Rising Income Inequality - NOT!!!

Discussion in 'Economy' started by Wiseacre, Nov 2, 2011.

  1. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Income inequality and the education of Jonathan Chait « The Enterprise Blog

    snippet:

    1. Research by Northwestern University professor Robert Gordon, generally a liberal fave, finds that “not only has the increase of inequality been exaggerated, but it has ceased. The excess growth of mean relative to median income reversed itself after 2000.” But maybe he is somehow saying just the opposite, that it has actually not ceased. Weird, that.
    2. And Gordon—who, in all fairness, does think incomes are more unequal today than a generation ago—has this to say about supposedly stagnant middle-class wages: “Correcting the upward bias of the official [consumer price index] adds more than 1 percent per year to official estimates of the growth in median and mean wages. Cumulatively since 1977, my best estimate of the upward bias in the CPI cumulates to 38 percent between 1977 and 2006.”
    3. In a blockbuster, the blog Political Calculations finds that “there has been absolutely no meaningful change in the inequality of individual income earners in the years from 1994 through 2010. … It would seem then that the real complaint of such people isn’t about rising income inequality, but rather, how people choose to group themselves together into their families and households.”
    4. Brand-new research from University of Chicago’s Bruce Meyer and Notre Dame’s James Sullivan, who find that “median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009.”
    5. A 2008 paper by Christian Broda and John Romalis from the University of Chicago documents how traditional measures of inequality ignore how inflation affects the rich and poor differently: “Inflation of the richest 10 percent of American households has been 6 percentage points higher than that of the poorest 10 percent over the period 1994–2005. This means that real inequality in America, if you measure it correctly, has been roughly unchanged.”
     
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  2. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    The one chart that explodes the myth of U.S. income inequality « The Enterprise Blog

    Promoters of the income inequality meme—Occupy Wall Street, the Obama White House, liberal think tanks, “progressive” bloggers—typically point to data showing how “rich” households and families have been getting even richer vs. those in the middle class. But yet there’s no evidence of any significant change in income inequality among individuals as this gobsmacking chart from the must-follow Political Calculations blog shows:
    An explanation from PC:
    The chart [above] shows what we find for each grouping of Americans according to their Gini Coefficient, where a value of 0 indicates perfect equality (everyone has the same income) and a value of 1 indicates perfect inequality (one person has all the income, while everyone else has none). … But here’s the thing. We have already confirmed that there has been absolutely no meaningful change in the inequality of individual income earners in the years from 1994 through 2010. If income inequality in the United States was really driven by economic factors, this is where we would see it, because paychecks (or dividend checks, or checks for capital gains, etc.) are made out to individuals, not to families and not to households.
    It would seem then that the real complaint of such people isn’t about rising income inequality, but rather, how people choose to group themselves together into their families and households.


    You gotta checkout the chart, I don't know how to get it pasted into a post. Cut and Paste didn't work.
     
  3. Wry Catcher
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    Wry Catcher Platinum Member

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    "There are liars, damn liars and statistics"
    Mark Twain.

    Here's another statistic:

    CBO is the source, Between 1929 and 2007 the increase in income for the poorest 20% of Americans rose 18%. The increase for the middle class increased 40%; and, the increase for for the richest 1% was 275%.
     
  4. FuelRod
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    FuelRod Gold Member

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    “You Can’t Believe Most of the Quotes You Read On the Internet” -Abraham Lincoln
     
  5. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    There's an interesting pov about the subject of income inequality from the Reason.com website. Regardless of your political leanings, you oughta read it.


    You Want More Equality? Support More Capitalism - Reason Magazine

    snippet:

    What we should be worrying about is economic mobility. And we do well there, too. A 2007 Treasury Department study showed that 58 percent of households that were in the bottom quintile in 1996 moved to a higher level by 2005, and of households in the top 1 percent during the same time, more than 57 percent dropped to a lower income group. And Reason Foundation Senior Analyst Shikha Dalmia recently pointed to a study by the University of Chicago's Steven Kaplan that "shows that, despite government bailouts, in 2008 and 2009 the adjusted gross income of the top 1 percent—a disproportionate number of whom work in the financial industry—fell to 1997 levels."

    These numbers show great mobility, upward and downward, and it's why "class" as a political wedge issue hasn't typically held traction—though the Obama administration is doing its best to change that dynamic.

    No doubt, the recent recession—and "stimulus"-induced extension of that recession—and structural and technological changes that often occur in the job market mean that every so often, we will have some painful times. Taking a snapshot of "inequality" when emotions are exacerbated by a recession is only meant to distort reality for political gain. And every time capitalism is hijacked by technocrats and bureaucrats, it seems there is a cry from other technocrats and bureaucrats (and their fellow travelers) to institute more of the top-down control that stifles mobility.

    You will notice that the Occupy Wall Street crowds—and the progressives who support them—focus on bringing the wealthy down to earth rather than lifting the 99 percent. They have a nearly religious belief that too much wealth is fundamentally immoral and unhealthy for society. The economic systems they cheer on would coerce downward mobility for the sake of equality but ignore prosperity for the people they claim to represent.

    If progressive were interested in mitigating inequality, they would support the dynamism of free markets to allow the merit of ideas, products, and services to win the day rather than stifle companies and pick winners in the name of imagined "progress." Yes, "too big to fail" means banks, but it also means union-backed bureaucracies, political parties, car companies, and green energy—nd more.

    If they were interested in spreading wealth, they would support lifting barriers that inhibit markets and make life difficult for entrepreneurs and businesses rather than spreading the destructive notion that life can only be "fair" if we rely on dependency and entitlement and tear down those who have more.
     
  6. PoliticalChic
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    PoliticalChic Diamond Member

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    There's probably a clue that your data is flawed in that to make it into the top 1%, one need only make $343,927
    National Taxpayers Union - Who Pays Income Taxes?

    Now for today's lesson in economics:

    1. The top fifth of household incomes began at $68,352 in 1980 (in 2004 dollars). But by 2004, the incomes of so many in the second 20% had increased above the former $68,352 threshold that the top 20% of earners now started at $88,029 in 2004! Therefore, if one calculates the mean average of all the incomes above $88,029 in 2004 it will be considerably higher than if you averaged all the incomes above the $68,352 as we did in 1980.
    The essential point is that this statistical effect does not mean that the rich are getting richer…it means more people are getting rich, and reflects the rising general prosperity!

    2. If you don’t see it, is it still there??
    The stock market boom of the ‘90’s caused IRA and 401(k) plans to triple: http://federalreserve.gov/releases/z1/Current/annuals/a1995-2004.pdf

    Yet while the largest part of the gain went to the bottom 99% of income earners, none was reported on income tax returns, and therefore none of it showed up in income distribution studies based on income tax return data.

    But the greatest part of the capital gains of the rich were outside such accounts and thus were reported on returns. This exaggerated and misidentified changes in income distribution. Remember, before the changes in the tax code, late ‘80’s, investment income of our middle-income earners was all counted on tax returns. Thus, once it was no longer counted, it appeared that the income of the middle was sharply decreased, while that of the rich appeared to receive the major portion of said distributution!

    a. Capital gains tax rate cuts in ’97 and in 2003 caused a surge in reportable capital gains realizations outside of tax-protected retirement accounts. The sharp cut in the rate on dividends in 2003 caused a similar surge in dividends paid and reported. These changes caused distortions in comparing trends in incomes for top income earners versus others.

    From Peter Ferrara's "America's Ticking Bankruptcy Bomb," chapter nine.


    Now...careful, Wry....if you stop by the library and pick up the book....you'll be a right-winger!
     
  7. PoliticalChic
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    PoliticalChic Diamond Member

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    And...

    "... 86.2% of all statistics are made up on the spot."
     
  8. Flopper
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    Flopper Gold Member

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    You can make the number support any premise, you just have to find the right numbers, however you don't have to be mathematical genius to realize that the rich have been getting a lot richer and poor have been getting a lot poorer.
     
    Last edited: Nov 2, 2011
  9. expat_panama
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    expat_panama Silver Member

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    Assuming this is true, you appear to consider this change a bad thing. Is that true? I mean would you like to see incomes change again and have the poorest 20% see an 18% cut just so they could be closer to the highest incomes?
     
  10. hortysir
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    hortysir In Memorial of 47

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    I would agree with all but the last of your reply.
    While the poor may not be getting richer at a fast (enough) rate, I don't see how they're actually losing money either.
    :eusa_eh:
     

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