About The Growing Income Divide

[Toro]

To accept that thinking though you have to beleive that economic gains are largely out of your control. That simply isn't true. It also assumes that you think someone other than you is suppossed to provide you with said economic gain. Also not true.

It assumes neither. And it is a moot point anyways since it is not about beliefs nor assumptions. It is about empirical observations, such as after the 2006 Congressional elections

Exit polls showed the economy competing with ethics and national security – and even besting Iraq – when voters were asked about the importance of the various issues in determining their vote for Congress. Eighty-two percent of Americans said economy was either extremely important (39 percent) or very important (43 percent) in their vote for Congress. By comparison, 74 percent said corruption and ethics were either extremely important (41 percent) or very important (33 percent) in their vote for Congress. Sixty-seven percent said Iraq was either extremely important (35 percent) or very important (32 percent) in their vote for Congress. Seventy-two percent said terrorism was either extremely important (39 percent) or very important (33 percent) in their vote for Congress. Sixty-two percent said illegal immigration was either extremely important (30 percent) or very important (32 percent) in their vote for Congress. And just fifty-seven two percent said “values issues” were either extremely important (36 percent) or very important (21 percent) in their vote for Congress.

Link

How can this be when economic growth has been pretty much average compared to past history? Usually, when things are good or average, people do not single out the economy as one of the most important issues, let alone resoundingly thump the incumbent party.

And the reason is because over the past few years, the gains from economic growth have accrued primarily to the wealthiest. People aren't stupid. For most people, the economy has not been good. The economy is growing but the majority of the gains are accruing to a minority of the population.

This, BTW, isn't an issue that started in 2000. The trend in economic inequality has been rising since about 1970. So, if you think I'm singling out Bush, that's incorrect, though Bush's policies have certainly exacerbated the situation.

I believe the whole have/have not issue centers around that. While not wanting full income equality for obvious reasons many still support some form of wealth redistribution. Inherent in that support is that people don't have control over their economic gains. That simply isn't true.

People have some control over their economic future but they certainly do not have control over all their economic future. A black kid growing up in the ghetto has a far less chance of making it in America than a white kid whose father went to Harvard and donated a million dollars to the endowment. This is an overwhelming statistical fact. Of course, the black kid from the ghetto certainly can make it in America, and there are many examples of such. But people do not have entire control of their destiny.

I do recall that from Buchanen now.

Anybody who rails against outsourcing is making a de facto argument for protectionism, whether they outright say it or not. They are statists, no different than socialists, using the power of government to redistribute wealth from the masses of the consumer to the few whose jobs are protected. If you believe there shouldn't be any form of taxation and redistribution, then you should support outsourcing fully because the effect of protecting jobs is the same as welfare. Its actually even worse, as economists have shown because writing a person a check brings about a lesser dead-weight loss than protectionism.

While I wouldn't support it, the opposite argument can be made. Forget about goods and focus on jobs for a second. How do American's gain econimcally if their jobs are taken from them and moved overseas to the lowest bidder. In alot of industries American businesses simply can not compete dollar for dollar with overseas labor. But the question remains how the have nots are going to gain economically if the jobs if they are qualified for given their skill sets are shipped overseas?

Actually, the opposite argument cannot be made. Americans' jobs are not being taken away from them. The number of jobs have been growing in America. Rather, specific industries have seen the number of jobs fall as manufacturing went overseas. But this describes only a small minority of American workers. In aggregate, Americans benefit by lower prices for goods and have more money to spend on other things, which generates economic activity elsewhere. The cost of protecting the jobs that would be outsourced is far greater than the cost of losing those jobs. You see the jobs that are lost from the closing plant but you do not see the jobs that are never created by forcing higher prices on Americans, and the cost of the jobs never created is almost always greater in aggregate than the jobs lost in the outsourced factory.

Extend your logic to America. If protecting jobs from foreign competition produces more wealth for Americans, then certainly protecting jobs in each state creates even more wealth. Therefore, no jobs should be allowed to move from New York to New Jersey because that is bad for New York. And if its good for states, why not for cities? Jobs in New York City can't go to Buffalo. And if its good for cities, surely its good for burroughs. Thus no job in Manhattan should go to Queens. And if its good for cities, it must be good for neighborhoods. No jobs in Midtown should ever go to SoHo. Etc., etc., etc.

Its bad economics.

 

[Bern80]

It assumes neither. And it is a moot point anyways since it is not about beliefs nor assumptions. It is about empirical observations, such as after the 2006 Congressional elections

It isn't moot at all, because the question of 'why' it is happening is most important of all. You can choose to believe in one of two extremes: 1)that there is some consipiracy afoot and no one has any control over the wealth they can accumulate or 2)that all people who aren't wealthy are poor because they're lazy, to anything in between..

That point is vital to this debate. It can completely change your point of view on the issue. If the second extreme is the case there is little reason to feel sympathetic or feel there is something unfair or immoral about a society with a few 'haves' and many 'have nots' because the reason the data is what it is, is based purely on the choice of the individual. If the first extreme is the reason behind that data then obviously we want to be able to enact policies that equal out the opportunities available to everyone.

Which is another point that people seem to forget. Are you for equal opportunity or equal outcomes? Many would like to go with the later because it can be legislated. Opportunities can not be legislated. No one can change the fact that life is gonna be more difficult for the black kid in the ghetto than for the white boy that goes to Harvard. I could ramble on for hours as to why the disparity in opportunity is actually a good thing for society, a better thing then if the field of opportunities was perfectly even for all.

The point is I think many people would prefer America be the land of equal outcomes rather than equal opportunity. I don't know if people don't accept that it is a part of human nature or what, but as a rule almost everyone looks for 'easier'. To facilitate that I beleive many would like to legislate away things like risk, adversity, the uncomfortable, etc. because they believe society will be better without those things. It may not even be intentional but it is the reality of their beleifs. The fact is those things (risk, adversity, etc.) are what make great societies.

And the reason is because over the past few years, the gains from economic growth have accrued primarily to the wealthiest. People aren't stupid. For most people, the economy has not been good. The economy is growing but the majority of the gains are accruing to a minority of the population.

This, BTW, isn't an issue that started in 2000. The trend in economic inequality has been rising since about 1970. So, if you think I'm singling out Bush, that's incorrect, though Bush's policies have certainly exacerbated the situation.

Again why this happening is the most important issue. As far as Bush is concerned I can only assume you mean the tax cuts. They occur and favor the rich for many reasons. Some reasons are good, some of them are well, math.

http://www.whitehouse.gov/news/reports/taxplan.html

That is a link to what happened to the tax brackets under Bush's tax cuts. You will notice the largest cut went to teh second income bracket, what we would call the middle income. The income tax rate for every level of income went down. But a tax rate is just that, a rate. A percentage. That's why it is so stupid to make the argument that the tax cuts went predominantly to the rich as if somehow that's some evil plot or bad thing. Meanwhile anyone who understands basic math is just gonna look at you when say that and say "Well, duh. How else would it work?". Look at what would have to be done the numbers than think about the impact on the economy if you reduce taxes to only the least wealthy and either keep them the same or raise them (as the dems propose to do) for the rich. Because again the purpose of a tax cut is to get people to spend. And let's be honest a spending increase by only the least wealthy is like a small drop in a very large bucket in terms of helping the economy.

The purpose of tax cuts is to encourage economic growth which happens when people spend more money. People spend more money when they have more disposable income available. People with the most money (the rich) are obviously going to spend the most money and are going to be the biggest contributor to the increased consumer spending.

People have some control over their economic future but they certainly do not have control over all their economic future. A black kid growing up in the ghetto has a far less chance of making it in America than a white kid whose father went to Harvard and donated a million dollars to the endowment. This is an overwhelming statistical fact. Of course, the black kid from the ghetto certainly can make it in America, and there are many examples of such. But people do not have entire control of their destiny.

And that is a question of degrees. You sell the black kid a lot shorter then what is fair because you beleive his odds are more insurmountable than they are. I also beleive there is group of people that some don't want to beleive exists. Or they choose to believe it is a smaller group of people than what constitutes reality. That is essentially the lazy, the quitters, the underacheivers.

The fact is we are becomeing more an more an instant gratification society. If it isn't easy, most likely we won't do it. That applies to almost everything in life. That is why you see the income disparity that you see. You see a growing gap in the haves and have nots not because of some uncontrollable barrier in the way, but because in this day and age fewer and fewer people are willing to quite simply, put forth the effort. That is they choose easy over hard. The fact is the silver spoon millionaires are the exception. Roughly 80% of millionaires are first generation millionaires. They are self made. Read "The Millionaire Next Door". it will change what you think about people that are wealthy

Anybody who rails against outsourcing is making a de facto argument for protectionism, whether they outright say it or not. They are statists, no different than socialists, using the power of government to redistribute wealth from the masses of the consumer to the few whose jobs are protected. If you believe there shouldn't be any form of taxation and redistribution, then you should support outsourcing fully because the effect of protecting jobs is the same as welfare. Its actually even worse, as economists have shown because writing a person a check brings about a lesser dead-weight loss than protectionism.

I was only makeing the argument. I clearly stated I don't agree with it.

Actually, the opposite argument cannot be made. Americans' jobs are not being taken away from them. The number of jobs have been growing in America. Rather, specific industries have seen the number of jobs fall as manufacturing went overseas. But this describes only a small minority of American workers. In aggregate, Americans benefit by lower prices for goods and have more money to spend on other things, which generates economic activity elsewhere. The cost of protecting the jobs that would be outsourced is far greater than the cost of losing those jobs. You see the jobs that are lost from the closing plant but you do not see the jobs that are never created by forcing higher prices on Americans, and the cost of the jobs never created is almost always greater in aggregate than the jobs lost in the outsourced factory.

It's purely subjective opinion on both sides. Jane Doe who lost her job will disagree with you because her job as a customer service rep in a call center (an industry that is seeing a large chunk of it's jobs go out of the U.S.) was lost and moved to India to somone who will do it for less. The rest of your paragraph is little solice to her and others like her, even though you are right that it is ultimately what is best for the country.

Extend your logic to America. If protecting jobs from foreign competition produces more wealth for Americans, then certainly protecting jobs in each state creates even more wealth. Therefore, no jobs should be allowed to move from New York to New Jersey because that is bad for New York. And if its good for states, why not for cities? Jobs in New York City can't go to Buffalo. And if its good for cities, surely its good for burroughs. Thus no job in Manhattan should go to Queens. And if its good for cities, it must be good for neighborhoods. No jobs in Midtown should ever go to SoHo. Etc., etc., etc.

Its bad economics.

Again not 'my' logic. Just makeing the argument. This is something Americans as they enter the work force are going to need to get smart about and gain competitive advantages in other areas such as value.

 

[Toro]

Bern

I wrote a reply last night, but for some reason it didn't post.

I'll reply later.

 

[Toro]

Here is a refutation of the article. It isn't incorrect, but the conclusions are misleading because of statistical quirks.

The WSJ calculation seems striking; but on reflection it is completely consistent with the conclusion that the U.S. has rapidly growing inequality. It shows only that there is indeed some income mobility but nobody denied that. And it is no more a sign that supply-side policies helped the poor than the fact that very few people win the lottery several years in a row.

Unfortunately, it is hard to explain this without a numerical example: Imagine an economy in which in any given year half of the families earn $100,000 and the other half earn $200,000. And imagine also that this economy fits the blender model, so that a family that starts in the bottom half has a 50 percent chance of being in the top half ten years later, and conversely.

Now do the WSJ calculation. Families that start in the bottom half begin with $100,000; ten years later, on average they have $150,000, so they gain 50 percent. Families that start in the top half begin with $200,000; ten years later, on average they also have $150,000, so they lose 33 percent.

But has the distribution of income gotten more equal? No: it is unchanged. All that we see is the familiar statistical phenomenon of “regression toward the mean.” Essentially, the initially rich have nowhere to go but down, the initially poor nowhere to go but up. So if the income distribution were stable, any income mobility would inevitably produce the WSJ result; and it is not surprising that we still get it even when income inequality is rising.

http://economistsview.typepad.com/economistsview/2007/11/inequality-and-.html#more

And a more detailed explanation for anyone who might be interested.

http://www.pkarchive.org/economy/therich.html

 

[Toro]

And here is further reason to be worried about growing inequality.

Improvements in child wellbeing in rich countries might depend more on reductions in income inequality rather than further economic growth, according to a study published today on bmj.com.

Poorer children fare less well than richer ones in each society. But a recent UNICEF report detailing 40 indicators of child wellbeing, said children in the UK and the USA fared worse than in any of the other rich countries. The new research examines whether the damage is done by being poor, or by being poorer than others.

To answer this question, the authors examined whether measures of child wellbeing were most closely related to average income (material living standards) or to the scale of income differences (inequality) in each society.

The authors studied these relationships in two different settings: among 23 rich countries, and then, independently, among the 50 states of the USA (and District of Columbia).

Among the 23 rich countries, the UNICEF index of child wellbeing (covering material wellbeing, health and safety, educational wellbeing, family and peer relationships, unhealthy and risky behaviours, and subjective wellbeing) was unrelated to average income, but was strongly related to the size of the income differences between rich and poor within each country.

Findings were similar among the 50 states of the USA. Data were analysed for teenage births, juvenile homicides, infant mortality, low birth weight, educational performance, high school drop-out rate, the proportion of children overweight, and mental health problems. All were more strongly related to the scale of income inequality in each state than to its average income.

http://www.eurekalert.org/pub_releases/2007-11/bmj-lso111607.php

 

[Bern80]

Here is a refutation of the article. It isn't incorrect, but the conclusions are misleading because of statistical quirks.

Interesting, however none of them address the points I made at all (nor did you). What I found interesting was again the author failed to ask a very critical 'why' question. There was a certain unstated sense that we have little ability to control our income potential.

There was an argument in there where the author pondered over the last 2-3 decades wondering where did the increase in income go? I got the impression the author thought that essentially the aithor beleived pay rates should have gone up for people who performed the same work over time. That's all well and good and it would be nice if income were adjusted at least for inlfation, but all in all the entire facet that I brought up in my post was completely left out of all of those articles.

While not haveing a real firm grasp on what the authors think should have happened to the incomes over the middle class, all I can really speak to is myself and how I would go about growing my own income. There are many, many options as to how to do that. The worst one however (the one the authors seem to rely on) is to simply hope that by doing the same thing my income will increase over time.

The articles don't talk at all about how or why people got where they are. Again I beleive that is the most vital component of the argument. Whether it is happening or not, whether it is good or bad is meaningless without understanding that. Maybe income isn't growing for the middle clase because they don't care to grow their income any more. Or maybe as I beleive is the case the majority of people that aren't willing to put forth all the effort required far, far outweigh, in a society where it is more and more common to do things for convenience sake and over all easiness, those that are willing to put forth the effort to make as much money as they so desire.

 

[Toro]

Interesting, however none of them address the points I made at all (nor did you). What I found interesting was again the author failed to ask a very critical 'why' question. There was a certain unstated sense that we have little ability to control our income potential.

Actually, I did address it the other day but it didn't post for some reason, so I never bothered to re-write it because it was tedious to do so at the time.

The reasons "why" really are not that important because people judge their progress based on certain benchmarks they themselves give. People tend to be happier, for example, when they do better than their neighbors, their peers, their expectations and their parents. And people tend to be less happy when the opposite occurs. This has been shown to be empirically true. For example, if a neighbor wins the lottery, was lucky/smart enough to buy Google on the IPO, makes it big as a celebrity or becomes rich in business, people tend to be less happy, even if it has nothing to do with their ownselves. You may not think this way, but it is empirically true in a population. And the reason is because most people believe, whether justified or not, that they are as deserving as their neighbor for success. Studies have shown that people over-attribute their own success to ability and their failures to luck. Thus, when someone is viewed as being successful, the peer wonders why he, too, was not as successful because he was just as hard-working, just as intelligent, and just as worthy as his neighbor. Another benchmark is how people do relative to their parents. It is a given that most people believe they should do better than their parents. However, many do not, and when this happens, people are likely to blame their circumstances rather than themselves.

But as to "why", the answer is a complex one. (And it is not surprising that the authors did not address it because it "why" was not the reason for their inquiry. After all, the academic process is a broad and deep one, and doesn't necessarily exist to provide refutation on a bulletin board.) There are several reasons given, probably all of which are true to some degree. Some reasons can be attributable to individuals' own actions and some just to plain luck.

One reason is education. Over the past four decades, the incomes of the educated have risen fairly steadily whereas the incomes of those with a high school education have been stagnant. In fact, wages after-inflation have actually fallen for males with a high school education or less during that time. (Wages for females with a similar education have risen quite substantially.) Now, education certainly is representative of individual initiative, but it is not entirely. The kid with the B average whose father donated a $1 million to Harvard is far more likely to make it in life than the kid with a B average from a poor neighborhood. That is a statistical fact. But having said that, taking the time to go to school for another four years is certainly a benign reason and one that should not be discouraged.

Another benign reason is what economists call "income to superstars" where the public is willing to pay for a highly specialized skill. Such an example are professional athletes such as A-Rod getting paid $280 million over 10 years by the Yankees. Another is the $20 million a picture A-list actors can command in Hollywood. Also included in this group are CEOs and hedge fund managers. The wages for these people have skyrocketed.

However, some reasons have less to do with one's skill and more to do with one's place in life. Some people are simply lucky. One obvious example are tax cuts to the wealthiest. If you are wealthy, even if you have done nothing over the past three decades and you are wealthy, your after-tax income has risen simply because taxes have fallen faster than it has for every other income group.

You can argue the efficacy of this policy, but regardless whether it is good or bad for the economy (the American economy has grown at pretty much the same rate over the past six decades regardless whether taxes have risen or fallen), it has lead to greater inequality.

Another reason for widening inequality which has nothing to do with one's skills has been the opening of China, which may be the single most important economic event perhaps of the past 100 years, akin to the opening of the American continent in the 19th century. Simply put, the opening of China has been enormously beneficial to the owners of capital whereas it has put pressure on wages. Those who derive the majority of income from capital are generally the wealthiest whereas those who derive the majority of income from wages is everyone else. The opening of China has increased the returns on capital by lowering the costs of production, which has increased the returns on capital owned by the wealthiest and has put pressure on wages paid.

Now, the opening of China is a great thing in aggregate because it expands the global pie, including for those in America. However, the distribution of the pie arising from the opening of China has been very unequal. The response in the political arena has been a backlash against globalization even though globalization has increased the wealth of America and the world. Despite the occasional demagogue on the Right, like Pat Buchanan, the manifestation of this backlash is occurring on the Left, most visibly in the 2006 Congressional elections where not a single new pro-free trade candidate was elected whereas there were several dozen new anti-free trade candidates elected, almost all of them in the Democratic Party.

So some reasons for widening inequality is attributable to the individual while some are not. And the reasons why, though not unimportant, are not as important as that it simply is happening, as sociologists will tell you (or at least tell me).

 

[Annie]

Not trying to be a nibbler here, but do you have something to back this up?

One reason is education. Over the past four decades, the incomes of the educated have risen fairly steadily whereas the incomes of those with a high school education have been stagnant. In fact, wages after-inflation have actually fallen for males with a high school education or less during that time. (Wages for females with a similar education have risen quite substantially.) Now, education certainly is representative of individual initiative, but it is not entirely. The kid with the B average whose father donated a $1 million to Harvard is far more likely to make it in life than the kid with a B average from a poor neighborhood. That is a statistical fact. But having said that, taking the time to go to school for another four years is certainly a benign reason and one that should not be discouraged.

Are you saying a kid from a 'poor neighborhood' that went to Harvard, regardless of grades? Perhaps a 'poor neighborhood' kid that went to a state college? Perhaps a kid from a 'poor neighborhood' that didn't finish 12th grade? Which poor kid?

 

[manu1959]

i am not an economist and have enjoyed reading this thread ....

i will say this before i share an observation, i was born with a silver spoon in my mouth, it was taken from me by family tragedy at the age of 4 .....

i then grew up poor.....i am no longer poor....

thru carter, reagan bush clinton and bush i have acquired more wealth.....i have always found a way to acquire wealth.....i think there are people that are just good at it.....

they are problem solvers......

what i find interesting about the opening of china, the world as a business opportunity and the influx of immigrants into wealthy countries is this ..... the middle and lower class is either being outsourced or it is being overrun by those from less fortunate societies ....

now if my nation was my company and i cared about my current employees / citizens .... well the answer is obvious .... at least to me ... none of my personal staff of 50 seems to want for anything and my closet dozen have been with me a decade ....

 

[Toro]

Not trying to be a nibbler here, but do you have something to back this up?

Years of reading many sources.

Start with this book.

[ame=http://www.amazon.com/Moral-Consequences-Economic-Growth/dp/0679448918]The Moral Consequences of Economic Growth[/ame]. 500 pages.

Are you saying a kid from a 'poor neighborhood' that went to Harvard, regardless of grades? Perhaps a 'poor neighborhood' kid that went to a state college? Perhaps a kid from a 'poor neighborhood' that didn't finish 12th grade? Which poor kid?

A poor kid with a B average is less likely to get into Harvard - or any Ivy League school - than a rich kid with a B average whose father gave the school a million dollars. The poor kid with the B average may not even be able to pay for college.

The point is that your status in life gives you more opportunities.

 

[manu1959]

Not trying to be a nibbler here, but do you have something to back this up?

Are you saying a kid from a 'poor neighborhood' that went to Harvard, regardless of grades? Perhaps a 'poor neighborhood' kid that went to a state college? Perhaps a kid from a 'poor neighborhood' that didn't finish 12th grade? Which poor kid?

it has to do with the business network......the B kid with the rich dad will have more options and contacts than the other kid.....the poor kid can do it...it will just be harder....thus the "more likely" qualifier in the statement

 

[Annie]

Years of reading many sources.

Start with this book.

The Moral Consequences of Economic Growth. 500 pages.



A poor kid with a B average is less likely to get into Harvard - or any Ivy League school - than a rich kid with a B average whose father gave the school a million dollars. The poor kid with the B average may not even be able to pay for college.

The point is that your status in life gives you more opportunities.

I'll not quibble about anyone's father giving 1m to Harvard or any school getting into college. I'll quibble though any kid from a low economic background with a B average not being able to attend college, (maybe not Harvard, maybe not U of I, maybe not even any state university), but they will attend college, what they make of that opportunity is up to them. They will NOT have the debt that most of our kids would.

 

[manu1959]

if our dollar is weak:

then:

americans will be forced to buy domestically

foreigners will see opportunity to invest and buy American

foreign tourism to america will increase

america will in turn gain wealth from other countries

it would seem to me good problem solvers could take advantage of a weak dollar.....

 

[Bern80]

The reasons "why" really are not that important because people judge their progress based on certain benchmarks they themselves give.

We will have to agree to disagree then. Why is fundamental to understanding most any situation. It determines wether what you are seeing is an anomoly or normal. If the situation demands attention and action or not.

As I stated in my other post, If the reason why there is income inequality was that there were all these barriers that the have nots can't control that are keeping then down I would care and believe we have problem. If the problem stems from the comparitive effort put forth by the haves and the have nots than I would say there is not a problem.

All of the whys you list below, people have control over. Probably more control than you care to admit. If people have control then they inherently have responsibility for the situations they find themselves in due to the reasons below. so as not to take up a lot of space I will paraphrase some of these or simply quote the essence of your reasons.

And the reason is because most people believe, whether justified or not, that they are as deserving as their neighbor for success. Studies have shown that people over-attribute their own success to ability and their failures to luck.

This goes back to how our society has changed over time. It is a problem. People probably do beleive that, but I don't beleive it has always been that way. If more people understand that they are as equally responsible for their successes as their failures you may see a shrink in income inequality.

One reason is education.

This is also a choice. Of course the data you posted with this makes perfect sense. Our job market values an education. It also hilights why it is so important to ask why. If you started out as you have by simply observing that there is this growing income inequlity and wanted to fix that, but didn't ask why, you wouldn't have identified this as reason. Had you not done that you may have embarked on some policy decision that doesn't even begin to address the problem.

If you were a person that thought growing income inequlity was a problem and had identified education as a reason why you would better equipped to make policy to solve the perceived problem.

Another benign reason is what economists call "income to superstars" where the public is willing to pay for a highly specialized skill. Such an example are professional athletes such as A-Rod getting paid $280 million over 10 years by the Yankees. Another is the $20 million a picture A-list actors can command in Hollywood. Also included in this group are CEOs and hedge fund managers. The wages for these people have skyrocketed.

Again I encourage you to continue your extensive reading of the subject by reading "The Millionaire Next Door". As far as reasons for growing income inequality this group is mathematically a non-factor.

However, some reasons have less to do with one's skill and more to do with one's place in life. Some people are simply lucky. One obvious example are tax cuts to the wealthiest. If you are wealthy, even if you have done nothing over the past three decades and you are wealthy, your after-tax income has risen simply because taxes have fallen faster than it has for every other income group.

Again tax cuts are always going to favor the wealthiest the most (unless you just don't give them one) as they should. Again under the Bush tax cuts everyone's income taxes went down. But it would be thoroughly pointless to, for example, only lower taxes for teh least wealthy and keep them the same for the wealthy in terms of trying to bolster the economy.

Another reason for widening inequality which has nothing to do with one's skills has been the opening of China

Beleive it or not this reason may be the one the American people have the most control over. Success takes effort for the most part. Part of that effort needs to involves Americans critically thinking about the value they can provide there employers such that it doesn't become overwhelmingly more reasonable to ship their jobs overseas. it is something Americans are simply going to have to become more conciencious about.

So some reasons for widening inequality is attributable to the individual while some are not. And the reasons why, though not unimportant, are not as important as that it simply is happening, as sociologists will tell you (or at least tell me).

I know I can't say this which much credibility, but to say the 'why' is unimportant or hardly important is not correct. Asking why establishes what polices should be enacted and what aspects of the phenomenon we have control over. So far you seem to be on the side that people have very little control over their income growth. To make policy based on that w/o determing if it is true would extraordinaliry detrimental to our society. Mainly becuase it simply isn't true. As I alluded to earlier, most people want easy. They don't want the responsibility, thus they don't want to accept that they have control.

I don't know if you have ever heard of the concept of the '5 whys' or not. Essentially what it says is that if you are observing some phenomenon you will need to ask why at least 5 times before you arrive at the reason behind the phenomonen. To say that is unimportant is simply ridiculous.

 

[Toro]

I'll not quibble about anyone's father giving 1m to Harvard or any school getting into college. I'll quibble though any kid from a low economic background with a B average not being able to attend college, (maybe not Harvard, maybe not U of I, maybe not even any state university), but they will attend college, what they make of that opportunity is up to them. They will NOT have the debt that most of our kids would.

What I was trying to convey was that for an average kid, where you come from matters. She won't get a scholarship, and because of her lack of income, she doesn't have as much of a chance as those who come from well-to-do backgrounds.

A brilliant A+ student from a poor neighborhood may very well end up making more of herself than the lazy-ass, C-, cocaine-snorting son of a multi-millionaire.

 

[Annie]

What I was trying to convey was that for an average kid, where you come from matters. She won't get a scholarship, and because of her lack of income, she doesn't have as much of a chance as those who come from well-to-do backgrounds.

A brilliant A+ student from a poor neighborhood may very well end up making more of herself than the lazy-ass, C-, cocaine-snorting son of a multi-millionaire.

Actually a C+ student from an inner city school has a better chance at scholarship than a B+ student from the middle class. Universities take into consideration socioeconomic factors. Thus there is an assumption that the C+ lower income student, has overcome a myriad of obstacles to do so.

 

[Toro]

Again tax cuts are always going to favor the wealthiest the most (unless you just don't give them one) as they should. Again under the Bush tax cuts everyone's income taxes went down. But it would be thoroughly pointless to, for example, only lower taxes for teh least wealthy and keep them the same for the wealthy in terms of trying to bolster the economy.

One would expect that a tax cut across the board would favour the wealthy in absolute terms. However, what has happened under Bush is that tax cuts have favoured the wealthiest in relative terms. You can have a situation where the greatest absolute gains from tax cuts accrue to the wealthy, but the greatest relative gains do not. That has not happened. And I'm not sure why, in a time when the wealthiest have accrued the biggest relative gains over the past three decades, they should accrue the biggest relative gains in tax breaks, especially when the deficit continues to rise, and it merely means higher taxes for you in the future, which I can guarantee will go up.

However, I am straying from the OP. In terms of income inequality, the Bush tax cuts have widened inequality.

 

[Bern80]

One would expect that a tax cut across the board would favour the wealthy in absolute terms. However, what has happened under Bush is that tax cuts have favoured the wealthiest in relative terms. You can have a situation where the greatest absolute gains from tax cuts accrue to the wealthy, but the greatest relative gains do not. That has not happened. And I'm not sure why, in a time when the wealthiest have accrued the biggest relative gains over the past three decades, they should accrue the biggest relative gains in tax breaks, especially when the deficit continues to rise, and it merely means higher taxes for you in the future, which I can guarantee will go up.

However, I am straying from the OP. In terms of income inequality, the Bush tax cuts have widened inequality.

you're going to have to explain relative and absolute because it seems both would and should favor the wealthy. This isn't rocket science and isnt' as complex as you make it sound. Percentages effect bigger numbers more than they effect small numbers.

Interesting that is all you commented on. You continue to ignore the human nature component of this issue.

 

[Toro]

you're going to have to explain relative and absolute because it seems both would and should favor the wealthy. This isn't rocket science and isnt' as complex as you make it sound. Percentages effect bigger numbers more than they effect small numbers.

Interesting that is all you commented on. You continue to ignore the human nature component of this issue.

I've already explained the human nature component.

Besides, its all human nature.

Let's say you have two taxpayers, one who makes $1,000,000 and another who makes $10,000. If you give the millionaire a 1% tax cut and the poor guy a 10% tax cut, the millionaire gets a $10,000 tax cut and the poor guy gets a $1,000 tax cut. The absolute tax cut is greater for the millionaire but his relative tax cut (1%) is lower than the poor guy (10%).

 

[Bern80]

I've already explained the human nature component.

Besides, its all human nature.

No you haven't. if you accepted the notion that people have a considerable amount of control over their income growth, you would no be presenting the data you are presenting. because if people have control then people have choice. The data then become pointless because people can change it whenever they want.

Let's say you have two taxpayers, one who makes $1,000,000 and another who makes $10,000. If you give the millionaire a 1% tax cut and the poor guy a 10% tax cut, the millionaire gets a $10,000 tax cut and the poor guy gets a $1,000 tax cut. The absolute tax cut is greater for the millionaire but his relative tax cut (1%) is lower than the poor guy (10%).

Then if I am to understand that the relative part refers to the percentage than you are still not entirely correct.l

If you had looked at the link I had provided you would see quite clealy what the percentage break was for each income bracket. The loweest received a 5% break, 2nd bracket a 13% break, 3rd bracket a 6% break. The top two brackets, 36% and 39.6% were combined into one bracket and reduced to 33% for a break of 3% and 6.6% respectively. The 2nd lowest income bracket recevied the largest relative break, the 2nd highest income received the lowest. The difference in the extreme ends is 1.6% in favor of the top earners. I would guess, haveing been in said bracket that had the tax rate been reduced anymore for the lowest income earners they basically wouldn't have been taxes at all after rebates and all.