. There are vast swaths of Americans who don’t want to rise socio-economically because of the work involved. They’d rather be whatever, 3rd grade teachers, making $25,000 to $50,000 a year (including investment income and house appreciation). But if you want to be a lawyer or a doctor or executive, education and entry level jobs are inexpensive and abundant. Can you imagine what an eager kid in some muddy thatch-rooved village in Malawi could do if he had the resources of merely “Smallville, KS”? The American Dream is more than alive and well – it’s even coddling often enough.

  8. Jonathan

    Under the broader definition of income which considers transfers, does it mean that with out those transfers, middle class American’s would not have made substantial gains? That is to say, did the middle class only make gains because of transfers? If so, then my question is what would have happened if those transfers were never received? Doesn’t that seem to imply that the middle class would be even worse off, and the gap wider today, if it weren’t for transfer payments?

  9. Norman R

    Don’t like the author of this piece much, but I love the story, however incomplete.

    It is what has always been intuitively correct to me despite the political speeches. Indeed it is the essence of capitalism that I learned as an economics major in college. It is ok for the rich to get richer, as long as the poor also get richer.

    Socialism teaches it is ok for the poor to be poorer as long as everyone gets poorer. You need only look to the modern history of centrally planned economies that attempt to control income distribution to see this.

    1. Robert Gruber

      And where did you learn its ok to start off a comment by taking a gratuitous swipe at the author, and then pat yourself on the back for being wise enough to intuitively agree with said unlikeable author’s premise? Is that supposed to emphasize how firmly you believe in your own opinions, that contrary to the author’s general unlikeability, you still agree with him because it confirms your own beliefs?

  10. Diana Furchtgott-Roth of the Manhattan Institute has also refuted the myth of increasing income inequality. In order to reduce the impact of the considerable redistribution of wealth that is already occurring under the current highly progressive U.S. tax policies, she cleverly examines trends from 1985 through 2010 in expenditures by quintiles of household income. There is no evidence of increasing inequality as measured by the ratio of expenditures in the top quintile of income to expenditures in the bottom quintile of income over the 25 year period.

    http://www.manhattan-institute.org/html/ir_2.htm

  11. The idea that Obama’s statements are predicated on some study that can be debunked is ridiculous. Obama’s statements are predicated on the idea that he needs to (and will) gin up class hatred because class hatred is a base function of both the Democrat Party and Alinskyite theories and he can be re-elected no other way. Nice try, but there isn’t a single Obama supporter that will look at the above post and change their mind about the evil rich. And there isn’t a single conservative that will read the above post and not know that already…intuitively if not factually.

  12. bflat879

    What Obama knows, better than most people, is the communities he was a community organizer in. Well, if that community was relying on a community organizer to pick them up by their bootstraps and get equality, they’ll never make it. Meanwhile, people outside of that community have been working hard and making a living, without the Obama’s of the world, until Obama gets real power and then messes the whole system up.

    In his case, it’s not his inexperience that’s the problem, it’s the wrong experience that’s the problem.

  13. Bacon is $7.99/lb and gas is over $4.00/gal. I wish more “mainstream” or “academic” economists would address the real underlying issue – the value (or lack) of money and our broken monetary system.

  14. mlindroos

    David Frum comments: “The cost of health benefits has rather notoriously exploded since 1979.”

    Is it correct that the 36.7% growth figure cited by Pethokoukis attributes as income the value of government benefits like health care? Is my understanding correct?

    MARCU$

  15. LadyLiberty

    ROFLMAO OUCH this had to hurt the leftists to admit even with the leftist spin it’s worth reading…

    Growth of Income Inequality Is Worse Under Obama than Bush

    http://www.nakedcapitalism.com/2012/04/growth-of-income-inequality-is-worse-under-obama-than-bush.html

  16. Additionally, the problem with this is that it looks at economic strata as if they were fixed groups of the same people who never move up or down, just get richer, stay the same or get poorer. “The rich got richer”? Hardly. Other people, younger people, got richer and moved up through the levels. The rich of the 1980s are 20 to 33 years older–or in many cases, dead. The rich measured in 2010 are mostly the lower and middle of 1980. The middle are the same, in general–from lower strata, and also from higher.

    Something that would illuminate this would be to see the median age of people at the various income strata by year. Only if it went up year by year, so that in 2010 the median in each income stratum would be about 30 years higher than the median in each stratum in 1980, would it mean that incomes were stagnant and the same people were losing, staying the same, or gaining stratum by stratum. If the median in each group is less than the difference in the years being compared, or the same, then in fact, that would demonstrate that income was not static, and “the rich” didn’t get richer alone, but people from lower strata gained and thus were elevated into higher strata.

  17. Inflation adjusted? Based on what exactly, BS inflation numbers our government gives us?

    Almost every middle class family now has 2 income earners. It wasn’t like that 50 years ago. If individual income has grown then the middle class should be far richer than the middle class of 50 years ago…..which the middle class is not.

    Healthcare included makes the numbers extremely misleading. I work for the big evil insurance companies. Trend for the last decade plus is 13% or higher every year. This study is giving middle class people a 13% raise every year just to keep the same benefits they had the year before. That doesn’t make you richer in any way shape or form when it comes to real life. You are simply getting 13% just to keep pace.

    I am not for Obama or his class warfare, tax the rich, blame the producers, but let’s be honest here. The middle class has a much harder time these days then when our parents were in our shoes. Most of our parents would even agree with this. They agree not because of numbers from a study but because they have witnessed how much harder it keeps getting over the last 50 years. If you don’t see it, then you aren’t paying attention.

    1. Thank the Federal Reserve–and politicians of both parties for spending beyond our means and covering the bill with borrowed money. The USD has been 95% debased since 1914 when Congress figured out that it could spend borrowed money as easily as tax receipts.

    2. rend for the last decade plus is 13% or higher every year.

      And for that 13% a year, we get continue to get higher life expectancy, cures for more diseases, and better health longer into old age. Yes, yes, the industry is not perfectly efficient, and there are indeed lying, thieving, greedy bastards involved (just like there are in every industry), but the underlying value has certainly increased IMMENSELY.

      2 obvious points:

      1) average USAGE of health services has gone up tremendously – this has cost, and people seem to think it has benefit as well (they keep doing it, despite the cost).

      2) the treatment for a heart attack 50 years ago was monetarily extremely cheap: pine box, 6′ hole in the ground. Treating stuff instead of dying from them is expensive.

      Whether we are getting our money’s worth from the increasing cost of healthcare does NOT change the fact that it is added benefit and value that most of us get from our place of employment as part of our pay, and that should be included when you look at how much people are being paid.

  18. The GOP is not seeking to send this country back to the Dark Ages, just back to the Golden Age.

  19. Commentator

    PLEASE READ THIS.

    But this is the most ludicrous cognitive dissonance in politics and economics today – it’s profoundly absurd. That is, these table don’t even slightly capture how well the poor have done over the last 30 years. Studies show people move up one quintile every 9 years. So over 30 years whoever was making $15,000 in the lowest quintile is making $50,000 30 years later. [All in constant dollars.] So they have not gotten just 27% wealthier as per these tables – THE POOREST HAVE GOTTEN 333% RICHER. Please forgive the brief use of capital letters for emphasis. Republicans have to stop letting Democrats deceive with the use of wage level tables. It’s a disservice to Reagan and Reaganomics.

  20. Commentator

    Actually I understated it. If that 4th highest quintile is no longer merely $50,000, but 40% higher as indicated above, the poorest who made $15,000 30 years ago are making $70,000 today. That is THE POOREST ARE 466% WEALTHIER TODAY THAN 30 YEARS AGO.

    There is a reason the poorest around the world leave the their homelands toward a difficult new culture and language, often at risk of life and limb to come to the USA … ask anyone … I remember a reporter asked this American of Mexican origin what he loved about the USA … Trabajo!

  21. Mr. Pethokoukis,

    I just finished your essay on Obama’s Inequality argument. Thanks for bringing the data to light and drawing attention to the Cornell Study.

    I have often compared ecoonomic status to an atomic mushroom cloud. One begins at the bottom and when one reaches the top (regardless of the criterion used to define “rich”) there’s no place else to go. The only alternative is to become “richer”. Thus, the mushroom cloud expands exponentially at the top, giving apparent, nt actual credence to Obama’s argument of predation by the greedy, soulless rich.

    There is an interesting corollary to this at the bottom of that mushroom cloud. Liberals are quick to point out that the U.S.poverty rate has remained constant at about 16% of the population. This, they surmise, is clearly an indication that the “War on Poverty” has failed and that more funding and government intervention is needed. In fact, the reason for the stable poverty rate is evinced in the Cornell data and your analysis; lower economic classes are actually successfully moving up and out of poverty They are then replaced by new workers entering the economic cycle at the lowest level(presumptively these are new immigrants and young workers leaving the protective umbrella of their parents’ household).

    If poverty were increasing, the percentage of the population in poverty would actually be growing. The fact that it remains relatively flat even with new incoming participants is a sign that the capitalist economic engine is actually working just fine.

    The Obama administration is economically so unsound and illiterate that arguments like yours are akin to shooting fish in a barrel. The real key to necessary change, however, is in getting this information out to the general public through the gantlet of a sycophantic press.

  22. Unfortunately, the media will ignore this and economically-ignorant voters will continue to buy into the politics of envy. I will link to this from my Old Jarhead blog.

    Robert A. Hall
    Author: The Coming Collapse of the American Republic
    All royalties go to help wounded veterans
    For a free PDF of my book, write tartanmarine(at)gmail.com

  23. Obama and the Dem class warriors know that their target audience is a bunch of dumbsh*ts who have no prayer of understanding either the data cherry-picking that Piketty and Saez did–nor its refutation. Get the media to repeat it all endlessly for a decade, appeal to laziness and envy, and you have your re-election formula.

    Face it: 53.6% of the voters in this country are either too lazy or too stupid to identify a con man when he is stealing them blind. Obama’s election was the only cultural indicator that any rational person needs to conclude that this country’s prime is in its wake. There is just no saving the place when morons will vote for a charlatan like Obama.

    1. swtoldbob

      PDQ,

      You make a persuasive argument for the failure of the electorate to act in their own best interest. However, after talking with lots of middle class people (some professionals, some well-paid managers/technicians, some small business owners…..)who admit, ashamedly, that they voted for Owedumbo in the last election, I think the blush is off the rose and this clown is going to have a very difficult time getting the vote of moderates/independents. He is now know for his racism, his radicalism, his sellout to the radical environmentalists, his pattern of serial lies, his abandonment of any pretense of being a uniter, and for his utter lack of any skill or reasonableness in international relations.

      If Romney (I am pretty well convinced that he will be the Republican nominee)and the Republicans can paint an accurate picture of this idiot’s failures, excesses, falsehoods and fraternization with radicals, and get the message out in spite of the shameless pandering of the mainstream media, this treasonous creep will have to go back to Chicago and get his old job back…..community rabble-rouser.

      That said, if the Republicans offer no comprehensive, cogent view of how they will return America to prosperity, liberty and greatness, they may be seen by the electorate as an angry mob of privileged reactionaries. They will be called racists whatever they do. I recommend that those of us who intend to work to defeat BO and turn out his radical associates simply ignore the ranting and raving of the race-baiting left. We have work to do, and there has never been more at stake.

      1. The view I think that the GOP needs to be selling for the long-term good of the nation, though, is a hard sell … because the only rational plan does not involve them having a “plan” that they execute from the top down.

        The rational plan is to return responsibility and decision-making authority back to individuals, instead of trying to solve their problems FOR them … i.e. getting the Federal government out of the socio-economic engineering business, including health care and education.

        Especially when so many are conditioned to think that the funding and experts makes the government better than they are with respect to solving these problems, the idea that we will elect someone that will do LESS for us is alien to many voters … even though it is the rational path forward.

  24. Dave Wendt

    One point that is usually neglected in these discussions is that we live in a country where the percentage of the population that has reached retirement is growing dramatically. A great proportion of “retired” folks end up in the middle quintile, no matter where they may have ranked during their working years. It’s fairly obvious that their income growth will trail the working population. Anayses that remove the retired from the calculation, indicate that middle income growth for the working population is greatly underestimated.

  25. Commentator

    Mr. Pethokoukis,

    JIMMY P! I’m a great fan of the Kudlow show.

    Great stuff, but on Kudlow you never hit this note. You’ve got to thwart Bernstein and the African-American ex-Clinton guy (who seems cool and definitely does well for himself on Kudlow). I just forget his name. Keith Boykin? Something. Also when he points to 30 consecutive months of job growth you have to hit back in devestating rebuttal that Obama spent $400,000/job created, funds that must be paid back later which will tend to cost 2-3 jobs for everyone he created with this temporary stimulous. That is the waste itself.

  26. “He would rather have the poor be poorer provided the rich were less rich.”

    Margaret Thatcher
    http://www.youtube.com/watch?v=okHGCz6xxiw

    1. alwanderer

      G-D what a GREAT link to the Iron Lady… i smile.

  27. Thucydides

    These numbers are good for the literate voters, but as noted we need to find easy to understand metrics for the economically illiterate.

    The “Thanks Obama” stickers on gas pumps everywhere is probably the best place to start (the legacy media can’t respond effectively to Samizdat), while GOP candidates should always quote the true unemployment statistics (currently U3 stands at over 10% while U6 stands at over 14%) rather than the fictional ones the media always uses.

    A sharp poke in the ribs using facts will get people’s attention in a way the Legacy media’s propaganda campaign won’t; people see the reality of high fuel prices and high unemployment and will respond to the party that explains the facts that they see on the ground

  28. Gcullison

    Why are you using statistics from 2007? The results of outsourcing manufacturing were not yet apparent back then. Do you think the economy might just be a little different now? I would love to go back to the economy of 2007 when my house was worth something and real unemployment was around 5%. I don’t get to live in the past. Cherry picking much?

  29. ReadTheNumbers
  30. IGotAComment

    These facts are too complicated to be understood easily by the majority of the usual Democrat voter. It’s easier to believe Obama saying that the middled class are poorer and the rich are richer … than the truth: The rich are richer and the middle class are only half as rich.

    Also, these facts will NEVER be heard by the Democrat middle or lower earning workers because the MSM will not print it.

  31. I’ve seen a few of these studies that took about income disparities, counting income BEFORE taxes are paid and before government benefits are received, and then these findings are used as a basis to call for increased taxes and government benefits to reduce the inequality. But even if we do adopt their proposals, by definition it will have ZERO effect on the claimed problem, because they are explicitly excluding the effects of their solution from their measurements. If you count income before taxes, then no matter how much you increase taxes it won’t show up in your measurements. If you count income excluding government benefits, then no matter how much you increase government benefits it won’t show up in your measurements.

  32. Obama was right.

    According to the article here, Obama’s economists are wrong because they look at individual “tax units” rather than households. But the problem is, income for households has gone up because more couples are working, children are moving back in with their parents, etc… So Obama was right: it has become much harder to be a lower or middle class American. You can’t say the lower and middle class has gotten richer when you need both husband and wife to work just to stay afloat.

    And measuring dole payments as income is substituting cause and effect, I think.

    Also, as David Frum pointed out on his website, the cost of health benefits has exploded in recent years, so it’s not really right to count that as imputed income.

  33. Oddly, I think this article accomplishes something it did not intend. Its actually made the case that the lower and middle classes make out almost as well as the wealthy do provided the government is assisting them. By pointing out that the Obama-embraced analysis neglected government assistance, this article has argued for the effectiveness of government assistance and the success of a quasi-socialist model.

  34. Even these charts are decieving. How many two parent households were there back in the earlier 70′s? Today a household who has a “stay at home mom” that doesnt have a job on the side is the minority i would imagine.

  35. Duncan Frissell

    In talking to the innumerate about income figures, I always just mention that income has to include both fringe benefits and government payments to be meaningful. This is a great study.

    Another example, when arguing about public employee compensation, I mention pensions but I emphasize retiree health benefits. My mother the librarian always said that her pension wasn’t much (she had a short career) but her health bennies were great.

  36. “Equality is one of those equivocal words which the philosophy of the 18th Century has made fraudulent. In the last twenty-five years it has cheated millions out of their lives and tens of millions out of their property.” – John Adams, 2nd President of the United States of America

  37. theBuckWheat

    I would caution everyone who makes any comparison using either the top X percent or the bottom Y percent that there is a significant fallacy trap that must be dealt with.

    The bottom bracket, no matter what slice, is bounded by utter poverty, with no income, and no assets. You cannot get more indigent than this. Comparisons involving this slice of the population almost always fail to take into account the value of any in-kind aid, which can be amazingly ample, at least in pockets. That is the only way to explain how this slice has the highest rate of obesity.

    The top bracket, no matter what percentile is chosen is unbounded at the top. If Bill Gates were to win the PowerBall megajackpot, he still would be in the top bracket. People at this level are highly transient. One year, they make a lot, the next year, they may have a tax loss carry-forward. The very top slice is full of special cases, once in a lifetime payouts, and the like.

    If any income and tax burdens are to be made, it is far more useful to ignore both the top and bottom slice, no matter how you thin or thick the slices are, especially because of the open-ended top slice.

    1. You are right. If we define “the poor” as the bottom quartile of wage-earners… WE WILL ALWAYS HAVE “THE POOR”… they will always be 25% of the population labeled “IMPOVERISHED”…even if they all doubled their incomes, doubled their number of cars, cell-phones and cable TV’s.

      It’s a catch-22-definition-trap that the government LOVES…

      Yes, there will always be the poor (to quote Jesus)… and I’ve been poor, too. But I went back to school, got my doctorate, and now making six figures. AMERICA, FTW, BABY!!!

  38. John Moore

    There’s a problem with these stats: they appear to measure household income.

    But during that time period, an ever increasing number of households had two earners. Take out the second earner and how do the stats look?

  39. Tom Carroll

    While including medical benefits and the impact of taxes and transfers to income seems legitimate to me when comparing compensation over time I cannot buy into using household income as a valid metric. It is far too easy to postulate a scenario where crashing compensation levels for middle class jobs leads to a return to the nest situation. Total household income might increase, even significantly, while compensation per job decreases. Spouses working because they have to and adult children returning home because they cannot earn enough to pay rent is hardly a sign of increasing compensation.

  40. Peter Murphy

    I shared this article on Facebook and 24 hours later, my sister, an extreme left winger, poster this one: http://www.cjr.org/the_audit/aeis_myth_of_equality.php

    Anyone care to comment?

    1. From the comments in the link you gave:

      “So in terms of spending power over the last 30 years the rich have gotten richer, while the poor have gotten…. richer. In fact, in terms of 2007 dollars, EVERYBODY’s gotten richer over the last 30 years.

      “Poor Got Richer” – Now THERE’S a factual headline you won’t see on Mother Jones, CJR or any of the other commie outlets.

      But you guys are griping because the poor got richer, but not as much as the richest people got richer? Seriously?

      If you commies want some wealth… Why don’t you make it, instead of trying to get the gubmint to steal it for you?

      Do W O R K.

      C R E A T E something people want.

      F A C I L I T A T E transactions that let people get or do things they want.

      Steve Jobs took a bread box and some microchips and turned them into the largest company in the world. He didn’t bang drums in a park, bitching about The Man.

      To paraphrase the Home Depot commercial, “More doing, less bitching”.

      Et voila! Wealth.

      #2 Posted by padikiller on Thu 27 Oct 2011 at 03:08 PM”

  41. Comenter

    All of the above analysis and hand wringing do not negate one fact… Forcably taking income and personal property from people who have earned it is morally wrong, and is the definition of theft. you people on the left are theives… the gyrations you go through to justify your theft is simply amazing.

    1. True Freedom

      Comenter,

      The core function of any government is theft through taxation. It isn’t a liberal vs conservative issue. Conservatives support taxation (read theft – property transfer through force) just the same as liberals do. The choice of using violence to organize society socially is the real injustice here. When a new party takes power the people who were in power are fearful, for good reason, the gun of the state is about to be pointed at them. Those who are coming into power feel good because they are now going to use the violence of the state against those who used it on them. This doesn’t get people to come together it is very divisive. If you really care about logic and reason when it comes to organizing society in a nonviolent manner see these links:

      http://www.youtube.com/watch?v=Xbp6umQT58A
      http://www.youtube.com/watch?v=P772Eb63qIY&feature=BFa&list=SP0629B97DDFA9C7DB&lf=list_related
      http://www.youtube.com/watch?v=sLCEXtpTNYU

      Read these books for free!!

      http://www.freedomainradio.com/FreeBooks.aspx

      Wake up and see the farm what it is…human farming.

  42. More socialism to obtain equal “outcomes” always results in less productivity. See Europe.

    Socialism has failed everywhere it has been tried while bringing down the standard of living for all but the ruling elitists. Obama and his economists wish to make it seem as if capitalism fails, when it simply isn’t so. It is most convenient to rely on woefully incomplete studies and the related statistics as the gist of this article states.

  43. Matthew D

    I feel both the author and the good folks at Cornell have ENTIRELY missed the point. Not to mention having made a VERY shaky conclusion based on largely opaque data.
    What empirical data do they use to declare that the middle class has gained 36% across the board by way of…social spending? How do they weigh the data given that some families will have elders living with them while others won’t?
    Anyway onto the missed point. WHY hasn’t the middle class realized pre tax gains? That is the question. The answer is class warfare. Social spending is no substitute. And given that today’s Republicans want to axe social spending to boot….

  44. This article is great and all, but the real problem with both of these studies is that they compare two totally different groups of people. The middle quintile in 1979 is obviously not going to be the same group of people as the middle middle quintile in 2007. The only way to really measure income growth of the middle class is to literally observe the physical human beings in the middle quintile at one point in time and evaluate how THEIR income grows. As in Susie Peppers made $xxxxx in 2000 and $yyyyy in 2010, so her income grew by yyyyy-xxxxx.

  45. Comparing after tax receipts is an intriguing addition to the analysis. There is another big problem with the data. Tax law changes in the mid-80′s caused a major shift in business income from C-Corps, which is not treated by Piketty and Saez as income, to pass-through entities such as partnerships and LLCs, where it is treated as “income” for the 1%. Apples and oranges provides for bad data as you can see at http://capmatters.com/wp/inequality-debate-based-on-bad-data/. Bad data leads to bad analysis which leads to bad policy.

    1. Jason Hayek

      Pass-through income is not “income” for the 1%. It is income for any business owner that is not organized as a “C” corporation. While it does include doctors, lawyers, CPAs, etc., it also includes the owner of a small rental house that earns $500 per month from it, as well as the corner grocer in a small town that barely makes ends meet. Until people stop making blanket statements without facts, or until others just believe everything that fits into their argument, truth will be ignored in favor of emotion.

      As an aside, wars of all kinds are started and fought based on emotional decisions, not on truth and logic.

  46. Sharmarke

    James’ article completely misses the point: what’s wrong with our economy is precisely that wages and real median incomes have stagnated tremendously.
    Here are some reasons to dismiss your piece, James:

    1) Your point on government transfer payments is legitimate, but you use the fact in the wrong way; much of the spike has to do with soaring entitlement spending brought about by a soaring retirement age population and rising health care costs. Also, tax loopholes and breaks have doubled since 1982:
    http://www.americanprogress.org/issues/2011/06/low_tax.html

    Rising Medicare spending doesn’t go to seniors. It goes to pay for health care that seniors need, meaning it goes towards insurers and hospitals. Social Security can be considered income, but that’s beside the point: the fact remains that by the figures above, incomes have barely grown relative to what they did 50-60 years ago. Social Security and welfare benefits aren’t taken into account with regards to any figures on median wages and median incomes.

    2) Median incomes have barely risen with productivity for over 30 years:
    http://stateofworkingamerica.org/charts/productivity-and-real-median-family-income-growth-1947-2009/

    So in reality, the President here has gotten it right: we need to get wages growing at the rate that they used to for over 20 years after the Second World War.

  47. All of the statistical analysis misses important points of economic reality, i.e. pure human action. It is the essence of human society that some (very few) are rich, some (very few) are poor. This fact cannot be avoided, masked or erased. That is because human society has evolved with singular task in mind: put limited resources available for production (limited not in a sense of absolute availability, but in a sense of being ready for immediate use) in the hands of the most competent so that they may serve the most pressing needs of the consumers in optimal way. If human society aims at using people’s skills in a best way to serve immediate needs of other people, this is the only way and it produces the outcome lamented by Piketty and Saez. Society awards those who use limited resources in the optimal way with profits and riches. It punishes others that squander those resources. Other way is inconceivable since it would preclude any rational action. Believe me, you would walk hungry every day if your baker used any other criteria for selling you bread besides your money. If he/she sold based on ideology, religion, sex, stature, race, education, affiliation with political, social or sport organization or any other arbitrary criteria, society as a whole could not exist. USSR is perfect example of such destructionist failure.
    I have never seen any statistical study pay any attention to the most important aspect of wealth gap, and that is the structure of wealth. It is relatively easy to research. Just take Forbes data about fabled one-percenters and see how it changes. True mark of real capitalist (market) society is not wealth of top 5%, it is the structure of top 5% and how it changes in time. Where top 5% are the same people for hundreds of years we can certainly say there is no capitalism. That is despotism and aristocratic society. Where top 5% changes constantly we see capitalism at work with its main mechanism – realocation of capital. Society at large takes limited production resources from less able hands and gives it to more able hands. In articles mentioned above statisticians (they are not economists, for they do not pay attention to human action) measure income between eighties and 2k-teens. But they fail to note the structure of wealth. Was Steve Jobs a billioner in 1980? Was Jack Welch? Was Bill Gates? We don’t even remember the names of “robber barons” from Forbes list in 1980. Those names have faded into obscurity. As long as there is a constant change in the structure of wealth at the top 5% and in all other arbitrarily chosen brackets, as long as new people are placed on top and the old ones fade to obscurity, we are observing the marvel of capitalism perform its magic – creating wealth by serving the needs of the most possible number of people in the most optimal way.
    Talking to people around me I have never encountered a single one that would say that their life in 1980s was better than now. Remember 80s? No computers, no mobiles, no GPS, no MRI, no Playstation. People thought that copy machine and telefax were God’s gift to humanity :-). Comparing 2012 to 1980 is ludicrous. It’s like comparing 1950 to 1850. This kind of perversion can only spring from the mind of statistician eager to compare the incomparable. They would gladly compare life with horse buggies and cars, for they are all “modes of transportation”.
    What would society want to achieve by restricting wealth creation? Who can say when did Steve Jobs create enough iPads, iPhones? When did GE create enough MRIs? When did Glaxo create enough vaccines? When did Intel create enough processors? For if we want to define “enough” wealth, we would have to stop those wealth creators from further work. We would have to order Apple to stop producing iPads since we will not tolerate profit from additional units. Would this restriction on production make people as a whole richer or poorer?

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