Income inequality: The snake that threatens to choke the economy

February 11, 2011

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.

Income inequality, from EPI

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.

More at the EPI website.

Econ chart - who gains, from EPI

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:

 


Sherffius on tax cuts for the rich: When does he get the Pulitzer?

December 11, 2010

So, when will Sherffius win a Pulitzer for his cartoons?  Did you see what he had to say about the tax cut legislation?

Sherffius cartoon from the Boulder (Colorado) Daily Camera, via Lobsterscope

Sherffius cartoon on tax cuts, from the Boulder Daily Camera

Tip of the old scrub brush to Under the Lobsterscope.


Quote of the moment: Jefferson on public education (again), “Preach . . . a crusade against ignorance”

November 26, 2010

Thomas Jefferson Elementary School, Anaheim, California, circa 1940

Thomas Jefferson Elementary School, Anaheim, California, circa 1940; image from the Anaheim Public Library, via the California Digital Library, University of California

Preach, my dear Sir, a crusade against ignorance; establish & improve the law for educating the common people.  Let our countrymen know that the people alone can protect us against these evils, and that the tax which will be paid for this purpose is not more than the thousandth part of what will be paid to kings, priests, & nobles who will rise up among us if we leave the people in ignorance.

To George Wythe, from Paris, August 13, 1786

Excerpted here from The Quotable  Jefferson, collected and edited by John Kaminski, Princeton University Press, 2006, p. 84

Quote of the moment: Hamilton, on taxes and the Constitution, Federalist #30

October 16, 2010

They claim to be constitutionalists, and they claim to want to uphold the U.S. Constitution.  But here’s an excerpt from Federalist #30, in which Alexander Hamilton explains why it is necessary for a federal government to tax, and sometimes to tax heavily.

Alexander Hamilton

Alexander Hamilton: "Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions."

This is the U.S. Constitution and the “Founding Fathers” the Tea Partiers hope you will never see, and this is the Constitution and Founders they work hard to hide (some highlights added):

IT HAS been already observed that the federal government ought to possess the power of providing for the support of the national forces; in which proposition was intended to be included the expense of raising troops, of building and equipping fleets, and all other expenses in any wise connected with military arrangements and operations. But these are not the only objects to which the jurisdiction of the Union, in respect to revenue, must necessarily be empowered to extend. It must embrace a provision for the support of the national civil list; for the payment of the national debts contracted, or that may be contracted; and, in general, for all those matters which will call for disbursements out of the national treasury. The conclusion is, that there must be interwoven, in the frame of the government, a general power of taxation, in one shape or another.

Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution. From a deficiency in this particular, one of two evils must ensue; either the people must be subjected to continual plunder, as a substitute for a more eligible mode of supplying the public wants, or the government must sink into a fatal atrophy, and, in a short course of time, perish.

In the Ottoman or Turkish empire, the sovereign, though in other respects absolute master of the lives and fortunes of his subjects, has no right to impose a new tax. The consequence is that he permits the bashaws or governors of provinces to pillage the people without mercy; and, in turn, squeezes out of them the sums of which he stands in need, to satisfy his own exigencies and those of the state. In America, from a like cause, the government of the Union has gradually dwindled into a state of decay, approaching nearly to annihilation. Who can doubt, that the happiness of the people in both countries would be promoted by competent authorities in the proper hands, to provide the revenues which the necessities of the public might require?

The present Confederation, feeble as it is intended to repose in the United States, an unlimited power of providing for the pecuniary wants of the Union. But proceeding upon an erroneous principle, it has been done in such a manner as entirely to have frustrated the intention. Congress, by the articles which compose that compact (as has already been stated), are authorized to ascertain and call for any sums of money necessary, in their judgment, to the service of the United States; and their requisitions, if conformable to the rule of apportionment, are in every constitutional sense obligatory upon the States. These have no right to question the propriety of the demand; no discretion beyond that of devising the ways and means of furnishing the sums demanded. But though this be strictly and truly the case; though the assumption of such a right would be an infringement of the articles of Union; though it may seldom or never have been avowedly claimed, yet in practice it has been constantly exercised, and would continue to be so, as long as the revenues of the Confederacy should remain dependent on the intermediate agency of its members. What the consequences of this system have been, is within the knowledge of every man the least conversant in our public affairs, and has been amply unfolded in different parts of these inquiries. It is this which has chiefly contributed to reduce us to a situation, which affords ample cause both of mortification to ourselves, and of triumph to our enemies.

What remedy can there be for this situation, but in a change of the system which has produced it in a change of the fallacious and delusive system of quotas and requisitions? What substitute can there be imagined for this ignis fatuus in finance, but that of permitting the national government to raise its own revenues by the ordinary methods of taxation authorized in every well-ordered constitution of civil government? Ingenious men may declaim with plausibility on any subject; but no human ingenuity can point out any other expedient to rescue us from the inconveniences and embarrassments naturally resulting from defective supplies of the public treasury.

More

IT HAS been already observed that the federal government ought to possess the power of providing for the support of the national forces; in which proposition was intended to be included the expense of raising troops, of building and equipping fleets, and all other expenses in any wise connected with military arrangements and operations. But these are not the only objects to which the jurisdiction of the Union, in respect to revenue, must necessarily be empowered to extend. It must embrace a provision for the support of the national civil list; for the payment of the national debts contracted, or that may be contracted; and, in general, for all those matters which will call for disbursements out of the national treasury. The conclusion is, that there must be interwoven, in the frame of the government, a general power of taxation, in one shape or another.Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution. From a deficiency in this particular, one of two evils must ensue; either the people must be subjected to continual plunder, as a substitute for a more eligible mode of supplying the public wants, or the government must sink into a fatal atrophy, and, in a short course of time, perish.

In the Ottoman or Turkish empire, the sovereign, though in other respects absolute master of the lives and fortunes of his subjects, has no right to impose a new tax. The consequence is that he permits the bashaws or governors of provinces to pillage the people without mercy; and, in turn, squeezes out of them the sums of which he stands in need, to satisfy his own exigencies and those of the state. In America, from a like cause, the government of the Union has gradually dwindled into a state of decay, approaching nearly to annihilation. Who can doubt, that the happiness of the people in both countries would be promoted by competent authorities in the proper hands, to provide the revenues which the necessities of the public might require?

The present Confederation, feeble as it is intended to repose in the United States, an unlimited power of providing for the pecuniary wants of the Union. But proceeding upon an erroneous principle, it has been done in such a manner as entirely to have frustrated the intention. Congress, by the articles which compose that compact (as has already been stated), are authorized to ascertain and call for any sums of money necessary, in their judgment, to the service of the United States; and their requisitions, if conformable to the rule of apportionment, are in every constitutional sense obligatory upon the States. These have no right to question the propriety of the demand; no discretion beyond that of devising the ways and means of furnishing the sums demanded. But though this be strictly and truly the case; though the assumption of such a right would be an infringement of the articles of Union; though it may seldom or never have been avowedly claimed, yet in practice it has been constantly exercised, and would continue to be so, as long as the revenues of the Confederacy should remain dependent on the intermediate agency of its members. What the consequences of this system have been, is within the knowledge of every man the least conversant in our public affairs, and has been amply unfolded in different parts of these inquiries. It is this which has chiefly contributed to reduce us to a situation, which affords ample cause both of mortification to ourselves, and of triumph to our enemies.

What remedy can there be for this situation, but in a change of the system which has produced it in a change of the fallacious and delusive system of quotas and requisitions? What substitute can there be imagined for this ignis fatuus in finance, but that of permitting the national government to raise its own revenues by the ordinary methods of taxation authorized in every well-ordered constitution of civil government? Ingenious men may declaim with plausibility on any subject; but no human ingenuity can point out any other expedient to rescue us from the inconveniences and embarrassments naturally resulting from defective supplies of the public treasury.


Quote of the moment, still: Oliver Wendell Holmes, Jr., on taxes as the price for civilization

April 15, 2010

The frequently quotable Oliver Wendell Holmes, Jr., circa 1930. Edited photograph from the Library of Congress Prints and Photographs Division. Original photo by Harris & Ewing. LC-USZ62-47817.  Copyright expired.

The frequently quotable Oliver Wendell Holmes, Jr., circa 1930. Edited photograph from the Library of Congress Prints and Photographs Division. Original photo by Harris & Ewing. LC-USZ62-47817. Copyright expired.

I like paying taxes. With them I buy civilization.

Justice Oliver Wendell Holmes, Jr., attributed. (see Felix Frankfurter, Mr. Justice Holmes and the Supreme Court, Harvard University Press, 1961, page 71.)

Did Holmes say that?

The quote was all over the internet in early October 2008 (and later), after New York Times op-ed writer Tom Friedman noted it in his column criticizing Alaska Gov. Sarah Palin for her assertion that paying taxes is not patriotic.

I found reference to the quote in a book about eminent economists, through Google Scholar:

Eminent Economists: Their Life Philosophies
By Michael Szenberg
Published by Cambridge University Press, 1993
320 pages

On page 201, Szenberg refers Holmes’s view of “taxation as the price of liberty.” In a footnote, he points to Justice Frankfurter’s book. The quote is dolled up a little. According to Szenberg’s footnote:

More precisely, he rebuked a secretary’s query of “Don’t you hate to pay taxes?” with “No, young fellow, I like paying taxes, with them I buy civilization.”

Frankfurter is a reliable source. It’s likely Holmes said something very close to the words Friedman used.

This is mostly an encore post.

Urge others to give a dime and give a damn for civilization:

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George W. Bush’s legacy in a pie chart

August 15, 2009

Matthew Yglesias made the chart from figures supplied by David Leonhardt in the New York Times.

Why is the Obama administration so constrained, and why is it so difficult to find ways to fund any change in health care?

Sources of our federal deficits, August 2009

Sources of our federal deficits, August 2009

Leonhardt wrote:

The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.

The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.

Yglesias described the chart’s inputs:

— “The first category — the business cycle — accounts for 37 percent of the $2 trillion swing.”

— Second, Bush-era legislation “like his tax cuts and the Medicare prescription drug benefit, [that] not only continue to cost the government but have also increased interest payments on the national debt.”

— Third, “Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000 […] 20 percent of the swing.”

— Fourth, “About 7 percent comes from the stimulus bill that Mr. Obama signed in February.”

— Fifth, “only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.”

Got any solutions for the deficits? Growing the economy may be the only way out — demonstrating, as if we needed to, the precarious situation we find ourselves in.  It’s a tightrope walk.


New Survey: Health Care Leaders Say Need for Reform Is Urgent; Broadly Support Public Health Care Option, Provider Payment Reform

August 3, 2009

Press release from the respected Commonwealth Fund, with views much to rare in blogging:

New Survey: Health Care Leaders Say Need for Reform Is Urgent; Broadly Support Public Health Care Option, Provider Payment Reform

Majority of Health Care Opinion Leaders Believe Other Key Elements of Comprehensive Health Reform Are Critical, Including a National Insurance Exchange with Standard-setting Authority

New York, N.Y., July 27, 2009—By a wide margin, health care leaders believe that individuals should have a choice of public and private health plans, and strongly support other central components of health reform such as innovative provider payment reform and a national insurance health exchange with strong standard-setting authority. In addition, two-thirds (68%) of opinion leaders feel it is urgent to enact comprehensive health care reform this year, according to the latest Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey.

“These results show that leaders from all the key stakeholder groups agree: comprehensive health care reform is urgently needed, to rein in costs and ensure that all Americans have access to affordable quality care,” said Commonwealth Fund President Karen Davis. “Leaders also agree that offering a range of insurance options, and changing the way we pay for health care are critical steps for controlling the growth in health care spending over the next decade.”

Seven of 10 respondents to the survey, conducted by Harris Interactive, support the creation of a national health insurance exchange with the authority to enforce standards of participation by carriers, standardize benefits, set rating rules, and review or negotiate premiums. Two-thirds (65%) say that the exchange should offer a public plan that incorporates innovative payment methods, moving away from traditional fee-for-service and toward bundled payments. Half of opinion leaders (51%) support setting provider payment rates in a public insurance plan either at Medicare levels or between Medicare and commercial plan levels.

Other findings from the survey include:

  • Fifty-six percent of respondents believe that, in designing an individual mandate, the required benefit package should be similar to the standard BlueCross/BlueShield option offered in the Federal Employees Health Benefit Program.
  • In considering strategies to reduce health costs, opinion leaders express substantial support for new insurance reporting requirements (78%), joint negotiation of pharmaceutical prices (72%) and provider payment rates (61%), and limits to high cost providers and overvalued services (71%).
  • Forty-five percent of respondents believe provider participation in the public plan should be linked to Medicare, while 43 percent believe it should not, with the strongest opposition among those working in health care delivery.
  • Nearly three quarters of opinion leaders (72%) support ending the two-year Medicare waiting period for the disabled.
  • When asked to indicate their support for a variety of approaches to financing coverage expansion, more than three-fourths of survey respondents (79%) support increasing the federal excise tax on alcohol, cigarettes, and sugar-sweetened drinks, and 77% support requiring employers to offer coverage or pay a percentage of payroll to finance coverage (pay or play).

The survey is the 19th in a series from The Commonwealth Fund, and the eleventh conducted in partnership with the publication Modern Healthcare. Commentaries on the survey results by Congresswoman Tammy Baldwin (D-WI) and Congressman Michael C. Burgess (R-TX) appear in the July 27 issue of Modern Healthcare. The commentaries are also posted on the Fund’s Web site, http://www.commonwealthfund.org, along with a Commission data brief discussing the survey findings.

Methodology: The Commonwealth Fund/Modern HealthCare Health Care Opinion Leaders Survey was conducted online within the United States by Harris Interactive on behalf of The Commonwealth Fund between June 8, 2009 and July 8, 2009 among 585 opinion leaders in health policy and innovators in health care delivery and finance. The final sample included 208 respondents from various industries, for a response rate of 35.6 percent. Data from this survey were not weighted. A full methodology is available in Appendix A.

The entire survey, “Health Care Opinion Leaders’ Views on Health Reform” is available here.


Putting the Tea Parties into the history books

April 24, 2009

Ghost in the Machine has the story, really, “U.S. History for Dummies.”  Well worth clicking over to read it in full.

But I also want to call attention to this brilliant graphic — a sort of photographic political cartoon, and it’s quietly, subtly, savage:

We dont like taxes!  Dont need em!

What things in this photograph were paid for by taxes?

Oh, there are a couple of inaccuracies — the phone lines were probably paid for by the telephone company, but eminent domain was used to get the easements in many cases.  (Who did the photo and the captioning?  Anyone know?)

Ben Sargent was a little less subtle, in the Austin American-Statesman, using that Oliver Wendell Holmes quote we looked at some time ago.

Ben Sargent, Austin American-Statesman, copyright 2009

Ben Sargent, Austin American-Statesman, copyright 2009


Carnival of Education Bankruptcy

October 24, 2008

Have you looked around lately?

Dallas isn’t the only school system in trouble in America.  Financial woes plague many, perhaps most of the nation’s schools systems.

Funding for schools is difficult in an environment where even good schools get stuck with the label “failing school” due to seriously misdirected programs from the federal government.  The situation is complicated by a non-booming economy, especially in districts that had been gearing to build new schools to accommodate increased student populations.

What will the future bring?

It’s enough to merit its own little impromptu carnival.  Oy.

There may be updates.  We haven’t even gotten to the Texas SBOE House of Science Horrors.

Vote, will you?


Quote of the moment: Oliver Wendell Holmes, Jr., on taxes

October 9, 2008

The frequently quotable Oliver Wendell Holmes, Jr., circa 1930. Edited photograph from the Library of Congress Prints and Photographs Division. Original photo by Harris & Ewing. LC-USZ62-47817.  Copyright expired.

The frequently quotable Oliver Wendell Holmes, Jr., circa 1930. Edited photograph from the Library of Congress Prints and Photographs Division. Original photo by Harris & Ewing. LC-USZ62-47817. Copyright expired.

I like paying taxes. With them I buy civilization.

Justice Oliver Wendell Holmes, Jr., attributed.  (see Felix Frankfurter, Mr. Justice Holmes and the Supreme Court, Harvard University Press, 1961, page 71.)

Did Holmes say that?

The quote is all over the internet Wednesday, after New York Times op-ed writer Tom Friedman noted it in his column criticizing Alaska Gov. Sarah Palin for her assertion that paying taxes is not patriotic.

I found reference to the quote in a book about eminent economists, through Google Scholar:

Eminent Economists: Their Life Philosophies
By Michael Szenberg
Published by Cambridge University Press, 1993
320 pages

On page 201, Szenberg refers Holmes’s view of “taxation as the price of liberty.”  In a footnote, he points to Justice Frankfurter’s book.  The quote is dolled up a little.  According to Szenberg’s footnote:

More precisely, he rebuked a secretary’s query of “Don’t you hate to pay taxes?” with “No, young fellow, I like paying taxes, with them I buy civilization.”

Frankfurter is a reliable source.  It’s likely Holmes said something very close to the words Friedman used.

Urge others to buy a chunk of civilization:

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