News What is the Impact of Income Inequality on Social Problems?

[BoomBoom]

You are quite wrong. Whether in absolute terms or in percentage of income, the poor contribute nothing to our tax revenue.

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

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. Not to mention the companies that prey on them like vultures such as check cashing institutions. This stuff amounts to many billions of dollars every year that go 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"

 

[Gokul43201]

Russ,

Here is a chart from the CBO.

http://www.epi.org/Issuebriefs/239/figurea.gif

Poor getting poorer.

If share of national income/GDP is to be used as a definition of poorness, then being poor has no direct relationship with standard of living. If, however, you wish to retain the standard of living as relevant to the definition, then you have have to use a measure of income/wealth adjusted for inflation.

So what is your definition of 'poor'?

 

[Klockan3]

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.

So, you want to force everyone to send in their infants to some huge baby care that raises all the kids in the nations equally? Because that is the only way to give everyone equal opportunity no matter their background.

As long as the parents are in charge of raising their children there will be good parents and bad parents, educated parents and uneducated parents, criminal parents and lawful parents, atheist parents and religious parents, right winged parents and left winged parents, culturally foreign parents and culturally domestic parents, dedicated parents and lazy parents, patient parents and impetuous parents etc.

I do not think that rich/poor parents do not matter that much, I think that you will see a lot more correlation with good, dedicated, educated, lawful, patient and culturally domestic parents simply because they will give the child the mindset that is the most fitting for succeeding in this country. Now, those parents are probably richer on average but that would be because those attributes are those of a perfect employee.

 

[WhoWee]

If share of national income/GDP is to be used as a definition of poorness, then being poor has no direct relationship with standard of living. If, however, you wish to retain the standard of living as relevant to the definition, then you have have to use a measure of income/wealth adjusted for inflation.

So what is your definition of 'poor'?

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

 

[Evo]

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

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

 

[Gokul43201]

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

If you go by that definition, it appears that the growth of the 'poor' segment clearly exceeds the overall population growth rate (even after you factor in the declining family size).

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=37

Not sure exactly how the income cutoffs are adjusted year-to-year. Also, not sure if the number of fraudulent claims is a significant enough fraction to require further inspection.

I find it odd that these numbers seem to contradict the general trends in inflation adjusted incomes, when they are in fact (at least if you go by the wikipedia page for EIC) determined by inflation adjusted incomes.

 

[Evo]

Here are the US Census poverty tables

http://www.census.gov/hhes/www/poverty/histpov/hstpov2.html

 

[Gokul43201]

Russ,

Here is a chart from the CBO.

http://www.epi.org/Issuebriefs/239/figurea.gif

Poor getting poorer.

Just noticed this now, but that's data from a 2 or 3 year period! That's hardly a useful plot in the context of this thread.

Consider that fluctuations in incomes during the course of an economic cycle can be as large as 10%, it is definitely overreaching to attempt to extract meaningful conclusions about general trends from such a short term dataset.

http://pewsocialtrends.org/assets/images/731-7.gif

http://pewsocialtrends.org/pubs/731/middle-class-phantom-recovery-testimony

Lots of other interesting data at that link too, like this curious plot of median household incomes over the last four decades, adjusted for household size:

http://pewsocialtrends.org/assets/images/731-8.gif

 

[edpell]

For the median adjusted income we need an honest correction for inflation (no not that kind :) ). The governments figures for inflation are politically driven and false.

 

[Evo]

For the median adjusted income we need an honest correction for inflation (no not that kind :) ). The governments figures for inflation are politically driven and false.

Post a link to the source for this.

 

[Evo]

I'm serious, next person that ignores the rules will close this thread and get an infraction. Final warning.

Even if someone missed my earlier warning, we have guidelines. You shouldn't be posting in here if you haven't read the guidelines, so there is no excuse.

 

[edpell]

Post a link to the source for this.

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]

For discussion of inflation calculations see (removed link)
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.

Thank you, and my warning wasn't aimed at you either, everyone here forgot the rules, it seems.

Edit: I just got around to looking at your link, that is not an acceptable site.

 

[russ_watters]

Nothing?!-----that's rather an elitist statement-----Nothing?-----I'm surprised you'd say/write something like that at all...really surprised

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.

As with virtually everything you've said in this thread, you have this preconception that you are working from and even now (after it has been demanded that you start dealing in factual data and not mindless propaganda) are not bothering to actually look at the data that your completely wrong perceptions are about.

"the poor are poor because they have chosen not to succeed"

well, well----I just have to ask-------can you back up that statement with a source?

You didn't read the one provided? If you think it is insufficient, explain why: If you don't make a comment on the one provided, then how do I know you're not just sending me on a wild goose chase?

And here's a question maybe you can look for an answer for on your own: what happened to the US poverty rate after Clinton reformed welfare and slashed the number of people receiving money. My guess is you think poverty rose...

And how about this: can you back up anything you have said in this thread with a source?

 

[russ_watters]

nothing to our federal income tax revenue. Everybody pays at least a little state and local sales tax.

Also, in the US the poor may own a beater car (!) or even a mobile home and thus pay a little property tax.

Yes, understood. That famous Warren Buffet statement someone brought up earlier about his secretary's taxes is about federal income tax.

I'd guess nobody posting in this thread believes that money can only be acquired by hard work.

Well that's because it can be acquired in several ways. If you're lucky, you find it on a lottery ticket or laying on the street or maybe dig it or pump it out of the ground. For most of us, most of our money is made via work, but a decent fraction (whether through a 401K, pension or SS) is made via investments.

 

[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[/color]). 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.