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The Truth About Income Inequality (1995)
- Thread starter Legion
- Start date
A lot of interesting information there. It would be interesting to see it extended into 2004, or even 2001. (The data stops at 1991)
I think a lot has changed since, NAFTA, China becoming a manufacturing powerhouse, etc. and it would be interesting to see how these macro events affected the wealth distribution.
I think a lot has changed since, NAFTA, China becoming a manufacturing powerhouse, etc. and it would be interesting to see how these macro events affected the wealth distribution.
This article shows stagnation of income in the lower income groups... At a time when the economy added a lot of wealth. It then ends with condemnation of gov role as redistributer of income thru taxes. I.E. social engineering... Without indicating what the new incomes would be without govs role.
So I guess the CIA's own assessment of income stagnation isnt viable? http://www.cia.gov/cia/publications/factbook/geos/us.html I would have liked to see a breakdown of that upper quintile in the ever increasing top percentages... Here in Canada the higher you go the more likely you arent Canadian anymore... Now they dont move to the US to pay less taxes... they move to the Bermuda or the Bahamas wher they pay none. Id bet its the same thing down south. Just another way to distort the stats these guys use...
Not only liberals distort stats...
So I guess the CIA's own assessment of income stagnation isnt viable? http://www.cia.gov/cia/publications/factbook/geos/us.html I would have liked to see a breakdown of that upper quintile in the ever increasing top percentages... Here in Canada the higher you go the more likely you arent Canadian anymore... Now they dont move to the US to pay less taxes... they move to the Bermuda or the Bahamas wher they pay none. Id bet its the same thing down south. Just another way to distort the stats these guys use...
Not only liberals distort stats...
I don't think there is much the government can do about income stagnation. As economies become more mature, they slow down, and productivity has limits.
Ultimately, the only way everyone's income can go up is if we can produce more with less input. There are practical limits to this and only radical technology can lead ot large boosts (e.g. robots, nanotech, etc) Until then, the only way for businesses to increase output and lower input is to tap into the huge disparity we have with the third world.
Since most people in the US work in services now, there are further limits imposed. Someone's job at Safeway as a Cashier simply is not going to rise very fast.
Income rose in the top 1%-5% because of a short term demand for college educated labor. During the 80s and 90s, white collar workers saw a huge boost in their incomes. I went from the bottom quintile to the top quintile myself. So did most of the people I know who graduated with tech or mba degrees. But now that market is saturated and quickly being outsourced to India as well.
This is not a "jobless recovery" or "income stagnation". Jobs are being created by US companies and salaries are rising fast for the lowest quintiles significantly, only, it's happening in Bangalore instead of Boston.
In a decade or two, salaries in Bangalore might be high enough, and the dollar might be low enough, that the costs of exporting the labor outweight the benefits, but until then, it is an irreversible process.
Pundits would like to see gains by white collar workers used to boost the salaries of the lowest quintiles, but the result would be disappointing, even if you redistributed every dollar over $50,000 to those below. White collar labor is also stagnated now, and except for investment income, their salaries will not rise at the rate they did in the 90s.
Simply put, there is no justification for significant wagegrowth for a guy working at StarBucks, Walmart, or Safeway. Their economic output does not justify any significant increases. They are at the top of the growth curve already. Likewise, for a software developer who went from $40,000 to $100,000 in the 90s, there is no justification for him increasing to $200,000 in the 00s, since there is an equally qualified IIT graduate in India prepared to do the same level of output at $10,000 or less.
Liberals are too focused on the industrial age, the way productivity was explicitly measurable, and they was a good argument that if you produce X+5 widgets per hour instead of X, you should receive some benefit from the increased. Today, wage growth happened in the upper 5% because a new generation of people started worked in hot new industries. And also because, most of the increase comes from being an investor as well as an employee.
I started out making $20k on my first job, and after 10 years, ended up making 6 figures. I did not do this by "stealing most of the gains" from lower quintile workers. The traditional liberal idea is that company X made a hellavalot of money, but evil CEO Y pocketed most of the money for himself. In the real world, company X was an old-school manufacturing company that got off-shored or stagnated, and investors sold off company X's stock and plowed their money into new startup company Y which employes white collar workers.
Because people in the upper quintiles can shift their capital around, they can plow their money into industries and ride the gain, so their incomes rise even as others stagnate. The lower income people weren't so much "robbed" as simply becoming irrelevent, as capital flowed away from their industry and into new industries.
Because a Japanese Bank (Softbank) funded one of the companies I worked at, does not mean my salary increases were "stolen" from the poor. Instead, Japan's investments in the US simply shifted from blue collar factories into high-tech services.
The 90s was an investment boom, and the growth of the upper class's wages did not come by simply stealing extra output from the wages of the lowest service workers.
Ultimately, the only way everyone's income can go up is if we can produce more with less input. There are practical limits to this and only radical technology can lead ot large boosts (e.g. robots, nanotech, etc) Until then, the only way for businesses to increase output and lower input is to tap into the huge disparity we have with the third world.
Since most people in the US work in services now, there are further limits imposed. Someone's job at Safeway as a Cashier simply is not going to rise very fast.
Income rose in the top 1%-5% because of a short term demand for college educated labor. During the 80s and 90s, white collar workers saw a huge boost in their incomes. I went from the bottom quintile to the top quintile myself. So did most of the people I know who graduated with tech or mba degrees. But now that market is saturated and quickly being outsourced to India as well.
This is not a "jobless recovery" or "income stagnation". Jobs are being created by US companies and salaries are rising fast for the lowest quintiles significantly, only, it's happening in Bangalore instead of Boston.
In a decade or two, salaries in Bangalore might be high enough, and the dollar might be low enough, that the costs of exporting the labor outweight the benefits, but until then, it is an irreversible process.
Pundits would like to see gains by white collar workers used to boost the salaries of the lowest quintiles, but the result would be disappointing, even if you redistributed every dollar over $50,000 to those below. White collar labor is also stagnated now, and except for investment income, their salaries will not rise at the rate they did in the 90s.
Simply put, there is no justification for significant wagegrowth for a guy working at StarBucks, Walmart, or Safeway. Their economic output does not justify any significant increases. They are at the top of the growth curve already. Likewise, for a software developer who went from $40,000 to $100,000 in the 90s, there is no justification for him increasing to $200,000 in the 00s, since there is an equally qualified IIT graduate in India prepared to do the same level of output at $10,000 or less.
Liberals are too focused on the industrial age, the way productivity was explicitly measurable, and they was a good argument that if you produce X+5 widgets per hour instead of X, you should receive some benefit from the increased. Today, wage growth happened in the upper 5% because a new generation of people started worked in hot new industries. And also because, most of the increase comes from being an investor as well as an employee.
I started out making $20k on my first job, and after 10 years, ended up making 6 figures. I did not do this by "stealing most of the gains" from lower quintile workers. The traditional liberal idea is that company X made a hellavalot of money, but evil CEO Y pocketed most of the money for himself. In the real world, company X was an old-school manufacturing company that got off-shored or stagnated, and investors sold off company X's stock and plowed their money into new startup company Y which employes white collar workers.
Because people in the upper quintiles can shift their capital around, they can plow their money into industries and ride the gain, so their incomes rise even as others stagnate. The lower income people weren't so much "robbed" as simply becoming irrelevent, as capital flowed away from their industry and into new industries.
Because a Japanese Bank (Softbank) funded one of the companies I worked at, does not mean my salary increases were "stolen" from the poor. Instead, Japan's investments in the US simply shifted from blue collar factories into high-tech services.
The 90s was an investment boom, and the growth of the upper class's wages did not come by simply stealing extra output from the wages of the lowest service workers.
Its not about outright thievery as placating inevitable outcomes of an unregulated economy. Govs role as redistributor isnt about equal outcomes only about avoiding the worse unequal outcomes. No I hope sabastian you dont start equating any redistribution with outright communism again.
Truth is not everyone can move up. For various reasons. Not everyone with the abilities to and not room or jobs for everyone at higher income levels. Tech and movement of capital is displacing everyone now and I hope voters finally see that tho capitalism + tech = greater wealth production its can also = increasing poverty and unemployement over time. This should create the proper response of modest but increasing redistribution to avoid unfair suffering from poverty. I use the word unfair to placate those who still hold to the theme of poverty = laziness.
Im not unhappy Bangladeshis can improve their lot. Im not sure they will buy what they make tho or if we will unless prices better reflect incomes and soon. And if the unchecked economy wont move what available production capabilities of goods and services there exist to target an increasingly smaller wealthier audience over time. Theres not enough data to show that yet. But theres plenty to show that what we have today isnt furnishing the basics for everyone when it easily could.
I know Ill be ok in my line of work. Tho Ill never be rich. Im a bit worried about the guy across the street tho.
Truth is not everyone can move up. For various reasons. Not everyone with the abilities to and not room or jobs for everyone at higher income levels. Tech and movement of capital is displacing everyone now and I hope voters finally see that tho capitalism + tech = greater wealth production its can also = increasing poverty and unemployement over time. This should create the proper response of modest but increasing redistribution to avoid unfair suffering from poverty. I use the word unfair to placate those who still hold to the theme of poverty = laziness.
Im not unhappy Bangladeshis can improve their lot. Im not sure they will buy what they make tho or if we will unless prices better reflect incomes and soon. And if the unchecked economy wont move what available production capabilities of goods and services there exist to target an increasingly smaller wealthier audience over time. Theres not enough data to show that yet. But theres plenty to show that what we have today isnt furnishing the basics for everyone when it easily could.
I know Ill be ok in my line of work. Tho Ill never be rich. Im a bit worried about the guy across the street tho.
Redistribution is occurring pax. The important disparity being addressed isn't between a computer programmer and a guy working at McDonalds or Detroit, it's between the incredibly wealthy guy working at Detroit & McDonalds, and the utterly poor guy working in Asia. Capitalism + technology is sending one $10/hr job over to India to employ ten new employees of the Indian middle class.
Redistribution within the US will not solve the problem you want to address. The "guy across the street" must either find a new line of work, or stay in his current income brackets. We cannot artificially order low-income employers to pay much higher wages without incredibly severe repercussions, and we cannot simply hand out checks to the poor people to make up the difference -- there isn't enough income (not wealth) in the upper 5% to steal. You could take 75% of my income, and everyone who makes the same or more than me, and it would not be enough to bring everyone to middle class. There are something like 30 million people who make less than $20k. If we wanted to give everyone of them $15,000 per year supplement, it would cost $450 billion. Think you can squeeze that much money out of white collar workers who are already being squeezed by outsourcing, debt, and big stock market losses?
I'm sorry, but the have-nots in Western economies are going to be squeezed by people in the third world, who need improvement in their wages far more than affluent westerners. A guy making $10k per year in the US is not going to die of starvation, exposure, or lack of clean water vs someone in a developing country. The best bet for the guy making $10k, if he is too old to switch jobs, is to have a kid, send him to college, and let him bring home the bacon in his retirement years.
Redistribution within the US will not solve the problem you want to address. The "guy across the street" must either find a new line of work, or stay in his current income brackets. We cannot artificially order low-income employers to pay much higher wages without incredibly severe repercussions, and we cannot simply hand out checks to the poor people to make up the difference -- there isn't enough income (not wealth) in the upper 5% to steal. You could take 75% of my income, and everyone who makes the same or more than me, and it would not be enough to bring everyone to middle class. There are something like 30 million people who make less than $20k. If we wanted to give everyone of them $15,000 per year supplement, it would cost $450 billion. Think you can squeeze that much money out of white collar workers who are already being squeezed by outsourcing, debt, and big stock market losses?
I'm sorry, but the have-nots in Western economies are going to be squeezed by people in the third world, who need improvement in their wages far more than affluent westerners. A guy making $10k per year in the US is not going to die of starvation, exposure, or lack of clean water vs someone in a developing country. The best bet for the guy making $10k, if he is too old to switch jobs, is to have a kid, send him to college, and let him bring home the bacon in his retirement years.
Oh yes it is and I think it needs to remain and be scrutinized to keep social peace. But someone making 10 g year in India has a lot more buying power than someone making same in the US... I'd like to see bottom wages in the US at 20g a year today. Or equivalent income\benefit support.
10 g is a bit low without access to health care dont you think?...
I understand the need to respect small employers ability to pay employees... But I also see lot of small employers make huge income at the expense of such low paid employees... One guy I knew working at a local pc store where the owner had only 2 employees paid minimum wage and he was making about 2 million a year in sales. Clearing about 450 grand for himself. I think he could of afforded 25 g can $ per employee... The employee I knew had access to the books... he did a lot of the accounting in fact.
Its a mixed bag thats why I think progressive taxation is the better way to do it. Poor employers wont pay them and rich will... In any case redistribution is here to stay. What level it will exists at is something for elections to decide. I would like to see them slightly modified for my part of course but its still pretty modest expectation...
10 g is a bit low without access to health care dont you think?...
I understand the need to respect small employers ability to pay employees... But I also see lot of small employers make huge income at the expense of such low paid employees... One guy I knew working at a local pc store where the owner had only 2 employees paid minimum wage and he was making about 2 million a year in sales. Clearing about 450 grand for himself. I think he could of afforded 25 g can $ per employee... The employee I knew had access to the books... he did a lot of the accounting in fact.
Its a mixed bag thats why I think progressive taxation is the better way to do it. Poor employers wont pay them and rich will... In any case redistribution is here to stay. What level it will exists at is something for elections to decide. I would like to see them slightly modified for my part of course but its still pretty modest expectation...
As I said before, I don't have any problem with health care subsidized for low income families. As far as I'm concerned, paying for education, childcare, and healthcare for low income people is a more effective way to increase people's disposable income than to just issue them a check.
What I am not in favor of is raising the minimal wage to something like $10. It won't solve the income stagnation problem, and it will do great harm to small business.
I'd rather pour massive amounts of money into education, science and technology research, in order that we might get lucky and hit on something which creates the economy of tommorow. We need to produce more and better things with less. That is the non-zero-sum way to raise everyone up, not simply reallocating a shrinking or stagnant pie.
What I am not in favor of is raising the minimal wage to something like $10. It won't solve the income stagnation problem, and it will do great harm to small business.
I'd rather pour massive amounts of money into education, science and technology research, in order that we might get lucky and hit on something which creates the economy of tommorow. We need to produce more and better things with less. That is the non-zero-sum way to raise everyone up, not simply reallocating a shrinking or stagnant pie.
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