Quoted completely from the Economic Policy Institute:
In recent decades, the bulk of income growth in America has gone to the top 10% of families, but that was not always the case. Throughout most of the 20th Century, the bottom 90% claimed a much larger share of income growth than they have in recent years. The Chart, from EPI’s new interactive State of Working America Web site, compares the distribution of income growth over two periods. Between 1948 and 1979, a period of strong overall economic growth and productivity in the United States, the richest 10% of families accounted for 33% of average income growth, while the bottom 90% accounted for 67%. The overall distribution of income was stable for these three decades. In an extreme contrast, during the most recent economic expansion between 2000 and 2007, the period that led up to the Great Recession, the richest 10% accounted for a full 100% of average income growth.
In other words, while average annual incomes over the seven-year period between 2000 and 2007 grew by $1,460, that growth was extremely lopsided. Average incomes for the bottom 90% of households actually declined. The interactive feature When income grows, who gains?, on the new State of Working America Web site, lets users look at income growth and distribution patterns for any time frame between 1917 and 2008.
This new feature lets users choose any two years between 1917 and 2008 to see how much the top 10%, versus the bottom 90%, contributed to growth in average incomes. Because income growth can change a lot during periods of recession, researchers tracking trends in inequality often chart movements between the peaks of different business cycles in order to avoid comparing a high point in one business cycle to a low point in another. The interactive feature on income distribution also shows how an increasing amount of income growth has been flowing not just to the top 10%, but to the richest 1% of families.
Income inequality, Economics Policy Institute – click on image for a larger version
If you find it difficult to read the chart, you can click through to a larger version at EPI, or click on the thumbnail image for a larger one.
Wasn’t income inequality one of the key causes of the Great Depression?
Tip of the old scrub brush to reader Nic Kelsier, and to Luiz Carlos Abreu, who appends this note:
I wish the bottom 90% would let go of the myth that we can all be in the 10% richest. In fact, being rich does not mean having a happy not even non-stressful life, not if polls on the subject tell anything.
Never mind Christianity, Judaism, Islam — the real religion of most Americans seems to be Capitalism; there are even some fundamentalist capitalists. Its main beliefs seem to be:
- The world has unlimited resources so long as we have faith in Money to whom nothing is impossible.
- Only Money is God, those who have Money are His Prophets.
- The Holy Sainthood and Divine Right of the Rich.
- Money is happiness, and to be one with Money is the Supreme Happiness.
- We can do all things through Money that enriches us.
- An amount of Money is a measure of Holiness or Godliness, therefore separating Money is a sin and accumulating Money is a holy act.
I wish this was just a bunch of BS.
Also see:
- Discussion on social mobility in different nations (hint: The U.S. doesn’t fare well); and follow-up at Café Philos
- “Five Zombie Economic Ideas That Refuse to Die,” John Quiggin in Foreign Policy
- See Prof. Hanley’s discussion of the middle class and standards of living, etc.
- You might want to see Quiggin’s stuff at his blog, or at Crooked Timber
Millard Fillmore's Bathtub 
Since Morgan likes to toss around the term “socialism” or “marxism”, here is a different term for him to consider:
Fascism
http://www.commondreams.org/view/2011/02/21-8
Fighting the 5 Fascisms in Wisconsin and Ohio
by Harvey Wasserman and Bob Fitrakis
The escalating confrontations in Wisconsin and Ohio are ultimately about preventing the United States from becoming a full-on fascist state.
The stakes could not be higher—or more clear.
As defined by its inventor, Benito Mussolini, fascism is “corporate control of the state.” There are ways to beat around the Bush—Paul Krugman has recently written about “oligarchy”—but it’s time to end all illusions and call what we now confront by its true name.
The fights in Wisconsin, Ohio, and in numerous other states are about saving the last shreds of American democracy. They burn down to five basic realities:
1) The bulwark of modern democracy is the trade union. This has been true since the beginning of the Industrial Revolution. All social programs can trace their roots to union activism, as can the protection of our civil liberties.
The first Germans Hitler put in concentration camps were neither Jews nor gypsies—they were trade unionists.
The attacks on state workers in Wisconsin, Ohio and elsewhere have nothing to do with balancing budgets. That could easily be done without destroying collective bargaining.
For the hard-right, this is about busting unions, the last organized force standing in the way of total corporate control of the United States by the rich and richer.
2) The material essence of fascism is the extreme separation of rich and poor, a massive transfer of wealth from those on the bottom to those on the top.
The unbalanced budgets in Ohio and Wisconsin are rooted in huge tax cuts given to the rich at the expense of the middle and lower classes. Widespread poverty among those who might otherwise rebel is essential to fascist control of a government.
A largely ignored aspect of this fight is the hundreds of billions of dollars currently locked up in union, government and Social Security pension funds. With unions destroyed, this huge cache of dollars will fall quickly into corporate hands. The additional “benefit” for the financial elite will be tens of millions of impoverished elders desperate for low-wage jobs in virtual slave labor situations.
3) The crisis crippling states everywhere is directly related to the massive destruction of social resources by war. Since the end of the New Deal and World War II, the American elite has engineered the biggest dump of material wealth by military means in human history.
The trillions of dollars of pure martial waste poured into the Cold War and those in Southeast Asia, central America, the Middle East, Southwest Asia and elsewhere could easily have clothed, housed, fed, educated, and provided otherwise decent lives for all human beings the world over.
Instead, poverty, desperation and stratification have been guaranteed.
The entire economic crisis now gripping the United States can be directly traced to the military budget, which exceeds the sum of what’s being spent by all other nations combined. In a brilliant recent column, Robert Greenwald points out that the entire alleged shortfall in Wisconsin could be covered by bringing just 180 troops home from Afghanistan.
But the purpose of that deployment is to undermine national security, not to protect it. A frightened, impoverished, insecure nation is one dependent on its fascist elite.
Democracy demands and protects true material security among the people as a whole. That’s what’s really at stake in the battle to cut the military budget. The fights in Ohio and Wisconsin are surface manifestations of that bigger battle.
4) Mussolini also made it clear that corporate control of the media is essential to fascist rule. Whoever would seize power first took the radio stations, then the television stations. Now the internet is under attack. The free flow of information is fascism’s ultimate enemy.
So the relentless Foxist portrayal of the battles in Wisconsin and Ohio as pitting “responsible, austerity-minded” governors versus “lazy, irresponsible state workers” is utterly predictable.
So is the appearance of the media-created Tea Party “movement” on the side of the corporations. It’s standard corporate procedure to invent a faux “grassroots” to fight unions and working people. So finding phony corporate “populists” like Sarah Palin and New Jersey’s Chris Christie in the right-wing media limelight is utterly predictable.
5) It is no accident that the “job loving” union-hating governors of Wisconsin and Ohio (along with Florida) have rejected billions in federal funds for re-building passenger rail service that would create thousands of jobs.
A corporate state relies on central control of “King CONG” energy—coal, oil, nukes and gas. Rail service threatens the power of the oil and auto lobbies. Renewable energy would replace centralized fossil/nuclear sources with decentralized Solartopian photovoltaic panels, bio-fuels, windmills, increased efficiency and the like. The push for federal nuclear loan guarantees is central to the corporate state.
The anti-union governor of Ohio is strongly focused on killing not only train service but all incentives for renewable energy. His energy plan is for extreme right-wing nuke-based monopolies like FirstEnergy to run the show. Atomic power is the ultimate weapon against community control.
For decades the term “fascist” has been dismissed from use in this country, and perhaps rightly so. Corporations have been dominant in the US since the 1880s, but we have managed to maintain a modicum of democracy.
It’s hard to see that happening if the remnants of the organized labor movement are crushed in Wisconsin and Ohio. Both states have long, important traditions of union activism.
In the wake of Citizens United, with the courts, media, Congress and presidency firmly in corporate control, we see no easy road to victory for working people.
“Vote the bastards out” has become a pipedream in the age of electronic voting machines. Especially in Ohio, a reliable electoral vote count is a thing of the past.
We also have a president who was elected with strong labor support and who is now genuflecting toward the unions. But US history is filled with Democrats who have betrayed their working-class backers, and this one may prove no exception.
So in the long run, we have only ourselves to rely on. The way to survival is not clear.
Ultimately, as Martin Luther King said, “the arc of the moral universe is long, but it bends towards justice.”
But from time to time, it does break. If these uprisings in Wisconsin and Ohio fail, there will—literally—be hell to pay.
Somehow, we must find a way to make sure they don’t
LikeLike
Oh and again, Morgan, if this country falls to actual socialism it won’t be at the hands of any Democrat.
It will be at the hands of the Republicans. Because that will be the reaction to the Republicans abject desire to hand all the wealth and all the power to a miniscule few. That will be the reaction of the Republicans desire to destroy the middle class.
So if you’re scared of one extreme, child, then I suggest you stop defending the other extreme and instead start fighting for the middle…the balance.
Because on that score…you’re a pathetic failure. You’re willing to screw yourself over ten times over just as long as the Koch Brothers and their ilk don’t have to pay for a damn thing.
LikeLike
Morgan writes:
WASHINGTON — President Barack Obama on Wednesday imposed a $500,000 cap on senior executive pay for the most distressed financial institutions receiving taxpayer bailout money and promised new steps to end a system of “executives being rewarded for failure.”
So..when Republicans in Wisconsin want to limit public employees pay and put a hard cap on it they are inching us towards socialism right?
When Tom Emmer of Minnesota said that waitresses are paid too much he was actively trying to inch us towards socialism right?
When Republicans have done everything possible in the last 30 years to make sure that the Middle class remains economically stagnant they are inching us towards socialism right?
Again, Morgan, you have no damn idea what actual socialism is. Go read Marx and you might learn what socialism is..and isn’t.
Or are your political convictions so weak that you’re scared of reading a book?
LikeLike
Here’s Morgan’s factual backup for a claim that the U.S. is headed down the road to socialism, as evidenced by controls on wages and prices — and, mind you, this is his only example:
Now, generally I would suspect that Morgan would be all for limits on federal welfare payments — at least, when they go to unemployed people, people unable to work, or people put out of work by economic transition. But in the case of fat-cat bosses who ran our economy into the ground, Morgan thinks it’s unfair to limit their pay to a half-million dollars a year.
Are you practicing for open-mic night at the comedy club? You need to work on the story — it’s humorous, but only mildly so. Not really funny.
A half-million-dollars-a-year salary is Marxism? I begin to see the appeal.
LikeLike
Hi Morgan!
Let’s try this one more time.
We all pay taxes for the privilege of being part of this union…this society. Sometimes, we are asked to pay a little more. This is particularly important when we fight a war, face a deficit or have fellow citizens in trouble. Yes, “we the people” covers it nicely. That’s called a covenant. “We MUTUALLY pledge”…we pledge this to one another. We are our brothers keeper.
As I have said, you don’t have to like it. And it’s perfectly fair to debate how much, when and where we pay and apply taxes. But to argue we should not pay any? To call it “theft”? No, sir. That runs counter to the entire concept of what it means to be a society.
This is why we keep pointing you to Somalia. Not that anyone really wants to get rid of you, Morgan. But if a person really believes government serves no purpose and taxation is theft, there you have a classic example of a place where there is no meaningful government…and no taxation.
Jim
LikeLike
Not in any industry is that accurate or true.
Ed,
Why do you keep doing this? It’s like you’re talking to people who can’t read.
LikeLike
Have Nick or Ed…have I…ever said everyone should have the same amount of stuff? I’ve not seen it.
Jim,
The title is “Income inequality: The snake that threatens to choke the economy.” Find a new hair to split.
So what’s the answer to my question? Where is the evidence that this nation, according to its design, is supposed to be governed according to an objective that income is to be equalized from one person to the next? “We the people” covers this? That makes it crystal clear that if my income is a million and someone else’s is 20,000, that person needs to get some of my property? That really is your position, srsly?
LikeLike
Not in any industry is that accurate or true. Even when the government used a classic capitalist tool to bail out two of our three biggest auto manufacturers, there was no control asserted over production, nor wages, nor prices.
Can you give any examples of where the U.S. government has “made progress” in taking over any means of production in the U.S., or anywhere else, in the past 20 years?
Not since Nixon, by my account.
LikeLike
Good morning, Morgan!
To quote you; “You can’t have this “hammer meet nail” moment with me by dishing out these pre-canned lectures that address what you wish the discussion was about.”
This is what you do and you’re getting a little too obvious about it. You accuse others of exactly what you have been doing all along. It is obvious to anyone observing this thread. You are the fellow who has insisted that our country was not founded as a union or a society. In short, you have said this was meant to be a Libertarian country. Instead, you insist, it has become a Marxist-lite state. That is ALL I have been talking about. So I am precisely on point. You are the one playing shuck & jive here. Why not disagree with my point that the founders intended us to be a society and not a bunch of disconnected individuals? Prove me wrong.
Another quote you offer; “If you really want to bowl me over and leave a smoking crater where I’m standing, why don’t you find a Founding-Father quote, or two, extolling the virtues of our tax system as a punitive device…to make sure everyone has the same amount of stuff.”
You’re doing it again, Morgan. You do this relentlessly. You put words in the mouths of those with whom you disagree. Have Nick or Ed…have I…ever said everyone should have the same amount of stuff? I’ve not seen it. In fact, I think (Nick, correct me if I am wrong) Nick even said he has no problem whatsoever with people being wealthy. I know I don’t. I’m fairly well off myself, Morgan. My wife’s brother — one of those evil public employees, btw — is not nearly as well off. Nowhere have I said that there should be completely equal distribution of wealth, where everyone is forced to have the same. You are trying to make it sound like we believe government should take, at gunpoint, from me exactly the amount more that I make and give that balance to my brother in law. That way, instead of me making 200-K and him making 40-K, we both meet in the middle and make the same. No one has suggested that.
(I would have a hard time asserting that he doesn’t deserve it. My brother in law runs INTO burning buildings when other people run out. He’s what we call a true hero and I do think it’s a crime that he doesn’t make more. But he’s not asking for — and I’m not proposing — that we take all the money that fatass bankers and investors like me — or you — have; and give it to him. Just maybe a few more dollars from all of us on the upper end. So instead of paying 34% tax, maybe the true fat cats like Koch and Buffett can pay 45. (Not even the 91 % they would pay with “Socialist” Dwight Eisenhower in office.) And maybe those of us, probably like you and me, who are well to do can bump from 34 to 38. So stop saying we are calling for a 1917-style total redistribution. NO ONE is calling for that.)
As to quoting the founding fathers, what the hell do you think I have been doing in citing the Preamble over and over? We the people (not, “I the individual”), in order to form a more perfect union (as opposed to a loosely connected bunch of self-seeking individualists), provide for the common (as opposed to the individual) defense, promote the general (overall, comprehensive, societal — again, not individual) welfare…etc…etc.
You wanted a quote…you’ve been given it over and over.
And along with it, you’ve been asked to decide if you want to scrap it. I know Libertarians, Objectivists and Anarchists who have enough integrity to admit to exactly that — they think the founders were all wet; a bunch of overly-sentimental do-gooders and bleeding hearts. Why don’t you have that much integrity?
LikeLike
Government neither owns the means of production, nor sets wages nor prices.
But it certainly has been making “progress” on taking control of the means of production over the last two years.
Furthermore, in order for the government to have some impact against this income inequality snake, it would have to take even more control. I mean, that’s almost the mission itself, isn’t it? The free market hasn’t done a good enough job getting the loot distributed, so government needs to step in and “correct” the situation. That’s what we’re really talking about, isn’t it?
LikeLike
Government neither owns the means of production, nor sets wages nor prices. By von Mises’s and von Hayek’s definition, we are a free enterprise, capitalist nation, with no strong socialist institutions in government. Even when the Obama health care rescue takes effect, government will neither own any part of the service or production enterprise, nor set wages, nor most prices.
LikeLike
And if you think we are in any way shape or form socialist or marxist then its only proof that you have no damn idea what true socialism or true marxism is.
So please define them for me, Nick ol’ boy.
Tell me what exactly we have to do to join the socialist’s club, that we have not either done, or elected someone who’s trying to do it. How exactly are we falling short of the definition you have in mind?
LikeLike
Hey Jim,
You can’t have this “hammer meet nail” moment with me by dishing out these pre-canned lectures that address what you wish the discussion was about. If you really want to bowl me over and leave a smoking crater where I’m standing, why don’t you find a Founding-Father quote, or two, extolling the virtues of our tax system as a punitive device…to make sure everyone has the same amount of stuff. To kill off that choking-snake of income inequality.
You have Jefferson’s campaign against primogeniture. All the other founders did not necessarily have sympathy with this; it’s a case of Jefferson representing Jefferson, and his motivation was to prevent another English aristocracy here, not to take money from producers and give to non-producers. So can you find something beyond this, something that approaches President Obama’s sentiment that “I just think when you spread the wealth around, it’s good for everybody”?
That, it seems to me, is what the post is really all about — America as a place where we use the power of the state to make sure everyone has more-or-less the same amount of stuff. Wealth or income (I don’t recall seeing a straight answer to my question about which one we’re discussing). Can you find a passage in a Federalist Paper somewhere, or perhaps a diary entry or autobiography, that says our country was designed to function around such an economic system?
LikeLike
Has American democracy been hijacked by the rich? Economist rant: http://www.economist.com/blogs/democracyinamerica/2011/02/phoning_it
LikeLike
Morgan, if you don’t like living here…you are free to leave. Take James’ suggestion and go try Somalia.
But sorry, you don’t get to drag the rest of us and the entire country down into the hell hole you want to create.
LikeLike
Morgan , if you think the Founding Fathers were libertarians and this country needs to become more libertarian then the Founding Fathers wouldn’t have scrapped the Articles of Confederation (i.e. weak central government) for the US Constitution (strong central government) You are simply wrong.
And if you think we are in any way shape or form socialist or marxist then its only proof that you have no damn idea what true socialism or true marxism is.
But that sure as hell isn’t stopping you from advocating Marx’s prediction of the fall of capitalism to a T.
Because everything Marx predicted would happen to cause the fall of capitalism, Morgan, would be caused by the rich, the powerful and their paid lackeys.
That means…caused by you and those you incessantly defend.
LikeLike
Morgan,
You’re the one claiming we have to “return” our country to the Libertarian paradise you believe the founders intended. You are the one suggesting we now live in a Socialist (and I think you have even called it “pseudo-Marxist”) state.
I’m simply arguing from the words of our founders. We the people. Not I the person.
You’re not wrong for wanting it to be different.
Since you are so sure you can do better in an anarcho-libertarian paradise, my suggestion was quite simple. Go for it. They exist. No one is forcing you to like paved roads, regulations on toxins or having the fire department come to your home when it is burning down.
Ayn Rand had no role in founding this country or establishing its core principles. That doesn’t mean you are not free to try and change things. If you want to argue that we must cast off our heritage, unmistakably rooted in the idea that we are a society and not a disconnected, loose association of rugged individuals– that’s surely your right. I just wish you had the integrity to do so openly, rather than pretend that up is down and black is white.
You could start a whole new movement, Morgan…and I would wager at least as much as I pay in taxes that you’d find lots of sympathy for your position from the Koch brothers, lots of tea partiers and Michelle Bachmann. Shoot, you could give the Gideons a run for their money. How about getting “Atlas Shrugged” or “The Virtue of Selfishness” in every hotel room, right next to the Bible?
Go for it, Morgan. If you think the Constitution is “quaint” and out of date, own it. But don’t tell me it — or any other founding document — did not establish this country as a union and a society. Actually, some folks already tried to do away with that whole idea once. It was pretty painful for everyone, but it ended on a particularly sour note for them. Would you look good in gray?
LikeLike
Your thinking, I presume, is that we should because you believe America was founded not as a union or a society, but as a very loose confederation of lone rangers and me-first individualists…But you made a major blunder in your reasoning. See, this country was founded as “WE the people”, not “I the person”. It was established so we could promote the general welfare…not so we could advance the “virtue of selfishness”.
Now now, you have to wait for me to advance the argument before you can start up with your pre-canned pre-rehearsed rebuttals. I know that might be frustrating at times, but if you don’t do this in sequence then you engage yourself in a game of what’s called “what this other person said is quite silly, presuming we pretend he said things he didn’t say, like I want us to.” Which is essentially admitting defeat…
The other problem is, if tea party people can’t stand up on a soapbox and start channeling the Founding Fathers and speak on their behalf authoritatively — then guess what? Neither can you.
LikeLike
How come you won’t?
Because if it isn’t voluntary, then of course it says absolutely nothing positive about you. This is, of course, granting that other point that paying more in taxes somehow makes you more patriotic…which is something I’m not willing to grant. But since some others are, then of course this would be entirely defeated if the baseline obligation were increased to match the excess contribution — at that point, it would no longer be an excess, and of course it would not be a contribution.
If the people you mention are willing to pay more, but they in fact are not paying more…then they’re not willing.
As for you, if you’re paying more…then the problem’s solved. Just keep paying more. No problem.
Hey here’s a thought. How about cutting some spending?
LikeLike
One more thing, Morgan. You used the same approach I used in a prior post — suggesting we leave America for Scandanavia. Your thinking, I presume, is that we should because you believe America was founded not as a union or a society, but as a very loose confederation of lone rangers and me-first individualists. You feel we’d be happier in a society; perhaps like Norway or Sweden.
Well, there’s a lot to be commended about life in those two fine countries. But you made a major blunder in your reasoning. See, this country was founded as “WE the people”, not “I the person”. It was established so we could promote the general welfare…not so we could advance the “virtue of selfishness”. We provide for the COMMON defense…not for the defense of ourselves alone and maybe a few of those who are just like us. Get it, chief?
The United States of America was founded by people like Jefferson, Adams, Washington, Franklin, Witherspoon, Hamilton, Jay and so forth.
Not Ayn Rand. I know you wish it weren’t so. But there you have it, Morgan. Make your choice.
LikeLike
Hi Morgan!
I actually DO send in extra. That’s what “check-offs” are for. I use them and wish more people would.
But your last post is really just so much shuck and jive. You are evading the whole point.
Whether Nick, Ed and I use checkoffs or not — we are actually willing to pay more in taxes. So are Warren Buffett and Bill Gates. I’m not in their class financially, but I am pretty well off. Yes, I do send in extra. And am working hard to persuade my elected representatives to make it so I pay more for the honor of living in the country I love.
How come you won’t?
LikeLike
And so the amount you’ve been paying in to the Department of the Treasury, over & above your actual tax liability is…
For 2009…
For 2008…
For 2007…
Oh heck, just give me the number for one of those years. You pick which one.
How much extra didja send in, Nick?
LikeLike
Oh and have fun choking on the fact that Germany which has far higher taxes then the United STates has a far better performing economy then the United States right now.
Sorry, Morgan, you’re wrong. You’ve been always wrong on this. It’s time you grow up and start looking a bit further down the road at what your positions would result in.
LikeLike
Then Warren Buffet can send in some extra. Along with you, Nick and Jim.
Or, all of you can move to Scandinavia. Send a postcard.
Ok by that logic, Morgan, since you hate government so much you can simply refuse to use any government service whatsoever. You don’t want to pay taxes…get out of the country. But until then you will have to deal with the fact that taxes are the price you pay for the fortune of living here.
THe rich used to pay 90% in taxes. They pay less than half that now. When exactly have we cut their taxes enough, Morgan?
Why should they pay a lesser tax rate than you do? WHy should they get all the wealth that you bust your ass to create?
LikeLike
Nick,
What’s the answer to my question? How much extra have you been sending in?
LikeLike
Morgan, noone is saying that everyone should make exactly the same.
But why should the middle class remain stagnant for 30 years and the rich gain, in some cases, upwards of 300% more wealth in the same time period?
Why should the middle class pay a higher tax rate then Bill Gates or the Koch brothers?
Why should the middle class pay higher taxes to pay for tax cuts to the rich?
LikeLike
Then Warren Buffet can send in some extra. Along with you, Nick and Jim.
Or, all of you can move to Scandinavia. Send a postcard.
LikeLike
Anybody foohardy enough to think the U.S. is in any way “a socialist system of forced ‘wealth/income equality'” should be invited to leave the country lest they pollute the national gene pool and bring down our national, collective I.Q. by ten or fifteen points, if they breed. We could ship the guy to China as a secret weapon.
I think, Morgan, you confuse a call for fair taxes and a cessation of the transfer of wealth from the poor to the rich as a call to confiscate property from the rich. It’s no such thing, of course.
But then, were we to subscribe to your view of force, we should ask you: Why should we allow the government to force poor people to make rich people wealthy? Why should we tolerate a system that removes money from the poor and middle class by force, to transfer it to Warren Buffett?
Not even Warren Buffett wants that money.
LikeLike
Hi Morgan!
To answer your question, yes.
If a person wishes to live in a country where there are no taxes, no government programs and where Tea Party fairy dust is everywhere…I can make several suggestions.
You dream of a country where there is no Department of Education; no Department of Health & Human Services; no Department of Housing and Urban Development? No national parks or historic sites, no heavily-regulated airports, toxic sites or workplaces under the crushing burden of intrusive government inspections and safety regulations? Try Somalia, pal.
I realize you were born here, so I’d love for you to get on board with the founders’ vision of “promoting the general welfare” and the view that we are a UNION and not a loosely-associated tribe of rugged individuals. But if you can’t accept that vision because your dreams are haunted by libertarian anarchy and the free-market follies, go for it.
I think you’ll find the roads, fire protection, airports and police service in Somalia to be less than satisfactory. But at least you can own a machine gun and a rocket launcher without the jacket-booted thugs of our current Marxist state breaking your door down. So there’s that.
Let us know how you like it. A man I know who served in Somalia said the beaches were just beautiful.
Meanwhile, the rest of us will pay our taxes — argue legitimately about how much and have our various opinions about where and how the money should be spent. We’ll hear stories about this program failing and we’ll want it scrapped…or we’ll read an article about that program working, but perhaps needing some mending around the edges. But we won’t and can’t ditch the idea our founders held sacrosanct…that we are our brothers’ keeper and we are a “WE” and not an “I”. And by definition, Morgan, that means paying taxes.
Good luck in Mogadishu. Send us a postcard, if the mail happens to be running on a given day.
Jim
LikeLike
It’s immoral to suggest that a citizen shouldn’t pay fair taxes, I think. It’s not taken from anyone by force, really. Any taxpayer may leave the U.S. if they object to paying U.S. taxes, and make their way somewhere else in the world.
The same could be said of anyone who desires, for whatever reason, to live under a socialist system of forced “wealth/income equality”. They could just go somewhere else. Right?
LikeLike
It’s immoral to suggest that a citizen shouldn’t pay fair taxes, I think. It’s not taken from anyone by force, really. Any taxpayer may leave the U.S. if they object to paying U.S. taxes, and make their way somewhere else in the world. Isn’t it cheesy to suggest someone making $500,000 or more a year is such a deadbeat citizen that they’d think paying taxes was anything other than a high patriotic duty?
We don’t take taxes by force in the U.S. Anyone who thinks otherwise doesn’t know history, the law, or U.S. tax collecting practice.
So, these veterans who put their lives on the line to defend those deadbeat taxpayers — don’t the deadbeats owe them?
I like how you back out of any claim that this is an exceptional nation — American Exceptionalism applies except when it comes time to defend the nation, or take care of the heroes who do.
Seriously, Morgan, either one of those claims should make a patriot gag. You strung them together — tell us it made you queasy, at least, yes?
LikeLike
Because those are far less important than making damn sure that the richest 5% of the country have 90+% of the wealth and pay absolutely nothing in taxes.
Please supply some proof that the richest 5% of the country pay nothing in taxes. Thankxinadvants…
So instead of increasing the taxes on the likes of Bill Gates….we should cut federal funding for the program that helps homeless military veterans stay off the street. My…how very morally depraved.
How morally uplifting is it to take money away from people by force, to fund programs for these military veterans who would otherwise be homeless on the streets — without first asking, why are these veterans who have served their country, reduced to a state of absolute helplessness and dependency on government programs?
But the point stands, Nick. You see some people have money and others do not. But what does this say about their relative degrees of comfort as they live life day to day? Practically nothing. And even if it could be established that our rich are happier or more comfortable than our poor, what would this say about the morality or lack thereof, of us as a people? Again: Practically nothing.
How much extra did you send to the Department of the Treasury last year, after you were done filing your taxes? I’m asking this as a straight question. Number of dollars, please. How much extra did you mail in? I’d like to know.
LikeLike
Or we should cut spending to healthcare, social services, environmental regs, child care and scientific research.
Because those are far less important than making damn sure that the richest 5% of the country have 90+% of the wealth and pay absolutely nothing in taxes.
Yeah that logic is very much like the logic one joker in Wisconsin used when he claimed that “destroying the public unions is an example of progressiveism.”
LikeLike
To quote:
Actually, the wealthy are getting further and further ahead acquiring items that, in five or ten years’ time, will be available to the middle class as well. That’s how technology works. If you’re willing to pay triple or quadruple for something that just came out, you can have it sooner. If not, then you can have it for relatively nothing, you just have to wait a few years.
So instead of increasing the taxes on the likes of Bill Gates….we should cut federal funding for the program that helps homeless military veterans stay off the street.
My…how very morally depraved.
LikeLike
The problem is that with current trends, the middle class won’t be able to afford those technological advances — and then the companies that make them will lose money.
Henry Ford made a remarkable discovery at the first of the 20th century: To change markets, to advance the world, people must be able to afford the product. Rising wages create a consumer class that drives technological advancement.
You’re right: Bill Gates doesn’t have a home 70,000 times as big as others. But the lack of those 70,000 new homes that others now cannot afford means (by my estimate) 400,000 people are out of work, 70,000 families have inadequate housing, and things ain’t lookin’ up for Bill Gates’s kids, either — their welfare depends on the existence of markets that cannot develop.
Having super-rich is not a great problem. Preventing a middle class, and preventing the education of a lower class with hopes of eliminating poverty, are catastrophes.
LikeLike
You may want to take a look at this quote from a review of Winner-Take-All Politics, a book which suggests income inequality is a serious handicap to America.
LikeLike
Actually, the wealthy are getting further and further ahead acquiring items that, in five or ten years’ time, will be available to the middle class as well. That’s how technology works. If you’re willing to pay triple or quadruple for something that just came out, you can have it sooner. If not, then you can have it for relatively nothing, you just have to wait a few years.
So Nick, your argument essentially becomes one that that middle class are getting ripped off because they were able to buy DVD players in 1998 to 2000, whereas the rich were able to buy them earlier for much more money…and they managed to snag a Blu-ray sometime in the last couple years, as opposed to 2005 or so. Meanwhile, the middle class still have the anti-lock braking and the safety glass in their cars.
In fact, I’d go further and say the relative quality of life is improving at a breakneck pace, since this lag-time is diminishing greatly as technology moves more quickly. Some of these life-saving features being discussed by James H. took decades to arrive in the cars — nobody’s waiting that long for anything anymore. The dollar amounts are distracting you here; going by quality of life, the differential is getting whittled down in a way that would never happen in some socialist mudpuddle.
This is discussed in great detail, with some pretty solid points made here, over at Hayek’s Cafe.
Bill Gates’s monetary wealth, for example, is approximately 70,000 times greater than my own, but I’m certain that he doesn’t daily ingest 70,000 times more calories than I ingest in a day. I’m also certain that the food Bill Gates eats isn’t 70,000 times tastier than the food I eat; that his many homes are not 70,000 times larger than my one home; that his children are not educated 70,000 times better than is my child; that he cannot travel to Europe or to Asia 70,000 times faster or more safely than I can; that he doesn’t have 70,000 times more annual leisure than I have; and that he will not live 70,000 times longer than I will live.
I’m even sure that he’s not 70,000 times happier than I am.
So, really, it’s incorrect to conclude that Bill Gates’s real wealth is 70,000 times larger than my real wealth. The difference isn’t remotely close to being that large.
LikeLike
Yeah of course I am. But the point still is that the poor and the middle class are at best remaining stagnant. And the wealthy are getting further and further ahead.
LikeLike
Nick,
I have a long comment that hasn’t shown up yet, in response to your question about cars. Perhaps it was too long and is in moderation. I won’t try to repeat it all, but let me just do a quick response to the question about whether cars cost more now.
A base model 1958 Chevy Impala cost $1,753. (Google 1958 Chevy Impala price, and click the “how stuff works” link.) Using an inflation calculator (I use westegg dot com) we find that would be $12,860 today.
A 1960 Ford Falcon was $1,974. That equals $14,140 now.
Now an Impala will cost around $24,00 today, and the Falcon is gone, but check out the Ford Fiesta, which costs, at the low end, $13,787. And it’s far more fuel efficient, safe, and reliable.
Let’s look at another low end car. A new Kia Soul will cost about $13,300, slightly more expensive than the old Impala, about the same as the old Falcon, but also vastly better car in terms of safety, reliability, and fuel efficiency.
Sure, some of that safety and fuel efficiency has been government mandated. But if that’s what’s causing the mildly higher price, then what’s to complain about? (I’m assuming that you are in favor of those gov’t regs.)
LikeLike
Nick,
Most of the reason cars cost more now are because of government mandated safety items. And mostly that’s ok. Adjusted for inflation, a 1958 Chevy Impala was about half the price of a Chevy Impala today (about $12,000 in inflation adjusted dollars versus about $24,000 today), but that 1958 one didn’t have seat belts, anti-lock brakes, a collapsible steering column, or safety glass in the windshield. The 1958 car also was far less likely to last 100,000 miles. Remember when that used to be a big deal? Now it’s a shocker if your car doesn’t last that long. That means the car you pay twice as much for is not only much higher quality, but lasts much longer, too.
Yes, college costs more these days. There are various reasons for that, some of which are cultural, some of which are governmental, some of which are technological, and some of which I don’t know the answer to. Cultural: Students demand a lot more in the way of amenities these days. Back then there was no cable, dining halls and dorms were spartan, and students were often 3-4 to a room. Nowadays they want to live in hotel-like dorms with single rooms. Fair enough, but that costs more. Governmental: With government providing education subsidies through student loans, grants, and loan guarantees, it allows colleges to push up the price because students become less price sensitive. As a college prof, I benefit from that, so I’m not complaining (and I think it’s generally good public policy, my benefits aside). But it does have that effect. Technological: Until the 1980s colleges had almost no technology costs, but those have gone up consistently since them. Students and faculty alike demand unfettered high-speed internet access, and profs like me get pissed off if their laptops aren’t updated every other year or so. This requires huge upfront costs and on-going annual costs that didn’t exist 40 years ago. Unexplained: I don’t know if that explains all of it, but those factors explain a large portion of the increased cost of college.
And, seriously, people demand houses that are twice as large now, even though they have only half as many kids. Airline travel is far cheaper than it was 30-40 years ago. Appliances, toys, and clothes are cheaper. I agree that income distribution is diverging, but the middle class is not worse off in absolute terms, only in relative terms. In absolute terms we live much better than the middle class of 30-50 years ago–but our expectations are so much higher that we feel worse off.
I remember in the mid 1970s visiting my cousins, and they had a microwave oven! That was cool, because there was no way my factory working mom and gov’t employee dad could afford one. Now you can get one for under $50 bucks if you shop around and wait for a sale. As kids, we first got a videogame when my mom found a Pong game for sale at a garage sale. Now most middle class families (although not mine) have a Nintendo, or Wii or Gamecube.
I’m sorry, Nick. I don’t mean to be argumentative, but the objective evidence shows that we really are better off than we used to be. We don’t feel better off, because our expectations have risen so much. But we do have more, and a great number of products are actually much cheaper now. I remember in the mid 1970s when my oldest brother started college and bought a calculator. It cost him over $100, which would be over $370 today. But who the heck pays over $300 for a calculator? You can get a high-end graphing calculator for about $100 today, which is about $25-30 in mid-1970s dollars.
In 1960 a 17″ Philco TV cost $250. That would be over $900 today. But today a 19″ flat panel hi-def TV costs only around $200, less than a third of the price, for a vastly superior product!
If you’re willing to forgo all these new fangled things and stick to the house sizes and amenities people had available to them in the 1960s, you can live more cheaply than they did then.
LikeLike
From:
http://www.thenation.com/blog/158719/us-uncut-takes-stage
US Uncut Takes the Stage
Peter Rothberg | February 18, 2011
Johann Hari’s recent Nation essay [1] detailed Great Britain’s growing popular movement demanding an alternative to forcing the poor and middle class to pay for an economic crisis caused by the rich.
The group, UK Uncut [2], has opposed government cuts, targeted companies accused of avoiding millions of pounds in taxes and taken its message far beyond the usual precincts of progressives. “The UK Uncut message is simple,” Hari wrote [3]. “If you want to sell in our country, you pay our taxes. They are the membership fee for a civilized society.” This Saturday will see UK Uncut’s first national day of action with protesters expected to bring more than 30 branches of Barclays Bank to a standstill.
Hari’s article [3] also noted the potential for a US Uncut, a progressive Tea Party [4], if you will. There’s certainly no shortage of targets, as this slide show highlighting eight egregious US companies [5] receiving federal dollars from the TARP bailout while hiding their own profits in overseas tax havens demonstrates.
Moreover, as reported by many major news outlets in 2008, the Government Accountability Office found that between 1998 and 2005 approximately two-thirds of all American corporations did not pay ANY income tax. Of the largest corporations, 25 percent did not pay any federal income tax despite generating over $1.1 trillion in revenue.
(Article continues at the link. But gee…I wonder how much better off financially the country and the states would be if those companies and those people were made to pay their share of the taxes.)
LikeLike
Evening, Nick!
Say, what’s wrong with you? Seriously! Paul Krugman? Why on earth would you waste the time and bandwidth of quoting a Nobel Prize winning economist about economic issues when you could be posting articles from, oh I dunno…
Alan Keyes? Sarah Palin? Maybe bring out the real big guns and find out what Lynn Swann, Curt Schilling and Steve Largent think? You know, the intellectual heavyweights!
What’s next with you and Ed and these other liberal eggheads? Galbraith? Reich?
Jim
(Who kids, of course…)
LikeLike
From: http://www.nytimes.com/2011/02/14/opinion/14krugman.html?_r=1&partner=rssnyt&emc=rss&pagewanted=print
Eat the Future
By PAUL KRUGMAN
On Friday, House Republicans unveiled their proposal for immediate cuts in federal spending. Uncharacteristically, they failed to accompany the release with a catchy slogan. So I’d like to propose one: Eat the Future.
I’ll explain in a minute. First, let’s talk about the dilemma the G.O.P. faces.
Republican leaders like to claim that the midterms gave them a mandate for sharp cuts in government spending. Some of us believe that the elections were less about spending than they were about persistent high unemployment, but whatever. The key point to understand is that while many voters say that they want lower spending, press the issue a bit further and it turns out that they only want to cut spending on other people.
That’s the lesson from a new survey by the Pew Research Center, in which Americans were asked whether they favored higher or lower spending in a variety of areas. It turns out that they want more, not less, spending on most things, including education and Medicare. They’re evenly divided about spending on aid to the unemployed and — surprise — defense.
The only thing they clearly want to cut is foreign aid, which most Americans believe, wrongly, accounts for a large share of the federal budget.
Pew also asked people how they would like to see states close their budget deficits. Do they favor cuts in either education or health care, the main expenses states face? No. Do they favor tax increases? No. The only deficit-reduction measure with significant support was cuts in public-employee pensions — and even there the public was evenly divided.
The moral is clear. Republicans don’t have a mandate to cut spending; they have a mandate to repeal the laws of arithmetic.
How can voters be so ill informed? In their defense, bear in mind that they have jobs, children to raise, parents to take care of. They don’t have the time or the incentive to study the federal budget, let alone state budgets (which are by and large incomprehensible). So they rely on what they hear from seemingly authoritative figures.
And what they’ve been hearing ever since Ronald Reagan is that their hard-earned dollars are going to waste, paying for vast armies of useless bureaucrats (payroll is only 5 percent of federal spending) and welfare queens driving Cadillacs. How can we expect voters to appreciate fiscal reality when politicians consistently misrepresent that reality?
Which brings me back to the Republican dilemma. The new House majority promised to deliver $100 billion in spending cuts — and its members face the prospect of Tea Party primary challenges if they fail to deliver big cuts. Yet the public opposes cuts in programs it likes — and it likes almost everything. What’s a politician to do?
The answer, once you think about it, is obvious: sacrifice the future. Focus the cuts on programs whose benefits aren’t immediate; basically, eat America’s seed corn. There will be a huge price to pay, eventually — but for now, you can keep the base happy.
If you didn’t understand that logic, you might be puzzled by many items in the House G.O.P. proposal. Why cut a billion dollars from a highly successful program that provides supplemental nutrition to pregnant mothers, infants, and young children? Why cut $648 million from nuclear nonproliferation activities? (One terrorist nuke, assembled from stray ex-Soviet fissile material, can ruin your whole day.) Why cut $578 million from the I.R.S. enforcement budget? (Letting tax cheats run wild doesn’t exactly serve the cause of deficit reduction.)
Once you understand the imperatives Republicans face, however, it all makes sense. By slashing future-oriented programs, they can deliver the instant spending cuts Tea Partiers demand, without imposing too much immediate pain on voters. And as for the future costs — a population damaged by childhood malnutrition, an increased chance of terrorist attacks, a revenue system undermined by widespread tax evasion — well, tomorrow is another day.
In a better world, politicians would talk to voters as if they were adults. They would explain that discretionary spending has little to do with the long-run imbalance between spending and revenues. They would then explain that solving that long-run problem requires two main things: reining in health-care costs and, realistically, increasing taxes to pay for the programs that Americans really want.
But Republican leaders can’t do that, of course: they refuse to admit that taxes ever need to rise, and they spent much of the last two years screaming “death panels!” in response to even the most modest, sensible efforts to ensure that Medicare dollars are well spent.
And so they had to produce something like Friday’s proposal, a plan that would save remarkably little money but would do a remarkably large amount of harm.
LikeLike
James, I have a question for you. How much did cars cost 50 years ago versus now? How much did college cost 50 years ago versus now? How much did homes cost then versus now?
For every dollar you paid for a car fifty years ago, how many pennies of that dollar went toward someone who did not have anything to do with building that car? Versus now?
Rip out the descriptor “wealthy” and replace it with “non-producers,” and Nick’s opinion of how our economy’s trolley is slipping off the track, pretty much lines up with my own. People who produce ideas & things that work according to the ideas, are dwindling in number, in engagement to the work, in compensation. The money is going to people who sell intangible and useless things; non-producers. union contract negotiators, administrators, regulators, lawyers lawyers & more lawyers. And pensioners.
The guy who actually spot welds the car door together, or comes up with a better way to program the robot that does that, is being trivialized. So of course everything costs more in “dollars”; our dollar is worth less. It’s based on trade, and so many more Americans are doing things that don’t create a commodity or asset (or aren’t doing anything).
The dollars that are being created that have something to do with a useful product or service, tend to coagulate around gravity wells that surround the few who are really productive. Of whom, there aren’t that many anymore. Supply and demand. Econ-101.
LikeLike
James, I have a question for you.
How much did cars cost 50 years ago versus now? How much did college cost 50 years ago versus now? How much did homes cost then versus now?
You can disagree if you want…but you’re errant. The fact of the matter is the wealth of this country is increasingly shifting to the hands of the wealthy. Instead of flowing to the middle class and others.
LikeLike
Nick,
I’m going to respectfully disagree again. The middle class is better off. If you look just at the dollar amounts adjusted for inflation, it doesn’t appear so, but if you look at what really counts, our ability to command goods and services, we’re getting an awful lot more for our money.
In the 1950s, you’d pay several hundred dollars for a black and white TV with a fuzzy picture. Now you pay several hundred for a hi-def TV. Cars cost just a little more, adjusted for inflation, but are far safer and more fuel efficient. The average American home size has doubled since the 1950s. In the 1950s, people with money had a hi-fi record player–now we have Ipods capable of holding an entire roomful of records. In the 1950s nobody imagined something like cell phones; now they’re ubiquitous. In the 1950s, only the rich could afford to fly, but now I can sometimes fly from the midwest to California for a mere $200. Look at the amount of toys kids have nowadays (that’s why we need the bigger houses!), and you can see that it’s because they’re less expensive so we can afford more. Back then nobody had a microwave oven, now almost everyone does.
The focus on dollars themselves is called the money illusion. Dollars have no inherent value. All that matters is their purchasing power, and our purchasing power has increased significantly, not because our dollar incomes have gone up, but because technology and competition have pushed the costs of so many goods down.
LikeLike
http://finance.yahoo.com/news/How-the-middle-class-became-cnnm-2876148381.html
Are you better off than your parents?
Probably not if you’re in the middle class.
Incomes for 90% of Americans have been stuck in neutral, and it’s not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.
In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.
Meanwhile, the richest 1% of Americans — those making $380,000 or more — have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust.
But according to Morgan and his fellow right wingers…that’s not a problem to be dealt with. It’s only natural that those who have more than enough already get everything and the rest of us get screwed.
LikeLike
Have to make one more correction. The Wisconsin Bureau of Finance says the state has a surplus of 56 million by the end of the year.
Of course they also say that Wisconsin would have had a surplus of 200 million dollars by the end of the year if Governor Jackass hadn’t given out 150 million dollars in tax cuts.
So manufacture a crisis…then use the crisis to further destroy the unions and erode the middle class.
Republican tactic 101
LikeLike
Well, that’s a relief, actually. I would share your horror if it was otherwise.
LikeLike
I stand corrected on that point.
LikeLike
Nick,
Is that correct? The news reports I’m seeing say that he’s mobilizing the Guard to temporarily replace striking workers, not to “sic” them on protesters. Or have I missed something?
LikeLike
And next on the “Republicans declare war on the middle class” and “Republicans declare war on doctors and women” is Wisconsin’s attempt to strip union employees of the right to collective bargain and to make them go through an union certification election every year. On top of that Governor Jackass has threatened to sic the national guard on the protestors which is very much like various Middle Eastern tyrants are attempting to do on their own dissenters. Oh and even better, the Republicans in their hypocrisy about kvetching that Democrats rammed laws down the throats of others quickly are trying to get that bill passed in Wisconsin through a mere 5 days after it was proposed…with only one open to the public meeting about it. Not to mention that they reserved seats for “supporters” of the bill…i.e. people right wing organizations like the Heritage foundation bussed in. And did I mention that the one open to the public meeting on it was announced by a piece of paper attached to the wall of the Wisconsin state house on monday night…and the meeting was the next day? But curiously several right wing groups had already set up plans to bus “supporters” in the saturday before. This in order to supposedly “fix the financial shortcomings in Wisconsin”….a state that has a near 200 million dollar surplus for this year.
Then there’s South Dakota…where the Republicans are attempting to make it justified homicide to kill doctors performing a legal medical procedure.
Let me know, Morgan, when you want to be honest enough to admit that you’re party has gone insane and no longer has the moral right to hold power. But don’t worry…I won’t be holding my breath on you opening your eyes.
LikeLike
They’re learning how, slowly. But they keep pausing in the middle of rolling their doobies and asking for cupcakes.
That’s what I love about my job. Anything that can’t get me arrested is pretty much safe for work.
LikeLike
If you roll joints for your kids, how will they ever learn to roll their own?
And, did you see this over at Pharyngula? (Probably not safe for work — especially with the sound on.)
LikeLike
A good nanny always has Ho-Hos around for treats. Sarah Palin: “Momma Grizzly” is just another phrase for “Nanny State.”
LikeLike
To quote:
What is the tax on a carton of smokes these days, Nick? :-)
*shrugs* Don’t know. Never have smoked. My mom lived….and died smoking so I have a less than..pleasant view on it
LikeLike
Hi there, Nick!
Nah, conservatives would say Mrs. Bush and Mrs. Reagan were not behind government-driven, taxpayer-funded initiatives. Their “causes” would not raise taxes and called for only voluntary participation. They would further opine that Mrs. Obama’s chosen interest is what’s driving proposed tax increase on sugary beverages, snack food and so forth.
Of course, you and I know they’d be wrong.
Billions (b) of taxpayer dollars have been poured into the great “war on drugs heist” since Nancy Reagan. And millions, at least, have gone into literacy programs — very worthy ones, I might add — since both Barbara and, later, Laura Bush made that their cause. Of course, conservatives will likely protest that such funding was purely coincidental…but that Michelle Obama is directly and squarely behind the drive to raise taxes. (Untrue, but when did that ever stop them from lying?)
And whatever the case…sin and vice taxes are effective win-wins. They either create great revenue or they help persuade significant numbers of people to reform their behavior patterns. What is the tax on a carton of smokes these days, Nick? :-) Now you know why I want pot and prostitution legalized. I consider the former unwise and the latter both unwise and sinful. But prohibition sure isn’t working. And if we heavily tax and heavily regulate both, while it probably wouldn’t solve our fiscal problems, it would sure help move us in the right direction one way or the other.
As to Ellie’s comment about what the poor eat, bravo. I couldn’t agree more, my friend, and I am glad you brought it up. Shame on those lazy poors for not having filet of sole, fresh asparagus and a large dinner salad with light dressing! Well, look at it this way, Ellie — it might be fattening and “irresponsible”. But they can always “eat cake”, n’est pas?
LikeLike
Damn right! That’s why I refuse to let my children read anything but letters to Penthouse and I roll them joints while they watch Jackass on TV. It’s all a matter of principle of course. Oh, and Sarah Palin sent me a care package full of home-baked lard cookies and Hostess Ho Hos. God bless momma grizz.
LikeLike
To quote:
Well now, in what would be comically hypocritical if it were not so very tragic, conservatives are fulminating about the First Lady’s passion for fitness, healthy eating and making healthy choices. Her calls, and those of other government officials, are being lambasted as “nannystatism” and more big brother, mandated liberalism.
Which always makes me wonder if the Lady Bush’s call for people to read more books or Lady Reagan’s “Don’t do drugs” was also a form of nannystatism and big brother mandated conservatism.
LikeLike
Jim, there’s also the fact that potatoes, macaroni and canned fruit cocktail are considerably cheaper than a nice piece of sole and a bunch of grapes.
LikeLike
Howdy Morgan!
Wait…your argument is that you’ve met and seen poor people who are fat? How is that any different from someone over here on my side citing anecdotal evidence “proving” that poor people are skinny, because I know some…or met some? Or is that the point you are making? If so, good on you. If not, that’s an egregious double standard.
The fact is, some poor people struggle with obesity. Some do not. What we know clinically is that a person can be obese, and malnourished. Solid arguments can be made that the American poor are malnourished. The conservative line has traditionally been to agree with this, but to blame solely the poor person himself or herself for being malnourished. Here is where you insert the requisite urban legend about standing in the grocery line behind a “welfare queen” who was using her food stamps to purchase cartons of smokes, malt liquor, twinkies, potato chips, hog jowls, collard greens and lots of butter. Of course, such a canard is just that…often tainted with horrific racial overtones. You’re not going there, so good on you. I mean that. And while I will not accept such stereotypes as accurate, I will concede that all people — rich, poor and in between — make stupid decisions at times. Particularly with regard to diet and exercise.
If a poor person is obese and malnourished…or just malnourished…it could very well be that he or she has made a series of irresponsible decisions about what to eat. I believe conservatives are right to insist that personal choice and responsibility must be expected. (But of all people, not just the poor.)
Here’s the problem, Morgan, when it comes to health and nutrition in our inner cities and rural poor areas. Sometimes, the poor know what to do but lack the means (not just money, but community resources) to do it. Other times, they sincerely don’t know what to do because they have not been educated. Perhaps they can’t even read nutritional information. And yes, more than likely, some of them just don’t give a damn and have no desire to try. (With regard to fitness and health, that’s no more or less despicable than when a wealthy person behaves the same way, right? Or do the wealthy get a free pass on personal responsibility?)
So why are some poor obese? And why are many poor malnourished, whether obese or not? How many legitimate supermarkets or groceries are there in the inner cities where you live? Here in Fort Wayne, there are none. They have all closed. One or two operate right on the edge, but most of the poorest city residents are forced to get on buses (if they can afford the fare) to go to the store. And like many medium-sized or small cities, our public transportation is very hit or miss…not running at all on Sundays and even at peak times, only once an hour. How are the poor supposed to get to the grocer? Many cannot. Others can, but must walk…which sounds inspiring and noble. But presents serious safety problems in many cases. What happens then? Instead of shopping where healthy choices are available, many poor use what little money they have to acquire fast food or to buy staples from gas station convenience stores — where prices are dramatically inflated. These businesses are readily available to the poor. The once ubiquitous “mom and pop” corner store is now a relic. Have you any left in your town? If so, what are prices like there?
Of course, on great option for urban poor is gardening. No small number of poor people here do grow their own vegetables. Some, on what little property the own or occupy. Others, in community gardens. These are wonderful! And more could be done to promote this concept nationwide…but of course…the money for such work must come from somewhere. Conservatives say government has no business taxing people to help such programs help their fellow citizens. So what now?
Well now, in what would be comically hypocritical if it were not so very tragic, conservatives are fulminating about the First Lady’s passion for fitness, healthy eating and making healthy choices. Her calls, and those of other government officials, are being lambasted as “nannystatism” and more big brother, mandated liberalism. It’s pretty arrogant to, on one hand, spit on poor people for making bad choices and, on the other, to spit on government for coming up with solutions that might help ameliorate the problem. What are your solutions? (I can tell you what my millionaire, born-again-Christian, Republican brother in law’s answer to that question is. Because we’ve had this exact discussion. He hopes poor people — black ones in particular — die off. The sooner the better, in his own words. I am SURE that’s not your position, Morgan. But what is? What would you suggest to help?)
LikeLike
Nick K,
Actually, no, although I understand the thought behind the argument, and recognize that my own lack of extended clarification feeds the misunderstanding.
Of course the future is always uncertain, and of course government can always make changes to the rules. But….
a) Autocratic governments are probably most likely to create regime uncertainty (although truly plutocratic ones might not). Case in point being Russia in the mid ’90s, which after appearing to liberalize and drawing in lots of direct foreign investment (DFI)suddenly started mucking with the rules and making arbitrary decisions that affected companies’ futures, with the result that there was a mass exodus of DFI as investors ran for their (financial) lives. (Russia, of course, was not plutocratic but kleptocratic.)
b) Knowing that the future is inherently uncertain, what investors want is the greatest certainty possible (or else a big premium on the potential return to compensate for the risk). What creates “the greatest certainty possible”? A government that they can expect won’t make major changes in the rules. I had long thought this required a fair degree of political stability, but recently became aware of the fact that Italy has had a pretty solid economic performance over the years despite having their governments collapse repeatedly–averaging more than once per year. How could investors dare to invest in such an unstable system? The answer seems to be that the government is so perpetually fragile that it can’t build a coalition in support of any major regulatory changes, so investors can be pretty confident that governments come and governments go, but the rules remain the same.
c) The FDR administration was famous for making new rules and changing old ones on almost a weekly basis. Their attitude was, “let’s try something to see if it works, and if it doesn’t let’s try something else.” But that meant that investors could be damned sure there would be no regulatory stability at all–they could be certain that the rules would be changing, but without any certainty about what the rules would be. And that seems to have deterred investment.
It’s worth remembering that businessmen supported FDR in 1932, because during his first campaign he actually argued that Hoover had meddled too much with the economy. It was only in 1936 after several years of the perpetually changing rules of the New Deal programs that they jumped ship and voted for his opponent (of course they were somewhat outnumbered by those who liked FDR’s active approach–it may have been unproductive economically, but it was very productive politically).
d) In the ’80s and ’90s we had considerably more policy stability on major issues, despite the conflict between the Republican controlled House of Reps and President Clinton. The
Again, though, whether regime uncertainty explains the slow recovery today, I’m not sure. A few economists think so, but I think most don’t agree. Still, there are some definite policy uncertainties out there, relating to the Bush tax cuts, the Democratic health care plan, cap-and-trade, and the size of the deficit, the actual regulations that will be written and implemented by the new Consumer Financial Protection Bureau (or even if it will actually end up being funded). All of those can affect the investment environment*, so I think the “regime uncertainty is hindering our recovery” hypothesis is at least plausible. But of course plausibility is a long way from, barely within shouting distance of, certainty.
_______________________________________
*Note that I am not arguing for or against any of these policies. Whether such regulations are ultimately good or bad is a separate issue from whether the prospect of them may affect investment decisions.
LikeLike
Hi Jim.
I met a fat person. He was poor. I met another fat person, he was also poor. And then my newspaper profiled some poor people…they were fat. There, that proves it.
This gets into the “black swan” falsifiability thing a little bit…you could, conceivably, present an American person who is poor and skinny and “prove” my claim false. But it wouldn’t be a very good job of proving, would it, when one observes how much easier it would’ve been for you to find a poor-skinny person in another country. No, overall American poor people live pretty well.
I have another one for you: Our noisy people who are of progressive leaning, don’t feel the need to prove anything. (I’m still waiting for substantial evidence, suitably compelling to change a mind inclined toward the opposite view, that wealth inequality is a snake that threatens to choke the economy.) No, progressives make the other side “prove” basic things, obvious things, including the self-evident truth that people are generally highly motivated by the prospect of profit and are therefore unmotivated by the prospect of profit being taken away. For the ideas they find more palatable, they generally just spout & move on. It’s just what you have to do to make a progressive idea look like a good one.
LikeLike
Hi Morgan!
Still using the “poor people are fat” meme? I asked you to explain what you base this conclusion on. You may have some hard, rather than anecdotal, evidence to contribute to our discussion.
I am sure you would agree that a person can be poor, and even malnourished, without appearing as near skeletons with bloated bellies.
I look forward to hearing from you. And I meant it when I thanked you for not trotting out the Reaganesque polemic about “welfare queens in Cadillacs”. A lot of folks on your side of this debate still love that one and it’s simply inaccurate. Your unwillingness to “go there” is a credit to you and I am grateful. Hope you have a great day.
Jim
LikeLike
Nick,
If I do that, do I then become eligible for the social services our poor receive that make them fat? If I do, then why do I need the eighteen grand, I’ll just live on zero. Heck, why should I even bother to do that; we’ve already got people doing that. And they’re fat. If they’re not going to convince you then there’s nothing I can do that will convince you.
You know, you may think of that as a silly comment for me to make, and I’ll admit I’m not entirely serious about it. But it’s still true, and contrasted against the wreckage of poverty on the global landscape it really is an amazing human achievement. I think some of the skinny denizens of other nations would have something to say about you disparaging this country so caustically, in that way you do, in which the poor people are fat. Some of them might not mind being poor & fat.
Hey I just thought of something you can do to convince me. April 15 is coming up. How about just get your taxes ready, and instead of paying that number on the bottom of the form, just send in everything you’ve got except for $18,000 for the entire year. Show us all how many problems get solved when people pay more taxes.
Being in California, I need some extra convincing on this. We are considered a high tax state; we’ve got property, sales, income, the whole shebang. It’s worked out precisely the way I said it does: Your hated “rich” see the new policies pop up and decide “well, screw this”…they move out…or stop working…or find loopholes. They do something that involves NOT starting or expanding something that would create jobs. Economically, the place is a disaster; we’re in a race with NY to see which state will declare bankruptcy first. Ed says Prop 13 is the problem. Going by that logic, an alcoholic’s only problem on earth is that someone hid the vodka and as soon as he finds it again everything will be rosy. Provided there’s another bottle available after he empties it.
See, it comes down to a simple thing here: People engage in business to create personal profit that they can actually take home. If it is okay for them to take some profit home, they’ll engage in the business. If it isn’t then they won’t.
LikeLike
Morgan, since you want to contend that the poor and the impoverished have it oh so well and all that jazz, I have a proposal for you.
For the period of three years agree to put all but $18,000 of your yearly take home pay into a trust that you, your spouse if you have one, and no other member of your family can touch. Meaning for a period of three years you and your family agree to live on $18,000 a year. That number being the poverty line for a family of three. If your family is more than three people we’ll of course up the amount according to http://aspe.hhs.gov/poverty/11poverty.shtml
Of course if your family is just two people or is just you we’ll have to use a lower amount than $18,000.
Come on Morgan, you want to run off your mouth then lets see you put your money….well more like…lets see you put your life where your mouth is.
LikeLike
To quote:
The regime uncertainty theory is not about specific business regulations, but about uncertainty about what the rules of the game will be down the road
Yeah the problem with that argument is that, taking that logic to its conclusion, that means that there should never have been any jobs created in this country…ever. It’s literally a theory that seems to be arguing “Ditch democracy, install a autocratic and plutocratic government.”
Which perfectly explains the current Republican party.
LikeLike
Ed,
The regime uncertainty theory is not about specific business regulations, but about uncertainty about what the rules of the game will be down the road. All investments are uncertain, of course, but businesses like to know that the rules of the game will not be changing on them. This is one of the leading theories for why the Great Depression lasted so long (not a theory of its cause, but of its longevity). I buy it as a theory, but a) not all economists do, and b) I don’t know that it explains the slow recover today (some economists do, many are skeptical, to put it politely).
Re: Manufacturing. I promise not to keep tooting my own blog, but please allow me to link to another post, since I wrote about this recently. American manufacturing has grown quite strongly (until a distinct downturn with the recent recession). In inflation adjusted value, U.S. manufacturing output grew phenomenally during the 2000s. But we were doing it with ever greater productivity, meaning with fewer and fewer laborers. Low-tech and low-skill production jobs moved overseas, but high-tech and high-skill (i.e., high value) manufacturing stayed in the U.S. It’s wrong to suggest we had an actual decline in manufacturing. We did, however, have a major structural shift in it, and did lose lots of manufacturing jobs, so it’s clear why people feel like our manufacturing sector declined. But from one perspective, keeping those jobs in the U.S. would mean forcing consumers to pay a premium for those goods, which would be a forced wealth transfer from consumers to labor.
Re: American manufactures.
Shoes: There are a good number of companies manufacturing shoes in the U.S., but they tend to be small companies making specialty shoes, hand-made and/or high-quality ones. Mass market shoes are a low-skill product, so there’s no need to pay a wage premium to the labor producing them. Besides, from my perspective a Thailander or Maylasian has just as much right to produce the shoes I buy as an American does. I’m very uncomfortable with saying an American has a greater right to sell to me than someone in another country, who’s demonstrably poorer, does. That has always seemed very illiberal to me.
Tires: Bridgestone, Michelin, Goodyear and Cooper makes tires in the U.S. They make tires elsewhere as well, but they produce them here, too. In fact there was a mini-flap when Obama announced a tariff on Chinese tires. Since they make mostly low-quality, lost-cost tires, the cost of the tariff fell primarily on the poor.
Steel: Lots of steel production in the U.S. When Bush (W) set steel tariffs to help the U.S. steel industry, it hurt the auto industry, refrigerator industry, etc, because they are steel users. But the steel industry has undergone a big transformation in recent decades. The big open mills that polluted the air over Pittsburgh and NW Indiana are gone, replaced by mini-mills. One of the most productive companies in the U.S. is Nucor steel–a model for a company even true anti-capitalists could like (check out Jim Collins’ book Good to Great). In fact the U.S. is still one of the top 3 or 4 steel producing countries in the world, and generally produces higher quality steel than the leader, the People’s Republic of China, and with less air pollution.
As to banks, I do share your concern about loss of local banks. I haven’t looked into it closely, but it appears to me that a big part of the problem with our financial shock in ’08/09 was because our banks were too financially dependent on each other, and in part because they were too big. More smaller banks and fewer bigger ones might be a good policy to promote. My wife and I have our main account at a local credit union, which I find pretty satisfactory both for checking and loan services.
LikeLike
On a somewhat related note in order to help balance the budget the Republicans have proposed eliminating the 75 million dollar a year program that helps homeless vets.
Yes that’s right, there are on any given night 76,000 homeless vets in this country but the Republicans want to eliminate the program that helps them. This is on top of the Republican proposal to cut veterans benefits, to cut funding to the VA as well as making it this side of impossible for a vet to get PTSD treatement. Oh and lets not forget that the Republicans insisted on sending the Iraq/Afhganistan vets off to fight wars without the proper equipment.
Yep, the Republicans sure do love our military veterans….
LikeLike
Ed,
Government regulations are regularly blamed for businesses not expanding. Sometimes, the businesses themselves cite this as a bother…and sometimes, politicians make foolish extrapolations and presumptions.
My response is almost always that the business owners can go pound sand if they don’t like it. We have seen what the “business-friendly” climate in Ireland, Greece and now Spain is doing to those countries. No taxes, relatively few regulations. I remember in the 90’s, conservatives were holding up Ireland as a model for the USA. End or dramatically cut taxes on business…eliminate as many “meddlesome” (read: pro-worker, pro-consumer, pro-environment) regulations as possible and magic bullet! Lots of new jobs created.
And of course, Ed, we cannot argue with the facts. Thousand and thousands of new jobs were created in Ireland. Lots of American companies expanded there or pulled up stakes and moved there. The conservatives are right. Cut or end taxes…cut or end regulations…and business will love it.
Until the country’s entire economy collapses and everything goes straight to hell.
I remain amazed that any American can — with a straight face — demand fewer restrictions on coal mines and oil rigs. After the horrific disasters of 2010? 40 human lives snuffed out in mining and oil rig disasters…both of which can be attributed to already lax safety and inspection regimes. (Not implying that there is a malicious intent on the partof business or supporters of business…just a disconnect based on greed, on the part of the former and ignorance on the part of the latter.)
Truly, what sort of jobs are we wanting to create? Low-wage, near slave-labor jobs? Unsafe ones? Ones that will poison on rivers and streams, causing cancer and birth defect rates to spiral?
We have to get back to the basic idea upon which this nation was founded. We are interdependent. We are not and never were a nation of lone rangers. In seeking that delicate balance between profit and neighborliness, we can create a healthy tension that will be both fiscally productive and humane. Unfortunately, since the 80’s — the “profit at any cost” drumbeat has persisted unabated.
And lest anyone think I am simply attacking Republicans, I lay as much blame at the feet of our corporatist Democrats as anyone else.
LikeLike
TO quote:
Some economists are attributing that to regime uncertainty–i.e., business’s uncertainty about future government policies that will make the U.S. either a more or less attractive place to invest. That theory is still very controversial though, and lots of good economists don’t accept it.
Which is a nonsense argument because that doesn’t explain the years 2000-2006. Nor does it explain the general boom during the 90’s. It’s magical thinking
LikeLike
Oh, I buy business uncertainty, but I don’t think it’s due to government regulation. I think businesses aren’t going to invest money in a new factory if there is no new demand for their products.
Generally I challenge anyone to show me a regulation that is causing uncertainty for businesses. Generally those advocated mumble something about global warming, for which we can be certain there is no regulation pending that we don’t know about for years — the only uncertainty is in Texas, where the Stat of Texas has refused to issue permits for CO2 emissions.
What regulations can you think of that might discourage businesses due to uncertainty?
LikeLike
You’re right, it doesn’t make much sense.
Sometimes even investing isn’t good enough. What we’ve discovered is that often we need quicker circulation of money, and we need to stimulate demand, so that manufacturers and other producers will increase and improve their plants, and hire more people to make more production. Investment alone won’t do that.
But I also caution that, as we’ve discovered through the work of several Nobel winners over the past decade, people don’t behave rationally with money.
Laffer’s claim was that the rich would invest, ostensibly in things that make new jobs — more cars, bigger houses, businesses, etc. Instead, it appears they invest in overseas REITs, yachts, bigger houses, but not new ones that require construction that would employ more people, and other stuff that multiplies money, but not jobs.
My investments in job-producing schemes paid off okay up to about 1999, but not so well since — I understand why the rich might avoid those investments. But that just convinces me that we need to get the tax break-equivalent money to people who will consumer with it, to spur demand, to spur jobs.
What are the rich doing with their money? Great question. Hedge funds? Who has invested in a company that opened any manufacturing inside the U.S. lately? Is there a shoe manufacturer left? Levi Strauss moved their last U.S. production offshore. Autos are still built here, but I can’t vouch for the steel that goes into them. Is there a U.S. manufacturer of tires left alive?
Other issues involve local lending. 25 years ago I could go to a local bank and get a loan to open a law office. Today, my town has Chase Bank, and Wells Fargo. Neither of them will lend to lawyers who want to open offices in our town. Both of them send me ads for my “firm,” once we grow to be more than 15 lawyers. In our town, I don’t think Chase loans to local businesses to expand. Construction in the past three years has all been financed by a surviving local bank two towns over.
We need people who will spend the money or invest it locally. The rich don’t appear to be doing that, either.
LikeLike
Nick,
Some economists are attributing that to regime uncertainty–i.e., business’s uncertainty about future government policies that will make the U.S. either a more or less attractive place to invest. That theory is still very controversial though, and lots of good economists don’t accept it.
Businesses may also sit on cash because they anticipate investing in equipment, etc., soon, but aren’t ready to pull the trigger. I don’t know that we can fairly blame a company for not investing when they don’t see a good opportunity for making their money back. If they invest at an inopportune time, not only will they not do good for themselves, but they won’t actually be doing any good for the economy either (failed investments are not economically productive). But at the same time, many businesses find recessions good times to make some important investments because borrowing is cheaper and resources are cheaper–and that’s one of the factors that does help bring us out of recessions. Consumer spending can’t help bring us out of a recession unless it increases, and it can’t increase unless people are making more, and they can’t make more unless businesses invest more. So there’s a little more to the story of economic recovery than “consumers keep on spending because they can’t stop paying for what they need.” Consumers do decrease their spending in recessions, cutting non-necessities, and just continuing at their lower level of spending can’t create an increase in economic growth.
But Ed said, and I focused on, rich people. I don’t think you’ll find many rich people sitting on large amounts of cash compared to the size of their investments.
LikeLike
Hello there, James!
I think you make a fair point, that the wealthy don’t stuff their money under a mattress. Too, your comment — and the argument of others that they DO invest offshore is quite apt. And this is part of the problem. We need laws forbidding or strictly limiting these Cayman or Swiss bank accounts. Such tax-free instruments are helpful only to the plutocrats and do nothing to strengthen the country that allowed these folks to “earn” (in some cases, earn is the appropriate verb…in others, less so) their vast fortunes in the first place. I am not sure much of this money even helps create jobs overseas, except for a few Cayman Island bankers. As to other overseas investments, we find the fabulously rich creating jobs alright. But they are often jobs that border on slave labor, even by the standards of the countries involved. And again, no revenue is returned to this country for the purpose of promoting the general welfare and securing the blessings of liberty. I am awfully hung up on the Preamble, I must admit.
Not trying to be combative — I always enjoy your contributions here, whether I agree or not. You have a lot to say and it’s always worthy of serious rumination.
Chewing the cud as we speak,
Jim
LikeLike
Morgan remarks that poor people are fat.
Okay…then by the same token the fact that Dick Cheney, Rush Limbaugh, Glenn Beck, Hannity, O’Reilly and quite a few Republican leaders are also fat means that they’re making more than enough and they can stomach, pun intended, higher taxes.
Don’t make stupid arguments, Morgan. I was just getting a little bit of respect for you but no…you have to go right back to “I’m going to make the stupidest arguments possible” spiel you were on.
That some of the poor may be fat, you brainless twit, is the result of poor noutrition and not indicative of this nonsense “Well they’re not as poor off as you think” bullshit you’re engaging in.
Oh and by the way…in case you didn’t notice..the truce is off. You want to argue stupid shit then you’re going to get treated like an idiot.
LikeLike
James, if you hadn’t noticed, quite a lot of US companies are sitting on very large piles of cash.
LikeLike
Re: The Laffer Curve.
It may be too complex to pin down mathematically (and I think that’s because there is probably no single Curve, but curves for different types of activities), but that doesn’t mean the idea is nonsense. It is possible to tax an activity to the point where you take in less revenue because people opt out of it. I think the normal liberal perspective that the Laffer Curve is false is untenable.
On the other hand, the typical conservative belief that we’re always on the wrong side of the Laffer Curve, so that we can always cut taxes and increase revenues, is identically ridiculous.
The difficulty, of course, because of the lack of mathematical formulation, is that policywise we often can’t be sure what side of the Curve we’re on except through empirical testing. The Bush tax cuts seem to me to show that clearly we were already on the lower side of the curve, so that right now we could raise taxes again on the wealthy and gain from it.
LikeLike
Ed,
I’m confused. You say the Laffer Curve assumes money gets reinvested into the economy but that this doesn’t happen, and you say the rich hang onto their money during recessions.
What are the rich actually doing with their money? They’re not stuffing it under a mattress. They’re investing it. Money keeps moving around and ends up as consumption or investment somewhere (although not necessarily investment in the US). Those are really the only three things you can do with money–spend it, invest it, stick it under the mattress–and the rich don’t do the latter.
LikeLike
Evening Morgan!
Thanks for your response. Your remark that “our poor people are fat” reminds me an awful lot of The Gipper and his beloved “welfare queens driving Cadillacs” meme. I realize some in the Tea Party have brought the “blame the poor mantra” up to date with rants about “babydaddies” and people who use their food stamps to buy cartons of smokes and malt liquor. So thanks for not using that one. Aside from being patently untrue, it’s also veiled racism.
But poor people are fat? I wonder. Are the poor any more or less obese than the middle class or the rich? If obesity is a condition particular to American poor people (and I am not convinced it is), is it your proposition that this is because they already have it too good?
Ed, thanks ever so much for the WaPo chart on tax policy. Quite helpful.
Jim
LikeLike
ANd your little contention, Morgan, is also proved false by this: We had sky high taxes on the rich prior to Reagan…and yet the rich didn’t flee, the country didn’t fail, the economy didn’t crash, there was no Depression, and hundreds of millions of jobs were created. But since Reagan the income gap has absolutely exploded, the wealthy have gotten ever bigger shares of the wealth of this country…..and you want to pretend that isn’t a problem? Seriously? Not done much study of world history have you?
The middle class has been barely holding on for three decades if not outright shrinking….and you want to sit there and pretend that isn’t a problem. Wealth has been concentrated in ever fewer hands but you want to pretend that isn’t a problem. Oh please.
LikeLike
Here’s where that chart should have made a difference, but made way, way too little: Tax policy. If you recall, the solution was to extend unemployment benefits for six months, and give away the store to the super-rich; this chart came before the deal was cut (did anyone do a similar chart after?):
From the Washington Post, via Flowing Data.
LikeLike
You’re right, Morgan, and I was in error: The Gini Coefficient is relevant to this discussion. It’s just not relevant to your point.
Go here, you’ll see the Gini Coefficient tends to argue that the U.S. is a third-world nation with our current coefficient.
It’s an incomplete measure. You appear to be arguing that a coefficient of 1, though politically incorrect, is better than a coefficient closer to zero.
I think a democratic society, especially with a democratic government, should be lower, and not higher on the coefficient scale. Among other things, we hope those who make the decisions have the ability to buy the knowledge to make wise decisions, and the incentives to do so, and the incentive to read enough to figure out where their own interest is (we come back to the “rational consumer” conundrum).
You’re also right that we’d need an alternative universe to provide any data to prove the Laffer Curve. That’s the problem: We live in the universe we have, and alternative universes don’t do us much good, unless we smoke a lot of dope. Even then, there is the issue that when the dope wears off, we’re back in this universe.
Other economic principles don’t seem to have that problem, which was the subject of my previous comment. Measures are imperfect, perfectly-controlled experiments are impossible, but it is still possible to collect numbers and do hard analysis of hypotheses, actions and consequences — except for the Laffer curve. As creationism gets bumped out of science because all of its hypotheses are ultimately untestable, so we must bump the Laffer curve into the realm of religion, as untestable.
The corollary of the Laffer Curve, Trickle Down Hypothesis, is not untestable, however — and we’ve seen that it doesn’t work.
Here in Texas we’re going to give every person who loses a job over the next year a pitchfork, a torch, and a map to Rick Perry’s house, Ron Paul’s office in Washington, D.C., and John Boehner’s office. Coefficient, shmoefficient — you know?
I don’t find any discussion involving the Gini coefficient to be particularly enlightening with regard to our present Republican Depression, because it sheds little light on what ought to be done. But to the extent it might shed light, anyone of any serious understanding of history should be alarmed by the trends.
People familiar with quality paradigms in manufacturing and other industry may prefer to look at things with the Pareto Distribution, which suggests the current wealth distribution is seriously out of whack and indicative of disaster to come.
And the more I think about it, the more I think a Gini coefficient is just an inapt tool. Any time we have declining incomes among the workers, the people who make America great, we have trouble. Even rich people ought to be familiar with the Ford Accidental Hypothesis, which is that it’s a good idea to have a larger market that can afford your products than a smaller market, and working to expand market by expanding income of the working people makes everybody winners for a long, long time.
If there were any evidence that the current income distribution inequalities suggested better anything in the future — job opportunities, schools, retirement, health care, pensions, products, businesses — we might have a debate.
Pointing to a Gini coefficient not only doesn’t make that case, it only shows the paucity of thought on the hard right. Memorizing a coefficient can’t overcome history that indicates such maldistributions of wealth and income foretell nothing good.
People in America are hurting. Therefore, America is hurting. Don’t point to some index and tell us the pain is unimportant.
LikeLike
Morgan writes:
Anytime you start taxing people with high incomes, the situation you run into involves people who make business decisions whenever they (optionally) work. Taxes offer these people a powerful incentive to decide the other way, and sit on their butts.
THen have fun explaining why the Bush tax cuts to the people with high incomes offered no economic boost, created no jobs and didn’t “trickle down” to higher incomes for the rest of us.
Your precious rich have been sitting on their wealth doing nothing to help the rest of us. If they’re not going to do it by choice then pray tell why shouldn’t it be done by government mandate? If they’re doing nothing to help the country with their money then why should we not hike their taxes and use that money to fix this country’s problems?
Your party has given them tax cut after tax cut after tax cut…and accomplished nothing. Exactly what has to happen for you to figure out that doing that again isn’t going to work?
Either they be made to sacrifice, Morgan, or you do. Which would you rather have?
LikeLike
[…] subtitle is “the snake that threatens to choke the economy.” The post wound down with this chestnut, which was somewhat new to me: Wasn’t income inequality one of the […]
LikeLike
To prove the Laffer Curve, you would have to create two universes going through two time lines, with all other economic factors meticulously replicated between the two time lines. This is why the discipline of economics exists in the first place; we can’t do that kind of experimentation. The same applies to your position “I could concede to you the validity of the Laffer curve, but point out that we’re far on the left side, where increasing tax rates increases government income in greater proportion…” What can you offer to prove this might I ask? Can’t I say that’s refuted the first time we use simple multiplication to predict how much additional revenue a tax increase will create — and then it falls short?
No of course I can’t. In the same sense you can’t really produce economic data to “prove” or refute anything. In the field of economics, every single experiment in the real world is conducted in a test environment that is as polluted and dirty as it can possibly be. We don’t know Reagan’s tax cuts helped the budget picture because spending went up, we don’t know Clinton stimulated the economy because those dot-com technologies were taking off, we don’t know the real impact of the Bush tax cuts because of 9/11. There’s always a contagion somewhere, and since the test bed doesn’t have a perimeter, the primary contagion is usually an enormous one.
But in fact, on a macro level the Laffer Curve is easily provable and you don’t need to jot down a single paragraph or produce a single table, you can rely entirely on the nature of human incentive. If tax rates are zero, you have zero revenue — that’s simple math; if tax rates are 1, so that the minute you make any money you’re obliged to hand it in, the government’s revenue would be negligible at best. Somewhere in between, there is revenue at a level greater than what you find on the extreme ends (every time a tax is levied and revenue comes in, there’s your proof for the last of these three). Now, if those three offerings are accepted then the curve is “proven.” So which one of the three are you going to debate? If you think it isn’t your job to say which, but insist the debate still must rage onward, then it’s time for the universe-splitting experiment. So, yes, it is laughable and that’s probably why you didn’t see the paper. Laffer was probably laughing right back at you, and he’d have been right to.
But you still haven’t explained why the Gini coefficient is irrelevant to a discussion about “income inequality: the snake that threatens to choke the economy.” What exactly is the meaningful difference between the discussion you are seeking to have here, and what the Gini is intended to measure?
LikeLike
The Senate Press Secretaries Association had Arthur Laffer in for one of our meetings. Several of us from the Republican side asked when he’d provide the mathematical work to back up his claims about the Laffer Curve, work he’d been promising for at least months. We could have used some back up for the stuff the Senate was passing, for op-eds, for press releases . . .
The absurdity of the situation makes me laugh, now. Laffer never did produce that paper. He couldn’t. The numbers didn’t add up. That it was a group of press flacks who needed the stuff and pressed him on it just increased the absurdity. There is a good reason Laffer didn’t win a Nobel for his curve. It didn’t work, it had no evidence to suggest it should.
Working with one of the laziest presidents in history, a guy who stuck to his guns even when they were just props from the prop department, I don’t find it convincing policy argument to say Reagan would stop making movies in a tax year. First, there’s no evidence that he ever did, is there? Second, even in the Eisenhower years with marginal rates bumping 90% — a realm Reagan never hit — anyone with a business could make a lot of hay once the personal income tax rates were maxed out.
The Laffer curve assumes that taxes not paid are reinvested in the economy. That doesn’t happen. The Laffer curve also shows a lot of territory where increasing taxes improves income to the government — one of Laffer’s failings was his absolute inability to say where on the curve the nation was at any point. I could concede to you the validity of the Laffer curve, but point out that we’re far on the left side, where increasing tax rates increases government income in greater proportion — you couldn’t deny it with any data.
But the Laffer curve is irrelevant here, just as the Gini index is.
You mention tax rates on corporations — but you don’t deal with personal tax rates. You mention tax rates on earned income, but you don’t mention tax rates on unearned income, where the great, socialist redistribution of money takes place.
I agree California is screwed up. But it was screwed up by Prop 13, the crazy idea that the lowest taxes possible to keep the lights on in government would be enough to maintain a well-working government. That doesn’t build roads, schools, and regulatory systems that can make things work, and it especially doesn’t provide enough money to operate the essential components of state and local government, especially the schools. We’ve seen the socialist future that favors the rich, in California. California once had the greatest school system in the world, pre-K through graduate school. People flocked to the state to take advantage of great schools, especially businesses who wanted to use the brain power of the graduates to make new stuff. Nearly 50 years of choking government, “starving the beast,” and not even Arnold Schwarzenegger can make it work with a wildly popular mandate.
I don’t think we can get accurate numbers to provide a good take on a Gini index. Too many people aren’t making enough money to pay taxes, to save for retirement. Too much money is going to rich people — and maybe organizations, you can make that argument if you wish — who take that money out of circulation, out of general use of the rest of the economy.
That’s a serious, difficult problem.
LikeLike
I fail to see any relevance of the Gini coefficient here.
You headline is “income inequality: The snake that threatens to choke the economy”, and you fail to see any relevance of the Gini coefficient here? How so?
This tax system has been stealing from the poor to give to the rich.
You really think so?
Even President Obama is admitting the corporate income tax rate is too high. Ours is the second-highest in the world.
As far as personal income taxes: When you skew them progressively, that’s about as good a way to make the economy “topple” or tip over, as any other. Come out to California and I’ll show you what I’m talking about. In a state with some 35 million residents, our annual budget’s success or failure is determined solely on the filings of just a couple thousand returns, with just a few hundred determining irreversibly its overall health.
It’s not a matter of just taxing Joe The Plumbers who were seeking to open their own businesses and decided not to. Anytime you start taxing people with high incomes, the situation you run into involves people who make business decisions whenever they (optionally) work. Taxes offer these people a powerful incentive to decide the other way, and sit on their butts.
Arthur Laffer was trying to make this point earlier this week:
When it comes to human behavior, you generally get more of the behavior you subsidize and you get less of the behavior you tax. The truism of that statement becomes easier to understand and harder to deny when you phrase it more concisely: The tax code has a distinct and pronounced effect on what people do. Make it okay to participate in the economy, and people will do it. That very activity, in fact, is precisely what I would define “the economy” to be: People acting to advance their own interests, as people are naturally inclined to do.
After decades of listening to progressive tax advocates talk about what it takes to make “the economy” more thriving and robust, I’m still unsure of what exactly it is they mean when they use those two words. How can we have an “economy” — at least, the thing I’m referring to when I use the word “economy” — if it isn’t okay for people to make money?
LikeLike
I fail to see any relevance of the Gini coefficient here. If you use the wrong measure, you’ll get the wrong answer. I think you’re asking the wrong question.
Over the past 30 years we’ve allowed the government to shift enormous amounts of wealth, from the poor and working class to the wealthy, by making the lower classes pay significantly more taxes, and then decreasing the taxes on the wealthy. It’s the largest wealth redistribution ever done — and there is absolutely zero morality behind it. Robin Hood was stealing from the rich and giving to the poor — but still stealing. This tax system has been stealing from the poor to give to the rich. “Supply side” propagandists claimed that the rich would invest the extra money in manufacturing and service creation. They didn’t do that. The propagandists claimed that this reinvestment would create jobs in the U.S. Jobs were moved out of U.S. borders instead. Trickle down doesn’t work, never has, and there is no indication it will in the future.
In a democratically-inspired nation, where people have a vote, generally things work best when wealth is spread among the people much more equitably than now, when everyday business decisions are not concentrated in the hands of a few. Oligarchy doesn’t work.
The question is, do we wish to hold on to a democratic system? If so, we need to stop the redistribution of wealth from the poor to the rich.
Workers build the nation. To claim they “contribute zero” is an insult to them, to the entire nation, and to our flag.
LikeLike
It should be pointed out that Wikipedia’s entry on the Gini Coefficient is fairly mature at this point, and one would assume reliable as well provided Stephen Colbert doesn’t give his audience some instructions about inserting phony information about elephants.
This is a hypothetical, real (fractional) number between 0 and 1. In a place where the coefficient is 0 everyone should have the same amount; if the value is 1, then everyone is dead broke except one person who has all of the money.
Now, here’s the kicker: Values of 0.0 and 1.0 are both fundamentally incompatible with any kind of free enterprise economic system. If the Gini is 0.0 and everyone has the same amount of money right down to the nickel, but you allow free enterprise, then all it takes is one person to offer a product or service while another person sits on his ass and plays video games. At the end of the day the enterprising person will turn a profit…and the personal wealth amounts will be unequal.
A Gini of 1.0 is even more incompatible, for if one person has all of the wealth and everyone else is broke, but we allow free enterprise, how long do you think it will be before the person with the money pays someone to do something? What, he’s going to do everything for himself? Not even. First time he needs a door held open, or some luggage hauled into a hotel room, the Gini plummets.
But if you do want a rigid, non-negotiable, integral Gini there is one solution and only one: Go statist. You can’t anchor the Gini to a 0 or a 1 without passing some hard rules. Be a villain straight out of Atlas Shrugged and pass a Directive 10-289. If you don’t do that, then capitalism will work its magic and the Gini will be sent inward, toward the middle, wherever the free market tells it that it should go.
I would also point out that if you go to the Wiki entry linked above and look at the world map, you’ll notice the nations in shades of green (low Gini), well, they don’t produce much. I like Canadian beer, Moosehead is sometimes a buck cheaper than the brand I normally buy. And I like the beer from Australia too, but this brand is really from New Zealand (which is aquamarine, Gini 0.35-0.39, not light green, 0.30-0.34).
I think to describe what you’re really talking about, Ed, what we need is a new number to demonstrate one’s ability to achieve personal wealth while contributing zero in terms of products & services that help people. You can take that thought of mine and huff & puff about rich Republican CEOs and I’ll do the same about lawyers in the Obama administration…but why get into it…we can come to an agreement that when an economy is saturated with profiteers of whatever stripe who are simply predatory and not helping anyone, then it is a distortion of the economy and is therefore a nudge in the direction of this collapse you are prognosticating. So I think that number would service the constructive point here — how many ways to get rich by providing helpful goods that people consume in betterment of their own situations, versus how many ways are there to get rich by destroying people. Or, coming up with & enforcing draconian rules that work against people, and help out very few people or no people.
LikeLike
Except this: In tight times, the rich hang on to their money; the middle class and poor spend their money (because they have to, for housing and food), thereby creating the demand that pulls an economy out of recession.
The inequality, per se, is only galling; the effect of the inequality, keeping money out of the hands of those who would circulate it and benefit most from the circulation, creates big trouble.
Think of the conundrums of idled factories, and idled workers who could both use the work from the factories and consume the products the factories produce . . . trickle down has never worked. The poor of Paris didn’t have flour; telling them to eat cake instead of bread only demonstrated the lack of understanding of the issues (even if the story is apocryphal).
LikeLike
A few new links at the bottom of the post, please note.
LikeLike
Ed: Wasn’t income inequality one of the key causes of the Great Depression?
No. In fact as normatively disturbing as such inequality is, I haven’t seen any clear evidence that it has negative economic effects. The issue is what causal mechanism causes that differential to have deleterious economic effects? Especially when so many people who are on the lower side of that differential objectively have a better standard of living than the middle class of half a century ago did. (If I may be forgiven for plugging my own blog, I recently wrote a post about that.)
There’s also the question of whether you really mean an “income” inequality or a “wealth” inequality, but I don’t think either one necessarily affects the economy that much.
If we shift to looking at political effects, then wealth inequalities certainly can have big political effects, because people have great difficulty in considering their wealth from an absolute standard (do I have enough, am I comfortable and healthy) and can’t help looking at it from a comparative standard (am I keeping up with the Joneses). Major inequalities can lead to revolutions or, at least, demands for public policies that even things out.
Nick: wouldn’t it drive up the median by the same token?
No, the median doesn’t shift. It’s just the middle point of the absolute number of people. So, for example, if we have three people, the first making $1,000, the second making $3,000 and the third making $5,000, the median is $3000, because there’s an equal number of people above and below that point. If the third person, instead of $5k, is making $5,000,000, the median is still $3,000.
A city’s home sales are usually reported by the median, because a few multi-million dollar homes in a community with mostly $100k-200k homes would really skew the mean, making homes look less affordable than the really are. If you want to know whether you can afford to buy a house in a particular place, you want to look at the mean, because you’ll know that half the houses sold for less than that amount.
By the same token, using the mean to gauge wealth or income falsely inflates the “average” wealth of the public, since the very wealthy skew the mean so badly. The median is a better measure because it tells us that half the people are worth (if we use wealth) or make (if we use income) above that amount and half below.
Of course it doesn’t tell us any more than that. It’s only a single measure, so it doesn’t reveal much detail. A better measure would be to look at the interquartile range of wealth or income distributions.
[Note: I’m making no comment on whether income/wealth inequality is bad, good, or neutral from a normative perspective.]
LikeLike
Because this “Rich getting richer and screw everyone else” model that exists now and has existed for at least the last three decades is an unmitigated disaster.
Our poor people are fat. And a lot of them have some pretty respectable looking teevee sets.
How many other countries would love to have an “unmitigated disaster” like that?
LikeLike
Ollie, wouldn’t it drive up the median by the same token?
Morgan writes:
Have we got some examples of societies with true equilibrium, in which the poorest achieve a standard of living very close to that enjoyed by the richest, and that standard of living remains very high? I’d be interested in seeing a list.
Morgan, with all due respect, you want to know what happened the last time the gap between the rich and everyone else got so wide as it is now? The Great Depression. Sorry, when the wealthy are the only ones getting ahead and the middle class is barely hanging if not outright shrinking then 1: there’s a problem and 2: it needs to be fixed.
You do not have a functioning democracy, Morgan, when the economic model underpinning it is a plutocracy.
The balance that used to exist needs to be restored. Because this “Rich getting richer and screw everyone else” model that exists now and has existed for at least the last three decades is an unmitigated disaster.
LikeLike
[…] went up by X doesn’t mean much; after all millionaires getting super wealthy would drive up this statistic even if the poor lose ground. The median would be a better measure […]
LikeLike
Ed,
I really don’t know what I mean by “rich”; EPI is the one that introduced the term, they must have a very detailed understanding of what it means since they’re making hard measurements with it (“richest one percent,” etc.). If we’re to infer something from what they’ve found out, it’s legitimate to question exactly what is being described here; in fact I’d say we’re remiss if we fail to do so.
Jim,
As far as what I think caused the change in how income is “distributed,” again, it’s going to be mighty tough to form a theory before we’ve substantiated that we’re really talking about income. If it is income, then what kind of income are we talking about? AGI? Or just investment income? Or small business owners declaring business income on their personal tax returns? What about phony income…I have a zillion shares in company XYZ, whose stock has been overvalued and a bubble is about to burst, thus my balance sheet is on an upswing but it’s all just air.
I think that last scenario is important to what EPI is trying to say here. If an economy is about to tank because a bubble is about to burst, then just before this disaster the hot-air phony-baloney “wealth” is going to be coagulated around those who happen to “have” it; therefore, the rich will get richer the day before. (They’ll also lose the most the day after.) That certainly was part of the phenomenon with the S&L toxic-asset situation as well as with the housing bubble situation.
So I think what they’ve set up here, is a theory that cannot really be proven because it cannot really be falsified. Phony wealth will tend to be concentrated in the hands of those who tend to accrue it; genuine wealth will also concentrate in the hands of those who tend to accrue that.
Have we got some examples of societies with true equilibrium, in which the poorest achieve a standard of living very close to that enjoyed by the richest, and that standard of living remains very high? I’d be interested in seeing a list.
LikeLike
Hello Morgan!
Why do you think there has been such a dramatic change in the way income is — to use a favorite word of Anarcho-Libertarians and conservatives — “distributed”?
What do you think has caused this?
I presume, already, that you think it’s just dandy and needs no rectification…and, of course, that is absolutely your right. But I’d be curious to know how you understand the dynamics of all this. What has made it thus?
Take care,
Jim
LikeLike
Do you mean “fundamentalist capitalist” instead of “rich?”
LikeLike
Is this Luiz Carlos Abreu basing this observation on interacting with actual people, and if so, are these people who have made themselves “rich” or people who simply want to be “rich”?
I have to ask because I’ve met far more “rich” people than most would have, coming from my humble background; they did not have this reverence for money Abreu describes, not even close. Actually, the people I’ve met who see money that way, overall have been poor, routinely making decisions that would undoubtedly keep them poor. In my experience it is the rich who see money as a rather mundane thing…a tool. Assets are a tool, debt is a tool.
What’s “rich,” anyway? Is a trust fund kid living on interest income, which is modest compared to an actual salary but perfectly suited to a debt-free person living a life of leisure, “rich”? How about a successful doctor who can pull in more income than most doctors, but still paying off student loans and with a retirement plan you wouldn’t wish on your worst enemy. Is he “rich”? Seems like an important question, but I couldn’t find where EPI’s web site goes into the detail necessary to resolve it.
LikeLike