The Widening Gap

[Memphis Mike]

Rich getting richer faster
New studies spotlight a growing gap between top and bottom. The divide is widest in Arizona, narrowest in Wyoming.

By MSN Money Staff

Two new studies find the rich are getting richer at a faster pace.

A study released in late January, from the Center on Budget and Policy Priorities and the Economic Policy Institute, found that the gap between the highest- and lowest-income families is significantly wider than it was 25 years ago.

And an analysis of income-tax data by Congressional Budget Office found that the top 1% of households own nearly twice as much of the nation’s corporate wealth as they did just 15 years ago.Start investing with $100.



The studies come among a growing push to increase the federal minimum wage of $5.15 an hour for the first time in nine years. Public advocacy groups have successfully lobbied for “living wage” reforms in 18 states and a number of cities, raising the minimum wage in some places as high as $12 an hour.

An employee working full-time at the federal minimum wage makes $10,712 a year. About 7% of the workforce earns a minimum wage.

“Growing income inequality harms this nation in a number of ways,” stated Jared Bernstein, a senior economist at the Economic Policy Institute and co-author of the income report. “When income growth is concentrated at the top of the income scale, the people at the bottom have a much harder time lifting themselves out of poverty and giving their children a decent start in life.”

Market rebound favors well-off
The five states with the largest income gap between the top and bottom fifths of families are New York, Texas, Tennessee, Arizona and Florida. Generally, income gaps are larger in the Southeast and Southwest and smaller in the Midwest, Great Plains and Mountain states. (To see the state-by-state list, ranked, click here.)

Income inequality declined somewhat, the report found, following the bursting of the stock and high-tech bubbles in 2000, which were costly to the highest-income families. But incomes at the top have rebounded, while the negative effects of the recent recession on low and moderate-income families have lasted longer than usual.

In 38 states where the incomes of the bottom fifth of families grew more slowly than those at the top, incomes at the top rose by an average of $45,800 (62%), while the incomes of the poorest grew by $3,000 (21%).

The only state in which incomes of the poor grew faster than those of the rich was Alaska.

The study is based on Census income data that have been adjusted to account for inflation, the impact of federal taxes and the cash value of food stamps, subsidized school lunches and housing vouchers. Income from capital gains is also included. The study compares combined data from 2001-2003 with data from the early 1980s and early 1990s, time periods chosen because they stand as comparable low points of their respective business cycles.

Possible steps to stem the disparity, the report offers, include raising state minimum wages, strengthening supports for low-income working families and reforming the unemployment insurance system. In addition, states can pursue tax policies that partially offset the growing inequality of pre-tax incomes.

Corporate wealth concentrates further
The richest 1% of households -- those with incomes above $237,000 for 2003, the latest year analyzed -- owned 57.5% of all income from capital gains, dividends, interest and rents in 2003, the CBO analysis found. That was up from 53.4% the year before and 38.7% in 1991.

Long-term capital gains were taxed at 28% until 1997, and at 20% until 2003, when rates were cut to 15%. The top rate on stock dividends was cut to 15% from 35% that year.

The poorest fifth of Americans owned 0.6% of corporate wealth in 2003, down from 1.4 percent in 1991.

The CBO analysis excludes the stock held in retirement accounts such as 401(k)s and IRAs, which isn’t subject to taxation and was thus unaffected by the tax cuts.

Although these tax cuts are slated to expire in 2008, Congress is already debating whether to extend them through 2010. The Bush administration has been calling for the cuts to be extended or made permanent.

An analysis by the Urban-Brookings Tax Policy Center found that an extension of the tax cuts would save households with incomes under $50,000 about $11 in 2009. Those with incomes above $1 million would save about $32,000.

The growing gap in family incomes
Rank State Top 5% Bottom 20% Ratio
14 Alabama $172,029 $14,765 11.7
45 Alaska $180,148 $20,533 8.8
1 Arizona $223,081 $15,719 14.2
13 Arkansas $163,908 $13,888 11.8
8 California $207,363 $16,773 12.4
19 Colorado $215,109 $18,983 11.3
24 Connecticut $231,928 $21,003 11.0
41 Delaware $188,435 $20,225 9.3
7 Florida $199,892 $15,396 13.0
36 Georgia $158,382 $16,345 9.7
26 Hawaii $208,340 $19,294 10.8
43 Idaho $162,923 $17,847 9.1
20 Illinois $203,876 $18,032 11.3
30 Indiana $195,217 $18,590 10.5
48 Iowa $155,722 $18,503 8.4
17 Kansas $209,125 $18,284 11.4
5 Kentucky $193,766 $14,814 13.1
16 Louisiana $153,334 $13,347 11.5
31 Maine $164,232 $15,975 10.3
12 Maryland $253,923 $21,480 11.8
11 Massachusetts $233,108 $19,690 11.8
21 Michigan $200,814 $17,927 11.2
33 Minnesota $223,411 $22,608 9.9
25 Mississippi $145,342 $13,456 10.8
38 Missouri $176,320 $18,482 9.5
42 Montana $135,164 $14,788 9.1
49 Nebraska $160,862 $19,242 8.4
39 Nevada $180,521 $19,143 9.4
35 New Hampshire $226,178 $23,128 9.8
4 New Jersey $268,889 $20,391 13.2
18 New Mexico $157,011 $13,748 11.3
3 New York $216,061 $16,076 13.4
9 North Carolina $183,253 $14,884 12.3
44 North Dakota $147,519 $16,805 8.8
27 Ohio $195,175 $18,216 10.7
37 Oklahoma $150,011 $15,483 9.7
32 Oregon $175,976 $17,367 10.1
10 Pennsylvania $223,152 $18,548 12.0
28 Rhode Island $200,859 $18,916 10.6
29 South Carolina $157,634 $14,957 10.5
47 South Dakota $155,427 $18,353 8.5
6 Tennessee $187,026 $14,303 13.1
2 Texas $203,174 $14,724 13.8
34 Utah $192,142 $19,594 9.8
40 Vermont $176,291 $18,846 9.4
23 Virginia $200,191 $18,110 11.1
15 Washington $195,170 $16,911 11.5
22 West Virginia $147,434 $13,208 11.2
46 Wisconsin $174,919 $20,197 8.7
50 Wyoming $145,587 $18,171 8.0

[ 02-08-2006, 12:00 PM: Message edited by: Memphis Mike ]

[Billy Bones]

Right you are mike. I think more Americans should make an effort to be poor. It is pretty clear after all that a significant number of Americans cannot abide prosperity.

[Norman Bernstein]

I've been harping on this particular issue for years... fighting the usual conservative misdirection and denial about it. If there's one thing that can seriously damage Democracy and the American way of life, it's this..... if the trend continues, unchecked, we will no longer be a democracy... we'll be an economic plutocracy.

[Alan D. Hyde]

It is a statistical fact that households are getting smaller.

I don't believe that results for per capita income would look as bad, and perhaps such results might not even support the same trends.

A clever debater can generally find SOME statistic to suppport almost any allegation...

Alan

[Memphis Mike]

It's pathetic what some of these CEO's are raking in while the poor try to subsist on $5.15 an hour.

They're laying people off and terminating the retirement benefits of others while reaping huge profits.

It will never happen but what we need is a nationwide walkout in protest of these animals.

[Erasmus B Dragon]

Originally posted by Alan D. Hyde:
A clever debater

AlanWatcha waytin on?

[pcford]

It is a statistical fact that households are getting smaller.

I don't believe that results for per capita income would look as bad, and perhaps such results might not even support the same trends.

A clever debater can generally find SOME statistic to suppport almost any allegation...

Alan "The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."

[cedar savage]

<Rant on>

Ya know what's pathetic? People who call themselves the reveredend and post pictures of anorexic wild weasels while bitching about rich CEO's. Get out there and help the people in Tennessee that are trying to raise the minimum wage: testify, witness, speak out on street corners and at AA meetings, boycott WalMarts and all the discount big boxes. Pay more than you need to for things. Practice random acts of charity.

<Rant off>

[Alan D. Hyde]

To the contrary, if you'd been paying attention you would have noticed that, particularly following his recent death, I've posted many excellent essays by the inimitable Peter Drucker, who made many thoughtful comments on precisely this issue.

From www.businessweek.com (http://www.businessweek.com) ---

"In a 1984 essay he (Peter Drucker) persuasively argued that CEO pay had rocketed out of control and implored boards to hold CEO compensation to no more than 20 times what the rank and file made. What particularly enraged him was the tendency of corporate managers to reap massive earnings while firing thousands of their workers. "This is morally and socially unforgivable," wrote Drucker, "and we will pay a heavy price for it."

http://www.businessweek.com/magazine/content/05_48/b3961001.htm

* * *

Alan

[ 02-08-2006, 12:51 PM: Message edited by: Alan D. Hyde ]

[Paul Pless]

I wonder if despite that 'gap' between the richests and poorest if the income level in America is still 'normally' distributed?

[Norman Bernstein]

A clever debater can generally find SOME statistic to suppport almost any allegation...
I agree. I've heard such amazing rationalizations from about half the conservatives I've discussed this issue with... some of which stretch perception tighter than a rubber band.

The other half? They completely DENY rising income inequality... and simply refuse to acknowledge the facts.

Both halves, incidentally, are composed of people who are big beneficiaries of the trend; not a middle class person among them.

[Tristan]

The poor are just lazy and ignorant. If they'd work hard, save their money, set aside money for education and medical expenses AND retirement, they'd have no problems. :D :D :D

[Keith Wilson]

Hey, is anyone surprised?

A very reliable way that you can predict which policies the Republicans will favor is this: Will it either increase income and wealth inequality, or increase the social effects of income inequality? If so, they're in favor if it.

[N. Scheuer]

Absolutely, Tristan!

And what is more, If people earning a Minumum Wage for 40 hours of work per week (HALF what is consoidered the poverty line at $20,00/year) were to have their wages reduced by 50%, The rich (Business Owners) could get even richer, even quicker, while the US Standard Of Living becomes ever more balanced with that of the Third World.

Moby Nick

[Norman Bernstein]

A very reliable way that you can predict which policies the Republicans will favor is this: Will it either increase income and wealth inequality, or increase the social effects of income inequality? If so, they're in favor if it. Truer words were never spoken.

I have yet to see an economic policy proposed by Bush... or pretty much ANY conservative leader... whose 'net' effect isn't the same thing, namely, serving to widen the income inequity gap.

Part of the sales job supporting the tax cuts of the first Bush term was the notion that it would benefit the middle class (and lower classes) tremendously via innovation, entepeneurship, revitalizing the economy, etc... since those cuts started 5 years ago, there's been more than enough time to assess the effect of those cuts over the past 5 years, by looking at income inequity by quintile over those years.

I'd be gilding the lilly by stating what the result has actually been.

[High C]

Originally posted by Tristan:
...If they'd work hard, save their money, set aside money for education and medical expenses AND retirement, they'd have no problems. :D :D :D That's how I did it. That's how the people I know who have achieved some degree of financial security did it.

What's so damn funny about it? :rolleyes:

[Tristan]

Originally posted by High C:
</font><blockquote>quote:</font><hr />Originally posted by Tristan:
...If they'd work hard, save their money, set aside money for education and medical expenses AND retirement, they'd have no problems. :D :D :D That's how I did it. That's how the people I know who have achieved some degree of financial security did it.

What's so damn funny about it? :rolleyes: </font>[/QUOTE]On $6 an hour? Try it today Mr. consersative. Sure, in the 1956 I earned $4,000 and saved $600. A few years later I paid for the births of all three of my kids out of my pocket, never had medical insurance, saved enough out of a $4,000 a year salary to put a down payment on a $4,000 house, bought junker cars for $200 and kept them running myself, we were poor but my wife didn't have to work. In 1970 I was earning big money, $12,000/year. We bought a modest 3/2 house for $21,000 that my ex. got $65K for in 1984 (It recently sold for $500,000). In other words, we were poor but we got by and paid all our bills. I don't believe the average lower middle class man (or woman) can come close to doing relatively this well today, even with two incomes. (Oh, I should add that putting three kids through college did not allow me to save a farthing for retirement!).

[ 02-08-2006, 05:23 PM: Message edited by: Tristan ]

[Peter Malcolm Jardine]

The other half? They completely DENY rising income inequality... and simply refuse to acknowledge the facts.
Not true. They just don't care. ;) That's the conservative way... enough about me, let's talk about me.

[ 02-08-2006, 05:17 PM: Message edited by: Peter Malcolm Jardine ]

[Dolly Varden]

Originally posted by Norman Bernstein:
I've been harping on this particular issue for years... fighting the usual conservative misdirection and denial about it. If there's one thing that can seriously damage Democracy and the American way of life, it's this..... if the trend continues, unchecked, we will no longer be a democracy... we'll be an economic plutocracy.I believe that we already are plutocracy. economic? that too

Dutch

[Norman Bernstein]

I believe that we already are plutocracy. economic? that too As a practical matter, I think you're right. With regard to politics, we've already essentially equated money with free speech... so as income inequity progresses, the price of free speech will continue to rise, in dollar terms.

It's a bit hard to believe the Founding Fathers had this sort of thing in mind.

[ 02-08-2006, 05:27 PM: Message edited by: Norman Bernstein ]

[bukuboy]

The "wealthy" mean has a higher IQ than the "poor" mean. The achievement gap correlates with the wealthy-poor gap. The wealthy nations have mean IQs that are higher than poor nations. Ya ever go to Africa or Haiti? Not much money flowin' in those areas of the world and not much brain power. ---Bukuboy

[John of Phoenix]

Have you seen what Bush's latest "let them eat cake" budget has done to programs for the poor?

There's gonna be a revolution.

[Norman Bernstein]

"The "wealthy" mean has a higher IQ than the "poor" mean. The achievement gap correlates with the wealthy-poor gap." Even if we bought off on this rather simplisitic analysis, what are the implications? Should we infer that we'll always have an underclass of lower-IQ citizens who not only don't deserve better lives, but don't even deserve the lifestyle they currently have?

This is the most repugnant face of social and economic Darwinism I've ever seen expressed.

[ 02-08-2006, 05:54 PM: Message edited by: Norman Bernstein ]

[bukuboy]

Bernstein, Sometimes the truth is very simplistic. Open your eyes and look around and the truth will be revealed to you- don't fight it just accept it. ---Bukuboy

[High C]

Originally posted by Tristan:
...On $6 an hour? ...6$ an hour? Where did you get that? Minimum wage? That's a kid's wage. Grownups who stayed awake in school, stayed sober, and learn a trade, do a hell of a lot better.

The minimum wage is relevent to nothing. Our only limitations are self imposed.

Nothing funny about it.

[Paul Pless]

High C,

I agree with you completely. At least here in America, there still is opportunity, I see it all around all the time and I have done so no matter what the economy was like at the time. You know, its really cliche to say so, but I honestly believe that it comes down your individual outlook on life and whether or not your willing to work, work smart, and take advantage of the opportunities that surround us all.

There's absolutely no bull**** in saying that everyone in America is presented with an opportuity to educate themselves to just about any level that they want. There's absolutely no bull**** in saying that if you apply yourself and work hard you will get ahead in almost any job market in this country.

When I hear arguements like a lot of the ones given in this thread that take a negative position, it makes me want to yell at the top of my lungs that the government is not responsible for an individual's success or failure in life.

Paul

[ 02-08-2006, 06:35 PM: Message edited by: Paul Pless ]

[High C]

Amen, Paul!

[Meerkat]

Norman; We try not to encourage or acknowledge the existence of the buku thing. "It" seems to be a racist.

Some of the richest people I've ever met did not come across as particularly smart. What got them to where they were was persistance, focus and hard work. Nothing beats those.

[bukuboy]

Pless you are being rather naive and not realistic. If an individual has an IQ of 80 that person has zero chance of being a brain surgeon. Would never be able to pass all the hurdles it takes even if he studied night and day. The individual with an IQ of 140 can be anything he wants that takes a lot of cognitive ability. Your cognitive ability potential exists at birth provided you are given proper nutrition. I was pestered relentlessly while in college to donate sperm to sperm banks.Do you think the sperm banks actively sought sperm from the black male in the ghetto? WHY? Somebody knows somethin' that you don't. ----Bukuboy

[bukuboy]

meercat: Please look up the word "mean" as it relates to average. Got EUPHORIA yet? ---Bukuboy

[Peter Malcolm Jardine]

the government is not responsible for an individual's success or failure in life.
Quite right. In a socially progressive democracy, government is there to make sure that people
get equivalent educations, opportunities, health care, and social programs. All of these things have a substantive effect on a young persons ability to succeed. By widening the gap between rich and poor, both in real means, and in social status, the chances of a poor person succeeding is much less than a middle class person. In this case I refer to youth.

[Peter Malcolm Jardine]

I was pestered relentlessly while in college to donate sperm to sperm banks You had a cousin named Sperm Banks? :confused:

[ 02-08-2006, 07:02 PM: Message edited by: Peter Malcolm Jardine ]

[Meerkat]

the biggest predictor of success is one's parents: rich people tend, overwelmingly, to have had rich parents, not that there are not exceptions.

Ambition without brains will take one further than brains without ambition.

[bukuboy]

Expose a kid with a high IQ to anything ya want; poverty, sexual deviance, domestic abuse, war, poor education and the list goes on. On average, this kid will have a higher chance of succeeding in life as compared to the kid with a lower IQ who is exposed to the same environment. This is a basic human truth. If ya look at public education, the monetary amount spent on low IQ kids dwarfs that amount spent on the gifted kids.WHY? Because the government realizes that high IQ kids are absolutely bulletproof. The holy grail is your IQ and its potential exists at birth. The best predictor of how one will succeed in life is that individual's IQ--- period. Most people can't handle this truth---especially the liberal mindset. ---Bukuboy

[Meerkat]

I'll make an exception, just this once.

You are a fool and have not the slightest clue as to what you're talking about.

[Donn]

Originally posted by Meerkat:
I'll make an exception, just this once.

You are a fool and have not the slightest clue as to what you're talking about.Oh look! Meerkat's made an exception to his normal behavior, and insulted someone! Will wonders never cease?

[Meerkat]

Facts may be insulting, but that does not make them less factual.

Per usual, you're on the wrong side of the fence again, Donn(key) - that is, unless you're also an elitist racist too?

[ 02-08-2006, 07:35 PM: Message edited by: Meerkat ]

[Donn]

I just find it humorous that you think insult is an unusual position for you to take. A goodly number of your hundreds of daily posts are insults.

[bukuboy]

Let me repeat this again for you Meercat: The BEST predictor at this moment of an individual's success in life is that individual's IQ, period. and NOT how wealthy or moral the individual's parents are. ---Bukuboy

[Meerkat]

Originally posted by Donn:
A goodly number of your hundreds of daily posts are insults.Donn(key) crap! tongue.gif

Oh, excuse me! Is that insulting? Try this instead: what you said is a lie. Feel better now?

[Donn]

I feel fine, you? tongue.gif

[Tristan]

Originally posted by High C:
</font><blockquote>quote:</font><hr />Originally posted by Tristan:
...On $6 an hour? ...6$ an hour? Where did you get that? Minimum wage? That's a kid's wage. Grownups who stayed awake in school, stayed sober, and learn a trade, do a hell of a lot better.
</font>[/QUOTE]Got to do a whole lot better just to survive, read the papers, look around you, or are deep into the "I've got mine and the rest are just slackers," mode?

[Peter Malcolm Jardine]

A goodly number of your hundreds of daily posts are insults. Don't worry Mr Greenjeans, you're still the king :D :D

[Memphis Mike]

[ 02-09-2006, 07:42 AM: Message edited by: Memphis Mike ]

[Paul Pless]

or are deep into the "I've got mine and the rest are just slackers," mode? I'd like to respond to that, if I may. Its not that many of 'us' feel selfish and uncaring as you have insinuated, its that many have worked hard, sometimes very hard, educating ourselves and our families and then putting that education to work with long hours and dedication to become 'successful' only to be told by many liberals that we don't deserve our lot in life, that it was luck, or that we got this way by suppressing the rights of others.

I for one, find such implicit accusations to be most insulting.

[ 02-08-2006, 08:27 PM: Message edited by: Paul Pless ]

[bukuboy]

Amen! Mr.Pless

[Meerkat]

Paul; You didn't see me saying anything like that in this thread!

[bukuboy]

Doesn't matter Meercat, Paul knew your liberal mind was "thinking" it. ---Bukuboy

[Paul Pless]

No Meer, not you, but it has been stated here in this thread, in more ways than one.

[ 02-08-2006, 08:34 PM: Message edited by: Paul Pless ]

[Peter Malcolm Jardine]

It's not that wealthy well educated privileged people don't deserve what they have..... it's just that they could give a little more, and still be very well off.. to the betterment of society as a whole.

That's why your country doesn't have the highest standard of living, despite it's incredible wealth.

[Paul Pless]

Peter, I'd like to agree with you, I'd just like our government to be a little more efficient i its efforts to equalize opportunities in this country. Paul

[Peter Malcolm Jardine]

We all want that of our governments. Frankly, if the USA didn't spend the equivalent of some countries GDP on defence, you wouldn't have any poor people in America.

[Erasmus B Dragon]

Originally posted by Peter Malcolm Jardine:
We all want that of our governments. Frankly, if the USA didn't spend the equivalent of some countries GDP on defence, you wouldn't have any poor people in America.Aye, wood ya jis givem da $ er what I wanna no yer plan fer razin doze 'poor people' (Ya sea I kin tipe OHKAY, I jis dont spel gud.

an hey you bukobouy, ma kuzin Al who Im stil triin ta find, hez reel smart. He tewk won o dem online testz, ya no da onez were ya gota buy yer rezultz Wel dey kep offerin em to him fir free but ya no hez on da run. Ya sene him? Raz

[geeman]

hey guys, I have watched the conversation about the gape,,heres my take.I live in Tenn ,,i know many very hard working people ,,cples with kids,,some that work 2 and 3 jobs and still cant make it.these are hard working people that just cant get ahead.please dont lump all "poor" people into the lazy and dumb class,,unless of course you mean because they cant get out of the situtaions they are in tongue.gif

[bukuboy]

Geeman, You along with Meercat look up the word "mean" as it relates to average. Maybe a statistics class in college should be in your future. ---Bukuboy

[Lew Barrett]

You left out luck, and fortune of birth. Both play their part in the equation.
Edited to add: Oops, sorry Meer! I see you got those in later in the thread! :D

"the biggest predictor of success is one's parents: rich people tend, overwelmingly, to have had rich parents, not that there are not exceptions.
Ambition without brains will take one further than brains without ambition." Meerkat

Still left out luck though...which can be independant of good fortune at birth, which might be viewed as an ultimate form of good luck I suppose......

Lew


Originally posted by Meerkat:
Some of the richest people I've ever met did not come across as particularly smart. What got them to where they were was persistance, focus and hard work. Nothing beats those.[/QB]

[ 02-08-2006, 10:44 PM: Message edited by: Lew Barrett ]

[shamus]

Not much mention of luck in this thread. One of the things I like about ol' Hemmingway is how he puts most of it (success)down to luck, while dipping his hat to hard work. As for high IQ, the 'failure' with really high IQ is a common sight. There's a simple explanation. Really intelligent people are easily bored, and not easily motivated by the simple devices of possessions and status. Hem also said a man moves a dollars width to the right with every dollar he makes. Which is a snappy idea, but not necessarily true.

[shamus]

Ok I posted a reply from page 1 I think.

Great minds think alike Lew!

[PeterSibley]

Something that I think has been left out of the discussion...to accumulate money a person has to want money. smile.gif Now I know it's fashionable to collect money but Mark Twain said something to the effect of......
most people confuse money with wealth,true wealth is our collection of hours, hours to spend as we choose.....making,friends, writing,growing gardens(for you Donn smile.gif ),sailing perhaps or even exchanging those hours for $.Its our choice.

[TomF]

Originally posted by bukuboy:
Let me repeat this again for you Meercat: The BEST predictor at this moment of an individual's success in life is that individual's IQ, period. and NOT how wealthy or moral the individual's parents are. ---BukuboyActually, the best predictor is the mother's level of education.

[Tristan]

Well some forumite has inplied that I am a liberal. Let's see, I am for the death penalty, I an dead against letting any illegal immigrants into the country and want those that are here deported yesterday. I believe there is only one political party (whoever is in power is bought by vested interests). There are occasional politicials who are able to squeeze some real concern for the country into their busy schedule of free luinches, signing payoff checks, and enjoying the fruits of their corruption (whish there were more). I support myself and my family partly by my own stock portfolio and live comfortably. I believe in free enterprise and find the accumulation of some wealth to be critical to survival. I believe everyone ought to pay a fair share taxes. Guess all this makes me a liberal.

I do read that the number of people living in poverty is growing and the gap between the so called middle class and the "rich" is getting larger. In my community teachers, law enforcement folks, etc. cannot afford modest housing. I find this concerning. With the current political situation and increasing nation debt I worry about the future of the U.S. I don't believe that all poor people struggling to survive, obtain medical care, and educate their kids are worthless slackers, low IQ blacks (as seems to have been implied), or usless members of society. I do worry about their chances. Guess this makes me a liberal.

If my "liberal" beliefs have offended then I suggest you notice the mistletoe pinned to my "liberal" backside.

By the way, IQ does not correlate with "success" later in life. It does correlate with success in school. This observation is based on available literature read during study of IQ and it's correlates while following a Va. Tech. clinical pschology program plus ten years of using the WAIS to prepare IQ reports :D :D :D Have a nice day

[ 02-09-2006, 08:51 AM: Message edited by: Tristan ]

[Tristan]

Originally posted by Paul Pless:
</font><blockquote>quote:</font><hr /> or are deep into the "I've got mine and the rest are just slackers," mode? I'd like to respond to that, if I may. Its not that many of 'us' feel selfish and uncaring as you have insinuated, its that many have worked hard, sometimes very hard, educating ourselves and our families and then putting that education to work with long hours and dedication to become 'successful' only to be told by many liberals that we don't deserve our lot in life, that it was luck, or that we got this way by suppressing the rights of others.

I for one, find such implicit accusations to be most insulting.</font>[/QUOTE]Sorry Paul, you have read some bizarre ideas into my reply to Hi-C. You are not the only soul who has worked long hours, etc. I really don't know how you arrived at your distortion of my message.

[Keith Wilson]

Our only limitations are self imposed.

. . .the government is not responsible for an individual's success or failure in life.

. . .only to be told by many liberals that we don't deserve our lot in life, that it was luck, or that we got this way by suppressing the rights of others.There’s a common thread here on the right (assuming we do the right thing and ignore Bakaboy’s lame paraphrases from The Bell Curve).

It has a lot of truth in it. Individual initiative and effort does, and should, play a great role in one’s economic success. Some poverty is certainly self-inflicted; it’s very hard to be successful if you smoke meth, have a baby at 16, or are just really lazy and don't inherit a fortune. However, consider that people don’t start out equal, through no fault of their own. Some have better parents, better education, better role models, more money, and more access to the things that make economic success easier. The actions of government, for better or worse, have a great influence on the economy and society, and can make these individual differences more or less important. How government allocates resources, how taxes are structured, what the government tries to do, all of this can either increase the economic differences among people or decrease them.

An example: How do we determine access to higher education? This can be done several ways. One extreme is to have all universities private and tuition-supported, with no government involvement at all – the Libertarian ideal, one might say. The other extreme might be to have all universities tax-supported and charging no tuition, just as we do now with public K-12 education, with admission by either academic merit, or a combination of merit and some other criteria. There are innumerable other ways between these two.

In the former case, access is almost completely dependant on money. It increases income inequality and class differences, in that on average those who have more money can get a better education, which will allow them to make more money. The second case takes money out of the equation altogether, and this tends to reduce income inequality. If we assume that talent is more or less randomly distributed, then access will be less class-based, and the opportunities given by education will tend to reduce stratification.

This is obviously not the only consideration; there may be excellent reasons to do something despite the fact that it promotes inequality. However, analyzing a policy’s effects on income distribution, and the social effects of income inequality is one useful way to look at things. The correlation between increasing income inequality and Republican policies is almost perfect.

[ 02-09-2006, 09:25 AM: Message edited by: Keith Wilson ]

[Paul Pless]

I really don't know how you arrived at your distortion of my message. The only choices offered in your musings were either ones of unobservance or implications of being uncaring. I don't feel guilty of either.

I apologize for insulting you by labeling you liberal. :eek: Egads! :D

[Tristan]

Originally posted by Paul Pless:
</font><blockquote>quote:</font><hr /> I really don't know how you arrived at your distortion of my message. The only choices offered in your musings were either ones of unobservance or implications of being uncaring. I don't feel guilty of either.

I apologize for insulting you by labeling you liberal. :eek: Egads! :D </font>[/QUOTE]Read again Paul, my message was not directed at you. The point that I and others have made is that there is a segment on this forum (probably those liberals) that refused to accept that there is a widening gap between "Rich" and "poor," the fact that there are more and more working poor, that education, housing and medical care are slipping from the grasp of more and more individuals, that a larger and larger percentage of folks are slipping below the poverty level. All this in addition to uncontrolled spending by the current Govt. This group of "liberals," live in a land of eternal spring and seem quite happy to remain totally unconcerned with what seems to be a cluster of serious issues in the U.S.
;) ;)

[Memphis Mike]

I don't have anything at all against successful people that have worked hard for it.

What I find obscene is the CEO who is making 300 million a year and lives in a 100,000 square foot mansion while his employees are just scraping by.

No one on this earth needs that much money and some of it should be put back into the economy in the form of bettering the lives of those that made it possible for them in the first place.

Instead, we have huge corporations reaping record profits while the employees are taking a gigantic screwing.

It's not right.

[ 02-09-2006, 10:49 AM: Message edited by: Memphis Mike ]

[Norman Bernstein]

The following web sight might enlighten the perspective of anyone who is curious to know about the 'widening gap':

themiddleclass.org talking points (http://www.themiddleclass.org/main.cfm?actionId=globalShowStaticContent&screenKey=talking)

Note to Tristan: you're not alone. I hold a number of views on many subjects which could only be described as conservative, but in the mindset of the 'you're with us or against us' crowd, I've been tagged as standing slightly to the left of Karl Marx. It seems that in today's contemporary debate, there's no room for anyone in the middle, nor is there room for anyone who evaluates each issue on it's own merits... as opposed to buying the party line, right or left. I've always been a 'militant centrist', myself smile.gif

[ 02-09-2006, 11:00 AM: Message edited by: Norman Bernstein ]

[TomF]

Mike, I agree that the pay disparity between workers and top managers is obscene. As is the disparity in other fields (entertainment, sports etc.).

The highly successful Mondragon (http://www.mondragon.mcc.es/ing/index.asp) group explicitly limits this wage disparity: the highest paid can only have 6X the salary of the lowest paid. And the wages paid to the average workers are comparable to industry standards.

Of course, this is a cooperative model, started with social justice as a primary principle. Our free-market advocates here will likely argue that it's inefficient and limiting ... though the areas of Spain where Mondragon cooperatives are most highly concentrated tend to have better population income measures than other places.

It all depends what your goals are.

[Lew Barrett]

YAWN! :D
But, the money was fun while it lasted.........

[QUOTE]Originally posted by shamus:
[qb] As for high IQ, the 'failure' with really high IQ is a common sight. There's a simple explanation. Really intelligent people are easily bored,..../QUOTE]

[ 02-09-2006, 11:58 AM: Message edited by: Lew Barrett ]

[Peter Malcolm Jardine]

: How do we determine access to higher education? This can be done several ways. One extreme is to have all universities private and tuition-supported, with no government involvement at all – the Libertarian ideal, one might say. The other extreme might be to have all universities tax-supported and charging no tuition, just as we do now with public K-12 education, with admission by either academic merit, or a combination of merit and some other criteria. There are innumerable other ways between these two.
Educational disparity is, in my opinion, not about money. It's far more complex than that, and it relates to class, power, and money. Public education is where the failure takes place for the most part, in both our countries. University tuition in Canada is 30 to 50% less, but we while we argue some about tuition costs, we still have a disturbing amount of young people who just never get that far to worry about tuition.

Poor neighbourhoods have poor schools. Good teachers usually go elsewhere.. who could blame them? Public education doesn't get enough money, or it gets managed badly, or both. Teachers Unions have significant power in the system, more than parents do. (up here fer sure).

As a result of all this, you get a whole class of people who are effectively illiterate. Blacks in America have been dealing with this for a long time. Aboriginals in Canada the same thing. Public education is a big unweildy system that gets a lot of lip service, but not much real reform and commitment from politicians. There's the failure

[Tristan]

Originally posted by Peter Malcolm Jardine:

Educational disparity is, in my opinion, not about money. It's far more complex than that, and it relates to class, power, and money. Public education is where the failure takes place for the most part, in both our countries. University tuition in Canada is 30 to 50% less, but we while we argue some about tuition costs, we still have a disturbing amount of young people who just never get that far to worry about tuition.
[/QB][/QUOTE]

Major problem is bootstrapping, parents who are uneducated produce uneducated kids, regardless of opportunity. It's hard to motivate or bootstrap these kids. Even poor parents can provide a springboard for their kids if they have books in the house, have an education, and have expectations that their kids will be educated. Otherwise it's a vicious circle, with uneducated parents producing uneducated kids, etc. etc.

[ 02-09-2006, 12:27 PM: Message edited by: Tristan ]

[cedar savage]

Is it possible that the upward spiral in the compensation of CEO's and other highly compensated employees is the result of market forces? What does it take to be the CEO of a multinational corpration? How many people are out there that can do that kind of work? Would corporations pay that kind of money if someone was just as good and willing to work for less?

[Meerkat]

Originally posted by cedar savage:
What does it take to be the CEO of a multinational corpration? The balls to ask for a boatload of money as compensation? :D

[Alan D. Hyde]

http://people.maine.com/publius/persin1.gif

I'm not pushing a particular position (so far), but am going to post some data from time to time, as I have time...

The above is a start. Since it shows an average, we can't tell from it whether the increases in that average are based on the upper-income earners, what has happened to the median, or whether or not the gap is widening--- and, if so, by how much.

I'll post more when I find it.

Alan

[Meerkat]

Meaningless unless it's plotted against cost of living with adjustment for inflation.

[cedar savage]

Originally posted by Meerkat:
</font><blockquote>quote:</font><hr />Originally posted by cedar savage:
What does it take to be the CEO of a multinational corpration? The balls to ask for a boatload of money as compensation? :D </font>[/QUOTE]Given that the compensation package is the result of negotiations after mutual interest is determeined, I'll ask you; "Who has cojones like that?" What kind of people?

[Norman Bernstein]

Alan, your chart does indeed demonstrate the 'rising tide floats all boats' defense.

However, the subject is increasing inequality of income, not the general raising of living standards.

If the famous 'rising tide' does indeed float all boats, that's great.... but the relative size of the boats is unchanged.

If, during the 'rising tide', the 6' dinghy stays the same size, or shrinks slightly... while the 30 ft sailboats turn into 150 ft megayachts, that's not quite the same thing! :D :D

[Meerkat]

Originally posted by cedar savage:
Given that the compensation package is the result of negotiations after mutual interest is determeined, I'll ask you; "Who has cojones like that?" What kind of people?Modern-day robber barons.

[Keith Wilson]

Actually, Meerkat, Alan's chart is in constant dollars (1929 dollars), so it's adjusted for inflation. It shows that the country as a h whole has been getting richer, which we knew already from GDP figures. It doesn't show anything about income distribution. That's the trouble with averages - like the old joke abut Bill Gates walking into the room and the average income increasing by 10X.

[Alan D. Hyde]

What did I say above, people???

To repeat---

"Since it shows an average, we can't tell from it whether the increases in that average are based on the upper-income earners, what has happened to the median, or whether or not the gap is widening--- and, if so, by how much."

It's a start, that's all. No more.

Alan

[Norman Bernstein]

Actually, Alan, the most reasonable interpretation of the posted chart is that it represents average income... since it purports no other basis.

However, if you acknowledge that the chart doesn't address the issue of income inequality (which is the topic of the thread)... why did you post it?

[Bruce Hooke]

Norman,

I think Alan is acknowledging exactly what you are asserting. The only question left is what relevance the graph has to this discussion. If someone can dig up graphs that do show the same thing but break it down more based on something like rank grouping in terms of income then this graph would have some relevance as a reference point...

[cedar savage]

Inequality is a problem. But there was a series of charts posted about this one of the times we discussed upward/downward mobility.

Those charts clearly showed a significant percentage of people moving into and out of the 5 different 20 percentile income brackets over a period of years. Yes, people stayed "stuck" in the bottom. But a lot of other people come into and move out of the bottom. Fewer people (on a percentage basis) "fell" out of the top, but it happens both ways.

There's also little doubt that certain misguided government pograms have created multi-generational pockets of persistent poverty, and that should be addressed by the government agencies responsible.

[Dolly Varden]

Originally posted by Alan D. Hyde:
http://people.maine.com/publius/persin1.gif

I'm not pushing a particular position (so far), but am going to post some data from time to time, as I have time...

The above is a start. Since it shows an average, we can't tell from it whether the increases in that average are based on the upper-income earners, what has happened to the median, or whether or not the gap is widening--- and, if so, by how much.

I'll post more when I find it.

Alan:rolleyes: comparing a largely agrarian society that farmed with mules, shat in privies, and gave loved ones single oranges for xmas with todays urban lifestyle of keeping up with the have mores who live next door, makes no sense whatsoever

Dutch

[Norman Bernstein]

Excellent point, dutch... there are clear differences in the cost of living in disparate regions of the country. There are also clear differences in prevailing wages, as well.

I don't know if the prevailing local wages and the local cost of living necessarily correlate... but I suspect they do.

One of the primary motivations for the great migration of Northeast retirees to Florida was not just the weather.... the cost of living in Florida was quite low, but the retiree's income from pensions and IRA's was more scaled to northeast incomes.

In the last few years, this effect has lessened. Florida real estate, for example, has inflated disproportionately to the rest of the country. My mother's new home in a gated community there, bought for $198K in 2000, now fetches $375K or more... a far greater rate of growth than my own home in Massachusetts.

[Meerkat]

Income in absolute dollars is irrelenvent. In the Weimer Republic, one took literal wheelbarrows full of money to buy a single loaf of bread.

No one disputes that incomes are up (adjusted for inflaction, something like 4% over the past 30 years or so), but one cannot dispute either that the cost of livng has risen faster (witness Norman's mother's house). Real purchasing power is down.

[Alan D. Hyde]

Per Capita Income (In Current Dollars) http://www.csupport.net/rtrp/images/income_clip_image002.gif

Source: Bureau of Economic Analysis (BEA)

Mean Household Income http://www.csupport.net/rtrp/images/income_clip_image004.gif

Source: Woods & Poole Economics, 2002 (1996 Dollars)

*.*.*

Alan

[ 02-09-2006, 02:12 PM: Message edited by: Alan D. Hyde ]

[Norman Bernstein]

cedar savage originally posted:

Those charts clearly showed a significant percentage of people moving into and out of the 5 different 20 percentile income brackets over a period of years. Yes, people stayed "stuck" in the bottom. But a lot of other people come into and move out of the bottom. Fewer people (on a percentage basis) "fell" out of the top, but it happens both ways.
I can't quite put my finger on it, but there are metrics for this... and the 'economic mobility' argument is one of a handful that conservatives like to use when discussing income inequality.

I'll see if I can't come up with the source... but in at least one study (supported by others), economic mobility is half what it was a few decades ago... so, as an explanation/argument on the topic of economic inequality, it just doesn't hold water.

[cedar savage]

Do you think that the loss of mobility is related to 'obscene' CEO compensation? What's really causing the gap? I propose that there are fewer people with multinational CEO skills and fewer people with upward mobility skills. Sort of a total deskilling of America?

[Alan D. Hyde]

Because of increased regulation and fear of lawsuits, more retirement-age owners of smaller enterprises are selling out to bigger businesses, rather than holding onto their small-to-medium size business as an investment, as was often done by their parents' generation....

Just one more piece of the puzzle...

Alan

[cedar savage]

A nation of store clerks aspiring to be store managers instead of store owners coupled at the other end with only a few "owners" of the entire chain of stores?

Stick with this point Alan, and go further. Your graphs were going nowhere.

[ 02-09-2006, 02:24 PM: Message edited by: cedar savage ]

[Norman Bernstein]

Do you think that the loss of mobility is related to 'obscene' CEO compensation? Certainly not. I do agree that CEO compensation has reached absurd levels, and it's all about plain old ordinary greed and selfishness... plus the abrogation of responsibilities entrusted to boards of directors. Too many boards have lost sight of the premise that they serve to protect shareholder interests... and, instead, protect their OWN interests.


What's really causing the gap? I think that's a hard question to answer.

A portion of the problem is the shift in taxation to less progressive / more regressive forms. The dropping of tax rates on dividends alone was a phenomenal boon to the top 5% income earners... while the refusal of Congress to do anything about the AMT is a tremendous penalty to middle income earners.

Another portion of the problem is probably thre 'fallout' of what we call 'globalization'. Don't get me wrong, I DO believe in free trade... but any such shift has consequences, and one of the consequences is loss of good-paying jobs to overseas interests. The overall job rate doesn't reflect this; each middle level manager who once earned $60K/yr, and who is now standing at the front door saying 'Welcome to Walmart' isn't registered, in the statistics, as a job loss... but it most certainly is, in a qualitiative sense.


I propose that there are fewer people with multinational CEO skills and fewer people with upward mobility skills. Sort of a total deskilling of America? I don't think the number of people who might be in a position to be a CEO of a major corporation is even a pimple on the ass of progress here in the US. We're not suffering from lack of CEO's. We might be suffering from a lack of CEO's with the foresight and vision to turn around failing industries. Automobiles, for example... you can't blame GM and Ford's problems on globalization... not when Toyota and Honda are building cars for the US market, right herein the US.

Yes, I also believe that educational shortfalls are a major problem, as well.

[Meerkat]

Originally posted by Alan D. Hyde:
Because of increased regulation and fear of lawsuits, more retirement-age owners of smaller enterprises are selling out to bigger businesses, rather than holding onto their small-to-medium size business as an investment, as was often done by their parents' generation....

Just one more piece of the puzzle...

AlanEither that or they realize they can't compete with the MalWart division of China, Inc. Really hard to compete with slave or near-slave labor.

[cedar savage]

I gotta go. But I think Alan has maybe hit on a BIG piece of the puzzle.

Has anyone considered the "flattening" effect in corporate America, the elimination of layers of reasonably well paid management positions?

[Lew Barrett]

I hold contracts with two Fortune 500 companies, and find that frequently the most out-of-touch people in the company are those at the very top, and paradoxically, they produce the least benefits and are the greatest impediments to progress. It's not universally true that the guys at the top are without vision or conscience, but when they are, they can do a great deal of harm.
I really like and subscribe to the notion of the soon-to-be abundantly rewarded entrepreneur hitting on the great idea and working it through to a delicious end but the bloated constructs of companies like GM....Ford...or....Enron and Worldcom....really make one question the value of the top management in many concerns. There's one thing to say about the cost ("market forces" in action) of something or someone, and quite another set of constructs to use when determining value.
Fairly, each case must be determined on its own merits, but equally, it brings us back to discussing the nature of the gap and how we've come to a place that sees large company CEOs routinely compensated at the value of 1000 workers.

Lew


Originally posted by cedar savage:
Is it possible that the upward spiral in the compensation of CEO's and other highly compensated employees is the result of market forces? What does it take to be the CEO of a multinational corpration? How many people are out there that can do that kind of work? Would corporations pay that kind of money if someone was just as good and willing to work for less?

[ 02-09-2006, 02:36 PM: Message edited by: Lew Barrett ]

[Norman Bernstein]

Fairly, each case must be determined on its own merits, but equally, it brings us back to discussing the nature of the gap and how we've come to a place that sees large company CEOs routinely compensated at the value of 1000 workers.
I realize it's popular these days to be outraged by CEO compensation... but while it may be offensive to our morals, ethics, and sense of fairness, I don't see how it really matters in the big economic picture. There aren't enough outrageously-paid CEO's to affect the overall numbers. Also, it's only in a very few cases where outrageous CEO compensation begins to make a serious impact on corporate earnings and shareholder value (one of these: Maxim Semiconductor, a few years back... CEO compensation took something like 95% of the corporations earnings for one year).

The best reason to be outraged by CEO's is in their management, and how it DOES affect the big picture... like in the auto company case.

[High C]

Originally posted by Norman Bernstein:
...However, the subject is increasing inequality of income, not the general raising of living standards...Then the subject is actually envy, not inequality. Where does the notion of equality come from, anyway? When did that get to be any sort of essential standard? From what ideology does such a concept come?

I need what I need for myself and my family. It has nothing to do with what the Joneses may have.

Edited to add: I also realize that the wealth of a "Jones" is not wealth that is taken from the rest of us. It is new wealth that a "Jones" has created and nurtured himself. That wealth is not buried in a can in the yard. It is invested in businesses, and heavily taxed. It benefits us all.

[ 02-09-2006, 02:59 PM: Message edited by: High C ]

[Norman Bernstein]

Then the subject is actually envy, not inequality. Where does the notion of equality come from, anyway? When did that get to be any sort of essential standard? From what ideology does such a concept come?
Actually, the word is wrong... it should be inequity, not inequality. And you're right, there's no rational idealogy in a democracy that demands equality... and not even equity.

So, why am I (and others) making such a big deal out of it?

The answer: read a little history, and you'll see why. Start with both the French and Russian revolutions. While they can't be completely attributed to the sort of thing we're experiencing here in the U.S., the underlying causes of both of those revolutions had a great deal to do with money and power concentrated in the hands of the few and wealthy, and the general population seeing their ability to survive declining.

Surely, you don't want it to come to THAT, do ya?


I need what I need for myself and my family. It has nothing to do with what the Joneses may have.
Yes, that's right.... until you start finding it hader and harder to provide for you and yours at the most basic level, while the Joneses are finding it easier and easier, and amassing greater and greater wealth... and power... and USING that wealth and power to accelerate the phenomenon for themselves... AND for you. At SOME point, you're gonna get pissed off... if you've got ANY blood in your veins, that is.


Edited to add: I also realize that the wealth of a "Jones" is not wealth that is taken from the rest of us. It is new wealth that a "Jones" has created and nurtured himself. That wealth is not buried in a can in the yard. It is invested in businesses, and heavily taxed. It benefits us all.
You'd be hard pressed to demonstrate exactly how this takes place. Looking at Census Bureau statistics over the past four decades, the wealth accumulated by the joneses has benefitted.... the Joneses.... and not 'you' (they hypothetical middle quintile 'you', that is). In fact, 'you' have lost ground, and continue to lose ground. I don't think you're working any less hard, either.

Edited to add: Of course, if 'you' are in the top 5% of income in this country, as I am, and many others here are, 'you' are not suffering... you're benefitting tremendously from being in the wealthy class. In all of the discussions I've had with people, face-to-face, who disparage or even deny the idea of a widening inequity gap, ALL of them are 'top 5%'s'.... it's not like they don't have apartisan interest in keeping things as they are. I guess I'M the only fool who thinks it's really, really BAD for the country.

[ 02-09-2006, 03:35 PM: Message edited by: Norman Bernstein ]

[Meerkat]

Originally posted by High C:
That wealth is not buried in a can in the yard. It is invested in businesses, and heavily taxed. It benefits us all.Somehow, I don't think the megamansion and the megayacht and the megadiamond necklace is going to benefit us all. Even the trickle-down isn't going to spread far for those items.

As for taxation, don't make me laugh! tongue.gif

[TomF]

Actually, Norman and High C, I'll take issue with that.

There's nothing explicit about economic equality in a democracy, to be sure, but political equality is the bedrock. It's an intrinsic recognition of each individual's equal worth. That worth is independent of the individual's talents, or wealth, or any other attribute; political equality is based on simply being a citizen.

It's a very radical point, with implications for education, for economics, and for the provision of social services to those who for any number of legitimate reasons have impaired access.

[Norman Bernstein]

There's nothing explicit about economic equality in a democracy, to be sure, but political equality is the bedrock. It's an intrinsic recognition of each individual's equal worth. That worth is independent of the individual's talents, or wealth, or any other attribute; political equality is based on simply being a citizen.

I'm too much of a cynic, Tom, to believe that there's been any really meaningful political equality in America... and I don't believe there HAS been any, for quite some time.

As long as we all are able to prosper, we can all improve our lives, we can all pay our bills and have some hope for the future, political equality is somewhat of a secondary issue...

But when we get to the point where income inequity is skyrocketing, people are finding that their quality of lives is declining despite their hard work and efforts, and while that is happening, a 'protected' class is gaining ever more power and wealth, then it's a recipe for trouble.

[Meerkat]

Connie Rice, cousin of Condi Rice, says that without a middle class there can be no democracy.

Is/was it the Hamiltonians that believed in a political elite? It is surely true that politics runs to money's bidding these days.

[Alan D. Hyde]

Ahah!

Some up-to-date help from Dr. Sowell---

(Courtesy of www.tsowell.com (http://www.tsowell.com) )

http://www.townhall.com/images/contributors/sowell.gif

Myths of rich and poor

Feb 8, 2006

by Thomas Sowell

There is a fundamental difference between seeking the truth and scoring points. In politics, the truth is strictly optional and that also seems to be true in parts of the media.

Much of what is said about the incomes of Americans is said to score points. For example, it has been repeated endlessly that the average American family's income has not increased significantly for decades and that real wages are actually going down, not up.

That is great stuff for scoring points. You can just imagine the words and the music: The economy is stagnating, the American Dream has become a nightmare, our best days are behind us, etc.

The fact that the conclusions are totally false has not cramped anyone's style. Best-selling authors reap the profits of doom by writing such stuff. Politicians show how compassionate they are by promising to rescue us from economic disaster. Those who want to show how hip they are by disdaining American society get their jollies by scoring such points.

A book titled "Myths of Rich and Poor" by W. Michael Cox and Richard Alm exposes such nonsense for the fraud that it is. (See--- http://www.thbookservice.com/products/BookPage.asp ?prod_cd=C5179 (http://www.thbookservice.com/products/BookPage.asp?prod_cd=C5179) )

Despite the statistics that show real wages going downhill over time, somehow Americans are consuming more than ever and have a larger net worth than ever.

As of 1970, for example, only about a third of American homes had both central heating and air conditioning, while more than four-fifths had both in the 1990s. Moreover, the homes themselves were more than one-third larger.

Just over one-fourth of American households had a dishwasher in 1970 but more than half did by the 1990s. Only 34 percent of households had color television in 1970 but 98 percent did in the 1990s.

How could this be, with lower real wages? Were we just going deeper and deeper into debt? Actually the net worth of Americans more than doubled during those same years.

Was there some kind of economic Houdini who could perform such magic?

No. Actually a lot of the point-scoring rhetoric involves misleading statistics. Wages are only part of total compensation -- and increasing proportions of that total compensation is taken in the form of fringe benefits. Total compensation has been going up while average real wages have been going down.

Even the decline of real wages has to be taken with a grain of salt. Real wages are calculated by taking the money wages and adjusting for changes in the consumer price index.

Only an economist can get excited by the consumer price index. Other people's eyes are more likely to glaze over when the term is mentioned. However, an inaccurate consumer price index is part of the reason for the appearance of declining real wages.

When the consumer price index says that inflation is 3 percent a year, it may really be more like 2 percent or 1.5 percent. As anyone who has had to pay off a mortgage knows, a difference of a percentage point can add up to real money over a period of decades.

Economists' estimates of how much the consumer price index exaggerates inflation range from an estimate of one percentage point by former Federal Reserve chairman Alan Greenspan to an estimate of 1.5 percent by Michael Boskin, former chairman of the Council of Economic Advisers to the President.

Even if we take the lower estimate of one percentage point, over a period of 25 years, that under-estimates the real income of the average American by nearly $9,000. In other words, a working couple will have their real income under-estimated by nearly 18 grand, using the consumer price index to correct for inflation.

No wonder the income statistics look so bad, even while the standard of living is rising and Americans have a higher net worth than before. Nothing is easier than to turn reality upside down, especially if you are just trying to score points, instead of getting at the truth.

My comment on this book has been reprinted on its cover: "Cox and Alm deserve a medal for bringing some sanity to a subject where insanity is the norm."

If making a whole society's rising prosperity look like a disastrous decline is not insane, what is?

Ed. Note: "Myths of Rich and Poor" by W. Michael Cox and Richard Alm is available from the Townhall Book Service for only $9.95 this week.

Thomas Sowell is the prolific author of books such as Black Rednecks and White Liberals and Applied Economics.

*.*.*

Alan

[ 02-09-2006, 03:58 PM: Message edited by: Alan D. Hyde ]

[Keith Wilson]

Where does the notion of equality come from, anyway? When did that get to be any sort of essential standard? From what ideology does such a concept come? Obviously no one here is arguing for enforced absolute equality; I think we're kind of short on Shakers or utopian Communists. However, I think that looking at the amount of inequality is one way, imperfect certainly, to tell if a society is just or unjust. Most of us think that one should be rewarded more or less according to one's efforts and talents, and (bakaboy excepted) we generally agree that talent seems pretty much randomly distributed. To the extent that a society has large hereditary class differences, it is unjust.

One reason to encourage some degree of income equality is that democracy becomes very difficult if not impossible if wealth is too concentrated. Wealth equals power and ability to influence government, law and public opinion (particularly if spending money equals protected speech under the first amendment), and countries with great concentration of wealth are never functioning democracies.

[High C]

Norman, a question about the scenario you paint, if, as you say, wealth is being concentrated more and more in the hands of the few, where is this wealth coming from?

All those poor folks? The increasingly "nonexistant middle class" that we hear so much about?

I challenge you to consider that you are thinking in "finite pie" mode. Wealth is dynamic, practically alive in the moment, not simply a collection of gold. It ceases to have value without constant action and nurture. New projects, products and ideas, new, more efficient ways of doing old chores, these are the things that create wealth.

There can be no wealth without customers. The rich will quickly fail without cash laden customers.

Besides, as I look around at the way people live today, the homes, the cars, the boats, and pricey man toys, the explosion in costly leisure travel, I find it hard to see the decline. I see a world that has grown better off, in all visible economic ways, and in all socio-economic classes, than the world I knew as a child, or as a young man.

[Alan D. Hyde]

Respecting the book Sowell discusses above---

"Future generations, no doubt, will swallow the bitter pill of downward mobility, as America becomes a nation of hamburger flippers. Not so, claim Michael Cox and Richard Alm. In fact, the truth is almost exactly the opposite. And the authors rely on hard numbers to prove it.

There's no hocus-pocus here. Cox, vice president and economic adviser of the Federal Reserve Bank in Dallas, and Alm, a business reporter with The Dallas Morning News, use the same facts and figures any of us could get in a good-sized library. Some of what you'll find in their upbeat report:

*Real wealth - the lifestyle we routinely enjoy - has skyrocketed. Why the next generation should be even better off

*Corporate downsizing creates jobs in the long run

*America's trade deficit is a sign of strength
The rich are getting richer, but the poor are getting richer, too. And most of us are still getting ahead

*America still ranks as the world's preeminent economic power - more dominant than ever

*The United States is still the Land of Opportunity, where hard work, education, and entrepreneurial spirit pay off

*Life has never been easier. We're working less than ever on the job and at home, and there's more time for pleasure

*U.S. workers in almost all industries are more productive than at any time in the past

*America leads in nearly all the technologies that will shape the next quarter century

*Consumer debt - no worse than in the past, or the Achilles heel of our economic boom?

*11 important ways to keep the American economic system humming

Cox and Alm sound a timely warning: What we don't know about the economy could hurt us. Many of the suggested remedies to problems that don't exist may leave us worse off. Myths of Rich and Poor, therefore, gives us the facts that could help ward off further government interference in the economy. It may even help us turn the clock back to a better day, when Americans were truly free. That's because Cox and Alm finally put the economic facts and figures where they've been all along - squarely on our side.

"No honest discussion of the American economy can ignore this book"
-Virginia Postrel, Editor, Reason magazine

"The best account I've seen of the real state of the American economy. Times are good - better than they've ever been before - and if we want to understand how to keep them that way we could not do better than to heed what Cox and Alm have to say."
-Larry Kudlow

"A clear-eyed, dispassionate analysis of what's good about today and why we should be optimistic about tomorrow. Cox and Alm neatly dissect the myths of the handwringing pessimists who would turn to government before understanding reality."
-Edward Crane, President , CATO Institute

"Cox and Alm show conclusively that the merchants of doom and gloom are not just wrong, but spectacularly wrong."
-Dwight R. Lee, Ramsey Professor of Economics, University of Georgia

"Clearly demonstrates how free markets effectively promote the general welfare and sustain human dignity."
-Rev. Robert A. Sirico, President, Acton Institute

"A fantastic volume. The sky (of opportunities) is not falling at all. Indeed, it is rising."-Richard B. McKenzie, Professor, University of California at Irvine

Myths of Rich and Poor: Why We're Better Off Than We Think
by Michael Cox; Richard Alm

Courtesy of http://www.thbookservice.com/products/BookPage.asp?prod_cd=C5179

*.*.*

Alan

[ 02-09-2006, 04:10 PM: Message edited by: Alan D. Hyde ]

[Meerkat]

:rolleyes:

[Norman Bernstein]

Alan, you seem to have a terrific ability for not only misdirection, but missing the point.

The entire Sowell C&P you posted had absolutely NOTHING to do with rising income inequity... it was nothing more than a sobriquet to the average rising standard of life and wealth, which VIRTUALLY NOBODY DISPUTES!

We're talking about RISING INCOME INEQUITY here, NOT the 'rising tide that floats all boats'.

In case you missed the analogy, I'll repeat it here:

no one is denying that the rising tide floats all boats. What we're TALKING about is how the megayachts have doubled in size as they rose, while the dinghys have shrunken slightly.

[Peter Malcolm Jardine]

Despite the statistics that show real wages going downhill over time, somehow Americans are consuming more than ever and have a larger net worth than ever.
Average net worth Dr Sowell... average...

I can't read this guy without retching. He completely ignores the class structure in america, including for blacks. Blacks have quite different statistics for education and wealth, and health, but he glosses over things like this.

I would think success is what all americans or canadians want to see in their socio-economic structure. The fact remains that there a great number of people in both our countries that are poor, uneducated, and unlikely to have their children succeed.

[Norman Bernstein]

Besides, as I look around at the way people live today, the homes, the cars, the boats, and pricey man toys, the explosion in costly leisure travel, I find it hard to see the decline. I see a world that has grown better off, in all visible economic ways, and in all socio-economic classes, than the world I knew as a child, or as a young man. HighC, the dramatic increase in income inequity has be so exhaustively documented with totally non-partisan statistics, it isn't even worth debating.

You can ignore it... deny it... or even, as Alan seems to be trying, misdirect the conversation to steer it away from the truth. But it's there, just like a huge mole on our collective noses... it can't be ignored.

For the LAST time.... ENOUGH with the damned 'rising tide' analogy.... it didn't work the FIRST time someone tried it!

[Lew Barrett]

I don't disagree, and named the auto companies, Enron and Worldcom as examples of sloth at best, rewarded with riches. Interesting, Ken Lay is all in the news today. Ben and Jerry's a company I'm all over on the other hand, or used to be at any rate. My kind of product :D
I don't think the issue here is the effect on the economy per se, though if you held Worldcom (or Enron) stock, or were a United employee...or worse...had invested in their pension plans, YOUR economy would have been dramatically impacted. Rather, the issue is one of fairness; and don't forget my caveat, that each case is to be judged on it's own merits.
Another place to look for really whacky and out of touch executive compensation: The Airlines. How much safer do you suppose flying Alaska is today? How much better is the fleet maintained? What do the executive compensation packages look like? I'm not against people making money.


Lew


Originally posted by Norman Bernstein:
The best reason to be outraged by CEO's is in their management, and how it DOES affect the big picture... like in the auto company case.[/QB]

[ 02-09-2006, 04:31 PM: Message edited by: Lew Barrett ]

[Alan D. Hyde]

Sowell and the book he cites DO make a valid and vital points that ARE relevant to this discussion.

One is, that the CPI unduly magnifies the effect of cost-of-living changes.

Many years ago, in my spare time, I read all the materials and got a ChFC. One of the things that the economists emphasized at the time was that CPI changes are not based on a dynamic but on a static shopping analysis.

For example, if the "market basket" price of beef is up 5%, you may not buy beef at all that week. You may instead choose pork, the price of which may be unchanged, or perhaps even lower. WHAT things people buy is affected by what it costs to buy them.

Suppose car or home prices are up 5%. Do you buy a new car or a new home every year? Most don't. And, some retirees plan on NEVER buying another house or car. So the effect of such price increases does not strike them, or even most of us, with its FULL impact.

Also, many middle-class earners rely on FAR more company benefits than their parents may have had--- dental insurance, medical insurance, 401(k)plans, company-provided child-care or gymnasia, company cars, vision (eyeglass or contacts) plans, family leave, etc., are all things that were less common a generation ago...

These all need to be factored-in to make any comparisons we do valid apples-to-apples comparisons.

Alan

[ 02-09-2006, 04:47 PM: Message edited by: Alan D. Hyde ]

[Norman Bernstein]

Sorry, Alan... it's a fair point to make that CPI adjustments have decidedly different effects, for different people, at different stages of their life... but it still doesn't have the slightest thing to do with income inequity, which is (or, is supposed to be) the point of this thread.

The numbers aren't lying in this case... inflation adjusted income as a whole has barely budged for the middle quintile of Americans, while it has simply skyrocketed for the top 5%... and Bush's economic policies have accelerated that trend (it's 5 years down the road since the first Bush tax cut, so I think it's fair to say that it's effect has kicked in).

You can only try to make up excuses for it... reduced size of housholds, 'rising tides', errors or inappropriateness of the CPI for specific individuals...I think I've heard ALL the rationalizations... but that wart on our noses isn't going away.

Wha'ts the NEXT rationalization? Or do you think this 4 decade old (and accelerating) trend is a good thing for America?

[ 02-09-2006, 04:53 PM: Message edited by: Norman Bernstein ]

[Alan D. Hyde]

Norman, you can't just go ASSUMING what your discussion is aimed at establishing...

That's a logical fault called "begging the question."

And, I haven't yet taken any position on whether (or not) the gap is widening. It may or may not be--- I'd like to make SURE of our numbers. And, don't forget the increasingly substantial underground economy.

Alan

[High C]

Originally posted by Norman Bernstein:
...the dramatic increase in income inequity has be so exhaustively documented with totally non-partisan statistics, it isn't even worth debating....I agree! It's not worth debating, and I am not doing so.

I am asking why this phenomenon, which is really very slight when put into historical perspective, matters so much to you, and to the many who speak of it so often? Given the undisputed reality that all American socio-economic groups are on a long term upward economic trend, what's the point?

I hear, over and over again, that it has to do with inequity, or inequality. Defend that! Why does that matter to you? Do you think the gap has grown so wide that we have become a society so stratified that there exists only a few rich masters, and their many impoverished servants? That clearly is not the case.

I would just like to understand why this causes you such concern. For most who trumpet this cause, I believe, it is pure envy. Or an attempt to foment envy for the sake of a political score. I have every reason, however, to believe that your motivation lies elsewhere.

Call me curious.

[Norman Bernstein]

Alan said:


And, I haven't yet taken any position on whether (or not) the gap is widening. It may or may not be--- I'd like to make SURE of our numbers. And, don't forget the increasingly substantial underground economy. Hmmm.. I'll have to add one more to the list:

1) 'The rising tide floats all boats'
2) 'economic mobility'
3) 'smaller households'
4) 'CPI inaccuracies'
5) 'substantial underground economy'

That's probably not ALL of the rationalizations and evasions I've heard from conservatives, every time the rising economic inequity issue comes up... but I'm certain to hear others as time goes on. ANYTHING to avoid confronting the truth.

HighC said:


I am asking why this phenomenon, which is really very slight when put into historical perspective, matters so much to you, and to the many who speak of it so often? Given the undisputed reality that all American socio-economic groups are on a long term upward economic trend, what's the point? I have never disputed that all Americans are on an upward economic trend. I'm simply illustrating that the trend is not proportional for Americans of all economic classes.


I hear, over and over again, that it has to do with inequity, or inequality. Defend that! Why does that matter to you? Do you think the gap has grown so wide that we have become a society so stratified that there exists only a few rich masters, and their many impoverished servants? That clearly is not the case. I never said that was the case, at least not yet.... that argument is taking a point to it's absurd extreme. However, give it another 40 years or so, without breaking the rapidly accelerating trend... and that statement will BECOME true, for sure.


I would just like to understand why this causes you such concern. For most who trumpet this cause, I believe, it is pure envy. Or an attempt to foment envy for the sake of a political score. I have every reason, however, to believe that your motivation lies elsewhere. I'm ONE of those 5% people, highC, with a six figure income, and a 7 figure investment portfolio. Income inequity has actually BENEFITTED me.

So, why am I concerned?

I have two daughters. Some day, I hope to have grandchildren... and, if God or fate or chance is willing, great-grandchildren. The reason I care is because of THEM. THEY may not be part of the 1 in 20 who benefits from a tilted playing field... and I doubt that the inheritance passed on to them will be sufficient to put them at the top of the heap, while growing masses of people grow increasingly frustrated and unsatisfied. Income disparity is the CLASSIC cause of violent revolution... and lower income disparity is the best way to help people maintain faith in their country, their government, and their democracy.

Our time in this world is brief... and if we don't leave it a better place than it was when we lived in it, nobody else will.

[Alan D. Hyde]

Hich C, I'm not entirely sure that it IS so.

Pierre DuPont, IIRC, was making something like $160,000,000 per year sometime in the 1920's, and would complain bitterly because some small part of it had to be paid out in Federal income tax.

Average income in 1920 was $1,500, according to the U.S. Census.

Alan

[Peter Malcolm Jardine]

I would just like to understand why this causes you such concern. I am concerned when people in my country have less than a level playing field when it comes to any issues concerning human dignity. Obviously you feel differently.

[Alan D. Hyde]

Human dignity? One poor honest man is worth a dozen wealthy cheats.

Money has little to do with honor.

Here's a poem for you, Peter---

A Man's a Man for A' That

Is there for honesty poverty
That hings his head, an' a' that;
The coward slave - we pass him by,
We dare be poor for a' that!
For a' that, an' a' that,
Our toils obscure an' a' that,
The rank is but the guinea's stamp,
The man's the gowd for a' that.

What though on hamely fare we dine,
Wear hoddin grey, an' a' that?
Gie fools their silks, and knaves their wine,
A man's a man for a' that.
For a' that, an' a' that,
Their tinsel show, an' a' that,
The honest man, tho' e'er sae poor,
Is king o' men for a' that.

Ye see yon birkie ca'd a lord,
Wha struts, an' stares, an' a' that;
Tho' hundreds worship at his word,
He's but a coof for a' that.
For a' that, an' a' that,
His ribband, star, an' a' that,
The man o' independent mind
He looks an' laughs at a' that.

A price can mak a belted knight,
A marquise, duke, an' a' that;
But an honest man's aboon his might,
Gude faith, he maunna fa' that!
For a' that, an' a' that,
Their dignities an' a' that,
The pith o' sense, an' pride o' worth,
Are higher rank than a' that.

Then let us pray that come it may,
(As come it will for a' that,)
That Sense and Worth, o'er a' the earth,
Shall bear the gree, an' a' that.
For a' that, an' a' that,
That man to man, the world o'er,
Shall brithers be for a' that.

Robert Burns, 1795

*.*.*

Alan

[ 02-09-2006, 06:31 PM: Message edited by: Alan D. Hyde ]

[Meerkat]

Originally posted by Alan D. Hyde:
Hich C, I'm not entirely sure that it IS so.

Pierre DuPont, IIRC, was making something like $160,000,000 per year sometime in the 1920's, and would complain bitterly because some small part of it had to be paid out in Federal income tax.

Average income in 1920 was $1,500, according to the U.S. Census.

AlanIn 1901 a beautifully built house with lots of millwork cost $600 (and would be snapped up at 100x that price today if it were available). The average wage was $1/day. What's your point?

[Alan D. Hyde]

I mentioned that to show there were very substantial income disparities in the past, David.

For example, $160,000,000 / $1,500 = 106,667

So, Pierre was making over 100,000 times what an average man made.

If an average man now makes $30,000, then Bill Gates would have to make 100,000 x 30,000 = $3,000,000,000 to proportionately do as well now as Pierre DuPont did then.

Alan

[Meerkat]

Well, his net worth is in excess of $50,000,000,000. ;)

[Alan D. Hyde]

Those numbers I quoted were for ANNUAL income...

Alan

[Peter Malcolm Jardine]

A Man's a Man for A' That Alan, how relevant do you think a poem written at the end of the feudal system is? You'd be right to have dignity, because a lot of people in England didn't have much else.

There never was much dignity in being dirt poor... someone rich just thought that up to make them feel good about being rich...

[ 02-09-2006, 07:08 PM: Message edited by: Peter Malcolm Jardine ]

[Meerkat]

Originally posted by Alan D. Hyde:
Those numbers I quoted were for ANNUAL income...

AlanYeah, yeah, I know. ;)

What about those CEO's that are pulling in $700,000,000/yr - and look at what Jack Web (I think that's his name) and his management team did to GE: 30% of a very, very large company became theirs in only like 10 years through stock options given by their tame BOD.

[Norman Bernstein]

Alan, I think the world was sufficiently different back at the turn of the last century to make the DuPont comparison probably less illuminating than it otherwise might be. The most highly paid person in the country is not by any means typical of the mean income of the top 5% of income... back in DuPonts' day, I'm sure he was a relative anomaly, even with all of the robber barons of the era.

I suspect it would be a lot more useful to compare ratios of incomes in the early 50's to what they are today. That era was noted for the ability of ordinary people of very humble means to find work that paid enough to raise a family and buy a home, and truly transition from poor to middle class... it was possibly the most 'equitable' era in American history. I don't mean to disparage all the progress and imrpovement in society that has occurred since then, but I don't want to dismiss the problems inherent in rising income inequity, either.

[Meerkat]

How about the 70's? A kid (me!) could find a small 1 bedroom or buffet apartment in a big city (SF) and afford to have it all to him/herself. In the 00's in Seattle, a kid is lucky to find a corner of a 1 br he/she shares with 5-6 others. This is the literal truth - i've met quiet a few in this situation. They simply can't afford to rent a private space on what a starter job will pay them (for things like waiters/waitresses, retail clerking, etc.). To me, this is a prime indicator of a dropping standard of living.

[ 02-09-2006, 07:32 PM: Message edited by: Meerkat ]

[pcford]

Mr. Hyde writes:

Human dignity? One poor honest man is worth a dozen wealthy cheats.

Money has little to do with honor.

Here's a poem for you, Peter---

A Man's a Man for A' That

Is there for honesty poverty.... boy. Unadulterated purest hokum.

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."

[Alan D. Hyde]

No, what that indicates is higher-priced housing, often the result of rent control, zoning, building codes, and other regulations.

When I got out of Bates College in 1972, two other guys and I rented part of the bottom floor of a Victorian house near campus--- rest room on the hallway (shared with other parts of the house).

It cost us $12 per week, so we each chipped in $4...

Under current rules, that landlord couldn't chop up an old house into sections the way he did then, and rent out portions without their own dedicated kitchen or rest room.

And, the cheap ticky-tacky houses built in the flood plains of many cities are now gone, and unlawful to build.

As are the old walk-up "cold-water-flat," supply-your-own-heat, tenements.

So--- surprise--- less units, less competition, cheap stuff torn down--- what's left costs more.

Alan

[ 02-09-2006, 07:55 PM: Message edited by: Alan D. Hyde ]

[Memphis Mike]

Anyone who thinks the standard of living hasn't dropped for the poor and middle class is simply just ignorant.

But in the Bush Adminstration, ignornance rules.

[High C]

Originally posted by Norman Bernstein:
...while growing masses of people grow increasingly frustrated and unsatisfied. Income disparity is the CLASSIC cause of violent revolution...Is this happening now? The rising economic tide is not causing frustration and dissatisfaction. Everyone is along for the ride. The only place I hear complaints about this disparity, however real or slight it may be, are from those with a political ax to grind. I don't hear it in the grassroots.

The revolution of which you speak comes when poverty worsens, not when it declines.

[Meerkat]

Originally posted by Alan D. Hyde:

So--- surprise--- less units, less competition, cheap stuff torn down--- what's left costs more.

AlanAnd wages have not risen to keep pace.

Fair number of big old houses in Seattle that are small boarding houses. I know a guy who owns/runs one. Made his pile in rollercoasters of all things - before he was 30. Invested in a big old house in an upscale neighborhood (Greenlake).

But what cost me $75 in 1972 now costs $4-600 and that's with a shared bath (mine was too).

[Alan D. Hyde]

I'm still looking for data, Mike, so I haven't come to any conclusions yet.

But, consider an example.

Two starting teachers, 22 years old, just out of college, making $30,000/year each, for a total of $60,000. That's $5,000/month gross.

Under the OLD, more cautious rules, they can afford 25% of that ($1,250) on a house payment. Around here, that will buy them a $200,000 house.

That's with a small or no down payment.

And, if they bought new, or got a good deal on old, that house may come with a big kitchen, dishwasher, range, refrigerator, hot tub on the deck, three or four bedrooms, etc.

And, if they're typical, this couple will have a big screen TV or two, fairly new cars, and eat out as much or more than they eat at home.

If you'd like to argue my numbers here, I can back them up for you.

And, if you think that their parents or grandparents started out that well, you'll be, in most cases, mistaken...

Alan

[ 02-09-2006, 08:15 PM: Message edited by: Alan D. Hyde ]

[Norman Bernstein]

Is this happening now? The rising economic tide is not causing frustration and dissatisfaction. Everyone is along for the ride. The only place I hear complaints about this disparity, however real or slight it may be, are from those with a political ax to grind. I don't hear it in the grassroots.
You would hear it, HighC, if you bothered to listen.

You undoubtedly HAVE heard the Bush administration trumpet loudly about how wonderful the economy is going. To hear them tell it, the economy has never been in better shape.

So... why do the polls consistently indicate that 2/3rds or more of all Americans think the economy is bad and getting worse?

I can tell you why: it's because the overall economy doesn't tell us squat about how different segments of society are doing. The economy has been terrific for those in the top 5%.. and not so hot for MOST Americans... you know, the ones who earn a median income of all of $42,000/yr.

However, if you close your eyes..AND your mind... to anything but a Bush flack's spin, you can safely ignore the opinions of the majority of Americans... who aren't doing so well.

[Norman Bernstein]

Two starting teachers, 22 years old, just out of college, making $30,000/year each, for a total of $60,000. That's $5,000/month gross.

Under the OLD, more cautious rules, they can afford 25% of that ($1,250) on a house payment. Around here, that will buy them a $200,000 house.

Interesting.

Here in the suburban Boston/Providence area, starting teachers aren't quite earning $30K (my future son-in-law is one of them, so I have a reason to know).

And there definately isn't any such thing as a $200K house (unless you want to live in the worst imaginable neighborhood of the most crime-ridden area). You can't even buy a condo for $200K... unless you're going to be driving well over 60 minutes to commute to school.

I guess Indiana is a better place to live... if you're relatively poor, that is :D

[Meerkat]

Originally posted by Alan D. Hyde:

And, if you think that their parents or grandparents started out that well, you'll be, in most cases, mistaken...

AlanAnd, if I'm not mistaken, mom and grandma stayed home and took care of the kids. Today, kids are not raised - they hang out at the mall because, typically, both mom and dad are working. (Which, IMO is the real problem with american families/our society, but I digress.)

That "better" (materially at least) quality of living has another price: for many people, a 50-60 hour workweek is far more typical than last generation's 40 hour workweek.

[ 02-09-2006, 08:25 PM: Message edited by: Meerkat ]

[Tristan]

Originally posted by High C:
</font><blockquote>quote:</font><hr />Originally posted by Norman Bernstein:
...the dramatic increase in income inequity has be so exhaustively documented with totally non-partisan statistics, it isn't even worth debating....I agree!

I would just like to understand why this causes you such concern. For most who trumpet this cause, I believe, it is pure envy. Or an attempt to foment envy for the sake of a political score. I have every reason, however, to believe that your motivation lies elsewhere.

Call me curious.</font>[/QUOTE]Probably a really sick reason here, but I am concerned about the American people and the future of America (the U.S.). Possible partly because I have children ranging from young to not so young. As for obscene salaries of CEO's (for example Scrushy or Tyco's former CEO), not envious, just amazed. Why would anyone WANT of give themselves that much money? Who NEEDS that much money? Isn't there any reason to put some back into the business or charity, or pension plans?

[Meerkat]

Prestige.

[Alan D. Hyde]

Hubris.

Alan

[Norman Bernstein]

Interesting that pride is a wonderful and honorable human attribute....and one of the seven deadly sins... all at once.

I like the sort of pride that SOME wealthy people exhibit... such as Bill Gates, incredibly generous benefactor of worthy causes....Don Imus, who berates and badgers CEO's to contribute to causes like the Intrepid Fallen Heroes Fund to complete the rehab hospital in TX for injured soldiers... and many others.

That's the sort of pride we need a lot more of, in society.

[ 02-09-2006, 08:54 PM: Message edited by: Norman Bernstein ]

[Erasmus B Dragon]

Originally posted by Alan D. Hyde:
Ahah!

Some up-to-date help from Dr. Sowell---

(Courtesy of www.tsowell.com (http://www.tsowell.com) )

http://www.townhall.com/images/contributors/sowell.gif

Myths of rich and poor

AlanDerz anoda grate book, allmost da same titel but I dont no da athors name. He wuz probly a pinkocommee tho. Polyticks of Rich an poor.

[Meerkat]

Norman; I feel it as a quiet sense of satisfaction, almost contentment when doing a goodness is it's own reward. I do not want to be praised or singled out.

When my ego is involved, then it's pride and it does not end up feeling nearly as good. It fades fast leaving a desire for more.

[Dan McCosh]

I haven't seen any data recently on net worth per capita. I find it difficult to believe most people have a higher net worth in recent years. Comparisons with the "good" old days regarding boats, cars, etc. don't seem to account for the reality that most of those items couldn't be financed. No loans for boats, 24-month car payments, etc. A kid graduating from my high school and going to work often had a house paid off by the time another kid got through college. The kid from college could pay his expenses with part-time jobs--graduating no debt. There were no credit cards, and common stock was paying 10-15% dividends, should you invest. The current low savings rate also would indicate net worth is at an all-time low for most Americans--unless it is calculated on the inflated price of housing.

[Norman Bernstein]

It's an area and topic, Dan, where overall statistics fail to reveal much of the underlying situation... much like the old joke about Bill Gates walking into a bar, and suddenly raising everyone's average income.

I think the most telling indicator is the disconnect between what the polls tell us is the opinion of the public regarding the economy, and what the administration tells us. The ordinary indicators look 'good'; unemployment is low, corporate earnings are good, the stock market has recovered, etc.

However, this says absolutely nothing about how differing segments of society are doing. The overall savings rate is way down... and this is far more reflective of the bulk of the population than the wealthy segment. The reasons are diffuse; changing spending habits, easy credit, or (more likely, in my opinion) the rapid increases of some specific costs of living that aren't really reflected in the CPI, like health care costs.

Regardless of what spin or misdirection is applied, the relative income numbers are undeniable, as is the length of the trend... all you have to do is look at the income distribution by quintile over the last 40 years or so.

The big question is really whether this will continue, and possibly accelerate... and what sort of country we'll be living in 40 years from now, if it continues unabated. As I pointed out, I don't harp on this point out of 'envy', as has been suggested; I'm a beneficiary of this trend!

I am seriously concerned about it for the sake of my children... and their future children. If, through luck or inheritance or perserverence, my kids end up in the top 5% of the pile, that's great... but what if they don't? I can't guarantee it...

[Dan McCosh]

In the last couple of weeks, the announcement of 100,000 cuts at US automakers has been followed by the announcement tha Nissan is eliminating health care for its US retirees, and GM and Ford are eliminating future pensions. 50% wage cuts for incoming autoworkers were done a decade ago. Northwest Airlines is petitioning to fire its US flight attendants and replace them with foreign hires. GM just chopped another 700 or so engineers at the tech center and replaced them with contract work in India. That was a move as large as the entire Kia R&D center in the US. Needless to say, things don't look all that upbeat around here at the moment.

Also--re the Dupont thing. Bill Gates current income--or more specifically the rate he acquires wealth--is more than Dupont's. That's probably why the current administration is attempting to eliminate the estate tax, to make such gains hereditary.

[Dan McCosh]

Found a couple of numbers--US median household net worth is about $40,000. That's about one-fourth what Statistics Canada says is Canada's mean. Dunno if they have the same basis of calculation, though.

[Norman Bernstein]

"In the last couple of weeks, the announcement of 100,000 cuts at US automakers...." All of those things you quote, Dan, are evidence that the overall numbers of the economy, no matter how rosy they get spinned, are a really poor indicator of how PEOPLE are doing these days. These kinds of perturberances in peoples lives are often devastating... and the rising income inequity simply means that those in the middle of the economic distribution are poorly prepared to deal with them.

I could hardly even appreciate what it must be like. I recall October 87, when the stock market took a substantial hit, and I lost, on paper, well into 6 figures. However, it was no personal catastrophe; I was well invested, still employed, and had adequate reserve funds. How many people in middle America can say the same? How do THEY weather occasional economic dislocations?