Income inequality in the USA. Stunning inequality in income growth!

[alhoon]

http://www.huffingtonpost.com/2014/05/01/income-inequality-charts_n_5241586.html?ncid=txtlnkusaolp00000592

According to the chart from the source above, nearly HALF (47% or so) of the income growth of the past decades went to the pocket of the top 1% while the bottom 90%, yes, that is 90% saw just 18% of the income growth!

"America’s top 1 percent of earners accounted for 47 percent of all pre-tax income growth over that time period. And that’s excluding capital gains"



I doubt the reason for this is that USA's top 1% is that smart and I believe it's more because... the laws, ethics and system there are helping the top 1%. Helping them a bit too much... and they don't help back the rest.

"The super-rich getting super-richer would all be well and good, except that it doesn’t appear the nation’s “wealth creators” are creating much wealth for anyone else. According to the OECD’s report, the pre-tax, inflation-adjusted incomes of the bottom 99 percent have only grown by an average of 0.6 percent per year in recent decades."

[Col. Tartleton]

https://www.youtube.com/watch?v=UTHlXb0PXh4

Honestly, just put money in the market, when you take it out its free money.

[Border Patrol]

inflation-adjusted incomes of the bottom 99 percent have only grown by an average of 0.6 percent per year in recent decades

So you're telling me that everyone has more now than they did decades ago.

Very well then, good work people. Job well done.

[Astaroth]

So you're telling me that everyone has more now than they did decades ago.

Very well then, good work people. Job well done.

There's a storm coming, Border Patrol. You and your friends better batten down the hatches, because when it hits, you're all gonna wonder how you ever thought you could live so large and leave so little for the rest of us.

You are essentially saying, 'the peons can be happy to get some scraps'.

One of the biggest problems with income inequality is that it distorts the political process and negatively affects the foundation of democracy, see Citizens United. One man, one vote is worth little when one man can buy political influence with money, vastly disproportionate to his one voice.

[YukonTrooper]

I doubt the reason for this is that USA's top 1% is that smart and I believe it's more because... the laws, ethics and system there are helping the top 1%. Helping them a bit too much... and they don't help back the rest.

Of course they don't help back. They game the system specifically to accumulate as much wealth as possible.

[FireElemental]

Trickle,trickle...

So, whats the news ? System is rigged since ever. Just get rid of morals and other BS ballast and you can play it too.

[Earl Dibbles Jr]

Rich people can donate to campaign funds so they can get someone in office with their interests. They're going to stay rich as long as this system is in place.

[ElvenKind]

The 400 wealthiest Americans have wealth equal to 150 million Americans.

[Roma_Victrix]

The 400 wealthiest Americans have wealth equal to 150 million Americans.

And when the 400 wealthiest heard that malnutrition among lower class children is on the rise, they collectively replied: "Let them eat steak."

[alhoon]

The 400 wealthiest Americans have wealth equal to 150 million Americans.

I can't believe that. Source please?

[ElvenKind]

I can't believe that. Source please?

http://www.politifact.com/wisconsin/...-more-wealth-/

It is from 2009-2010 study.

[sumskilz]

I think it's appropriate to quote Thomas Sowell here:

Who are those top one percent? For those who would like to join them, the question is: How can you do that? The second question is easy to answer. Virtually anyone who owns a home in San Francisco, no matter how modest that person's income may be, can join the top one percent instantly just by selling their house. But that's only good for one year, you may say. What if they don't have another house to sell next year? Well, they won't be in the top one percent again next year, will they? But that's not unusual. Americans in the top one percent, like Americans in most income brackets, are not there permanently, despite being talked about and written about as if they are an enduring "class" — especially by those who have overdosed on the magic formula of "race, class and gender," which has replaced thought in many intellectual circles. At the highest income levels, people are especially likely to be transient at that level. Recent data from the Internal Revenue Service show that more than half the people who were in the top one percent in 1996 were no longer there in 2005. Among the top one-hundredth of one percent, three-quarters of them were no longer there at the end of the decade. These are not permanent classes but mostly people at current income levels reached by spikes in income that don't last. These income spikes can occur for all sorts of reasons. In addition to selling homes in inflated housing markets like San Francisco, people can get sudden increases in income from inheritances, or from a gamble that pays off, whether in the stock market, the real estate market, or Las Vegas. Some people's income in a particular year may be several times what it has ever been before or will ever be again. Among corporate CEOs, those who cash in stock options that they have accumulated over the years get a big spike in income the year that they cash them in. This lets critics quote inflated incomes of the top-paid CEOs for that year.

[Astaroth]

sumskilz, the problem with that quote is that it implies that wealth fluctuates more than it actually does. Of course part of the 1% might no longer be there 10 years later. But there can be many reasons for that, including the death of the person (most of the richest people are fairly old). Much more importantly, we are talking about relative wealth here.

This means that no longer being part of the top 1% usually doesn't mean that you lose all or most of your wealth over time. Instead, what it often means is simply that someone else became even richer than you (more accurately: someone else's wealth grew at an even faster rate than your own).

To give an example: A is part of the top 1% of Absurdisatan with 10,000 denars in the year 2000. In the year 2010, he is no longer part of the top 1%. Why? Did he lose part of his wealth? Nope, he actually now owns 15,000 denars. Even including inflation, his wealth grew by (say) 40%. However, now the minimum threshold for being part of the top 1% is 20,000 denars, because now more people have even more money.

To convert it to the real world, it is really rare for people in the top 1% to ever lose all or even most of their wealth, unless they die. Even if they are no longer part of the top 1%, this usually just means that someone else's wealth grew faster than their own and that they are now part of the top 2% or, rarely, perhaps 5 %. With a few notable exceptions, there is hardly any serious movement between the major brackets. I would be interested to know how many of the top 1% were not at least part of the top 5% for the decades before or had parents or other relatives with at least that money.

Of course there is also some fluctuation due to changes in housing prices, stock market booms and crashes and so on. But in the long run, the vast majority of people in the 1% only ever get richer -- the only question being if someone else gets even richer even faster.

[Denny Crane!]

I wonder at these statistics. Justicar claimed to me that the UK was better in the 1970's but income inequality was better then so surely he is right! But no...it was horrendous in the UK then.

There are all sorts of factors that contribute to the wellbeing of a society and income equality is one of them, but it isn't the be all and end all and I suspect recessions like this will have a negative effect but I do not think that means the skies are falling.

What this recession was without doubt was the biggest wealth transfer from the common to the elite that we have ever seen, but I doubt that some form of government action will help it. They have done quite enough!

[sumskilz]

I certainly buy that it is extremely rare for someone at the top to drop to the bottom, but Sowell's main argument is that when you use categories instead of individuals it allows for all sorts of distortions.

More on that point...

Currently we are hearing a lot in the media and in politics about the "top one percent" of income earners who are supposedly getting an ever-increasing share of the nation's income. That is absolutely true if you are talking about income brackets. It is totally untrue if you are talking about actual flesh and blood people. The Internal Revenue Service can follow individual people over the years because they can identify individuals from their Social Security numbers. During recent years, when "the top one percent" as an income category has been getting a growing share of the nation's income, IRS data show that actual flesh and blood people who were in the top one percent in 1996 had their incomes go down — repeat, DOWN — by a whopping 26 percent by 2005. How can both sets of statistics be true at the same time? Because most people who are in the top one percent in a given year do not stay in that bracket over the years.

If we are being serious — as distinguished from being political — then our concern should be with what is happening to actual flesh and blood human beings, not what is happening to abstract income brackets. There is the same statistical problem when talking about "the poor" as there is when talking about "the rich." A University of Michigan study showed that most of the working people who were in the bottom 20 percent of income earners in 1975 were also in the top 40 percent at some point by 1991. Only 5 percent of those in the bottom quintile in 1975 were still there in 1991, while 29 percent of them were now in the top quintile. People in the media and in politics choose statistics that seem to prove what they want to prove. But the rest of us should become aware of what games are being played with numbers.

[Astaroth]

I certainly buy that it is extremely rare for someone at the top to drop to the bottom, but Sowell's main argument is that when you use categories instead of individuals it allows for all sorts of distortions.

More on that point...

Quoting the guy himself, this is quite ironic:

People in the media and in politics choose statistics that seem to prove what they want to prove. But the rest of us should become aware of what games are being played with numbers.

His statistics are a prime example of making the numbers fit the narrative. Let me give a few examples:

IRS data show that actual flesh and blood people who were in the top one percent in 1996 had their incomes go down — repeat, DOWN — by a whopping 26 percent by 2005

What does that actually mean? Did those people lose wealth? No. They are just making less on top of what they already own. Their income decreased -- does that mean it went down gradually? Does that mean it happened to be, in the randomly chosen year 2005, 26% lower than in 1996? Does that mean income relative to their wealth? Total income? Adjusted for inflation?

But that's not even the biggest issue here. In more practical terms, many things happened between 1996 and 2005. 1996 could have been a boom year -- in fact, there were various bubbles going on. 2005 is after the dot-com crash. And so on, and so forth.

This guy is using carefully chosen statistics, combined with a few partisan statements about everyone who happens to disagree, to support his fairly obvious agenda.

The same goes for his other statistics. They might very well be true, but he is misrepresenting their meaning and/or intentionally presenting them in a way to support his own bias:

A University of Michigan study showed that most of the working people who were in the bottom 20 percent of income earners in 1975 were also in the top 40 percent at some point by 1991.

That means absolutely nothing. "Most of the working people"? What does that mean? "At some point by 1991"? Again, what does that mean? This includes any number of things. Highly qualified people starting in a low-paid position and quickly working their way up. People generally earning more than they did before simply due to getting older/rising up in the ranks slowly. People at one point in time having a momentarily higher income for various reasons, such as selling a house et al.

Tl;dr: having a momentarily "top 40%" (in itself nothing special whatsoever to begin with) earning at one point within 16 years means jack all.

Only 5 percent of those in the bottom quintile in 1975 were still there in 1991, while 29 percent of them were now in the top quintile.

Once again playing around with percentages. Let's decipher what he says here. Quintile means 1/5, i.e. 20%.

So we have the bottom 20% of income earners in 1975.

Of those, 5% were still there in 1991. Does that mean 5% of the 20% (i.e. 1% of the total income earners) or merely 1/4 of the original 20%? I assume the latter, but it's far from clear.

Another 29% of the bottom 20% from 1975 were now in the top 20%. Sounds impressive, eh? Except it isn't. 29% of 20% is 5.8% of all income earners. This means that only about 5% of the income earners manage to work their way up from the bottom quintile to the top quintile.

Still, not that bad, right? Except for the fact that it includes all those who just graduated and started working, all those in low-wage internship programs etc. are included. In other words, you could be a Harvard graduate, son of two millionaires and start out as a low-paid NGO worker after graduating ("bottom quintile in income") only to soon shoot up to a high-paying job. Granted, that's not the norm.
But you have to keep in mind that the 5% of the whole income earners we are talking about are mostly not people who worked their way up through hard work, dedication and brains.

It's mostly people who simply started in a fairly low-paying job due to being new at their job, only to be essentially guaranteed a much better paying job few years in the future. This is not Joe Shmoe self-made small business owner, this is mostly graduate A who was never going to stay in the bottom quintile to begin with.

[Davius]

Quoting the guy himself, this is quite ironic:



His statistics are a prime example of making the numbers fit the narrative. Let me give a few examples:



What does that actually mean? Did those people lose wealth? No. They are just making less on top of what they already own. Their income decreased -- does that mean it went down gradually? Does that mean it happened to be, in the randomly chosen year 2005, 26% lower than in 1996? Does that mean income relative to their wealth? Total income? Adjusted for inflation?

But that's not even the biggest issue here. In more practical terms, many things happened between 1996 and 2005. 1996 could have been a boom year -- in fact, there were various bubbles going on. 2005 is after the dot-com crash. And so on, and so forth.

This guy is using carefully chosen statistics, combined with a few partisan statements about everyone who happens to disagree, to support his fairly obvious agenda.

The same goes for his other statistics. They might very well be true, but he is misrepresenting their meaning and/or intentionally presenting them in a way to support his own bias:


That means absolutely nothing. "Most of the working people"? What does that mean? "At some point by 1991"? Again, what does that mean? This includes any number of things. Highly qualified people starting in a low-paid position and quickly working their way up. People generally earning more than they did before simply due to getting older/rising up in the ranks slowly. People at one point in time having a momentarily higher income for various reasons, such as selling a house et al.

Tl;dr: having a momentarily "top 40%" (in itself nothing special whatsoever to begin with) earning at one point within 16 years means jack all.


Once again playing around with percentages. Let's decipher what he says here. Quintile means 1/5, i.e. 20%.

So we have the bottom 20% of income earners in 1975.

Of those, 5% were still there in 1991. Does that mean 5% of the 20% (i.e. 1% of the total income earners) or merely 1/4 of the original 20%? I assume the latter, but it's far from clear.

Another 29% of the bottom 20% from 1975 were now in the top 20%. Sounds impressive, eh? Except it isn't. 29% of 20% is 5.8% of all income earners. This means that only about 5% of the income earners manage to work their way up from the bottom quintile to the top quintile.

Still, not that bad, right? Except for the fact that it includes all those who just graduated and started working, all those in low-wage internship programs etc. are included. In other words, you could be a Harvard graduate, son of two millionaires and start out as a low-paid NGO worker after graduating ("bottom quintile in income") only to soon shoot up to a high-paying job. Granted, that's not the norm.
But you have to keep in mind that the 5% of the whole income earners we are talking about are mostly not people who worked their way up through hard work, dedication and brains.

It's mostly people who simply started in a fairly low-paying job due to being new at their job, only to be essentially guaranteed a much better paying job few years in the future. This is not Joe Shmoe self-made small business owner, this is mostly graduate A who was never going to stay in the bottom quintile to begin with.

Exactly. Huffpoo loves the haves vs have nots narrative. It fits their idealism. Everyone I know is far better off today than 10 years ago, even with the crash of '08.

Capitalist society is capitalist. What a shocker.

On the fun side, I'll be opening my pool and jacuzzi this weekend. The jacuzzi needs to be at a perfect 90 degrees (f). The pool I like at about 80 the heater needs to run all week. My meter is spinning like a 78 rpm record!!

So why is your question relevant to the topic at hand Denny? Sure the quality of life is better than it was 20 years ago. Does that somehow make inequality okay?

It kinda does. The US is a capitalist nation. There are communist nations where these inequalities are non existent. Funny how those seem to have awful criticisms thrown at them. Usually human rights criticisms.

[Earl Dibbles Jr]

^ Economics be crazy.

[Heathen Hammer]

I think its time for USA to have a "spring" just like Ukraine did. I can not wait to see violent mobs set American cops in Washington on fire with Molotov's and then call them freedom fighters just like Americans do in Ukrainian thread.

[Denny Crane!]

I hate to be blunt here but I'm going to...

So what is the point and what are the consequences and what are the solutions?