News Income Inequality Causes Social Unrest?

[ThinkToday]

Inequality is part of life. Contrary to what schools tried to teach my kids with games where everybody wins, that's just crap. Life is about choices and competition. Effort in education, life, and work should be rewarded. Likewise, our rewards are also based on our choices. We can choose a career that is enjoyable or financially rewarding, and for some, it can be the same.

For example, my child wants to be a writer, even though he has the IQ to do very well in a paying technical field like engineering. If a writer makes it big, they do well, but the average income of all writers is less than engineers. The following quotes are all according to www.bls.gov . For writers, “In May 2008, writers and authors had average yearly wages of $64,560. Editors made an average of $57,180.” And of those writers, “More than one-third was self-employed“, ouch for job security. For the EE, “In May 2008, the average yearly wages of electrical engineers were $85,350. Electronics engineers earned an average of $88,670.” Interesting the EE has issues with jobs “Jobs for electrical engineers are expected to experience little or no change through 2018. There will be a need for more electronic devices like giant electric power generators or wireless phone transmitters, but electrical engineers will face competition from companies based in other countries.” Oh, and we physicists, “In May 2008, physicists had an average yearly wage of $106,440.” Our outlook is, “Employment of physicists is expected to grow faster than the average for all occupations through 2018. The limited amount of money to do research means that physicists will have to compete for research jobs. But there will continue to be a need for people with physics knowledge to work with computers and in other sciences.” For the Civil Engineer, “Civil engineers had average yearly wages of $78,560 in May 2008.” The CE outlook is, “It is expected that civil engineer jobs will increase much faster than the average for all occupations through 2018. More civil engineers will be needed to design and build things as the population grows. For example, they will need to fix and replace buildings and roads as they continue to become old, unsafe, and worn out.” Perhaps a doctor, “The median yearly wages of general practitioners were $186,044 in 2008. Specialists usually made more, about $339,738 per year.” The outlook for an MD, “The number of jobs for physicians is expected to grow much faster than the average for all occupations through the year 2018. This is partly because new machines and tools are letting doctors treat more health problems. It is also partly because the population is growing and getting older, so they will need more health care. Job opportunities for doctors are expected to be good, especially in rural and low-income areas. Some of these areas do not have enough doctors.”

So, you want to have your fun now. How about being a Disc Jockey? “Earnings are higher in large cities than in small ones. In May 2008, the average hourly wages of radio and television announcers—some of whom were disc jockeys—were $19.43.” That’s $40,414/yr. The outlook is “There is a lot of competition for these jobs. It is easier to get jobs at small radio stations, especially if you finish an internship or work at a school's radio station.” Or, maybe a Designer, “In 2008, earnings of designers varied widely. For example, the average yearly wages of floral designers were $24,510 in May 2008. The average yearly wages of interior designers were more than double that amount, $51,020. Graphic designers, the largest design occupation, earned $46,750 per year on average as of May 2008.” The outlook for them is “Most designers are expected to face tough competition for jobs because many talented people are attracted to a career in design. However, job opportunities should be good for floral designers as many people leave the occupation due to low pay.” Perhaps the life of an auto mechanic, “In May 2008, the average yearly wages of all automotive service technicians and mechanics were $37,540.” The outlook is, “Employment of automotive service technicians and mechanics is expected to grow slower than the average for all occupations through the year 2018. The closing of many automobile dealerships will lead to fewer job openings in dealer service centers. However, job opportunities are expected to be very good for people who complete a training program and receive a certification. People who are good at figuring out problems should have the best chances. Their training should include basic electronics skills. People without formal automotive training will likely have to compete for beginner jobs.Most people who enter this field can expect steady work. This is because changes in the economy have little effect on the amount of work.”

So…. Why post all this? Choices matter in life, play, education, vocation, etc., and don’t complain about inequality if you chose poorly. My hat is off to anyone that works hard at any occupation, except OWS. Income inequity has and always will exist. What we can choose to do is drag everyone down to the lowest level to have equality or allow people to pull themselves up to whatever level of achievement they desire to obtain the level of “equality” they’re willing to work for.

 

[mheslep]

Suppose we have a major city with high inequality. Because of the inequality, crime rates increase in the city (http://siteresources.worldbank.org/DEC/Resources/Crime%26Inequality.pdf); as a result, the police may profile those on the lower end of the inequality spectrum, and they may ratchet up their force in an attempt to quell the crime. Suppose again that the city is racially fragmented. The inequality of the city magnifies trust issues in minorities. (http://www.econ.upf.edu/eng/graduates/gpem/jm/pdf/paper/JMP%20Tesei.pdf ). One incident occurs where the police over-react with force to a person from one of the minorities, and it gets caught on film.


The 1992 riots were triggered by and large over such an incident.
...

There are many other factors that will correlate as well, and might just as well be considered causal: culture, government transfer payments, lousy/corrupt big city governments, poor public education, on and on

 

[SixNein]

Inequality is part of life.

At what point would you say we have too much inequality?

 

[CAC1001]

Since the current income and wealth gaps are historically high, you do have to go back to completely different times to find analogs. You certainly won't see it by going back to the 1950s. Those gaps were at historical lows (and the top marginal tax rate, over 90%, was near its historical high) throughout the 1950s.

IMO, wealth gaps, in terms of the actual goods and services available to the masses, are at the lowest point they've ever been. The wealth gap in this sense was much higher in the 1950s then it is now. But this is because people are forgetting a few things:

1) Even if there are larger gaps in monetary wealth between wealthy and middle-income today as opposed to the 1950s, society as a whole is still a lot richer today than back then. So even though we may today be more unequally rich (at least monetarily) than we were in the past, we are still a lot richer today, as a whole, then in the past.

2) The other thing people forget is that there really is no such thing as a "distribution of income" or a "distribution of wealth." Income inequality is a partisan tool used to stir up populist rage, because it implies that there is a fixed supply of income that is then distributed among society by some central authority, and the wealthy have rigged the system to hog more of the income for themselves. But that's not how a free-market economy works. Income is what you make in exchange for the goods/services/labor you offer on the market. There is no central income authority. Same with wealth. There isn't some fixed pie of wealth.

It's like saying that there's a "fat distribution" and that the poor are getting oppressed because obesity is a major problem among the poor, and therefore the wealthier portion of society must somehow be making the "fat distribution" be concentrated among the poorest people in society. Now, statistically, is there a "fat distribution" in society? I'm sure there is. If you add up the total weight of people in America, and then divide it up into income and wealth quintiles, you'd probably find that the fat is mostly distributed among poorer people. But obviously there is no fixed supply of fat that gets distributed among the people of society!

3) Income and wealth quintiles do not represent fixed classes of people. A comparison could be a statistic representing the "fastest 5%" of cars on the highways at any given time in the nation. 24/7, there is a fastest 5% of cars. And this fastest 5% may make up more or less of the total amount of speed of the cars on the highways, depending on the time of day. Does this mean this fastest 5% is some fixed "class" of cars? No way. The actual cars making it up changes constantly throughout the day.

To see a comparable gap you have to go back to the Gilded Age or the Roaring 20s. There was violence then, much more so than the current tepid OWS stuff, even with May 1. The Wobblies were pretty dang violent, and so were the thugs hired to keep the nascent unions at bay. The US managed to avoid the more severe, sometimes revolutionary, problems that occurred elsewhere by reforming itself. My thoughts on FDR: While none of his efforts "cured" the depression (it took WWII to make that happen), his efforts did keep us from going down a road nobody would want to be on.

If you mean the spending of WWII cured the depression, I would disagree there. I'd argue it was the combination of the infrastructure built up from the New Deal, the development of the Interstate Highway System, the defense budget (which was directly tied to the development of many of the technologies that led to the computer and electronics revolution, for example everything from the transistor to the C++ programming language, to the beginnings of the Internet to the GPS system are tied to money for research for defense-related purposes---some of the first computers were built for military purposes), and the fact that WWII built up a bunch of industrial capacity in America while the rest of the civilized world was bombed out and rebuilding afterwards, making the U.S. THE dominant economic power on the planet at the time.

Yes, income inequality is one cause of social unrest. The U. S. maldistribution of wealth, in which an enormous segment of the population struggles while the fortunate few ride the gravy train, is a world-class recipe for social unrest.

Economic inequality will cause social unrest if a class of wealthy are living off the backs of the poor and brutally oppressing them, ala Russia before the revolution. Economic inequality as the United States has is quite normal in a market capitalist economy. In any society, you are going to have economic inequality, but the question is, is it an economic inequality in which everyone continues to become richer, even though society remains unequally rich.

Income inequality in the United States is higher than in any other advanced industrial democracy and is nearly the same as that in Ghana, Nicaragua, and Turkmenistan.

The United States is a lot richer than Ghana, Nicaragua, or Turkmenistan. Those countries are unequally poor. The U.S. is unequally very rich.

The concentration of wealth in the hands of a few has been called “unsustainable” and “incompatible with real democracy”. It divides us from one another in nearly every aspect of our lives. I agree that this great imbalance is dangerous to our national interest and must be readjusted.

People with an agenda will call it unsustainable or incompatible with real democracy. Also, what is meant by a "real democracy?" A democratic system is supposed to protect the majority from the minority but also the minority from the majority. Concentration of wealth in the hands of a few has always existed and always will. It doesn't divide us from one another, if anything one could argue that it has helped connect us more so than ever before. A lot of those fortunes that exist today were created by the development (of the private-sector) of all the new communication technologies that we have today (cellphones, the World Wide Web, Twitter, etc...).

Another cause of social unrest is high long-term unemployment. When a person is out of work for over one year she begins to lose her self-esteem and is often discriminated against by potential employers. This is highly demoralizing. Highly educated workers forced into taking menial jobs are really stagnant human capital and represent stagnant social mobility. The American promise of equality of opportunity seems just a dream to those underemployed.

Recessions, depressions, booms, busts, etc...are always going to occur. Long-term unemployment is definitely a problem, but the United States will recover from it eventually unless we follow some really crazy policies. The last economic crisis really dealt a blow to the economy, so it will take some time.

But there is a long list of additional factors in the U. S. today that contribute to instability. One is the resentment and mistrust between the “haves and have nots”. The percentage of families in “poverty” today is higher than ever. The search for scapegoats is a common reaction to systemic problems in a society. Some even begin to blame certain religious groups, immigrants, or other nationalities.

The United States is not Germany in the 1930s, in which the economy was literally devastated. But also, there's a difference between what is measured as "poverty" and real poverty. Real poverty versus people who struggle financially, but otherwise still live in a heated/cooled home or apartment, have access to clean water, electricity, computer, Internet, television, fresh food, etc...that's not real poverty. Now homeless sleeping under a bridge is real poverty.

 

[ParticleGrl]

IMO, wealth gaps, in terms of the actual goods and services available to the masses, are at the lowest point they've ever been. The wealth gap in this sense was much higher in the 1950s then it is now.

Do you have any data to back this up? Or is it just a gut feeling?

 

[CAC1001]

Do you have any data to back this up? Or is it just a gut feeling?

Look at the goods and services the average person today has compared to the average person in the 1950s. The average person is far wealthier today then the average person back then. In this sense, the wealth gap is a lot narrower. For comparison, look at the wealth gap, goods and services-wise, in the 19th century. Then, even if the monetary wealth gap was smaller, the richest people, aside from their mansions and yachts, did not have a standard of living much higher than the average person today in terms of the goods and services available. While the average person back then was literally poverty-stricken. There was an enormous gap back then in that sense. Becoming rich could really change your life around. Today, even if there is a large monetary wealth gap, it is a wealth gap in which we are unequally rich. Becoming rich today can change a person's life, sure, but not in the same way as back then. You just go from being rich to super-rich (by global and historical standards).

I think maybe you are misunderstanding my point some? The more goods and services that become available, the narrower the gap between "the rich" and "the poor" will get. Let's say fifty years from now, they create the technology to grow people brand new organs from scratch. So you need a new eye or a new heart? They can just grow you a new one. Only the problem is that this medical care costs a LOT and is thus only available to the wealthy. Okay, let's say it advances another thirty years, so that eighty years from now, the technology becomes cheap enough that they can grow almost anyone a new organ from scratch. Are there still, monetarily, going to be "rich" and "poor?" Sure. But the actual wealth gap, in terms of goods and services, will be even narrower then (average people then will have access to a whole slew of other goods and services that even the rich today do not have). This is the story of market capitalism. Goods and services that start out as luxuries of the rich then become commoditized as the technology advances. For example, the automobile. Or air conditioners. Or being able to watch movies at home (VCR-->DVD player-->downloadable movies-->etc...). Or braces for someone's teeth or laser eye surgery.

Goods and services are the actual wealth of society, not the money that represents it. So the more goods and services available to the masses, the richer they become and the closer the wealth gap narrows.

 

[ParticleGrl]

Look at the goods and services the average person today has compared to the average person in the 1950s.

This tells us nothing about the wealth gap between rich and poor in the 50s.

Then, even if the monetary wealth gap was smaller, the richest people, aside from their mansions and yachts, did not have a standard of living much higher than the average person today in terms of the goods and services available.

To talk about the wealth gap in the 50s being larger than the wealth gap today, you need to compare rich and average in the 50s to rich/average today. You seem to say "average people today have access to things only the rich had in the past" that might be true- but the wealth gap isn't about comparing rich people in the 50s to average earners today. Its about comparing rich people in the 50s to average earners in the 50s vs. rich people today vs average earners today.

 

[russ_watters]

This tells us nothing about the wealth gap between rich and poor in the 50s.

The answer to your previous question is no, it probably isn't possible to easily quantify it. The closest we could probably get is with market penetration of certain products, such as air conditioning, computers, and cell phones - things that didn't exist for the general public 50 years ago but now even most poor own.

The issue is one of diminishing returns. If a poor person's income rises by 10%, it will affect their lives greatly. If a rich person's income rises by 100%, it will barely affect them at all. Thus, we could say that though the gap in their incomes increased, their "wealth" gap as a matter of living conditions decreased.

This issue is a pretty well accepted fact - and often stated - when you go back hundreds of years. People say things like 'the poor today live better than a medival king' and it should be pretty obvious that it is true. It is harder to see on a shorter timeframe, but should still exist.

ou seem to say "average people today have access to things only the rich had in the past" that might be true- but the wealth gap isn't about comparing rich people in the 50s to average earners today. Its about comparing rich people in the 50s to average earners in the 50s vs. rich people today vs average earners today.

What do rich people have access to that everyone else doesn't, that significantly affects their lives? Cell phones? Measles vaccines? Flipping the issue over, we can say that over a relatively short timeframe (less than a generation), rising income inequality has not created/expanded a barrier to new technologies impacting the lives of all. More to the point: if Bill Gates (Steve Jobs!) doesn't have a cancer vaccine, how much better off is he than me, really?

 

[ThinkToday]

At what point would you say we have too much inequality?

I went to a private college in a very poor state. Many of the students I went to school with were locals that didn't have the money, but with student aid, scholarships, and loans, they were able to attend. They worked at the college, at local eateries, as tutors, etc. to pay what they could. They had “skin in the game”, and they studied like it. There was an equality of opportunity, and that's enough. We can't guarantee success; that is up to the individual.

When there is significant inequality in opportunity, something needs to be done. That doesn't mean the poor get a free ride. You no doubt know the old saying "To whom much is given much is expected". I think most people would tag that as being directed toward the 1%, however, I think it equal applies to the 99%. If we (tax payers) assist in paying for the education of the poor, we have every right to set expectations for performance and conduct. In a financial sense we (the tax payers) are acting (paying) the role of a parent. A parent would "lay down the law" to their kids to get good grades and stay out of trouble if they want the parent to continue to pay their way. I know mine did. I have told my kids the college costs for schools they are looking at run $30k-50k/yr each, and for at least three years both of them will be in college at the same time. I'm not rich, but I make too much to get any significant aid. The total to keep the two of them in college will be $60k-100k/yr, and that is one hell of a bill I have to pay without help. My kids understand the expectations I have for taking on that much debt. With graduate school possible too, I could be in hoc for more than $500k, and I will be paying off college costs for many many years. So, the poor have to have "skin in the game" too, otherwise it’s not fair to those of us that do. As many of my old college friends know, when it's our own money, we tend to work a little harder.

So here’s your equality….. we all get the opportunity to bleed equally to educate ourselves and our children.

 

[ThinkToday]

Its about comparing rich people in the 50s to average earners in the 50s vs. rich people today vs average earners today.

IMO, the question is the reason behind the difference. If more are rich because of their own work, saving, investment, business (family or their own), etc., it's an earned difference, and people shouldn't hold it against them. Even inheritance assets were earned by someone in the family to be passed on to progeny to make their life better, just as I hope to do for my kids.

If more are poor we need to look at the “why”. From http://family.jrank.org/pages/1574/Single-Parent-Families-Demographic-Trends.html , “The United States has the highest percentage of single-parent families (34% in 1998) among developed countries, followed by Canada (22%), Australia (20%), and Denmark (19%). There was a dramatic increase in single-parent families in the United States in the last three decades of the twentieth century; only 13 percent of families were headed by a single parent in 1970. Over one-fourth of children in the United States lived with a single parent in 1996, double the proportion in 1970. Approximately 84 percent of these families are headed by women. Of all single-parent families, the most common are those headed by divorced or separated mothers (58%) followed by never-married mothers (24%). Other family heads include widows (7%), divorced and separated fathers (8.4%), never-married fathers (1.5%), and widowers (0.9%). There is racial variation in the proportion of families headed by a single parent: 22 percent for white, 57 percent for black, and 33 percent for Hispanic families." IMO, we have too many families with one person doing the work of two. That means less time and resources for children with a single parent.

Then there is education. According to the http://www.bls.gov/emp/ep_chart_001.htm , the variation between education and pay is huge. According to http://www.edweek.org/ew/issues/dropouts/ ; “According to the U.S. Census Bureau’s American Community Survey, the population of U.S. 18- through 24-year-olds not enrolled in school and without a high school diploma or General Educational Development, or GED, credential was 16.4 percent in 2009.” A sad fact is the degree means less than it once did, since the real education obtained is less than the past. "Americans barely reach the international literacy average set by advanced democracies, according to a report issued by the Educational Testing Service after looking at the International Adult Literacy Survey (IALS). Unlike the math and science surveys, the IALS was given to a cross section of adults aged 16 to 65. Despite the high expenditures on education in the United States—and the large numbers of students enrolled in colleges and universities—the United States ranked 12th on the test ." http://www.hoover.org/publications/hoover-digest/article/6325 .

So, it's not as simple as who has "more" and is that "fair". People need to stop worrying about redistributing wealth via welfare, etc., and work on redistributing responsibility, accountability, and providing for opportunity. It's like a bad tasting medicine for force your kids to take because is what's good for them. IMO, fixing the mindset, conduct, and root issues will go a long way toward fixing the problem.

 

[SixNein]

I went to a private college in a very poor state. Many of the students I went to school with were locals that didn't have the money, but with student aid, scholarships, and loans, they were able to attend. They worked at the college, at local eateries, as tutors, etc. to pay what they could. They had “skin in the game”, and they studied like it. There was an equality of opportunity, and that's enough. We can't guarantee success; that is up to the individual.

When there is significant inequality in opportunity, something needs to be done. That doesn't mean the poor get a free ride. You no doubt know the old saying "To whom much is given much is expected". I think most people would tag that as being directed toward the 1%, however, I think it equal applies to the 99%. If we (tax payers) assist in paying for the education of the poor, we have every right to set expectations for performance and conduct. In a financial sense we (the tax payers) are acting (paying) the role of a parent. A parent would "lay down the law" to their kids to get good grades and stay out of trouble if they want the parent to continue to pay their way. I know mine did. I have told my kids the college costs for schools they are looking at run $30k-50k/yr each, and for at least three years both of them will be in college at the same time. I'm not rich, but I make too much to get any significant aid. The total to keep the two of them in college will be $60k-100k/yr, and that is one hell of a bill I have to pay without help. My kids understand the expectations I have for taking on that much debt. With graduate school possible too, I could be in hoc for more than $500k, and I will be paying off college costs for many many years. So, the poor have to have "skin in the game" too, otherwise it’s not fair to those of us that do. As many of my old college friends know, when it's our own money, we tend to work a little harder.

So here’s your equality….. we all get the opportunity to bleed equally to educate ourselves and our children.

Average wages declined over the last decade for those with college degrees.

http://blogs.wsj.com/economics/2011/09/19/only-advanced-degree-holders-see-wage-gains/

At the same time, the cost of education has been increasing. Student loan debt today is huge. And most students will have to pay it off themselves.

 

[russ_watters]

Cherry-picking one-cycle stats is intentionally misleading.

 

[SixNein]

Cherry-picking one-cycle stats is intentionally misleading.

We could exaggerate the data more by considering:

Today's the day that the student debt clock crosses the $1-trillion-dollar mark.

http://www.cbsnews.com/8301-505145_162-57429655/student-debt-clock-strikes-$1-trillion/

Then... add interest.

 

[ThinkToday]

Average wages declined over the last decade for those with college degrees.

http://blogs.wsj.com/economics/2011/09/19/only-advanced-degree-holders-see-wage-gains/

At the same time, the cost of education has been increasing. Student loan debt today is huge. And most students will have to pay it off themselves.

Yes, misleading. You are comparing a % change and not raw dollars. A person with a BS degree earns on average 2.33 times what a person with no HS degree makes.

Unemployment rate Education attained Median weekly earnings
in 2011 (Percent) in 2011 (Dollars)

2.5% Doctoral degree $1,551
2.4 Professional degree 1,665
3.6 Master's degree 1,263
4.9 Bachelor's degree 1,053
6.8 Associate degree 768
8.7 Some college, no degree 719
9.4 High-school diploma 638
14.1 Less than a high school diploma 451

7.6 All Workers 797


Note: Data are for persons age 25 and over. Earnings are for full-time wage and salary workers.

Source: Bureau of Labor Statistics, Current Population Survey.

BLS has some data on the employment status of the civilian noninstitutional population 25 years and over
by educational attainment, sex, race, and Hispanic origin online.

The Census Bureau also has some data on the educational attainment online.

BTW, I borrowed 100% of my grad school funds and paid them off in three years. I chose a degree that pays well, and I made the largest payments I could afford and bought nothing I didn't need.

 

[russ_watters]

At what point would you say we have too much inequality?

I don't know. Could you help me out by providing a logical reason for why such a point should exist? Once I know what I'm looking for, then I can determine where I think it should be.

 

[SixNein]

Yes, misleading. You are comparing a % change and not raw dollars. A person with a BS degree earns on average 2.33 times what a person with no HS degree makes.

And wages are falling faster for the BS. And at the same time, costs are going up.

 

[SixNein]

I don't know. Could you help me out by providing a logical reason for why such a point should exist? Once I know what I'm looking for, then I can determine where I think it should be.

Suppose 99% of Americans were living in utter poverty while 1% lived the lifestyle of kings.

Suppose still that your one of the 1%.

Is inequality a problem?

 

[ThinkToday]

Suppose 99% of Americans were living in utter poverty while 1% lived the lifestyle of kings.

Suppose still that your one of the 1%.

Is inequality a problem?

Lets see, "Last year there were 86 million people who didn't have a job and weren't consistently looking for one, according to Labor Department data." http://money.cnn.com/2012/05/03/news/economy/unemployment-rate/index.htm

86 MILLION weren't consistently looking So, do you think 86 million people have the right to live off the income the rest of us generate WORKING?

 

[SixNein]

Lets see, "Last year there were 86 million people who didn't have a job and weren't consistently looking for one, according to Labor Department data." http://money.cnn.com/2012/05/03/news/economy/unemployment-rate/index.htm

86 MILLION weren't consistently looking So, do you think 86 million people have the right to live off the income the rest of us generate WORKING?

Strawman...

I'm simply asking about how much inequality can be stomached.

 

[ThinkToday]

Strawman...

I'm simply asking about how much inequality can be stomached.

Not so much as your "example" using 99% poverty and 1% rich. You've yet to address the "inequality" from a causal standpoint. e.g. Using my quote; inequality from because 86 million stop looking for work? Inequality because some don't want to spend the time, money, and effort to better themself with an education, incl. HS, college, trade school, etc.?

 

[SixNein]

Not so much as your "example" using 99% poverty and 1% rich. You've yet to address the "inequality" from a causal standpoint. e.g. Using my quote; inequality from because 86 million stop looking for work? Inequality because some don't want to spend the time, money, and effort to better themself with an education, incl. HS, college, trade school, etc.?

I don't think America's high inequality is a result of education; instead, I think it is a result of America's ability to create jobs. America's productivity, wages, and it's ability to create jobs seem to be disconnected. Even if the entire American population were to become highly educated, I think you'd just see more pigeons trying to cram into the same holes.

http://www.huffingtonpost.com/2012/01/31/wages-2011-record-corporate-profits_n_1244297.html

 

[CAC1001]

Strawman...

I'm simply asking about how much inequality can be stomached.

I think any monetary level of inequality can be stomached so long as the rest of society is seeing living conditions improve year-after-year. What causes revolutions is when one group lives off of the oppression of the rest of society.

 

[mheslep]

America clearly has the ability, historically, to create jobs. From '82 to '89 20 million jobs (208 thousand/month average, almost double last month's) were created with an economy a third the size of the current one (nominally) and ~70 million fewer people. The reason the nation is not doing so now must include the current governmental policy.

 

[russ_watters]

Suppose 99% of Americans were living in utter poverty while 1% lived the lifestyle of kings.

Suppose still that your one of the 1%.

Is inequality a problem?

I'm sorry, I was unclear. Let me rephrase: Could you help me out by providing a logical reason based on a factual and relevant starting premise for why such a point should exist? I'm not going to use an ancient Egyptian social structure as a basis for making decisions regarding social structure today!

 

[ParticleGrl]

The issue is one of diminishing returns. If a poor person's income rises by 10%, it will affect their lives greatly. If a rich person's income rises by 100%, it will barely affect them at all. Thus, we could say that though the gap in their incomes increased, their "wealth" gap as a matter of living conditions decreased.

But that's just diminishing marginal utility of money- it was just as true in the 50s as it is today. Also- isn't that an argument for taxation and redistribution?

The contention is that the wealth gap in terms of lifestyle is less severe today than it was in the 50s but that seems to conflict both with the data (increasing income inequality is a stylized fact), and with my own anecdotal experience.

I agree that in SOME ways we are better off today than richer people in the 50s, but that doesn't tell us anything about the wealth gap in each era. Also, in some ways today we are worse off. If I had the chance to be a man with a physics phd in the 50s, I would take it in a heartbeat.

You seem to want to be making the argument 'as long as we are all getting better off with time, inequality is acceptable.' There is probably an argument to be made there, but its a fundamentally different argument than arguing the wealth gap has gotten less severe 'in terms of lifestyle.'

Flipping the issue over, we can say that over a relatively short timeframe (less than a generation), rising income inequality has not created/expanded a barrier to new technologies impacting the lives of all.

But inequality isn't just about new technology- look at things like retirement. It seems like most people in my grandparent's generation were able to retire at some point, and live if not well, than comfortably. Lots of people in my parents generation have had to put that on hold. I'm sure there are lots of people who, given the choice, would take retirement and no ipad to working another 5-10 years and having an ipad.

 

[ParticleGrl]

America clearly has the ability, historically, to create jobs. From '82 to '89 20 million jobs

I'm sure you can find similar creation of jobs during the Clinton presidency. The slump in job creation seems to have started during Bush.

The reason the nation is not doing so now must include the current governmental policy.

Or fed policy, or a different international climate, or completely different population demographics, or some combination of other conditions. There are lots and lots of things different today than in the 80s.

 

[CAC1001]

But that's just diminishing marginal utility of money- it was just as true in the 50s as it is today. Also- isn't that an argument for taxation and redistribution?

Just because a high-earning person doesn't need all of their income doesn't mean that the government has any right to tax it away to spend it on any number of various social programs that politicians conjure up (which may not even work or may make things worse, or could be just giveaways to certain special interests and meant to win votes).

The contention is that the wealth gap in terms of lifestyle is less severe today than it was in the 50s but that seems to conflict both with the data (increasing income inequality is a stylized fact), and with my own anecdotal experience.

I would argue that income inequality is meaningless with regards to the wealth gap in terms of lifestyle. If we go 100 years into the future and we find that even the poor have access to all of the healthcare that today is only available to the wealthy, then regardless of whether income inequality exists, in terms of living standards, the gap is going to be more narrow. Income inequality is just a statistic. It refers to the various income quintiles (it isn't representative of the actual people in those quintiles).

I agree that in SOME ways we are better off today than richer people in the 50s, but that doesn't tell us anything about the wealth gap in each era. Also, in some ways today we are worse off. If I had the chance to be a man with a physics phd in the 50s, I would take it in a heartbeat.

Generally, the farther back you go in history, you find a larger and larger difference in the standard of living between rich and poor. For example, go back to the 1900s and look at the differences in living standards. They were enormous. A rich person could live a very nice home (very nice even by modern standards), have fresh fruit and vegetables, meat, coffee, chocolate, cakes, pastries, leisure time, ability to take a bath if they so desired, music whenever they wanted it (they'd have servants or people hired to play it for them), and so forth. They were still "poor" in that there was no running water back then or electric light, but they got by with gas globe lighting and servants could pump water. Whereas the average person lived without running water, no electric light, bathing was unheard of, fresh fruit, meats, chocolates, coffee, music whenever they wanted it, etc...were all luxuries. Today, pretty much all of these things are available to the masses, and in new variations that were not available to the rich then. So in this sense, the wealth gap has narrowed greatly, as we are now all rich.

I wouldn't argue we are worse off in certain ways so much as certain professions are just worse off now then back then. Right now, we are in the midst of a bad economy (which happens every now and then) due to a major financial crisis that hit the economy.

But inequality isn't just about new technology- look at things like retirement. It seems like most people in my grandparent's generation were able to retire at some point, and live if not well, than comfortably. Lots of people in my parents generation have had to put that on hold. I'm sure there are lots of people who, given the choice, would take retirement and no ipad to working another 5-10 years and having an ipad.

Remember though that historically, most people couldn't retire because there was no Social Security or Medicare. And when Social Security was created, the lifespan of people wasn't much longer than the age you had to be to start receiving Social Security. The idea was that most people would die before they needed it, or die soon after. People of your parent's generation are living longer. Also, if the government hadn't started robbing Social Security, it would probably be a lot more financially sound. A lot of people unfortunately lost their retirement in this financial crisis as well.

For people to be able to retire, unless they are wealthy, they either need to work long enough at a company to receive a pension, which isn't as viable today, and if the firm goes under, the pension can too, or they need to rely on investments in the markets (definitely not a secure way), or they need to rely on the government safety nets (which the government has messed up).

I'm sure you can find similar creation of jobs during the Clinton presidency. The slump in job creation seems to have started during Bush.

The 80s, 90s, and 2000s all benefited from a generally healthy economic climate and bubbles, the problem is that the 2000s bubble really dealt a hard blow to the economy when it popped.

 

[russ_watters]

But that's just diminishing marginal utility of money- it was just as true in the 50s as it is today. Also- isn't that an argument for taxation and redistribution?

No, it's an argument for why the small gains in $ income for the poor are actually bigger in standard of living terms than the big $ gains of the rich. It means that the wealth distribution in pure $s might be getting worse, but the standard of living gap is actually probably narrowing.

Taxation and redistribution can be justified on that basis (hurting one rich person a little helps a lot of poor people a lot -- so we should do it) if one takes a purely utilitarian (and short-sighted) approach to morality, but in the US we believe in individual rights.

The contention is that the wealth gap in terms of lifestyle is less severe today than it was in the 50s but that seems to conflict both with the data (increasing income inequality is a stylized fact)...

I'm not clear on what you mean by that. Are you saying the income data is adjusted to account for standard of living in a way that appropriately shapes the curve? It isn't - it is adjusted in a fixed constant. Ie, it says that something twice the price of something else is twice as good. Adjusting for value on a sliding scale would be extremely difficult.

I agree that in SOME ways we are better off today than richer people in the 50s, but that doesn't tell us anything about the wealth gap in each era.

Correct: It doesn't tell us how the wealth gap has changed. What it does is it invalidates the concept of a trackable wealth gap over time.

Also, in some ways today we are worse off. If I had the chance to be a man with a physics phd in the 50s, I would take it in a heartbeat.

Fair enough, but from talking to you for a while I get the feeling your feeling of worth is mostly wrapped up in you professional identity. That's great/not materialistic, but it doesn't have anything whatsoever to do with wealth.

You seem to want to be making the argument 'as long as we are all getting better off with time, inequality is acceptable.'

That is exactly my point, but looking back at the OP, there is a follow-up: the fact that most everyone is getting better off over time is probably the reason why social unrest is actually decreasing, contrary to the popular claim that it is increasing.

I don't want to go off topic, but there is another inequality issue related to the other two, which is: inequality is almost certainly a necessity of economic development. In other words, inequality causes everyone to be better off. This isn't necessarily easy to prove because there are so many examples that are so different from each other, but there are some telling examples, such as China, whose spectacular drop in poverty rate over the last 30 years or so has been accompanied by an increase in inequality. Correlation does not always equal causation, but I think in China's case there is a good argument to be made: Increased freedom causes increased inequality causes increased standard of living for virtually everyone.

But inequality isn't just about new technology- look at things like retirement. It seems like most people in my grandparent's generation were able to retire at some point, and live if not well, than comfortably. Lots of people in my parents generation have had to put that on hold. I'm sure there are lots of people who, given the choice, would take retirement and no ipad to working another 5-10 years and having an ipad.

Retirement funding is certainly a big problem, but I think you are reading it backwards: It is because of increased standard of living that retirement has gotten more expensive. Specifically, it is because people are healthier and living longer.

 

[CAC1001]

I don't want to go off topic, but there is another inequality issue related to the other two, which is: inequality is almost certainly a necessity of economic development. In other words, inequality causes everyone to be better off. This isn't necessarily easy to prove because there are so many examples that are so different from each other, but there are some telling examples, such as China, whose spectacular drop in poverty rate over the last 30 years or so has been accompanied by an increase in inequality. Correlation does not always equal causation, but I think in China's case there is a good argument to be made: Increased freedom causes increased inequality causes increased standard of living for virtually everyone.

IMO there's two types of inequality here, monetary and standard of living. Many confuse monetary inequality as also representing standard of living inequality, but it doesn't. Monetary inequality can grow while standard of living inequality decreases.

 

[SixNein]

I'm sorry, I was unclear. Let me rephrase: Could you help me out by providing a logical reason based on a factual and relevant starting premise for why such a point should exist? I'm not going to use an ancient Egyptian social structure as a basis for making decisions regarding social structure today!

I think the inequality we have today is a result of the lack of available jobs. We don't have enough job creation to create enough scarcity in the labor markets to get wages moving. The economy has been hemorrhaging job creation ability due to automation, globalization, and other factors. So the labor markets are ending up more and more saturated as more and more workers are being displaced. And quite frankly, automation is going to continue to climb up the corporate ladder and so is globalization.

See I don't think our inequality is structural. Education may help spread the saturation of the labor market, and it may help some, but I don't think it will solve the problem. In general, I think we have crossed an equilibrium were we simply don't need everyone in our economy. Technology is wiping out the need for a segment of the population.