What is the Impact of Income Inequality on Social Problems?

[madness]

There was a thread a while back where I claimed that inequality is more important than poverty when it comes to crime and other social problems. I don't think anybody agreed with me. Anyway, I found an interesting link with information about it:
http://image.guardian.co.uk/sys-files/Guardian/documents/2009/03/13/inequality.pdf

It shows that the US has the highest income inequality in the free world and has the most prisoners, obese people, depressed people and teen pregnancies per population. There is a strong correlation shown across all countries included between income inequality and the above quantities. The study also claims that the wealth of the country has little bearing on these.

 

[Astronuc]

I don't know how well controlled that study would be.

I suspect it has to do with the standard of living of those in the middle or bottom.

Interestingly - http://www.commondreams.org/view/2010/02/19-5

http://karws.gso.uri.edu/jfk/conspiracy_theory/the_paranoid_mentality/the_paranoid_style.html

 

[madness]

Well it compares the top fifth with the bottom fifth. Most of the statistics seem quite objective - e.g. income, prison population, homicide rate, infant death rate ...

 

[Skyhunter]

The Obama administration reversed a Bush policy of not allowing the release of statistical data about the top 400 incomes.

http://www.tax.com/taxcom/features.nsf/5379826c02267cd485257173000d68e0/0dec0eaa7e4d7a2b852576cd00714692/$FILE/Chart-1.pdf"

The rich keep getting richer because they control the game.

The Republican party is a wholly owned subsidiary and the Democrats are negotiating a buyout.

 

[russ_watters]

There was a thread a while back where I claimed that inequality is more important than poverty when it comes to crime and other social problems. I don't think anybody agreed with me.

I certainly don't.

Anyway, I found an interesting link with information about it:
http://image.guardian.co.uk/sys-files/Guardian/documents/2009/03/13/inequality.pdf

It shows that the US has the highest income inequality in the free world and has the most prisoners, obese people, depressed people and teen pregnancies per population. There is a strong correlation shown across all countries included between income inequality and the above quantities. The study also claims that the wealth of the country has little bearing on these.

That probably has more to do with the shape of the curve at the bottom than the difference between the bottom and the top. Eurpoean countries have more socialism than the US, which props up the bottom. If Bill Gates and Warren Buffett move to England, it won't change the amount of crime or amount of money the lower end has.

Also, it is tough to compare countries that all have a very high level of development. The signal to noise ratio in the data is very low because the differences are small.

The usual case study on income inequality and development is China, which has seen its income inequality rise recently while its poverty has dropped dramatically. Some numbers...

Page 17, China's GDP more than doubled from 1989-1999: http://globetrotter.berkeley.edu/macarthur/inequality/papers/PikettyQian2004.pdf

Page 38, from 1991-2000, China's gini went from .37 to .44: https://www.msu.edu/~gilesj/BBGW.pdf

A quote from that one:

Second, in urban China, absolute living standards have risen so much that even with rising
inequality, most of the poverty (or “low income,” more accurately) has been eliminated, at least if
someone uses a “reasonable” benchmark. In rural China, significant gains in income growth during the
late 1970s and early 1980s resulting from the introduction of HRS pulled tens of millions out of poverty.
Further reductions occurred through the early-to-mid 1990s, but there was deterioration the last half of the
1990s, that may have reversed in only the last year or two.

Page 9, the poverty rate in China dropped from 11.6 in 1989 to 3.4 in 1999 (note, they use a vastly lower poverty line than we do): http://www.nscb.gov.ph/poverty/conference/papers/4_poverty statistics in china.pdf

 

[russ_watters]

The rich keep getting richer because they control the game.

Interesting. The poor don't control the game - how have they kept getting richer? Are the rich pulling the poor up?

The Obama administration reversed a Bush policy of not allowing the release of statistical data about the top 400 incomes.

Here it is.

That doesn't make any sense at all - the top 400 Americans only make an average of around $400k? That must be an order of magnitude (or more!) too low. Baseball's league minimum is $400k and football's is $300k. I bet there's more than 400 people in those two groups alone.

 

[Pengwuino]

That doesn't make any sense at all - the top 400 Americans only make an average of around $400k? That must be an order of magnitude (or more!) too low. Baseball's league minimum is $400k and football's is $300k. I bet there's more than 400 people in those two groups alone.

The chart is done in 1000's of dollars. Odd... not sure why they didn't just say millions. In any case, 400 people to show something about 300 million?

 

[madness]

I certainly don't. That probably has more to do with the shape of the curve at the bottom than the difference between the bottom and the top. Eurpoean countries have more socialism than the US, which props up the bottom.

"Propping up" the bottom is what reduces the inequality - they are propped up by taxes from those at the top. The fact that European countries have more socialism is the reason they have less inequality, it's not a separate complicating factor.

Also, it is tough to compare countries that all have a very high level of development. The signal to noise ratio in the data is very low because the differences are small.

Did you look at the graphs? They are all developed countries and the trend is very clear. On pretty much every issue the US is out on its own with a big gap to the next worst.

The usual case study on income inequality and development is China, which has seen its income inequality rise recently while its poverty has dropped dramatically. Some numbers...

Page 17, China's GDP more than doubled from 1989-1999: http://globetrotter.berkeley.edu/macarthur/inequality/papers/PikettyQian2004.pdf

Page 38, from 1991-2000, China's gini went from .37 to .44: https://www.msu.edu/~gilesj/BBGW.pdf

A quote from that one:

Page 9, the poverty rate in China dropped from 11.6 in 1989 to 3.4 in 1999 (note, they use a vastly lower poverty line than we do): http://www.nscb.gov.ph/poverty/conference/papers/4_poverty statistics in china.pdf

The article is not about income equality and its link to poverty. It's about whether income inequality or poverty are responsible for a variety of social problems. And the study shows that it is income inequality that is responsible.

 

[Skyhunter]

Interesting. The poor don't control the game - how have they kept getting richer? Are the rich pulling the poor up?

The short answer is, they're not. Two thirds of the wealth generated by economic growth goes to the top 1%. That leaves the smallest slice for the other 99%.

However that should change since historically the poor fair much better under democratic administrations.

That doesn't make any sense at all - the top 400 Americans only make an average of around $400k? That must be an order of magnitude (or more!) too low. Baseball's league minimum is $400k and football's is $300k. I bet there's more than 400 people in those two groups alone.

The figures are in 1000's of dollars, the average top 400 incomes in 2007 were $344,759,000.

 

[CRGreathouse]

Interesting. The poor don't control the game - how have they kept getting richer? Are the rich pulling the poor up?.

The short answer is, they're not. Two thirds of the wealth generated by economic growth goes to the top 1%.

Skyhunter, these sentences appear to be contradictory. Would you clarify?

 

[russ_watters]

The chart is done in 1000's of dollars. Odd... not sure why they didn't just say millions. In any case, 400 people to show something about 300 million?

Ooops...that was dumb.

 

[russ_watters]

The short answer is, they're not.

They're not what? The rich aren't pulling up the poor? Then how exactly are the poor getting richer? You do know that the poor are getting richer (historically), right? I mean we've probably discussed it a dozen times a year for the past 5 years. By now, you must know where to find the income data that shows it, right?

Two thirds of the wealth generated by economic growth goes to the top 1%. That leaves the smallest slice for the other 99%.

You do realize that that has nothing at all to do with the issue (fact) of if the poor are getting richer, right?

Skyhunter, these sentences appear to be contradictory. Would you clarify?

It's not that they are contradictory, they just don't have anything to do with each other. It's a red herring argument tactic: trying to make an argument that one thing is bad by saying something else bad is related to it - even though it really isn't.

 

[Al68]

There was a thread a while back where I claimed that inequality is more important than poverty when it comes to crime and other social problems. I don't think anybody agreed with me. Anyway, I found an interesting link with information about it:
http://image.guardian.co.uk/sys-files/Guardian/documents/2009/03/13/inequality.pdf

It shows that the US has the highest income inequality in the free world and has the most prisoners, obese people, depressed people and teen pregnancies per population. There is a strong correlation shown across all countries included between income inequality and the above quantities. The study also claims that the wealth of the country has little bearing on these.

I don't find this surprising at all. Wealth envy is rampant and promoted by many politicians to stir up hatred and gain power.

And the fact that the poor today are much better off than the middle class of a few decades ago is less important to some than the unimportant fact that rich people have more "dollars", despite the fact that those "dollars" of the rich simply do not represent buying power that could theoretically be transferred to the poor. It only works that way in the propaganda of the power hungry and the minds of those that don't know any better, not in reality.

And it seems obvious to me that one can't advocate the use of force to "redistribute wealth" and simultaneously claim that theft and robbery are inherently wrong, independently of their illegality.

 

[Skyhunter]

Skyhunter, these sentences appear to be contradictory. Would you clarify?

The poor are not getting richer. Their share of American wealth is getting smaller and smaller. While the cost of living keeps getting higher and higher. The vast majority of all created wealth goes to the top 1%. The Trickle down theory of economics does not work for the poor.

Beginning with Reagonomincs, the percentage of the population living in poverty here in America stopped declining, and started growing. In 1993 under Clinton it began to decline again. Enter Bush and rates once more begin to rise.

Bottom line, historically Republican economic policy promotes poverty.

 

[BoomBoom]

Then how exactly are the poor getting richer?

Depends on how you measure "poor"...the slice they get is as small as ever.

So how do you think the rich get rich? Where do you think all their money originates from?
As a percentage of income, I'm quite sure the poor contribute much more to the rich than vice-versa.

The rich "pulling up the poor" is just as ridiculous a concept as "trickle down".

 

[drankin]

The poor are not getting richer. Their share of American wealth is getting smaller and smaller. While the cost of living keeps getting higher and higher. The vast majority of all created wealth goes to the top 1%. The Trickle down theory of economics does not work for the poor.

Beginning with Reagonomincs, the percentage of the population living in poverty here in America stopped declining, and started growing. In 1993 under Clinton it began to decline again. Enter Bush and rates once more begin to rise.

Have you spent any time in a third world country? The poor in America are only poor in comparison to other Americans. They are rich in comparison to the poor in most parts of the world. Not only are the poor here well fed, they have the most opportunity to not be poor if they so choose.

Bottom line, historically Republican economic policy promotes poverty.

I'm not one to promote a political party but doesn't welfare in its current form, typically championed by the Dems, promote poverty?

 

[mheslep]

There was a thread a while back where I claimed that inequality is more important than poverty when it comes to crime and other social problems. I don't think anybody agreed with me. Anyway, I found an interesting link with information about it:
http://image.guardian.co.uk/sys-files/Guardian/documents/2009/03/13/inequality.pdf

It shows that the US has the highest income inequality in the free world and has the most prisoners, obese people, depressed people and teen pregnancies per population. There is a strong correlation shown across all countries included between income inequality and the above quantities. The study also claims that the wealth of the country has little bearing on these.

There is likely a strong correlation about several factors and those social ills. Heterogenous populations are the first that come to my mind. The US is big melting pot, Japan has a relatively homogeneous population with nil immigration.

 

[mheslep]

The poor are not getting richer.

Yes they are. The stats have been shown several times in these forums. The case of China since the onset of free markets there was posted above.

Their share of American wealth is getting smaller and smaller. While the cost of living keeps getting higher and higher.

Maybe, though I doubt it, but that doesn't mean the poor are worse off. The pie is growing, and the poor have an increasing standard of living in the US.

 

[russ_watters]

Skyhunter, you need to cite data to support your claim that the poor are getting poorer or retract the claim. It is factually wrong and you've participated in this discussion enough times for you to know it.

 

[rewebster]

http://upload.wikimedia.org/wikipedia/en/2/2e/BeforetaxfamilyincomemedianUS1989-2004.gif

http://en.wikipedia.org/wiki/File:BeforetaxfamilyincomemedianUS1989-2004.gif

 

[Vanadium 50]

Also, suppose we start with Skyhunter's table, and took all of the increase from 1992 to 2009 among the 400 richest people, and redistributed it to the people in the last column. Then instead of having an increase of income of 13.5%, it would be 13.9%.

So, while one might get a sense of moral outrage at how much money these people have, from a practical point of view, it makes little difference to the purchasing power of everyone else.

 

[mheslep]

http://upload.wikimedia.org/wikipedia/en/2/2e/BeforetaxfamilyincomemedianUS1989-2004.gif

http://en.wikipedia.org/wiki/File:BeforetaxfamilyincomemedianUS1989-2004.gif

Thanks for referencing rewebster.

A couple things to keep in mind for this plot are that a) it's by family not per capita; family size has been changing in the US, and b) it tracks statistical quartiles, not individuals. Individuals can move in and out of those groups. In the US a large chunk of the population growth is from immigration http://en.wikipedia.org/wiki/Immigration_to_the_United_States#Demographics", i.e. people continually entering the bottom quartile.

 

[rewebster]

http://mises.org/images2/CardenChart.gif


http://mises.org/daily/1229


I'll still look for something more recent



http://www.demos.org/inequality/images/charts/changesrealfamily7905_thumb.gif

http://o-k.newsvine.com/_news/2008/...r-bill-the-way-we-pay-our-taxes-its-like-this


"not individuals"---if you start putting specific parameters on, then, of course, it will be different---should I look for one that includes individuals in families that have dogs?

 

[mheslep]

It occurs to me that there the US needs more super rich. Ever since Andrew Carnegie's essays on philanthropy and his subsequent actions, it has become SOP for the super rich to give away most of their income. The so-so rich don't seem to do as much by percentage. That is, if one wants http://en.wikipedia.org/wiki/Carnegie_library" built around the US in 1910, one needs an Andrew Carnegie or a Bill Gates. I expect it is much more difficult to do the same with ten thousand so-so rich.

 

[Al68]

The Trickle down theory of economics does not work for the poor.

Can you provide any evidence that any politician ever advocated this "trickle down theory of economics" or that there even ever was such a thing except in the delusional minds of Democrats?

 

[rewebster]

http://avbp.net/assets/images/poor_poorer.jpg

"In fact, since the 1800s there has been a rapid expansion in the number of poor people on the Earth, both in sheer numbers and percentage (read unable to purchase acceptable living standard) "


http://porena.blogspot.com/2005_10_01_archive.html

 

[rewebster]

Can you provide any evidence that any politician ever advocated this "trickle down theory of economics" or that there even ever was such a thing except in the delusional minds of Democrats?

have you looked?

 

[mheslep]

"not individuals"---if you start putting specific parameters on, then, of course, it will be different---should I look for one that includes individuals in families that have dogs?

Just look for 'per capita' income statistics. Seventy years ago the family income pool might have included Papa Walton, Grandpa Walton, Uncle Walton, Aunt Walton, John Boy Walton. Now its just Ma and Pa, or maybe just Pa, so the 'family income' with other conditions unchanged shrinks.

 

[rewebster]

Just look for 'per capita' income statistics.

why?---I think what was posted is good enough for me.

here's more though:

http://en.wikipedia.org/wiki/Income_distribution_of_the_United_States

 

[DavidSnider]

Can you provide any evidence that any politician ever advocated this "trickle down theory of economics" or that there even ever was such a thing except in the delusional minds of Democrats?

http://www.theatlantic.com/doc/198112/david-stockman/5

Yes, Stockman conceded, when one stripped away the new rhetoric emphasizing across-the-board cuts, the supply-side theory was really new clothes for the unpopular doctrine of the old Republican orthodoxy. "It's kind of hard to sell 'trickle down,'" he explained, "so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory.

 

[rewebster]

It occurs to me that there the US needs more super rich. Ever since Andrew Carnegie's essays on philanthropy and his subsequent actions, it has become SOP for the super rich to give away most of their income. The so-so rich don't seem to do as much by percentage. That is, if one wants http://en.wikipedia.org/wiki/Carnegie_library" built around the US in 1910, one needs an Andrew Carnegie or a Bill Gates. I expect it is much more difficult to do the same with ten thousand so-so rich.

so, you think that we should have 50 really rich people controlling 300,000,000 living in poverty, with the hope that those 50 may have a change of heart sometime in their life? or...

 

[Al68]

Can you provide any evidence that any politician ever advocated this "trickle down theory of economics" or that there even ever was such a thing except in the delusional minds of Democrats?

have you looked?

I didn't make the claim. I have, however only heard the phrase used by those who advocate higher taxes and government control of the economy.

Can you provide any evidence that any politician ever advocated this "trickle down theory of economics" or that there even ever was such a thing except in the delusional minds of Democrats?

http://www.theatlantic.com/doc/198112/david-stockman/5

LOL. Nice propaganda piece. A story about someone against supply side economics claiming it's the same as "trickle down".

The fundamental problem with "trickle down economics" claims are the absurd claims about how government originally has the cash, gives it to the rich so it will trickle down. That's not only absurd, but just delusional logic.

It's not worthy of discussion among those over ten years old and an IQ above 65.

 

[rewebster]

I didn't make the claim. I have, however only heard the phrase used by those who advocate higher taxes and government control of the economy.LOL. Nice propaganda piece. A story about someone against supply side economics claiming it's the same as "trickle down".

The fundamental problem with "trickle down economics" claims are the absurd claims about how government originally has the cash, gives it to the rich so it will trickle down. That's not only absurd, but just delusional logic.

It's not worthy of discussion among those over ten years old and an IQ above 65.

its Reaganomics (the republican plan of the period)

http://en.wikipedia.org/wiki/Reaganomics

 

[mheslep]

so, you think that we should have 50 really rich people controlling 300,000,000 living in poverty, with the hope that those 50 may have a change of heart sometime in their life? or...

The US doesn't have 300m living in poverty, and I don't accept that 50 such people like Bill Gates or Warren Buffet 'control' the poor, nor even spend much time worrying about how they might do so. I don't accept they need a change of heart before doing philanthropy. If the poor are controlled by anyone, it is government fiats.

 

[mheslep]

why?---I think what was posted is good enough for me.

As you like. I thought you were asking for other ways to measure the issue.