The Great Divergence: The United States of Inequality

I didn't notice this mentioned in FWF yet. Looks to be an excellent read, no matter your own viewpoint, with more installments to come.

The Great Divergence: The United States of Inequality

You could blame entitlement programs for the growing inequalitiy as much as anything - the poor no longer have as much incentive to 'keep up', they're able to receive a portion of other's spoils without contributing any effort of their own.

Instead of continually chastising the rich and attempting to bring them back to the pack, maybe we should reign in the programs that prop up the poor, and give them a kick in the ass to start adding their own productivity to the calculation.

The increasing govt subsidy of the poor simply presents more opportunities to the resourceful. so we can transfer that money to ourselves.

The inequality exists, and is getting worse. The problem is not just between the richest and the poorest, whether you think they are lazy scum or abused victims, but between the richest 1% and everyone else, from the upper middle class on down.

Even if you think the inequality is justified and self-inflicted, the fact is that such disparity can lead to big problems. "Let them eat cake" won't work as a long-term solution.

cestmoi123 said: Glitch99 said: You could blame entitlement programs for the growing inequalitiy as much as anything - the poor no longer have as much incentive to 'keep up', they're able to receive a portion of other's spoils without contributing any effort of their own.

Instead of continually chastising the rich and attempting to bring them back to the pack, maybe we should reign in the programs that prop up the poor, and give them a kick in the ass to start adding their own productivity to the calculation.

Yes, because expanded food stamp programs explain the growing gap between the top 1% and the next 19%.

Shhh, stop using facts to argue slogans, that's just ain't fair.

Glitch99 said: You could blame entitlement programs for the growing inequalitiy as much as anything - the poor no longer have as much incentive to 'keep up', they're able to receive a portion of other's spoils without contributing any effort of their own.

Instead of continually chastising the rich and attempting to bring them back to the pack, maybe we should reign in the programs that prop up the poor, and give them a kick in the ass to start adding their own productivity to the calculation.

Even with that the "poor" today enjoy standards of living unlike any other time in history. Income inequality is a useless measure - the accurate measure should be the difference between the standard of living of a "poor" person and "rich" at times throughout history.

Just because people these days can make a billion dollars relatively "easily" and skews the average "inequality" gap upwards does not mean he is doing so at the expense of the rest of the population. As human history has shown the economy is not zero sum - as a whole, high income and high net worth is a reflection of real wealth that is created, and with the way our economic system works, it works to benefit society as a whole, whereas in past times of history the wealth hoarder had absolute power and did keep down the rest of the population.

DamnoIT said: Huge problems when the poor need to consume more then they can produce, the rich do not spend on goods services and only invest and the middle class is erode away.

GDP = private consumption + gross investment + government spending + (exports − imports)

Yeah the standard of living has gone up for everyone

Even people on section eight vouchers are renting nice new homes in many areas

The richest people in the country have pledged to donate most of their wealth

There are some differences in that it can be tough to support a family on one income as in the fifties, but in the fifties you had a 1200 sqft house and the family didn't have three cars and cell phones to pay for

In before "Tax cuts for the Rich and Corporate" shows up.

SUCKISSTAPLES said: Yeah the standard of living has gone up for everyone

Even people on section eight vouchers are renting nice new homes in many areas

The richest people in the country have pledged to donate most of their wealth

There are some differences in that it can be tough to support a family on one income as in the fifties, but in the fifties you had a 1200 sqft house and the family didn't have three cars and cell phones to pay for

There are problems with donations of huge magnitude. The problem is if the aid is directly given and people form dependence and what little economy that may have existed is destroyed with free goods services food that is given. Also regionally some parts of the world aren't really viable for the density of life that inhabits them. It does no good in some case to keep people where they are because there is not enough ample fertile land and water to sustain. Consider is it a greater feat to give a billion to help treat everyone with cancer or to fund uninhibited research and application of methods that cure.

The objective is for the people in control to keep everyone else's noses just above water.. give them just enough to get by (if i can use that analogy). If their head goes under they start panicking and pulling everyone else down with them. If their head gets too high out of the water they start talking and scheming and trying to change/question things. They like things how they are and want to keep it that way. The reality is talking about it isn't going to solve anyone's problems. People need to start acting. The only way change is really going to happen is if people start doing something about it. You can't keep doing the same thing every day and expect different results. Talk to people, tell your kids what the problem is, organize meetings.. do something. Ah forget it, I'm going to play Farmville and txt my bff.

Rich investing is great but if they spike commodity or good prices beyond reason it can be detrimental to those who just need items to live. I also wanted to highlight that the middle class churn money in the economy quite well and as that pool dwindles so does the resilience of the overall structure.

Cake or death!
UncaMikey said: "Let them eat cake" won't work as a long-term solution.

The elderly aren't going to be wealthy for long , since the healthcare industry has discovered how to keep them alive but needing expensive assistance

All their money will be spent onmeds and nursing homes

In much of the rest of the world, the following picture is an accurate depiction of how the "middle class" live, maybe even "upper middle class"

Those of us living in the USA are very fortunate, and most of don't even realize how good we have it compared to the rest of the world

SUCKISSTAPLES said: The elderly aren't going to be wealthy for long , since the healthcare industry has discovered how to keep them alive but needing expensive assistance

All their money will be spent onmeds and nursing homes

And why again is this a bad thing? If we're talking about leveling the inequality gap, having the elderly essentially forced to spend their money on healthcare instead of gifting it to the Paris Hiltons of the world seems like a pretty good way to even that wealth curve out again. As it is, the burden of that "expensive assistance" is being dumped on the backs of the middle-class via taxes for social programs. And no one realizes it because it's being applied as an indirect tax.

There's a huge problem in this country where the sanctity of life is somehow rated to have a value of "infinity dollars" and people seem to think resources are infinite as well -- and since all healthcare costs are abstracted away via dozens of middle men and indirect sources (insurance company => doctor => medicare => taxpayer), NO ONE is left to actually confront the question "is it worth spending a ridiculous sum of money to gain a few extra hours of life for a person who is going to die anyway?". What sounds initially callous is certainly not when you picture the vast amount of good that quantity of money could do paying for the health of other people in the system (or in simply boosting our economy by lowering costs).

When such a question is posed in a free market, the answer is simple: you live so long as you can afford it, and then you're cut off. However, in our bleeding heart world where people think resources/money grows on tree and everyone can be cured of everything and everyone has the right to multi-billion dollar operations, if you try to introduce _any_ view other than "100% healthcare for everyone that needs it", you're seen as a heartless dick rather than just the realist that recognizes that services cost money.

wojtyk said: When such a question is posed in a free market, the answer is simple: you live so long as you can afford it, and then you're cut off. However, in our bleeding heart world where people think resources/money grows on tree and everyone can be cured of everything and everyone has the right to multi-billion dollar operations, if you try to introduce _any_ view other than "100% healthcare for everyone that needs it", you're seen as a heartless dick rather than just the realist that recognizes that services cost money.

It's important to remember, though, that this same decision gets made in non-free market systems as well, and in many cases more explicitly. England uses QALYs (Quality Adjusted Life Years), and compares treatments on the basis of $/QALY. Something that costs $10k, and will extend the life of a comatose patient by only a few hours, has an extremely high QALY, and the NHS won't pay for it. Something like polio vaccination (at the other end of the spectrum, very high QALY, very low cost) is absolutely covered.

In every system, there's got to be someone who says "we're not spending money on that," and it saddens (but doesn't surprise) me that people on both sides of the health care debate like to pretend that it isn't the case ("evil health insurance companies getting between you and your doctor" or "evil government death panels").

Glitch99 said: You could blame entitlement programs for the growing inequalitiy as much as anything - the poor no longer have as much incentive to 'keep up', they're able to receive a portion of other's spoils without contributing any effort of their own. Instead of continually chastising the rich and attempting to bring them back to the pack, maybe we should reign in the programs that prop up the poor, and give them a kick in the ass to start adding their own productivity to the calculation.

Here's the problem in a nutshell: the rich are really, really bad at spending lots of money money. For all you hear about overpriced luxury cars and yachts and houses, as a proportion of their assets their spend is tiny. Give them an extra $10,000,000 in annual tax breaks, you will be lucky if they spend 10% of that windfall. Wealth concentrated in the top percentiles is effectively wasted money - its velocity is low, it's just sitting around not "trickling down" fast enough. Hand the rich an increasing big chunk of your wealth, and you stop looking so much like a modern, vibrant consumerist economy and you start looking a lot more like, well, Argentina.

By comparison, the poor spend like crazy. Give them an extra $1,000 a year, they will probably spend close to 95% of that "windfall" on consumer items such as gas, diapers, food, and consumables. That money is not being wasted, it has a high velocity as it is circulated through the economy. You have just expanded the money supply, but also expanded demand. Well done! This is why redistributing excess wealth from the very highest echelons of the social pyramid to its lower levels is A Good Thing for any modern economy.

Evidence?
Income inequality in the United States has not worsened steadily since 1915. It dropped a bit in the late teens, then started climbing again in the 1920s, reaching its peak just before the 1929 crash. The trend then reversed itself. Incomes started to become more equal in the 1930s and then became dramatically more equal in the 1940s. Income distribution remained roughly stable through the postwar economic boom of the 1950s and 1960s. Economic historians Claudia Goldin and Robert Margo have termed this midcentury era the "Great Compression." The deep nostalgia for that period felt by the World War II generation—the era of Life magazine and the bowling league—reflects something more than mere sentimentality.

See that? The periods in its recent history when the US economy was growing the fastest and for which people have most sentimentality (ie, 1950s) coincide with its greatest periods of extreme wealth taxation. When this was reversed, when wealth was allowed to accumulate endlessly at the top again, you get a virtual re-run of the 1920s and the subsequent asset price crash, preceded by a time when median incomes first rose only by A) entering women family members into the workforce and B) Working longer hourse, and then eventually stagnated, and then began to fall.

Want to see it in pictures?

LordKronos said: What's with all these comments about how the standard of living now is so much better than the standard of living in the 1940's? So, what's the point? The 1940's standard of living is a hell of a lot better than the standard of living 1000 years ago, so I guess unless you are bathing in the river and have a life expectancy of 30 years, I guess there's no room to complain, right? Because that's pretty much what I seem to be reading into all these comments.Read them again. The premise of the original argument is that income inequality is a problem that needs to be solved. The original Slate article linked stated that the income inequality has increased (so the problem has gotten worse) since 1915. That sounds dire until you stop to apply some common sense. Obviously the poor today are significantly better off than the poor of 100 years ago.

The Slate author, and his supporters, are arguing that, if your neighbor makes the same salary as you, you're OK. But if he gets a raise, you have somehow become worse off.

Glitch99 said: You could blame entitlement programs for the growing inequalitiy as much as anything - the poor no longer have as much incentive to 'keep up', they're able to receive a portion of other's spoils without contributing any effort of their own.

Instead of continually chastising the rich and attempting to bring them back to the pack, maybe we should reign in the programs that prop up the poor, and give them a kick in the ass to start adding their own productivity to the calculation.

The gap has a lot more to do with inflation. Poor and lower classes can't often take advantage of inflation as their wages don't typically increase at the same rate.

That being said... The entitlement programs sometimes trigger events that lead to inflation.

Krazen1211 said: nycll said: Krazen1211 said: Is that redistribution, or the natural distribution of economic productivity in the absence of government intervention?If natural is always good, nobody will be doing boob jobs.

That answers that question perfectly.

Good and bad is up to personal preference. Silicone and flesh, well, not as much.Glad you get my point. While I always try to make the truth as easy to understand as possible, it is not always easy. If you think about it, it is pretty silicone vs ugly flesh, so the choice is indeed personal preference. Same dilemma of higher economy growth higher standard of living with more wealth spreading vs lower economic growth lower standard of living with less wealth spreading. People should be free to make their own choices. But they should know what choice they are actually making.

Why do you dismiss part of the data as an oddity, but not the overall data as an oddity?

I merely pointed out that the biggest wealth spreading in history did not have the claimed effect.That is because you simply can't dismiss the overall data. You don't decide who won WW2 by the battle of Pearl Harbor, do you? At worst case, the overall data can be deemed inclusive (I don't think so, but we can agree to disagree). But even if you can prove the overall data is inconclusive, you still can't use one data point to draw a conclusion.