US: Income gaps between very rich and all others tripled, 1979-now

[Xanthippus of Sparta]

Yesterday I read a very disturbing article that put into perspective what has been talked about quietly for some time, usually not by any TV media outlets. The rising income inequality in the US.

In 2007, with the gap between the top earners and virtually everyone else is at a level not seen since 1928, the year before the Great Depression started, it's no suprise that our current financial crisis began then.



Keep in mind this is after tax income.

The gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007 (the period for which these data are available), according to data the Congressional Budget Office (CBO) issued last week. Taken together with prior research, the new data suggest greater income concentration at the top of the income scale than at any time since 1928.

While the recession that began in December 2007 likely reduced the income of the wealthiest Americans substantially and may thereby shrink the income gap between rich and poor households, a similar development that occurred around the bursting of the dot.com bubble and the 2001 recession turned out to be just a speed bump. Incomes at the top more than made up the lost ground from 2003 to 2005.

http://www.cbpp.org/cms/index.cfm?fa=view&id=3220

[Grof]

Is it any different anywhere else? The rich get richer and the poor get poorer.

[JP226]

Wealth is more dynamic than that chart. It's not only a matter of how much more money you have but how much more you can consume. The difference between rich and poor these days versus say france in the late 18th century is that me being rich and consuming what I consume doesn't actively take away from your consumption. You can still buy your beer, eat your ribeye and go on vacation. Back then??? Not so much. In those days, you breaking your back fed their appetites.

Even then, assuming we're on a pie chart, more money is actually concentrated outside of upper brackets. IRS has these SOI tables that show which brackets control how much taxable income and of that how much is paid.

[eran]

It called liberlisem, and its one of the reasons the US is so strong.

[Friendo1231]

It called liberlisem, and its one of the reasons the US is so strong.

What is this "liberlisem" you speak of?

[Big War Bird]

Wealth is more dynamic than that chart. It's not only a matter of how much more money you have but how much more you can consume. The difference between rich and poor these days versus say france in the late 18th century is that me being rich and consuming what I consume doesn't actively take away from your consumption. You can still buy your beer, eat your ribeye and go on vacation. Back then??? Not so much. In those days, you breaking your back fed their appetites.

Even then, assuming we're on a pie chart, more money is actually concentrated outside of upper brackets. IRS has these SOI tables that show which brackets control how much taxable income and of that how much is paid.

Silly man. You underestimate the dangerous latently violent greed and envy that courses through the veins of the proletariat.

[JP226]

Silly man. You underestimate the dangerous latently violent greed and envy that courses through the veins of the proletariat.

Unfortunately there is alot of truth in that statement.

[Il-Principe]

The chart proves that it's definitely not the proletariat, which is greedy...

Anyway a development like this will result in social unrest, Latin-American circumstances and finally in revolution. In Germany the disparity between rich and poor is also growing.
Another point is that in democracies the poor are in the majority and can vote for a change in policies meaning that a hyper-capitalist wealth distribution is not likely to be accepted by the majority. So either there'll be a change in welfare policies or a collapse of the whole system. One way or another a change is long overdue.

[Lord Mandelson]

The difference between rich and poor these days versus say france in the late 18th century is that me being rich and consuming what I consume doesn't actively take away from your consumption. You can still buy your beer, eat your ribeye and go on vacation. Back then??? Not so much. In those days, you breaking your back fed their appetites.
.

Too simplistic by half. I admit that France's transition to economic liberalism was wilfully delayed by comparison to say Britain and Holland, but that does not mean Ancien Regime France was a feudal state. In fact, the pre-Louis XIV days of France can be regarded as somewhat Halycon. It was a mixture of war and famine that caused such misery in France, not the Roi and the aristocracy pillaging the land. French farmers did not farm for feudal reasons, they were paid. Just like the farmers of today. Pre-revolution famine was not the fault of the aristocracy. Over-authoritarian behaviour, poor advisors, the presence of charismatic revolutionary figures, and most of all the ravages of war on France did far more to precipitate the revolution than some spurious pseudo-feudal economy.

[Snoopy]

Of course, we have all seen what has befallen nations in South America, where the above is the case. I am not suggesting it is ever going to be a risk in the USA, but now that the USA is slowly losing its position as economic driver of the world, there's no guaranteeing that the US will be safe from such dangers in the future.

South America is generally the breeding ground of right wing dictatorships (often with religious ties) where the government nationalizes businesses for the benefit of rich families/local corporations and left wing dictatorships where the government nationalizes businesses for its own benefit, in addition to various democracies that come back once in a while.

Actually, Chile is an example of a generally democratic society, and it came about from a right wing military coup followed by free market reforms.

[Yosemite]

their just stupid they should have gone to collage

[Azog 150]

Unfortunitly its a similar story here in Britain. But thats the ways of capitalism I guess.

[SorelusImperion]

The underlying problem is that with wealth comes political power and influence and unless you want a revolution or a Russian style 1990's Oligarchy inequality has to be adressed to a certain degree.

But thats the ways of capitalism I guess.

Depends. Capitalism offers the oportunity for such developements but does not nessecitate them if there is a sufficiently carefull and responsible government.

It called liberlisem, and its one of the reasons the US is so strong

The reason why the US was and still is very powerfull is not "liberalism" but protectionism, easy access to the resources of a whole continent, a large population base and the self-destructive wars of the USA's main rivals in the early 20th century.

[JP226]

The underlying problem is that with wealth comes political power and influence and unless you want a revolution or a Russian style 1990's Oligarchy inequality has to be adressed to a certain degree.

No it's not. People could give two about political crap. For all the bashing I do and the money that the feds waste, their day to day lives are effected by the state governments more so than not. And then, what's going to get a rep elected? Getting jobs for the locals or blocking a market with senseless regulation? Cali is different but that's essentially a country in and of itself. More often than not it's the bank account that matters and as long as I and others can eat what we want when we want and do what we want when we want, DC is whatever. You'd be amazed by the number of people that not only don't know who's the president but don't have to know.

The chart proves that it's definitely not the proletariat, which is greedy...

Of course they are greedy. It's not like their world isn't centered on themselves. You think some proletarian is going to buy a more expensive loaf of bread or choose McD's over BK b/c it'd help the baker or the burger flipper?

[SorelusImperion]

People could give two about political crap. For all the bashing I do and the money that the feds waste, their day to day lives are effected by the state governments more so than not. And then, what's going to get a rep elected? Getting jobs for the locals or blocking a market with senseless regulation? Cali is different but that's essentially a country in and of itself. More often than not it's the bank account that matters and as long as I and others can eat what we want when we want and do what we want when we want, DC is whatever. You'd be amazed by the number of people that not only don't know who's the president but don't have to know.

What do you want to argue ? That people don't care about politics or that wealth does not provide political power ? Neither of which would be true but you aren't even providing a coherent argument.

You think some proletarian is going to by a more expensive loaf of bread or choose McD's over BK b/c it'd help the baker or the burger flipper?

Don't be foolish. The "poletariat" if you insist on using that term does not have the financial options to choose. No doubt the USA has developed a particularly disgusting mentality of greed and materialism but it's not the lower classes who advocate it.

[Border Patrol]

Except your implication that the rich get richer and the poor get poorer is stupid as . In a modern economy while the rich get richer they usually do it by creating wealth.

Imagine it like this- A pie is on the table with nine slices on it that are all the same size. Now imagine a CEO comes to the table with four slices and adds them to the pie. So now the pie has 13 slices. Mr. CEO keeps two of those slices. So essentially by his actions he added two pieces to the pie, allowing others to grab more pie.

Capitalism isn't some "system" we follow or anything like that, it's essentially the science of understanding what the hell is going on with that pie. It's a study of human behavior, not a guide for how we should live or spend our money. Capitalism doesn't mean banks or bosses, socialists just like to associate them and paint a demonic picture of a science for lord knows what reason.

What's wrong with a disparity anyways? When the rich get richer the poor do as well- the best way to make money is by finding a way to get everything to the customer for cheaper, after all. Carnegie may have treated his workers harsher than is legal today, but he sure as did more for developing this country than any charity has. So basically if you have an agenda against the disparity you're simply upset that someone has more than others. Not that the others are being harmed by the person being rich- on the contrary, they benefit from it- just this person having more irks them. So the poor be damned, we must bring down the rich simply because they're rich, those bastards.

[Il-Principe]

Imagine it like this- A pie is on the table with nine slices on it that are all the same size. Now imagine a CEO comes to the table with four slices and adds them to the pie. So now the pie has 13 slices. Mr. CEO keeps two of those slices. So essentially by his actions he added two pieces to the pie, allowing others to grab more pie.

Your parable doesn't sound too convincing to me. What happened in the last years was that from the nine slices of the pie in your example the CEO gave four to the dogs. Ultimately he was fired for his stupidity, but he still got two slices as compensation. The rest just melted away. You really shouldn't underestimate the grave consequences of the financial crisis. The crisis is far from over.

Except your implication that the rich get richer and the poor get poorer is stupid as . In a modern economy while the rich get richer they usually do it by creating wealth.

Do the rich really create wealth or do they just accumulate more debt? The chart speaks only about income gains.


Also as far as I understand the numbers in the chart are not inflation-adjusted. This likely means that the poor become indeed poorer.

[Stark of Winterfell]

Except your implication that the rich get richer and the poor get poorer is stupid as . In a modern economy while the rich get richer they usually do it by creating wealth.

Imagine it like this- A pie is on the table with nine slices on it that are all the same size. Now imagine a CEO comes to the table with four slices and adds them to the pie. So now the pie has 13 slices. Mr. CEO keeps two of those slices. So essentially by his actions he added two pieces to the pie, allowing others to grab more pie.

Capitalism isn't some "system" we follow or anything like that, it's essentially the science of understanding what the hell is going on with that pie. It's a study of human behavior, not a guide for how we should live or spend our money. Capitalism doesn't mean banks or bosses, socialists just like to associate them and paint a demonic picture of a science for lord knows what reason.

What's wrong with a disparity anyways? When the rich get richer the poor do as well- the best way to make money is by finding a way to get everything to the customer for cheaper, after all. Carnegie may have treated his workers harsher than is legal today, but he sure as did more for developing this country than any charity has. So basically if you have an agenda against the disparity you're simply upset that someone has more than others. Not that the others are being harmed by the person being rich- on the contrary, they benefit from it- just this person having more irks them. So the poor be damned, we must bring down the rich simply because they're rich, those bastards.

Judging from the graph, it seems that your pie analogy is a little off. The CEO brought 6 pieces of pie, took five of them for compensation, and then told the workers "Look at all the pie I'm bringing you!".

[JP226]

What do you want to argue ? That people don't care about politics or that wealth does not provide political power ? Neither of which would be true but you aren't even providing a coherent argument.

It's both. People don't care because they don't have to care. If the vast majority of Americans had something at stake in the politial arena, they'd know more than whatever the hell is on TV be it sports or some sitcom. And wealth and poltiical power, money is a lagging variable to political points. If a politican does start catching on to the electorate, the money follows. It's not the other way around. It's a myth that politicians can buy elections.

Except your implication that the rich get richer and the poor get poorer is stupid as . In a modern economy while the rich get richer they usually do it by creating wealth.

Imagine it like this- A pie is on the table with nine slices on it that are all the same size. Now imagine a CEO comes to the table with four slices and adds them to the pie. So now the pie has 13 slices. Mr. CEO keeps two of those slices. So essentially by his actions he added two pieces to the pie, allowing others to grab more pie.

Capitalism isn't some "system" we follow or anything like that, it's essentially the science of understanding what the hell is going on with that pie. It's a study of human behavior, not a guide for how we should live or spend our money. Capitalism doesn't mean banks or bosses, socialists just like to associate them and paint a demonic picture of a science for lord knows what reason.

What's wrong with a disparity anyways? When the rich get richer the poor do as well- the best way to make money is by finding a way to get everything to the customer for cheaper, after all. Carnegie may have treated his workers harsher than is legal today, but he sure as did more for developing this country than any charity has. So basically if you have an agenda against the disparity you're simply upset that someone has more than others. Not that the others are being harmed by the person being rich- on the contrary, they benefit from it- just this person having more irks them. So the poor be damned, we must bring down the rich simply because they're rich, those bastards.

Awesome, I wish I could rep you.

[SorelusImperion]

People don't care because they don't have to care. If the vast majority of Americans had something at stake in the politial arena, they'd know more than whatever the hell is on TV be it sports or some sitcom.

Obviously politics is not a 24/7 occupation for the ordinary citizen and not each and every question is of interest. Your view that nothing is at stake for the people as long as they are well fed is rather disturbing.

If a politican does start catching on to the electorate, the money follows. It's not the other way around. It's a myth that politicians can buy elections.

Politics are more than just elections as Russia proves till now. Virtually all countrys where the economical power was concentrated in the hands of a few devolved into dictatures or oligarchys. A famous example is the history of Florence and the Medici family which using their wealth managed to turn a Republic into a hereditary Duchy. Since then the underlying mechanics did not change much. The only difference is the framework within which th modern Medici are operating.