What is the Impact of Income Inequality on Social Problems?

[russ_watters]

Zantra:

1. Education is only a pathway to richness if only a LIMITED number has the same education and expertise as yourself.

If everyone became qualified engineers, engineer salaries would plummet.

No doubt, that is partially true. But that hypothetical situation you describe does not exist. Today, in the real world, if a person chooses to get the education the government provides, their income is all but certain to be higher than if they don't.

And I say it is only partially true because with better education comes better social responsibility. A janitor becomes a better janitor, and so on up the line. As a result, the overall productivity of the workforce rises and the median gets boosted.

Based on that, I'm not sure it really is possible for the populace to become too educated - but let's deal with that "happy problem" (as my dad would call it) when we get to it.

2. For those who do not have the ABILITY to become highly proficient in academic lines of work, higher education IS a
waste of time, and their choice of not pursuing such a career is a RATIONAL choice, not a bad one.

"Higher" education refers to education above high school. We're not talking about "higher" education, we are talking about the free, government provided primary education. A high school diploma.

4. And many lazy people are perfectly aware of that they are lazy, and do not blame others for their own lack of material resources. Many lazy people simply don't care about acquiring material riches, and find meaning elsewhere. And nobody should denigrate them for making THOSE choices, either.

The question was just about whether someone chooses to be poor, but yes if someone is happy with that choice, then fine. But people here are complaining about the issue - and in any case, I rather suspect most poor people would prefer not to be.

 

[russ_watters]

So it's wealth redistribution if rich people are taxed more than poor and the money put into public services (this is where the money goes in current socialist countries), but it's not wealth redistribution if the poor are taxed more than the rich?

Sure it is - but one of those things happens and the other doesn't!

The part where it says "The wealth of nations has little bearing on the list of social evils examined. But in (almost) every case there is a link with inequality.". The point of the article is that all of the countries mentioned are less wealthy than the US, yet have less social problems - the problems are scaling with income inequality, not with poverty.

"The wealth of nations" refers to the average, which makes the US "wealthy". But the US also has a relatively high poverty rate. So the two statistics are not compatible as you are suggesting. That was the point of my "the shape of the curve" discussion.

You can't expect all these problems to go with an exact linear fit. There are multiple factors involved. In any case, the overall trend is very clear.

Not even any fit at all, is the problem.

I agree that it is possible for a poor person to become rich, that's not my point. Poor people are statistically likely to stay poor and rich people are likely to stay rich. This is reason enough to argue that they don't have equal opportunities. If a baby is born into a rich or poor family, statistically they will remain poor or rich.

[separate post]If you take someone born into a poor background and someone born into a rich background, then with no other information about the person you could guess whether they will go to college, whether they will get a high paying job, whether they will get addicted to drugs or go to jail, and statistically you would guess right (assuming you have knowledge of the statistics). There may be theoretical "opportunities" available to everyone, but their statistical opportunities are more important, and they are not at all equal.

There's no logic in that conclusion and it doesn't address the issue anyway. The fact of what they do doesn't provide a discussion of what they can do. It doesn't tell you why the poor stay poor. And the answer is, by and large, that people follow the lead of their parents. Whether it is following the same religion their parents did and watching the same sports teams, people do what their parents did. And that applies to having unprotected sex as a teenager (leading to teen pregnancy) and not attempting to take advantage of your education. On the other end, for me it was always expected/assumed I would go to college. My parents would have never accepted anything less. If I hadn't graduated high schoo? They'd have kicked me out of the house for sure.

 

[russ_watters]

For discussion of inflation calculations see http://www.shadowstats.com/

Also see inflation numbers published by the World Bank versus the numbers published by the U.S. Federal Government. Also see the inflation numbers published by the Columbia University School of Business versus the other two sets of numbers.

Evo should have said, post a reliable source. That site is basically a conspiracy theory site and they are manufacturing the statistics, as it clearly says in the discription of the second graph: "The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994..."

If I make a website that says the opposite and looks just as pretty, would that provide a dilema for you?

 

[TheStatutoryApe]

http://www.ted.com/index.php/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen.html

This has been posted here before. A good talk regarding world poverty, wealth, ect. and associated statistics.

 

[edpell]

second source for pre-Clinton CPI

http://www.gold-eagle.com/gold_digest_08/taylor061208.html

"The chart on your left shows the Official CPI in red. The blue “Alternate CPI” was calculated by economist Walter Williams, who simply applied the same methods of CPI calculation as was used pre-Clinton. Note that the existing CPI using pre-Clinton methodology is already close to 12%. By contrast, the “official” government number is only 4%."

if you do not like these sources can you post a source?

 

[russ_watters]

The Gov't has established standards. I think a good starting point in this discussion may be families eligible for the Earned Income Credit.

Could you explain why you think that is a relevant statistic?

 

[edpell]

as it clearly says in the discription of the second graph

I am referring to the first graph. You keep talking about the second graph. Apples and Oranges. What do you not like about the first graph? What source or string of reasoning leads you to conclude they are lying? Just not liking the answer is not proof of is falsehood. Do you have a reference? Please include your reference.

 

[edpell]

If I make a website that says the opposite and looks just as pretty, would that provide a dilema for you?

No. Please feel free to make any websites you desire.

 

[russ_watters]

I don't recall mentioning taxes...I meant they contribute a large portion of their income to the rich.

You're right, I misread, sorry...here was that original quote:

As a percentage of income, I'm quite sure the poor contribute much more to the rich than vice-versa.

Ok...frankly, I'm not even sure what that means. Contribute what? Money? How do the poor contribute money to the rich? Do you mean by buying products that make the owners of companies rich? Well sure, but at the same time the owners of those companies are paying their employees and the employees are giving the owners their time. What that says or what you can measure from that, I really don't know. So I really can't see anything useful/measurable in your comment.

Those who struggle to make ends meet generally pay much more for everything they buy. They pay much higher interest rates and they pay many fees, dues, or penalties.

Gokul posted a link in another thread that disputes that first sentence, but the second one is certainly true, which may affect that first one. Yes, banks and credit card companies and mortgage companies must charge the poor more - because they have to protect against defaults. The current financial crisis shows that the risk is real and that that's a necessity.

But there is such a thing as going too far:

Not to mention the companies that prey on them like vultures such as check cashing institutions.

Certainly credit card companies are getting out of hand. Regulations are starting to change that. I'm not really seeing how that's relevant, though, because of what I said above. Anyway...

This stuff amounts to many billions of dollars every year that go straight to the 'rich folk'.

I'm in the 4th income bracket and carry relatively small (for me) balances on a couple of credit cards and one has a 30% interest rate because I accidentally missed a payment like two years ago.

And "straight to the rich folk"? Banks are businesses like any other. Why this attitude about the banks? Do you see the money you spend at the supermarket or the electronics store as going "straight to the rich folk"?

Heck, just last year alone, the banks made almost $40 billion from just overdraft fees alone. I think it is safe to assume that most of this money came from people who are struggling...
http://www.washingtonpost.com/wp-dyn/content/article/2009/09/20/AR2009092002879.html"

Perhaps they are excessive - I don't know - but you do at least acknowledge they are necessary, right?

In any case, I don't see how that makes your original statement useful. As I alluded to above, one could easily say all of the money the poor have comes 'straight from the rich folk'. It's true but no more or less useful than your "straight to the rich folk" comment.

 

[Gokul43201]

Nothing is a word that is equivalent to the number zero it is data and it is facutal (I gave a reference). It can't possibly be elitist.

[coloring mine] Where is the reference? I don't see it.

 

[madness]

There's no logic in that conclusion and it doesn't address the issue anyway. The fact of what they do doesn't provide a discussion of what they can do. It doesn't tell you why the poor stay poor. And the answer is, by and large, that people follow the lead of their parents. Whether it is following the same religion their parents did and watching the same sports teams, people do what their parents did. And that applies to having unprotected sex as a teenager (leading to teen pregnancy) and not attempting to take advantage of your education. On the other end, for me it was always expected/assumed I would go to college. My parents would have never accepted anything less. If I hadn't graduated high schoo? They'd have kicked me out of the house for sure.

Yes but my point is that you can't blame someone who hasn't been born yet for what background they will be born in, leading statistically to what kind of life they will lead. I don't think it's fair to claim that people are born with equal chances of success in this kind of a society.

 

[russ_watters]

[coloring mine] Where is the reference? I don't see it.

Sorry, must have been another thread. I know I posted this within the past few days:

An astonishing 43.4 percent of Americans now pay zero or negative federal income taxes.

http://www.cbsnews.com/stories/2009/04/15/politics/otherpeoplesmoney/main4945874.shtml

 

[russ_watters]

No. Please feel free to make any websites you desire.

So then really, you'll just believe whatever you want, regardless of the data that exists that doesn't fit your claim? And you'll believe data that does fit your point of view, regardless of the source? How can you even believe you have an informed opinion?

I am referring to the first graph. You keep talking about the second graph. Apples and Oranges. What do you not like about the first graph? What source or string of reasoning leads you to conclude they are lying? Just not liking the answer is not proof of is falsehood. Do you have a reference? Please include your reference.

It is discussed in more detail in your other thread, but the point was me being a moderator and saying that your source is unacceptable: it is a single individual's personal website (for the purpose of that post), he has acknowledged manufacturing the data himself(whether he believes his adjustments are reasonable or not, he is the one who generated the data). Searching his website (again, discussed in your other thread) shows he manufactured the data for that graph too.

And again, I've done your work for you: it is your claim and your source, so your burden of proof. As far as theoretical reliability goes (based on the type of source), it couldn't possibly be any worse: a single individual's website where he takes government data and applies his own, non-peer-reviewed corrections.

 

[russ_watters]

Yes but my point is that you can't blame someone who hasn't been born yet for what background they will be born in, leading statistically to what kind of life they will lead.

Yeah, you really can blame someone for not taking advantage of what is given to them. It isn't anyone's fault for being born into poverty, but is usually their fault for staying.

I don't think it's fair to claim that people are born with equal chances of success in this kind of a society.

Just to be clear, I'm not sure what you mean by "success" - what I claimed is merely that nearly anyone can get out of poverty just by getting a high school diploma.

Heck, it is so critical, I think there should be penalties for kids and parents for not finishing high school.

 

[madness]

Yeah, you really can blame someone for not taking advantage of what is given to them. It isn't anyone's fault for being born into poverty, but is usually their fault for staying. Just to be clear, I'm not sure what you mean by "success" - what I claimed is merely that nearly anyone can get out of poverty just by getting a high school diploma.

But their chances of staying in poverty (whether they will "take advantage of what is given to them") are determined statistically before they are born. Unless you think that poor people are innately different from rich people (ie are born different), then it is not their fault that they stay in poverty.

 

[rewebster]

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.

my, my, my...

what a long way this thread has come and all of the diverting sub-areas discussed from this first post (like the 'poor are getting poorer')...

I think its amazing the way that statistics can be used and interpreted (which is often done by politicians to muster their own agendas).

Income inequality from one of our favorite sources:

"While there seems to be consensus among social scientists that some degree of income inequality is needed, the extent of income inequality and its implications on society continue to be a subject of great debate, as they have been for over a century.[3] The majority of social scientists believe that income inequality currently poses a problem for American society with Alan Greenspan stating it to be a "very disturbing trend."[4][5]

Meanwhile, other, mostly conservative social scientists argue that income inequality is mainly the result of more workers in the average household and their age and education, and that the disappearance of the middle class is more statistical than real[6]"

"Gross annual household income does not, however, always accurately reflect standard of living or socio-economic status, as it does not consider household size.[33] Therefore, a large household in the upper quintile may have a lower standard of living than a small household in the fourth quintile. Similarly an upper middle class household with one income earners may have a lower gross annual household income than a lower middle class household with two income earners.[14]"

"On average, women are less willing to travel or relocate, take more hours off and work fewer hours, and choose college majors that lead to lower paying jobs. Women are also more likely to work for governments or non-profits, that pay less than the private sector.[54][55]"


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

a very interesting article...

One thing (of the many) I got out of it is :

"Income inequality has many causes, some of which are relatively clear, others which remain unknown and yet others which remain disputed. All societies feature some income inequality as the positions people hold in these societies vary in responsibility, importance and complexity. In order to provide sufficient incentive for a wide variety of occupations to be filled with motivated incumbents societies need to provide a variety of rewards.[46]"
=======================================
I just noticed I got an "infraction" for trolling--hmmm...

 

[russ_watters]

But their chances of staying in poverty (whether they will "take advantage of what is given to them") are determined statistically before they are born. Unless you think that poor people are innately different from rich people (ie are born different), then it is not their fault that they stay in poverty.

No I don't think poor people are innately different - I explained the problem: Culture/upbringing. What logical reason can you provide to connect the statistical likelihood with the lack of choice? Its like saying that since 9 of 10 people enjoyed a movie, you have no choice but to enjoy it to.

 

[madness]

No I don't think poor people are innately different - I explained the problem: Culture/upbringing. What logical reason can you provide to connect the statistical likelihood with the lack of choice? Its like saying that since 9 of 10 people enjoyed a movie, you have no choice but to enjoy it to.

Yes, it's mostly to do with culture and upbringing - in more extreme cases, people may have drug addicts as parents etc. My point was that the choices you are likely to make is determined by your upbringing. We can still attempt to improve the social and economic standards these people are born into to make society more equal.

 

[Evo]

For discussion of inflation calculations see Edit: removed unacceptable source

Also see inflation numbers published by the World Bank versus the numbers published by the U.S. Federal Government. Also see the inflation numbers published by the Columbia University School of Business versus the other two sets of numbers.

That source is not acceptable. Sources need to be well known and mainstream.

 

[rewebster]

That source is not acceptable. Sources need to be well known and mainstream.

Is the source/link in post #1 also 'not acceptable'? if it is, then isn't this whole thread?

The thread seemed like a discussion rather than trying to be a 'scientifically correct in every aspect' paper.

Russ,

I don't quite understand still why you gave me a 3 point infraction--

--is it for making a personal comment (as it seemed almost everyone made some kind of a personal comment), or do links now have to be pre-approved in some way?



edit: The reason I bring these things up is that more than a few percentage of threads that are similar, and contain similar posts.

 

[mheslep]

second source for pre-Clinton CPI

http://www.gold-eagle.com/gold_digest_08/taylor061208.html

"The chart on your left shows the Official CPI in red. The blue “Alternate CPI” was calculated by economist Walter Williams, who simply applied the same methods of CPI calculation as was used pre-Clinton. Note that the existing CPI using pre-Clinton methodology is already close to 12%. By contrast, the “official” government number is only 4%."

if you do not like these sources can you post a source?

That site is authored by a guy hawking gold. That doesn't mean the sources the gold-guy references are bogus, but if you really want to know what is behind the alternate CPI story, why not follow up by searching for the actual data and basis for the calculations by W. Williams the economist.

 

[CRGreathouse]

Let's discuss CPI on the CPI thread, and income inequality here.

 

[WhoWee]

Please post the sources for your post so everyone can be on the same page.

Sorry for the delay in responding.

The Earned Income Credit is described on the IRS website.
http://www.irs.gov/individuals/article/0,,id=96406,00.html
http://www.irs.gov/individuals/article/0,,id=96466,00.html

"The Earned Income Tax Credit or the EITC is a refundable federal income tax credit for low to moderate income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to have a filing requirement.

The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments."

...and in this PDF
http://www.irs.gov/pub/irs-pdf/p596.pdf

Some rules
"2009 Tax Year

New for tax year 2009: The amount of EITC increased for workers with a third qualifying child* and the rules changed for determining who is a qualifying child.

Earned Income and adjusted gross income (AGI) must each be less than:

*
$43,279 ($48,279 married filing jointly) with three or more qualifying children
*
$40,295 ($45,295 married filing jointly) with two qualifying children
*
$35,463 ($40,463 married filing jointly) with one qualifying child
*
$13,440 ($18,440 married filing jointly) with no qualifying children

Tax Year 2009 maximum credit:

*
$5,657 with three or more qualifying children
*
$5,028 with two qualifying children
*
$3,043 with one qualifying child
*
$457 with no qualifying children

The Fostering Connections to Success and Increasing Adoptions Act of 2008 changed the uniform definition of a child. Now, a "qualifying child" must:

* Be younger than the taxpayer claiming that child unless the child is disabled and
* Not have filed a joint return except to claim a refund

It also added a new Parent AGI rule. If the same child is a qualifying child of a parent and another relative, the person who is not the parent can claim the child only if their AGI is higher than the AGI of any parent of the child.

*The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes are temporary and apply to 2009 and 2010 tax years.

For more information on whether a child qualifies you for the EITC, see Publication 596, Chapter 2, Rules If You Have a Qualifying Child.

Investment income must be $3,100 or less for the year.

The maximum Advance EITC workers can receive from their employers is $1,826."

"Childless Workers
EITC - it's not just for families with children. You do not have to have a child to qualify for EITC, however, you must meet certain rules. Find out more about claiming EITC if you do not have a qualifying child..

Don’t overlook the state credit

If you qualify to claim EITC on your federal income tax return, you also may be eligible for a similar credit on your state or local income tax return. Twenty-two states, the District of Columbia, New York City, and Montgomery County, Maryland, offer their residents an earned income tax credit.Find more information on states with EITC."

I selected this tax program because it's an income redistribution program.

There are rate schedules in your 1040 publication and several calculators available on line.

 

[WhoWee]

Could you explain why you think that is a relevant statistic?

The Earned Income Credit focuses on incomes of people who either work or file taxes up to nearly the median income levels. The program was intended to provide equality.

 

[Evo]

Sorry for the delay in responding.

The Earned Income Credit is described on the IRS website.
http://www.irs.gov/individuals/article/0,,id=96406,00.html
http://www.irs.gov/individuals/article/0,,id=96466,00.html

"The Earned Income Tax Credit or the EITC is a refundable federal income tax credit for low to moderate income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to have a filing requirement.

The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments."

...and in this PDF
http://www.irs.gov/pub/irs-pdf/p596.pdf

Some rules
"2009 Tax Year

New for tax year 2009: The amount of EITC increased for workers with a third qualifying child* and the rules changed for determining who is a qualifying child.

Earned Income and adjusted gross income (AGI) must each be less than:

*
$43,279 ($48,279 married filing jointly) with three or more qualifying children
*
$40,295 ($45,295 married filing jointly) with two qualifying children
*
$35,463 ($40,463 married filing jointly) with one qualifying child
*
$13,440 ($18,440 married filing jointly) with no qualifying children.

Wow, they can make $48,279 annually? That's not poor.

 

[WhoWee]

Wow, they can make $48,279 annually? That's not poor.

To keep it in context - the concept is "working poor", adjusts for number of children, and requires that persons not file as married filing separately.

 

[Evo]

To keep it in context - the concept is "working poor", adjusts for number of children, and requires that persons not file as married filing separately.

That's not poor, but it really discriminates against childless couples. Which brings me to my gripe that people with children get huge benfits compared to those without children. We need to stop rewarding and encouraging people to havve kids.

Also, I posted the US Census show people below the poverty level, that is what we should be using.

 

[WhoWee]

That's not poor, but it really discriminates against childless couples. Which brings me to my gripe that people with children get huge benfits compared to those without children. We need to stop rewarding and encouraging people to havve kids.

Also, I posted the US Census show people below the poverty level, that is what we should be using.

I have the same gripe, then I see the stat on families with 1 parent in your post - a poverty rate approaching 40% in some groups is very disturbing.

 

[Evo]

I have the same gripe, then I see the stat on families with 1 parent in your post - a poverty rate approaching 40% in some groups is very disturbing.

That's poverty, but in most demographics it's improving. Unfortunatly for blacks, it's getting worse.

 

[rewebster]

It will be interesting to see the results of the 2010 census, and I bet the income inequalities will be even more dramatic, right after this recession...

 

[Evo]

It will be interesting to see the results of the 2010 census, and I bet the income inequalities will be even more dramatic, right after this recession...

Yep, I think we will see huge falls from middle and upper middle class as those are the ones hit the hardest. People on welfare and disability will be getting the same incomes, IMO. Also, low income workers are still needed, it's the people in higher incomes that are suffering, IMO.

 

[WhoWee]

That's poverty, but in most demographics it's improving. Unfortunatly for blacks, it's getting worse.

This may be worth noting...
"U.S. Census Bureau
Current Population Survey (CPS)
A joint effort between the Bureau of Labor Statistics and the Census Bureau

Footnotes:

(1) The 2003 CPS asked respondents to choose one or more races. White Alone refers to people
who reported White and did not report any other race category. The use of this single-race
population does not imply that it is the preferred method of presenting or analyzing data.
The Census Bureau uses a variety of approaches. Information on people who reported more
than one race, such as "White and American Indian and Alaska Native" or "Asian and Black
or African American," is available from Census 2000 through American Factfinder. About
2.6 percent of people reported more than one race in 2000.

(2) Black alone refers to people who reported Black and did not report any other race category.

(3) Asian alone refers to people who reported Asian and did not report any other race category.



Source: U.S. Census Bureau
Contact: Demographic Call Center Staff at 301-763-2422 or 1-866-758-1060 (toll free)
Last revised: September 10, 2009
URL: http://www.census.gov/hhes/www/cpstables/032009/racenotes.htm"

...the stats do not account for mixed races.

 

[Evo]

...the stats do not account for mixed races.

There is not a report for reporting more than one race? I'm sure there is. I will look tomorrow.

 

[Al68]

its Reaganomics (the republican plan of the period)

No, it's not. It's what Democrats claimed Reagonomics to be. Big difference.

 

[Al68]

What you say doesn't follow. "Wealth redistribution" may be theft to you, but then property is theft to someone else. You can't assume your own political stance in order to prove it.

It's a matter of semantics, not political stance. But there is no reason to argue about the meaning of the word theft.

Semantics aside, Democrats advocate actions by government that are commonly referred to as theft when the same exact actions are performed by anyone else. It's irrelevant whether or not you choose to use the word theft to describe it. It's the same action being advocated either way.

In the US the richest are paying an effective tax rate of less than 1%, which is wealth redistribution in reverse.

LOL, just plain false. This absurd myth has been debunked many times in this forum. Democrats are very successful in perpetrating this nonsense, but only because many don't bother checking the facts, and the facts say the opposite.

The opposite is true to such a large extent that many would never even believe possible given the lies and propaganda perpetrated by the Democratic Party. Here's a link from CBO: http://www.cbo.gov/ftpdocs/88xx/doc8885/EffectiveTaxRates.shtml

From CBO 2005: Total effective Federal tax rates (including Social Security taxes):

Top 1%: 31.2%
Top 5%: 28.9%
Top 10%: 27.4%
Top 20%: 25.5%
Next 20%: 17.4%
Middle 20%: 14.2%
Lower 20%: 9.9%
Bottom 20%: 4.3%

The numbers are similar for other years, and interestingly, historically more progressive after each so-called "tax cut for the rich". Pretty big difference between Democratic Party lies and reality.