Thursday, November 7, 2013
On the Limitations of Income Inequality Arguments - A Review
a) The analysis tends to focus on static categories and not on flesh and blood human beings who consistently move amongst these categories. b) The statistics do not include transfer payments which in a great many instances represent the vast proportion of a family's purchasing power. c) The statistics tend to examine only pre-tax income and because of that the purchasing power of the top 1% is significantly exaggerated. d) The statistics do not take into account the fact that families in the upper qunitile have significantly more workers (4Xs as many in fact) per family and that this is a major reason for the disparity. e) The statistics fail to underscore the fact that workers in the highest quintile are older (the highest age demographic in terms of income is 45-54) and much more highly educated.
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Whatever the arguments and spins,
Israel recognizes the problem and has a plan.
I don't know how Israel does its stats but if they do them like the left does in this country, they're quite deceptive. BB, according to the U.S. government's own numbers, the income of families in the bottom quintile rose (adjusted for inflation) an average of 91% (from 1996 to 2005)! This while the income of ACTUAL human beings in the top 1% saw a 24% reduction in income. I'm still not seeing what the problem is here.
It is all in the numbers you choose.
I don't know where you got your numbers, but using a previous reference that you used (Tax Foundation), between 1996 and 2005 the adjusted gross income of the top 1% increased 112% ($737 billion to $1561 billion) while the bottom 50% increased only 48% ($646 billion to $953 billion). They don't break down the bottom any further.
Also note that the top 1% not only increased their income at a rate twice as much as the bottom 50%, they also earned, as a group, more than the bottom 50%.
Again, Jerry, you're looking at static categories and not the individuals who comprise them. The ACTUAL human beings in the top 1% in 1996 saw their incomes DECREASE by 24% and the ACTUAL human beings in the bottom quintile saw their incomes INCREASE by 91%. These numbers come from the Department of the Treasury (2007) - http://www.treasury.gov/resource-center/tax-policy/Documents/incomemobilitystudy03-08revise.pdf
And the top 1% families are also older and more educated, and have significantly more full-time/year-round workers than do those at the botoom quintile. Of course they're going to have a much better income situation.
So what if the people change. The fact is the top grew faster and more than the bottom. Of course the individuals changed. Generally, as we get older we earn more up to a point, and then income decreases. Let us not confuse mobility with wealth inequality.
It makes a big difference to me, Jerry; actual flesh and blood human beings as opposed to abstract categories - the fact that people move up and down the income scale based on a whole host of different variables; age, education, hours of work, number of wage-earners per family, location, etc........And the same sort of games are played with wealth inequality, too. Say you have this one 66 year-old fellow. The dude has $2 million in the bank (after selling his home and liquidating his 401K) and this puts him into the top 1%. But that's the money that he's going to be living off of for the next 25-30 years and so I really don't consider him all that damned "wealthy".......And, Jerry, the average number of wage-earners per family in the bottom quintile is .5 (as opposed to 2 in the top 1%). How could you possibly be astonished that their income hasn't risen as much (and, please, keep in mind here that their tallies generally do not include transfer payments)?
The average # of workers per family stat comes from the Department of Labor - ttp://www.hoover.org/publications/policy-review/article/123566
Individual or household income, they both show greater growth at the higher income levels than lower levels. And now it appears that you are mixing wealth and income, just like mobility and inequity. But then I guess you have to, to make your point.
I don't have to mix mobility and inequality in that they're already intimately interrelated. The left tries to constantly say that the rich are getting richer and the poor are getting poorer and I have absolutely obliterated that assertion by showing that the ACTUAL human beings in the top 1% show a DECLINE in income and the ACTUAL human beings in the bottom quintile show an INCREASE in income......I have also accurately pointed out that the families in the top 1% have 4Xs as many workers as those in the bottom quintile, are generally older, and have a significant advantage in terms of education. Ditto, the fact that most of these income disparity figures fail to figure in transfer payments to the poor or the taxes that the top 1% pays (an effective rate in federal taxes of 29% - the bottom quintile pays -1%) on their income.......And I'm not exactly sure what your end-game is here, Jerry, that we should somehow make the rewards for success less than they currently are?
And I wasn't "mixing wealth and income". I was simply showing how those from the progressive movement play games with this indicator, too, and of how they fail to understand that having wealth and being wealthy aren't necessarily the same thing (a 66 year-old guy with a couple of mil being my example).
Are you implying that you can be wealthy without having wealth? Really?
If the poor are getting richer, why have we gone from about 11 to 12% living below to poverty line in the mid 70's to about 15% now?
No, I was saying that a 66 year-old guy with $2 million in the bank and no income other than SS is not the type of person who I would consider "wealthy", Jerry.
According to the Department of Labor, the bottom quintile (this time I AM talking about the static category) of income earners saw it's actual income rise (adjusted for inflation) 18-25% from 1967 to 2009. That, and the rate of consumption to income has exploded, too, from 112% in the '60s to 198% in the 2000s.......As for the increased poverty rate, I would probably say, recession
The recession is over.
The poverty rate is high because the unemployment rate is high and the jobs people are getting are lower pay jobs than the jobs that were lost during the recession.
The man with only SS and $2 mil in the bank falls into the below 50% group in annual income. No one is claiming that the below 50%!group is wealthy.
Roughly 45 million people live in poverty, 36% of those are children. The fact that the bottom quintile saw their income double between 18 to 25% between 1967 and 2009 is meaningless to these people. They and their children are still in poverty.
The recession was technically over 2-3 years ago but this is the most anemic recovery (brought about by idiotic government policies, I would argue) since the Great Depression and so, yes, it continues to be a huge factor.......And, yes, there are a lot of people out there who would say that ANYBODY in the top 1% in terms of wealth would be wealthy (they do this in response to my obliteration of the income inequality myth), Jerry. A lot of them.......As for poverty, yeah, that sucks. But what you continuously seem to ignore is the massive amount of transfer payments that those in the bottom quintile continue to receive and the fact that these have grown exponentially under Bush and Obama. I mean, I know that you want to make poverty in America seem Dickensian and all but when you see pretty much everybody in poverty with cell phones, VCRs, etc., and their consumption to income ratio at nearly 2:1, it isn't all that, Jerry.
In 2009, if your net worth (wealth, not income. There's a difference you know.) was more than $1.569 million, you were in the top 5% of net wealth. That means that you were worth more than 950 out of 1000 people, or you were one of 50 out of 1000 people. So, yes, I would say you are wealthy. Someone with $2 million dollars in net worth is even higher on the ladder. Yes, they are wealthy too.
And certainly anyone in the top 1% of net worth is wealthy, perhaps even very wealthy.
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