Thursday, October 25, 2007

Inequality Increases

Slightly off topic post.....

My last post reminded me of an article I read in the WSJ a couple weeks back. As those who read regularly have already observed, I tend to be a bleeding heart. I see this situation as a failing of both our market economy and of our democratic political system. In fact, I find it downright disgusting.

Kudos to the Journal for covering this. Their readers are in the top income brackets and need to be exposed to these figures. How can it be that so few have so much, while so many have so little in this "land of opportunity"? Our middle class society doesn't seem to have much of a middle class anymore.

Excerpt below:

"The richest Americans' share of national income has hit a postwar record, surpassing the highs reached in the 1990s bull market, and underlining the divergence of economic fortunes blamed for fueling anxiety among American workers.
The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks. The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000."


Giacomo said...

Capitalism creates wealth in a competitive environment. It does not guarantee that everyone will be successful.

Compare our "middle class" to countries which have neither democracy nor full-blown capitalism. Better yet, compare our "poor" (which typically own televisions and cars) to the REAL poor in the world.

Fostering class envy is on the checklist of socialist proselytizers. I'm not buying it.

buying time said...

Not saying we all need to be equal. But we do deserve an equal opportunity not to be equal. For instance everyone should have reasonable access to quality healthcare and education.

The initial distribution of wealth is an enormous factor in someone's success. Its like a select few get to start the 100yd dash at the 50yd line. They get a big head start....doesn't guarantee they will win, but it stacks the odds in their favor.

There are a lot of assumptions about an efficient market economy that are not met by ours. Transactions aren't always transparent nor are they arms-length. The higher you get, the more the "old-boys network" kicks in. Just look at the alumnae admissions preferences that are given at Ivy League schools.

There is a standard of living in the U.S. Not sure a TV fits in, but to hold stable employment, most need access to a car if public transport is no adequate.

Anonymous said...

Giacomo, you are doing what all naysayers do, you are comparing the USA to the 3rd world. When America is compared to the first world it begins to look much more shameful. Let's compare apples to apples.

BT is right, now that we are eliminating the middle class, people have to prepare themselves to not be poor by striving to be rich..this requires a lot of expensive education (Higher education is free in Sweden) which if you are not rich requires excepting a lot of debt., this then limits the good public works you will be able to do outside of college since you will have to make a lot of money. You probably won't work at a non-profit, you probably won't even have time to volunteer (consultants, lawyers and doctors work 12+ hour days) It also becomes much to risky for most to strike out on their own or take chances due to student loans, insane cost of housing and the cost of Healthcare. In fact, it doesn't really seem much like a capitalist society anymore, more like there is a rich ruling class who has moved middle class jobs to the real 3rd world.

But as long as there are T.V.s all around (1940's technology) I guess all is well in the U.S. of A.


buying time said...

Ouch hit WAY to close to home.

At one point hubby and I were in almost 100k with student loans. Although I did eventually manage to make it into a non-profit...just one that pays better than most. (after being a consultant on 100% travel for a while).

mbc said...

There is so much wealth in this country that it's downright shameful how many we have living in poverty. The powers that be are taking us back to a 19th century gilded age on purpose.

I'm no socialist, but I also don't think the almighty free market is perfect either. Survival of the fittest (or most connected) and screw the rest maybe the law of the jungle, but it shouldn't be the way a civilized society operates.

Anonymous said...

We were in the same state of economic inequality back in the 20's...

I say raise the bottom and lower the top.. Provide our citizens with free healthcare and make at the very least community colleges free again (come on boomers, give SOMETHING back), do away with the $100 dollar + textbook (are there gold toilet seats in the teacher's lounge?), bring back the taxes on the rich that Reagan cut for his friends, and bring back the choice to be middle class again.

And if anyone wants to bring the tired argument that if you can only be a multi-millionaire (due to taxing of the rich) in America people will not strive for more.. I've got the world's tiniest violin playing for you.

-=Happy in SF

Anonymous said...

BT, it's the modern trap that people who had cheap college tuition, housing and the chance to gain valuable working experience with a paltry 4 year degree (or no degree) can't seem to understand.

Today a graduate from Sac State might be able to land a $10/hr. admin. job, with their bills they MIGHT be able to afford rent somewhere in Sacramento county.


Giacomo said...

Boo hoo. Life does not deal everyone the same hand, and no economic or political manipulation will change that.

Capitalism is just the best system yet devised, it's not going to be anywhere near "perfect," because that is a false standard. It has a pretty good track record, especially compared to Socialism, which has a really crappy one.

I can only assume that people who think the USA compares badly to ANY other country have not spent much time in other places. I HAVE. People still struggle and sacrifice to get into this country, and for good reasons. Sweden, not so much.

People in Europe (1st world) think of Americans as having the biggest and best of everything. Most of my relatives in Italy (middle class) live in small, attached flats or tiny houses; usually one car is shared. They have very little discretionary income. They settle for jobs that bore them, and keep them until retirement without complaint. The average person has very little ambition or hope of advancement, as they are ACTUALLY blocked from high paying positions because of corruption, patronage systems and nepotism (which, by the way, are typical by-products of Socialist / Communist governments).

If Americans are guilty of anything, is is of being ungrateful, spoiled brats.

Anonymous said...

Been to Italy this millennium?


Anonymous said...

Oh also, to be fair, I've only spent lots of time in northern Italy, they seem to want for nothing..

Like most of Europe they make due with less more efficient things.. exactly what I would like to see here, I'd also like to see our citizens draped in all those designer fashions too.

I did see like one homeless guy though.

Giacomo said...
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Anonymous said...

Boo Hoo, poor Italians, with their job security and health care and their big expensive Euros and lack of homelessness. Guess there are ugrateful spoiled brats everywhere.


Giacomo said...

Of course, if all you want from life is job security, a roof over head, and free health care: Cuba's your place.

There are a few trade-offs, though.

BTW, in Milano, when you pay the rent or buy groceries, they don't care how much that is in dollars.

Anonymous said...

So, are you saying the Euro has not been beneficial then?

Is travel or the importation of goods not important?

I've seen a large influx of Italian tourists here, the Euro buys a lot of U.S. Pesos.

Got anything better than Cuba? o.K., you're right, the U.S. is better than Cuba, and the bottom of the Sea, and Mars.. I mean, our poor people would Explode on Mars! You are right the U.S. is better than a lot of places.

So.. Sweden sucks.. do you have any real argument to support that.

Why should we not incorporate the best ideas of the first world instead of simply accepting the ever diminishing status quo like you seem to prescribe. Free healthcare does not magically turn your country into a communist one.

"Of course, if all you want from life is job security, a roof over head, and free health care" that's a start.. then let's see what we can do from there!

buying time said...

There are tradeoffs to be sure. I lived in Northern Italy for a year in college.

Yes Europeans have more universal healthcare and education, relatively low crime (probably cause there is less poverty), great maternity leave, lots of vacation, and a relatively good work-family balance since most business are closed in the evenings and on weekends.

We on the other hand have a more dynamic and entrepreneurial economy, a 24-7 culture, endless shopping malls, as well as wide open spaces.

I would love to find the happy medium between the two. However, now that I am raising a family, I seem to envy the European model more and more as they seem to focus more on quality of life as opposed to quantity.

P.S. Spirited debate - Encouraged.
Name calling - Not Okay.

Cmyst said...

I don't think anyone is demanding "success" for all. The key phrase here is "competitive environment".
Personally, I have a lot of respect for Warren Buffet. He made sure his kids would not suffer, but he didn't ensure that his entire line far into the future would "succeed" without any personal effort. And he gave back to the world.

Everything is relative. Happiness and success are independent of financial wealth. Wealth is no measure of a person's intelligence, honesty, or morality.

Class envy based on materialism is of dubious merit; on the other hand, class PRIVILEGE is rightly a matter of debate.

Giacomo said...

I apologize for my part. I felt that I was being insulted.

Anonymous said...

One problem with the analysis is it assumes the rich were the rich of ten years ago.

Ten years ago I made 48K a year and now I make 248K a year. Plenty of people I knew ten years ago who at that time were 50 years old and making tons of money have since been pushed on to greener pastures and now are making a lot less.

The rich in the US have a lot of self made millionaires and plenty have gone bankrupt in their earlier years. My point is the rich of today easily could have been the poor of ten years ago so you have to take macro numbers like this with a grain of salt.

buying time said...

To be fair to both sides....yesterday the WSJ, true to form, had an editorial on this issue..."the truth about the top 1%".

Of course personally I can't stand reading the editorial section of the WSJ....but wanted to put it out there cause I strongly believe in informed debate. Its what sets our country apart from most of the pack.

P.S. Spirited debate - Encouraged.
Name calling and insulting remarks - Not Okay.

Cmyst said...

248K will put you in the top 10%, I think, but I think that is still far below the 1% top.

In another venue a couple years ago, a sociologist explained to us that our class system is entirely different than most people believe it to be. For instance, most people believe that they are in a higher class than their earnings, education and family history would place them in. This is especially common amongst the middle class, who often believe themselves to be upper class when sociologists would not consider them to be so.
The middle class is a broad area. It includes many high-income earners such as medical doctors and business owners. And the lower echelons of the middle class are notorious for voting against their own best economic interests because they believe that they will one day achieve "wealth"; they also tend to go into debt in order to project the image of having already achieved "wealth" to which they only aspire.
To be sociologically a member of the upper class, you must not only be financially secure, you must be truly wealthy. Wealthy enough that you and your family will never HAVE to work again. And even this only places you into the lowest echelon of true upper classiness. The highest echelon is reserved for those whose families have been this financially secure for several generations.
Ever since learning the sociological perimeters for class, I have simplified it for myself.
I am working class. I work in order to pay my bills. My children must work. No one will pull any strings for us above the level of putting in a good word on a job interview. If the Draft is reinstated, my younger kids and grandkids would have to serve. If they want to get into an Ivy League college, they will have to do so strictly on grades and merit. If I want to open a business, I must secure financing by presenting a viable business plan and reasonable assurances that the loan will be repaid. Too many failures in succession in business means I won't be given any more seed money, and I'll have to work for someone else.
Anyone who believes that the truly wealthy must follow the same rules is delusional.
If you have enough money that you can retire and also ensure that your children can attend a top-notch college and have the connections to get them into lucrative jobs after, you are wealthy.
If you have enough money that your children and grandchildren never need to work, you are in the top 1%.
Otherwise, there's just the working class and the "poor" (disabled, dependent totally on government subsidies, homeless, etc.)

Anonymous said...

For anyone who CAN stand reading the editorial section of the WSJ...

"These statistics are extremely misleading."

buying time said...

Thanks for the link Anon. I don't have an online subscription so I rarely find the articles I am looking for.

I should get some credit, after all I was trying to help your case on the statistical issues by posting the info on the follow-up editorial (cause I did read most of that one).

Anonymous said...

This dribble makes me sick.

I usually here the chants of revolution and uprising from the left, but honestly the closer we get to getting Hillary in office and every day I have to here from Nancy Pelosi and Harry Reed, I feel closer to starting a right wing revolution.

I would honestly be happy to give 50 to 60% of the countries land to the left and all of the people looking for the left's hand outs, so long as they kept their socialist, P.C., equality of outcome, multi-cultural, moral relativist, enviromently whacko policies to themselves.

You make your own lot in life. Envy is pathetic. If you want something, go get it. If you want a better life, earn it. If you want better health insurance, earn it.

If you hate capitalism and democracy, please leave.

Anonymous said...

Anon, I see you're a real anti PC straight shootin' darn tootin cowboy!

Erm, If you hate freedom of speech so much I'm not sure America suits you very well.

buying time said...

Okay....nuf. Let's get back to housing. Tha's what we are all here for.

It seems it's rather difficult to have a reasoned debate in the blogosphere.

Any further comments on this issue will be deleted.

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Giacomo said...
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Giacomo said...
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anon1137 said...

I wish everyone would use the spelling and grammar check tools on their computers when having an intellectual debate. It makes your arguments much more persuasive.