Althouse: "Why don't Americans pay more attention to growing income disparity? One reason may be our enduring belief in social mobility."

September 7, 2010

"Why don't Americans pay more attention to growing income disparity? One reason may be our enduring belief in social mobility."

Timothy Noah wrings his hands and puzzles over the perplexing problem that he, himself, answers with astonishing ease.

114 comments:

I'm Full of Soup said...: Not everyone is as convinced as Noah that the income disparity and wealth disparity is true and accurate [at least to the dire extreme that liberals claim is true]. But that has not stopped libs from using it as one of their most tried and trusty memes in their 40 year class war.; 9/7/10, 12:36 PM
Joe said...: (The Crypto-Jew)

I don’t know why the Sheeple don’t worry, but I know the answer to the problem…government spending and higher taxes…much, much higher income taxes…no wealth tax please, Uncle Caiaphas didn’t labour as a Shylock just to turn his ill-gotten gains over to the government of Goyim, that money was meant for his family, so we could clip stock coupons all day, fomenting trouble and Socialism….; 9/7/10, 12:37 PM
Bruce Hayden said...: To some thing, I think that he is right that most of us see that we too can become rich, if we just work hard, etc.

But also, the poor here are not that poor. Sure, in comparison with the richest. But they almost all have adequate food, housing, air conditioning, cars, cable TV, cell phones, etc.

Another thing to keep in mind is that the poor don't create jobs - the rich do. They can't consume anywhere near what they have, and so end up investing the rest (and, yes, putting it in the bank is economically equivalent to investing it). And the investment of all that money is what creates the jobs in this country (and part of the problem with Obama trying to spread the wealth around).

Then, there is the abject unfairness of taxing those who have more at a much, much higher rate. They don't get that much more from the government, but provide most of the money to support it.

But, I think that the author was right, though he didn't want to be. The American dream is that we can all rise from poverty to wealth. And one of the reasons that Barack Obama is likely to only have one term is that he doesn't believe in that dream.; 9/7/10, 12:40 PM
Robert Burnham said...: My usual reply to people (Lefties almost entirely) who raise this matter is to ask them what they think the proper range of incomes in society should be?

In other words, What's the "magic multiple?" How much greater can the highest income be taken as a multiple of the lowest? Twice as big? Three times? Only half again as big?

And then you ask them how they arrived at this number. Does it ever change? Which way — up or down? And how do they know it's time to change it?

And — here's a Biggie Question — how do they intend to enforce this? And what do they imagine the results of this enforcement will be?

And, finally, why do they always assume implicitly that they and their friends will be the ones making the key decisions in this matter?

By the time you reach this point in the discussion, I've found that most of them shut up and try to change the subject.; 9/7/10, 12:47 PM
I'm Full of Soup said...: Bingo Bruce- President Obama really views the game of life as rigged. Except of course where his Ivy League pals are concerned [they all earned what they have because they are, to paraphrase Palladian, all sooper geenyoouses].; 9/7/10, 12:47 PM
jr565 said...: Bruce Hayden wrote:
But also, the poor here are not that poor. Sure, in comparison with the richest. But they almost all have adequate food, housing, air conditioning, cars, cable TV, cell phones, etc.

There's a great early bloggingheads that addressed this subject. Basically the premise was, that even if you argue that people are earning less, the lifestyle that people live far outpaces what they could have achieved a decade ago. So, it's not even a question of how much you earn but rather how markets make things affordable even for people who don't have money. Case in point, how many people who are considered poor have DVD players and/or iPods? Such things would be unheard of a few decades ago.

Another reason for income disparity is that many people are simply not good with money. They spend a lot of money on lottery tickets or ipods or dvd players rather than saving or investing and at the end of the day have nothing of value to show for it. Kind of like on the old Married With Children episode where the Bundy family wins a million dollars in a contest and Al's great idea is to spend a million dollars on scratch off lottery tickets as an investment vehicle. And lo and behold, the Bundy's are back to being low class middle class rubes.
Dave Ramsay has an entire career based on the premise of counseling people who don't know the value of dollars. And it's true. Especially for poor people. People have no problem plunking down 4 dollars a day for a latte, day after day and then wonder what happened to their money (I'm guilty of this too,though Starbucks is not my vice).

As another blogging heads guest discussed (seem to be quoting blogging heads a lot), in reference to why blacks aren't achieving, they stressed that the black leaders pushing the racist America agenda are doing a disservice to blacks. If blacks (or anyone) goes to college, gets married (thus providing two incomes) and stay employed (in other words sell out and play the game) they will be guaranteed to be upper middle class over their lifetimes (provided of course they don't fall into the traps discussed above).; 9/7/10, 12:53 PM
Scott M said...: Another reason for income disparity is that many people are simply not good with money.

Some people simply know how to stand up, set their shoulders to a task at hand, and get to work until it's completed. If you couple that with an entrepreneurial spirit, it can become of a force of nature unto itself that just happens to get wealthy along the way.

One of my biggest problems with the way the current 1600 Penn Ave crew has done things goes back to the tax increase cutoff. No tax increases whatsoever over $250k income. WFT does that mean? $250k in L.A. or, indeed, Manhattan, does not mean the same thing as $250 in Dallas or Memphis. It's as arbitrary as their politics. "Cuz we said so"; 9/7/10, 12:59 PM
Joe said...: (The Crypto-Jew)
One of my biggest problems with the way the current 1600 Penn Ave crew has done things goes back to the tax increase cutoff. No tax increases whatsoever over $250k income. WFT does that mean? $250k in L.A. or, indeed, Manhattan, does not mean the same thing as $250 in Dallas or Memphis. It's as arbitrary as their politics. "Cuz we said so"

Don’t worry about that I have read that several members of Congress, from places such as Manhattan, have a bill to ensure that tax increases will not fall on their constituents, as they would provide exemption for such increases for areas that have a hi cost of living. Fly-over country, taxes a way…Manhattan, is a “tax-increase safe haven.” We’ll take care of our friends, don’t you worry.; 9/7/10, 1:04 PM
Scott M said...: Don’t worry about that I have read that several members of Congress, from places such as Manhattan, have a bill to ensure that tax increases will not fall on their constituents

Yeah, I read about that POS that put that idea forward, but that was fairly recent. What I'm talking about goes back to the campaign trail.; 9/7/10, 1:06 PM
Hagar said...: For social reformers, shared misery is always preferable to unequally distributed wealth.

However, the American Dream for an individual is to get on the high end of that unequal distribution.

wv: sheall - your wife?; 9/7/10, 1:08 PM
TosaGuy said...: This whole "tax the rich" mantra of jacking income taxes is class warfare. Outside of actors and athletes, the rich don't derive their wealth from income, they derive it from investment, estates, etc. Jacking up income taxes simply limits the amount of money regular people can invest. Essentially, "taxing the rich" via income tax hikes is simply a method to keep people from becoming rich, which is an outcome that I think this president is quite happy with.; 9/7/10, 1:10 PM
I'm Full of Soup said...: Also, I don't think govt benefits like subsidized housing, food stamps, paid day care are included in the calculation of income. Govt benefits like these are also tax free [for the most part] so the incomes for the poorest may be understated by a substantial amount.; 9/7/10, 1:14 PM
Anonymous said...: The enduring belief that really keeps Americans from getting too interested in income inequality is the belief in meritocracy. (Social mobility isn't all that good a proxy for it.); 9/7/10, 1:18 PM
Anonymous said...: Government intervention and welfare, along with said "income disparity." has risen since the '30s. I would suggest Noah look for a causal connection there.; 9/7/10, 1:18 PM
Calypso Facto said...: Just what I was dropping in to say, AJ. The chart states "excludes government transfers" and government transfers account for up to 20% of US income. It's ridiculous to try to compare historical incomes while ignoring the growing social safety net and disregarding the largest single source of incomes....

He tries to make an argument for class warfare by completely ignoring the social welfare already in place, provided by the top earners and used by the lowest. His conclusion could be: "We really should have some kind of mechanism for transferring wealth from the richest to the neediest. Oh, wait, we already do and I was just ignoring it...."; 9/7/10, 1:23 PM
tim maguire said...: Bruce sums it up well. "Rising disparity between rich and poor" just means we as a society are getting more wealthy--obviously when society as a whole gets richer, the top 10% is going to gain more in raw dollars than the bottom 10%. Duh!

What matters is not "is the gap getting bigger?", but "are the poor getting richer?" The answer to that is a pretty clear, "yes, they are."

So everyone is better off, but some are more better off than others. Why is that such a hand-wringing problem?; 9/7/10, 1:26 PM
SteveR said...: "Income" does not equal money you make from working. If you are rich, in the vast majority of cases, it is because your money (or yor family's) is doing the work.

You can imagine income equality but what can't ever happen is equality in the mentality, motivation and effort that creates wealth for individuals or families.; 9/7/10, 1:31 PM
I'm Full of Soup said...: Tim:
I know yours was a rhetoriacl question. Most here agree that without their fevered hand-wringing and obfuscation of the facts, about nine of the top ten liberal issues go poof into thin air.; 9/7/10, 1:35 PM
Paul Brinkley said...: Another reason income gaps tend to widen is simple math. People are used to seeing bell curves in economy; anything else seems counter-intuitive. But while population per percentile may follow a bell curve, absolute wealth follows more of a power curve. The more wealth you have, the easier it is to make more, faster. The less wealth you have, the more slowly your absolute wealth changes - and it's quite hard to maintain negative wealth.

Timothy Noah seems to imply that all this wealth at the high side of the power curve is being made at the expense of the low side. It's not. The more wealth exists above whatever's "livable" for the time, the more is invested, creating more.

Noah would get a lot more legitimacy claiming that income gaps are bad IF the poor weren't able to maintain livable wealth. More people would agree with that. Unfortunately, it tends to be a moot point. As others have said, living conditions of the poor have risen right along with the size of the gap. (You might notice Noah produces a chart only of share of the pie, never size of the pie.) And many of the poor who aren't earning a livable wage are actually young and/or inexperienced people just entering the workforce. Their skill and productivity and wage will rise naturally, no matter what redistribution does - so long as it doesn't keep them from entering the workforce.; 9/7/10, 1:43 PM
Paul Brinkley said...: To Slate's credit, they at least are not blocking comments. And it took only until the first comment for the article to be refuted.; 9/7/10, 1:48 PM
I'm Full of Soup said...: I was at a breakfast recently. This same topic came up but we all shrugged and asked if it is unfair or unreasonable if we earned, on average, way more than the less educated?

[there were 4-5 graduate degrees and 4-5 professional certifications between the five of us].; 9/7/10, 1:50 PM
Bruce Hayden said...: And, finally, why do they always assume implicitly that they and their friends will be the ones making the key decisions in this matter?

To some extent, the Obamas in this world have a rational expectation that they will at least have a decent chance at affecting the decisions, because of their Ivy League credentials.

But realistically, most of those pushing for more government intervention are going to have less, not more, affect on the decisions being made. Why? When dealing with the free market, you have at least some ability to affect outcomes by withholding your business. But government bureaucrats are mostly unaccountable, even to those who are blessed with being on the top.; 9/7/10, 1:55 PM
Automatic_Wing said...: What a yawner. Tediously earnest pieces about income inequality are kind of a rite of passage for liberal pundits. People like Timothy Noah have been writing this goddamn article for at least 30 years without ever managing to say anything interesting.; 9/7/10, 1:58 PM
Sigivald said...: Much as Robert Burnham said, except my version is ... "why am I supposed to care about a disparity?"

The poor in this country aren't starving*, dying in the streets*, or forced to take their kids out of school to work.

So why am I supposed to care that other people make lots of month?

(* Except for those either too proud to take any help [very rare] or those who are on the streets dying and poor because they're addicts and it's illegal to force them into treatment.); 9/7/10, 2:02 PM
garage mahal said...: "Why don't Americans pay more attention to growing income disparity? One reason may be our enduring belief in social mobility."

You need a compliant mass doped up on anti-depressants, mood stabilizers, light beer, and boner pills. It's amazing after decades of hyper consumerism that this country can even piss straight. We're now looking at Governor Ebay, and Senator WWF. It won't be long before we're watering our crops with BRAWNDO. It's got what plants crave!; 9/7/10, 2:05 PM
alan markus said...: When I see articles like this, it seems like they don't acknowledge the concept of "assortive mating" - like-marrying-like.

When I grew up, most professionals like physicians & lawyers (men) had wives that either didn't work (but were very active community volunteers)or their wives were sometimes part-time nurses or substitute teachers, mostly to keep their certifications up to date.

Nowadays, your lawyer or physician is apt to be married to another lawyer or physician.

My daughter's pediatrician is married to a stock broker, my wife's physician is married to the anesthesiologist who put me out during surgery, my nephew the lawyer is married to a CPA. In my township, there are several large expansive homes owned by couples where both are professionals. I'm not aware of any local professionals who are married to WalMart clerks.

I saw a reference that assortive mating could account for 40% of the rise in income disparity.; 9/7/10, 2:08 PM
A.W. said...: Well one observation is that the complaint of the mis-distribution of wealth is really, in America, an appeal to jealousy for most people. The reason why it is bad for person A to make $1 Million a year while you make only $40K is because they are making so much more than you. But the fact is $40K isn’t a horrible living, either, so its not a complaint that you are starving etc. but just you want MORE. and of course the result under socialism is that it somehow gets redistributed to being $30K for both the former millionaire and the $40K shlub with the government officials getting the rest. The redistribution of wealth typically involves a transfer of capital from the producing class to the ruling class.; 9/7/10, 2:23 PM
Drew said...: The enduring belief that really keeps Americans from getting too interested in income inequality is the belief in meritocracy. (Social mobility isn't all that good a proxy for it.)

That's my belief. That in spite of all the attempts by politicians (usually Democrats) to get the poor to march against the wealthy with their torches and pitchforks, the masses still believe that here in America it's still possible for someone of a poor background to achieve great wealth. They won't march against the rich because they look at the rich and see themselves in a few years' time.

So the Dems have to hire Union Thugs to do it.; 9/7/10, 2:23 PM
roesch-voltaire said...: To believe that the top %1 use their to create jobs is a bit of a stretch; it seems al too often more goes into off-shore companies and Swiss bank accounts. At one point in history often the top executive earned only from 30 to fifty times that of the average worker. Universities often were held up as a model for this, but of course today that is no longer true and I can attest to the resentment it creates. Of course professionals, doctors, lawyers, engineers, have always made up the upper middle class have have earned respect in doing so, but of late with the wage cuts in manufacturing, combined with out-sourcing of job--lawyers must now move to India for work, resentment is building, but that resentment is not going to be covered or voiced too often in corporate media; 9/7/10, 2:25 PM
Joe said...: (The Crypto-Jew)
roesch-voltaire said...
To believe that the top %1 use their to create jobs is a bit of a stretch; it seems al too often more goes into off-shore companies and Swiss bank accounts

Please stick with the world-class Environmental Engineering. What do you think happens to the money in those accounts? It just sits there, it’s like a giant offshore mattress? You silly boy, those banks offer them INTEREST…and that interest is generated by LOANING THEIR DEPOSITS OUT…you know to other businesses…THAT EMPLOY PEOPLE?!?!?!/

Tell me this was just me misreading your sarcasm…you’re not that economically illiterate are you?; 9/7/10, 2:36 PM
William said...: A recent article pointed out that above $75,000 an increase in income does not purchase an increase in happiness. In NYC where housing and call girls are absurdly overpriced, I would put the figure somewhat higher, but not by much. Some people try to validate their lives by seeking more power and money, but even they themselves would acknowledge that their greater wealth and power is not likely to lead to a happier life. They do it because that is who they are.... Most people have a reasonable chance of attaining an income of$75,000 and material satisfaction with life. There's a good chance that life contentment at this income level is higher than at the hypermillionare level. Someone should fund a study to determine why intellectuals like Noah think that income disparity is such a great wrong.; 9/7/10, 2:41 PM
Bruce Hayden said...: To believe that the top %1 use their to create jobs is a bit of a stretch; it seems all too often more goes into off-shore companies and Swiss bank accounts. At one point in history often the top executive earned only from 30 to fifty times that of the average worker.

Keep in mind that few make it into the top 1% of wealth based on their salaries. Rather, they do it with investments, or someone in their family (or wife's previous husband's family, in the case of John Kerry) invested it. Often in a family company.

The comment about off-shore companies and Swiss bank accounts gives away the game of part of how the really, really rich (who, again, mostly didn't get that way through salaries) protect themselves against the government trying to take an ever increasing portion of their wealth for ever less legitimate reasons.

Our income tax system is not really set up to collect a sizable piece of this wealth, and, indeed, it may be not be legally possible to do so without a Constitutional amendment. The one exception is the "Death Tax", which is ostensibly levied on all estates when people die - except that the very rich spend a lot of money making sure that it doesn't affect them, which leaves it hitting the rest of us much harder than it hits them (despite being sold as a means for wealth redistribution).

So, we have a tax system that is tilted heavily against earned income, and effectively exempts actual wealth. And the class warriors who talk about taxing the rich rarely really discuss actually taxing the really rich, but only those who aren't rich yet.

Nevertheless, much of that wealth is not being held overseas, as is suggested by that post. And that is because it is held in stock in U.S. companies - often the company created or grown by the person who created the wealth - such as Bill Gates for a long time holding so much Microsoft stock.; 9/7/10, 2:54 PM
Revenant said...: I've never understood why I'm supposed to care about income disparity. I care that people can afford the things they need. Who cares if Bill Gates can afford a gold-plated tropical island? What matters is that the poorest among us have adequate food, clothing, and shelter, plus free education and entertainment options.; 9/7/10, 3:01 PM
I'm Full of Soup said...: I wonder if Tim Noah thinks it is a problem when the assets of non-profits like universities and activist organizations have also seen an above average increase when compared to 30-40 years ago.

For instance, Harvard has about $30 Billion and the Southern Poverty Law Center has about $200 Million.; 9/7/10, 3:02 PM
Joe said...: For all the hand wringing, even the poor in this country live in surprisingly good conditions and quite often own, or have ready access to, a car, television, food and so forth.

There are people who are truly destitute and the question is how to help them without them turning into leaches (like one of my brothers-in-law.); 9/7/10, 3:14 PM
Scott M said...: For all the hand wringing, even the poor in this country live in surprisingly good conditions and quite often own, or have ready access to, a car, television, food and so forth.

Through my involvement with various charitable groups, I've been exposed to some startlingly poor people. To a person (with the exception of one old couple), though, if they had a place to stay, they had a TV and a DVD player.; 9/7/10, 3:17 PM
Anonymous said...: re: Harvard's trust.

Remember that the trust was forced to publish salaries of its employees in the early 00s. The professors the objected to those (mere technicians) traders making more than they did (they likely would have kept quiet if they weren't embarrassed by the publicity). There was a major exodus of very able people who were well connected. Then the trust lost billions.

Salaries are "just" another product of the market, and more than fair if there's any competition. Either you trust the market or you don't.

Remember that when IBM brought in the first tabulating machine they priced it at half the salaries of the 100 bookkeepers it replaced. Same happened in the executive office when corporations downsized headquarters' staff in the 70s-80s as automation and networks made 80-90% of those below-the-line paper-pushers redundant. They either found jobs in the money-making part of their organization or they left the companies. The Boards of the time rewarded the remaining executives with some of the cost savings and salaries went up 10 fold or more. We should do the same with Federal agencies. They've yet to do the same headcount recovery.

The only valid question (if we believe a market is at its best when left unconstrained to maximize the good, even with some bad) is if there is good competition, locally or internationally that will discipline these prices (salaries). If there is competition, we should trust the salaries are just compensation.

Note that when Japan constrained salaries the business leaders were compensated (at times outrageously) in other ways. Salaries have the great advantage of being transparent.

I suspect what the left is really complaining about is the implicit sharing of power (money) by the government. It takes a great deal of trust for a government to allow its citizens to have this kind of power. In the American system, we believe the government power flows from the people, so, just like taxes, “it’s not their money” (nor is it their power).; 9/7/10, 3:25 PM
KCFleming said...: Envy is a destructive force, moreso when it becomes a political system.

Coerced egalitarianism eventually requires violence for enforcement, and yet disparity persists no matter what is done, or how many are killed.

We are all born equal, but only in the eyes of the law, although thanks to our 'living' Constitution, that's no longer true either.; 9/7/10, 3:32 PM
roesch-voltaire said...: Joe you give an idealistic view of what banks do with their money especially with the repeal of the Glass-Steagall Act, which has opened up a can of derivative worms that encourages gambling instead of supporting loans to small businesses etc. You know Joe, my student who went off to study in Denmark, described the department as one that was "world class,and has returned happy with his choice. I would never claim the UW-Madison, COE, where I work is world class, as we are ranked only 15th by U.S News.; 9/7/10, 3:48 PM
ricpic said...: I figure three squares, a roof over my head, a shirt on my back and I'm good. But waddaIknow?

Today I was toolin' down the highway at 50 MPH and I hit a deer. If I'd only had a bike it would never have happened. There's a lesson in there, somewhere. The deer? The deer is dead. My car? Half dead. But I'm alive! Funny how envy dissipates after an encounter (even a mild one) with Mr. D.; 9/7/10, 3:49 PM
Paul Brinkley said...: A.W. cites an appeal to jealousy. Indeed. Noah makes that clear with his quote from Willford I. King. "It is easy to find a man in almost any line of employment who is twice as efficient as another employee, but it is very rare to find one who is ten times as efficient. It is common, however, to see one man possessing not ten times but a thousand times the wealth of his neighbor." (The whole article is a cavalcade of literary references; I kept feeling like Noah felt he had to prove something.)

Again, the whole thing strikes me as silly. If someone claws their way to their first million, their next million is much easier to make; the tenth million easier still. It's a totally different occupation at that level. You're not a doctor; you're a doctor and a money manager. Except you're hiring someone to manage your money so you can focus on being a doctor. That's life in the top 20%. Only when you're in the top 10 or 1% - what Noah so tellingly labeled the "stinking rich" - are you compelled to leave your former existence completely behind and do little more than look for great investments, cut your check, and sit and wait.

Not only do I find nothing wrong with that; I find a lot wrong with cutting off that source of investment for new ventures.; 9/7/10, 3:54 PM
Scott M said...: Not only do I find nothing wrong with that; I find a lot wrong with cutting off that source of investment for new ventures.

Agreed. Should one ever find oneself in that predicament though, you have to constantly remind yourself how wide the eye of a needle is and stay slim enough to fit through it at need.; 9/7/10, 3:57 PM
garage mahal said...: Everything is fine then. The rich are doing well and the poor have cell phones. Why do we need Republicans this fall?; 9/7/10, 3:57 PM
Scott M said...: Everything is fine then. The rich are doing well and the poor have cell phones. Why do we need Republicans this fall?

Because we're currently on a ballistic course that ends with ONLY the rich having cell phones.; 9/7/10, 3:59 PM
KCFleming said...: "Why do we need Republicans this fall?"

Because Obama set the stage for the impoverishment of all of our children, except the politically connected Democrats, of course.; 9/7/10, 4:01 PM
Chip Ahoy said...: I felt nothing as I read that piece. Does that make me bad?; 9/7/10, 4:02 PM
Paul Brinkley said...: Agreed. Should one ever find oneself in that predicament though, you have to constantly remind yourself how wide the eye of a needle is and stay slim enough to fit through it at need.

Back at ya. That's almost exactly the state I've been in for many years: hungry for investment in a struggling company. While a lot of it's not under my control, I can definitely say I'd rather go under for lack of a quality product (or heaven forbid, merely a sufficiently marketed one) than to succeed from money my government says I'm entitled to just because I'm not stinking rich.; 9/7/10, 4:06 PM
I'm Full of Soup said...: Garage:

As to universal basic needs, where would you draw the line for govt largesse? What comes next after free cell phones?; 9/7/10, 4:10 PM
Hagar said...: As far as I can tell, President Obama's latest proposal for stimulating the economy - not too different from his previous ones - is to tax the businesses that are presently still profitable to get money that the Government will then dole out - less its cut and operating expenses, of course - to non-profitable companies to spend as directed by the Goverment for the overall good of society - and especially the unionized parts.

This sound like a plan to you?

The Democrats are willing to do anything to help - except get out of the way!; 9/7/10, 4:10 PM
I'm Full of Soup said...: Chip:

That depends- was it the first time you read that tale of woe? Or is it a rehash of a rehash of a rehash times ten?; 9/7/10, 4:12 PM
AllenS said...: I remember garage mahal saying that he made six figures. Which is about 3 ot 4 times what I make. I say, good for him. He'll probably make a lot more when the Republicans are running things, especially if they are from the Tea Party.; 9/7/10, 4:16 PM
hombre said...: It isn't about comparisons or financial equality, it's about having enough and being satisfied, which are highly variable concepts.

Lefties don't get this just as they don't get other quaint concepts like: Thou shalt not covet.; 9/7/10, 4:26 PM
David said...: The reason for the "enduring belief" in social mobility is the enduring fact of social mobility in the United States.; 9/7/10, 4:46 PM
garage mahal said...: Because Obama set the stage for the impoverishment of all of our children, except the politically connected Democrats, of course.

ALL our children. Wow!; 9/7/10, 4:48 PM
blake said...: >>ALL our children. Wow!

Hey, who doesn't love Susan Lucci?

wv: obashmu

lol; 9/7/10, 4:50 PM
David said...: Chip Ahoy said...

"I felt nothing as I read that piece. Does that make me bad?"

Man bad, right? You got the memo.

But you are still (relatively) young. As bad as you are now, you have a opportunity to become much, much worse.; 9/7/10, 4:51 PM
KCFleming said...: 'ALL our children. Wow!"

Staists only feel their best when they screw people in really really large numbers.

Six million. Wow!; 9/7/10, 4:53 PM
David said...: Noah: But according to the Central Intelligence Agency (whose patriotism I hesitate to question), income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador. Income inequality is actually declining in Latin America even as it continues to increase in the United States. Economically speaking, the richest nation on earth is starting to resemble a banana republic. The main difference is that the United States is big enough to maintain geographic distance between the villa-dweller and the beggar.

This is probably why Guyana, Nicaragua, and Venezuela have such a difficult problem with illegal immigrants from the United States.; 9/7/10, 4:57 PM
GMay said...: garage mahal lamented: "We're now looking at Governor Ebay, and Senator WWF."

A marked improvement over Senators KKK and DUI.; 9/7/10, 4:59 PM
I'm Full of Soup said...: Garage -you are good at playing dumb.; 9/7/10, 4:59 PM
David said...: Noah: "Income inequality is actually declining in Latin America even as it continues to increase in the United States."

Might this have something to do with the fact that the most poor in Latin American tend to come to the United States? If you reduce the number of their poor, and increase the number of ours . . . . (Well, you get it.)

On the other hand, maybe this is the way to solve the illegal immigration issue. The Latinos need better information. Someone tell them it's a much worse deal here than where they are now.; 9/7/10, 5:02 PM
Revenant said...: especially with the repeal of the Glass-Steagall Act, which has opened up a can of derivative worms that encourages gambling instead of supporting loans to small businesses etc.

The amazing thing is that you probably think that statement made sense.; 9/7/10, 5:04 PM
Revenant said...: We're now looking at Governor Ebay

My goodness, we can't go around electing people who have actually been successful outside of government. Who knows WHAT that could lead to?

I want my politicians to have no experience at anything but spending other people's tax money. That's how you build a great government.; 9/7/10, 5:08 PM
KCFleming said...: Then there's Senator Trunkfullaballots Franken.
He used to write for the teevee.; 9/7/10, 5:10 PM
garage mahal said...: Pogo
So walk us economic illiterates through this.

Obama is doing X which will lead to an impoverished nation. Too much what? Too little of?; 9/7/10, 5:15 PM
blake said...: garage,

Obama is doing X which will lead to an impoverished nation. Too much what? Too little of?

Whoa. Seriously?

wv: hangordr; 9/7/10, 5:19 PM
KCFleming said...: Too much taxation, regulation, socialization, penalization of thrift, punishment of success, nationalization, vacillation, theft of private property.

Too little of?
Getting the fuck outta the way.
Signalling a certain and level playing field for the market.
Honoring contracts.; 9/7/10, 5:23 PM
garage mahal said...: Too much taxation, regulation, socialization, penalization of thrift, punishment of success, nationalization, vacillation, theft of private property.

Great! Substance. Sadly, no there isn't any real substance there. You could have pulled those chestnuts off the NRO from 30 yrs ago.; 9/7/10, 5:28 PM
blake said...: Sort of like the election results, eh, garage?

wv: gronesms; 9/7/10, 5:32 PM
KCFleming said...: Yeah, true.

They're true, however. They don't lack substance; Ryan and others have detailed proposals to do exactly that. CATO and Heritage have details too.

But you don't want that shit, garage.
It's easier to claim there ain't any there there, although the Democratic machine is sure falling apart because of it's own rotten old chestnuts.; 9/7/10, 5:37 PM
garage mahal said...: I asked what Obama is doing specifically. I can never seem to get an answer.; 9/7/10, 5:39 PM
Automatic_Wing said...: You could have pulled those chestnuts off the NRO from 30 yrs ago.

Just as true now as it was then.; 9/7/10, 5:40 PM
Big Mike said...: Mobility is an obvious fact. Did Tim Noah start out at his current salary and receive no raises? Or did he, like most people, start out with a pretty modest salary and work his way up to a respectable income?

Actually, realizing that it's Tim Noah we're talking about, given his intelligence and work ethic, he probably is being paid pretty much what he started out at.; 9/7/10, 5:46 PM
Cedarford said...: Bruce Hayden - "Another thing to keep in mind is that the poor don't create jobs - the rich do."

It has been said so long by so many rich Republicans that it has almost become an article of faith amongst the lower masses of Republicans that only teh rich create jobs...so the richer a few get, the better for all, since they will bestow jobs on their lessers.

Except it isn't true.

Some of the richest people live in places like Mexico, Brazil, Saudi Arabia, Nigeria. Places with 15-35% unemployment. The world's richest man, Mexican Carlos Slim, watches 14% of his WHOLE country flee joblessness for the deteriorating US.

Jobs do not depend on how many mansions containing the Richest 1% of people have discissions about the need for new maids, or hiring 3 new lawyers at their loggying firm - but economic conditions.

The great post-WWII jobs machine that ended in the 70s was built on economic conditions. We made things. We sold them to the world. Top income tax rate was 90%.

What we are going towards is not a concentration of wealth in the hands of a few that will create jobs - but an African or Latin American model of a small oligarchy with all the power..nervously watching the lowly masses for signs of Socialism.

We can still save the middle class - but it will take limits on free trade and investment in business, infrastructure, R&D - not in entitlements for the parasitic. It does not involve more tax cuts and corporate welfare for the wealthy - or any new wars of imperial adventurism.; 9/7/10, 5:54 PM
Innovation rules said...: 1) Mobility up and down the income brackets is very common, rendering the disparity argument much less meaningful.
2) Any complex system will form a Pareto distribution. So what is 'normal'?
3) Most of the self-made rich are not like Buffet or Gates. They are heads of very highly regulated and subsidized marriages of big government and business; the government is part of the problem. People understand this hypocrisy.
4) Is disparity 'bad'?
5) The Protestant work ethic and the idea of getting ahead.
6) That the Left does not mention any of these facts results in much skepticism about their laments.

Perhaps more importantly, the danger of the bail-outs to the well-connected threaten society's psychological fabric, destroying number 1,4,5. IF people perceive the system is fixed, cynicism and corruption will ensue. And a lot less hard work.; 9/7/10, 6:00 PM
Anonymous said...: The deep nostalgia for that period felt by the World War II generation—the era of Life magazine and the bowling league—reflects something more than mere sentimentality. Assuming you were white, not of draft age, obsessed with your relative status instead of your absolute standard of living, and Christian, there probably was no better time to belong to America's middle class.

Fixed.; 9/7/10, 6:02 PM
AST said...: I heard a report this morning that money only makes people happier up to about $75,000 annually. Above that, it doesn't really make people happier. I didn't hear why they thought this was so, but I wondered if it might reflect expectations for higher income that aren't born out.; 9/7/10, 6:03 PM
bagoh20 said...: There are many people who make 1000 times what I do. Should I worry, should I be angry?

Sorry, I just don't do that.

Rich people give us jobs, buy our products, fund our ideas, pay our taxes. I love the rich.

Where would you rather work: A place where everyone makes the same and do alright, or a place were some people make a lot of money and rest do alright?

Not everyone answers that the same. That's where the disparity comes from.; 9/7/10, 6:06 PM
dbp said...: Too much taxation (the automatic increases which Obama and the Democratic Congress will do nothing to prevent, the carbon taxes they want to enact, but haven't yet been able to), regulation(Health care, financial sector regulations, fuel mileage, drilling bans etc), , socialization, penalization of thrift, punishment of success,< nationalization(GM), vacillation, theft of private property(violation of law in the allocation of assets in bankruptcy--again GM, bank bailouts).

Great! Substance. Sadly, no there isn't any real substance there. You could have pulled those chestnuts off the NRO from 30 yrs ago.

All to be waved away with a snarky shrug no doubt.; 9/7/10, 6:08 PM
Joe said...: This comment has been removed by the author.; 9/7/10, 6:11 PM
Joe said...: ...according to the Central Intelligence Agency... income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela...

Has this guy ever been to these countries? I've lived in Venezuela when it was the richest country in Central and South America and the poor there were dirt floor poor and they were still better off than many other places in the region.

In this case, though, I think the CIA is full of shit and redefining "unequal." Anybody who has spent time in Central and South America has seen a difference in real terms between the wealthy and the poor that is far greater than exists in any first world country. (A more stark difference is that historically many countries had no middle class--you were rich or poor. Even if that difference was small, which it wasn't, there were few paths from poverty to wealth.)

...the most poor in Latin American tend to come to the United States...

I disagree. I'd say most immigrants, legal and otherwise, from Latin America are middle and working class. The very poor don't go anywhere (which is a problem even in the US.); 9/7/10, 6:15 PM
dbp said...: "but it is very rare to find one who is ten times as efficient. It is common, however, to see one man possessing not ten times but a thousand times the wealth of his neighbor."

This is kind of an irrelevant metric. In many businesses a small marginal effect is magnified by high stakes: Take a Hollywood movie for example: Tom Cruise is (to my view) not as good an actor as William Hurt and yet makes ten times the pay (or more). Why? There is only one of him and his movies tend to make a lot of profit. Or look at what a CEO can do. A competent one might help his company grow at 10%/year, but one who is only slightly better might double the value of his company in a few years. Our ex-CEO got a 27 million Dollar payout, but he doubled the value of our firm in 4 years--so he made us shareholders 3-4 Billion in that time. Yeah, he was worth every penny.; 9/7/10, 6:20 PM
bagoh20 said...: So what is the correct amount of disparity?

Just like what is the correct global temperature?

You can't pursue a goal, unless you know what it is. Of course that only matters to people who actually care about fixing problems. Some people really just love the part where they tell you there is a problem...everyday...all day.; 9/7/10, 6:21 PM
Anonymous said...: To believe that the top %1 use their to create jobs is a bit of a stretch; it seems al too often more goes into off-shore companies and Swiss bank accounts.

Oh, yeah, every household making $400,000 a year is sinking it all into offshore corporations and Swiss bank accounts.; 9/7/10, 6:33 PM
Joe said...: it seems [all] too often more goes into off-shore companies and Swiss bank accounts.

What do you think the Swiss do with it? Put it in mattresses?; 9/7/10, 6:44 PM
bagoh20 said...: Where would you rather have your money: a Swiss bank, the U.S. Treasury or a mattress?; 9/7/10, 6:59 PM
Unknown said...: "In 1915, Noah quotes King, "It is easy to find a man in almost any line of employment who is twice as efficient as another employee,"

but it is very rare to find one who is ten times as efficient. It is common, however, to see one man possessing not ten times but a thousand times the wealth of his neighbor"

The reason for income inequality rests not in effort but in talent. A top movie actor earns a 1000 times more than one earning the minimum.

A baseball pitcher with a 20-2 record esily earns 1000 time more than a 2-20 pitcher.

A top author with books that sell over a million copies earns more than an author who can't fibd a publisher.

Only in a socialist workers' paradise such as Cuba or Ethiopia does everyone earn the same -- about $1.00 per day.

Only in the socialist workers' paradise of Uganda is everyone paid $1,000,000,000/hour.; 9/7/10, 7:01 PM
Robert Burnham said...: Y'know, if you let the Lefties set the terms of the argument ("income disparity is increasing!"), you'll never put them on the defensive.

You need to go for the jugular by making them explain in full smart-people detail how they'd make it all work.

Because the overwhelming majority of Lefties fall into the book-smart/life-dumb category, this is where you'll run the pants off them.

Don't argue over how much disparity is good, bad, or irrelevant. Make them defend their idiotic idea by working through the (im)practical details.

As St. Mies (or someone) said, God is in the details — and it's precisely the details that are the source of all the "unexpected" outcomes we're ass-deep in.

That's where all these grand Big Brain ideas fall apart. That's where their natural fault lines run, and if you hit them hard enough, you will destroy them.; 9/7/10, 7:14 PM
Anonymous said...: My income's pretty low now. If there were no or little income inequality, then I wouldn't have much incentive to change that.

But I see people in my field who earn (yes, earn) enormous incomes. I can, and will, do that, too.

- Lyssa

WV: nologic No, I'm not kidding.; 9/7/10, 7:17 PM
Bruce Hayden said...: Bruce Hayden - "Another thing to keep in mind is that the poor don't create jobs - the rich do."

It has been said so long by so many rich Republicans that it has almost become an article of faith amongst the lower masses of Republicans that only teh rich create jobs...so the richer a few get, the better for all, since they will bestow jobs on their lessers.

And where does the money to build the factories or pay the employees come from? Thin air? The government? But, of course, the government doesn't create wealth, but rather redistributes it very inefficiently.

So, where does this Carlos Slim have his money right now? In Mexico? Or maybe in the U.S.? My bet is that he has at least some of it here, invested somehow.

Part of the Keynesian fallacy is that the government can invest the money of the "rich" better than they can. But, of course, history shows that that is far from the case. And, as we have seen, the sort of investing that the government does is giving government employees at all levels raises and overly generous pensions. So much for efficient investing.

It the by investing and saving that the rich create jobs. And they can do so because a much smaller percentage of their wealth and income goes to supplying their basic needs.

Yes, some economic growth will occur without such investment. After all, it is possible to grow a business purely through internal cash flow. But that is invariably slow, and often those who try that route end up losing to those who borrow (ultimately from the "rich") to expand their businesses. But much of company growth is funded by investment and savings dollars.

"Jobs do not depend on how many mansions containing the Richest 1% of people have discissions about the need for new maids, or hiring 3 new lawyers at their loggying firm - but economic conditions.

The great post-WWII jobs machine that ended in the 70s was built on economic conditions. We made things. We sold them to the world. Top income tax rate was 90%."

Not sure what a "loggying" firm is. But the number of maids is an irrelevancy. As I noted above, the "rich" have enough wealth that the difference between two and three maids doesn't affect their investment and savings decisions one iota. As I noted above, they spend far less of their wealth and income on consumption, and thus have most of it left over for investment and savings (which translates into investment through the banking system).

As for the 1950s and 1960s, you simplify greatly. For one thing, we were still on the gold standard, and had the bulk of the gold in the world, thanks to WWII. And there was a huge amount of pent-up demand for goods as a result of that war, plus FDR's Great Depression before that.; 9/7/10, 7:19 PM
Hagar said...: Cedarford et al.,

Have you guys seen any of the studies that show that while it is true that most rich people are Republicans, the very rich are practically all Democrats? Including Bill Gates Jr. & Sr. and Warren Buffet?

Garage Mahal,
Is it permissible to ask in what general line of work you made a six-figure salary?; 9/7/10, 7:28 PM
Peter V. Bella said...: There is no such thing as income inequality or disparity. Income and wealth are not rights, privileges, or entitlements. Income and wealth are earned and created. Someone somewhere has to work, save, invest, and actually do things to earn money and create wealth.

The poor will always be with us. People are poor because they did nothing to generate income and create wealth. The poor can create wealth just as easily as the inherited class can squander it.

The only equality is the equal opportunity to create your own financial destiny and your definition of wealth. The rest is all nonsense.

There is no such thing as economic equality, income equality, economic justice, or any other such non-sense. There never has been and hopefully there never will be.

There is no societal or government responsibility to bridge any income or wealth gap. It is up to the individual to do this on his/her own.; 9/7/10, 7:34 PM
garage mahal said...: Garage Mahal,
Is it permissible to ask in what general line of work you made a six-figure salary?

I sell used and refurbished HP laserjets. We're generally insulated from recessions, and if anything there is more demand from savvy buyers, and we kind of lucked into a booming sector of document management print services -I sell to the service providers that offer end users an all in one bundled office solution . The servuce provider provides all the toner, paper, service, etc to the end user, and bills them on a cost per page basis, and I supply all the printers. And there are a host of good reasons to buy refurbished.; 9/7/10, 7:48 PM
blake said...: Nice, niche, garage!; 9/7/10, 7:59 PM
ken in tx said...: In 2007 I was close to becoming wealthy. Now, not so much. My IRA and 401K lost a lot of value. However, my standard of living is pretty much the same. I can go where I want to go and do what I want to do. What’s missing is peace of mind and confidence in the future.; 9/7/10, 8:03 PM
Eric said...: There's a great early bloggingheads that addressed this subject. Basically the premise was, that even if you argue that people are earning less, the lifestyle that people live far outpaces what they could have achieved a decade ago.

Yep. Income disparity isn't an economic problem. It's a political problem.; 9/7/10, 8:04 PM
Hagar said...: Well, logically and statistically you had ought to be a Republican then, but politics really is more religion than reason, isn't it?; 9/7/10, 8:05 PM
dick said...: joe,

Agree totally with you on the Latin American countries. When I was in Rio they had tours of the favelas you could go on. They were truly miserable places, far worse than anything in this country, and not too far away was the mansion of Dr Fischer(?), the media baron of Brazil which was an immense palace of a place. The differences were truly stark there.; 9/7/10, 8:07 PM
David said...: Joe sayeth" ...the most poor in Latin American tend to come to the United States...

I disagree. I'd say most immigrants, legal and otherwise, from Latin America are middle and working class.

Probably true, Joe. I overstated my point. The most poor go to Latin American cities.; 9/7/10, 8:16 PM
Synova said...: Well, I guess AJ said it in the first comment, but about that income disparity...

How great is it, really, in real terms?

A person like Al Gore can serve Earth Friendly Sea Bass for his 500 closest friends at his son's wedding while I picked up fried chicken for the rehearsal and had buns with ham on them after the ceremony, with paper cups of butter mints, punch and cake... served by church ladies for free.

But did we miss the Sea Bass? Not at all. Nor did the 500 people who would have only come for the food because they certainly would have been nothing more than the barest of acquaintances.

I've lived overseas, seen a whole lot actually. Even the poorest person in the US is expected to have a cell phone, computer, and high speed internet access. The access I've got to health care is almost science fictional compared to 20 years ago... or 40... or 120... or however long ago it was when the "income disparity" was what it "ought" to be.

I wish I had a new car... will need one before too long... and I wish I could have spent the summer at the Lake... an endless credit card would be awesome.

But am I supposed to feel *bad* that I don't have one?

Huh?

And that's what it's about isn't it? It's not sad that we're not all as rich as Daddy Warbucks, but we're supposed to *feel* sad. Look over there! There is someone with a nicer car who holidays rather than vacations.

OMG I'm just eaten up with envy and personal dissatisfaction. *snif*; 9/7/10, 9:09 PM
Phil 314 said...: If interested Will Wilkerson of Cato has written a lot about this. This paper is nicely (maybe too nicely) detailed.; 9/7/10, 9:31 PM
Kirk Parker said...: GMay,

I'm pretty sure "WWF" is a typo, and Garage meant to type "Senator WTF" (which of course is a reference my very own dear senator: Patty "Osama the Daycare Provider" Murray.); 9/7/10, 9:57 PM
jr565 said...: dpb wrote:
Our ex-CEO got a 27 million Dollar payout, but he doubled the value of our firm in 4 years--so he made us shareholders 3-4 Billion in that time. Yeah, he was worth every penny.

And I bet because the company doubled in value that it had to hire more people, based on the simple fact that as the firm got bigger, it required more people to handle the additional work generated. OR, individuals in the company made more money because there was so much more to go around. OR those who invested in their company stock saw it go through the roof. In all respects, the rich guy got richer for himself, but also made others richer through his actions.; 9/7/10, 10:15 PM
NotWhoIUsedtoBe said...: It could be that people can be happy without being the richest person around.

In absolute terms, I'm fabulously wealthy even by the standards of 40 years ago.; 9/7/10, 10:45 PM
AllenS said...: Good for you, garage.; 9/8/10, 6:24 AM
Phil 314 said...: I just put together a very simple (and simplified) spreadsheet of 100 "citizens" with the lowest income being $5,000 (five citizens make this little) and the highest being $1,000,000. Not using any US data but trying to bunch incomes in the middle my array had an average income of $85,600 and a median income of $50,000.

To this array I added a new "Mexican" who presumably now does the yardwork for several of those median to upper middle class citizens. This Mexican immigrant has a "Mexican" viewpoint on a "good" income. He earns $2000 per year. No one else's income changes. So now the number recalculate and:

-the average income drops to around $84,800 (or 1% less)
-the median income stays the same (I assume you all know the difference between mean and median)
-the difference between the average income of the top 5% to the bottom 5% goes from 10,000% to 12500%

And yet who got poorer?
-the "Mexican" immigrant? No, he sees this as a great opportunity and the first step towards, moving up the "ladder"
-the "middle class"? No, their incomes haven't changed. And some now enjoy the "luxury" of not having to do their own lawn every week
-the top five percent? No and in fact Mr. "High and Might" (the guy with the million dollar salary) who owns the local factory may now have better rested employees (a least a few) who can put more work into their weekday (read "job") activities.

Obviously this is an over-simplification but it points out the "problems" with income disparity as a measure of wealth and well-being.; 9/8/10, 9:02 AM
test said...: The left's obsession with "income disparity" doesn't reflect reality primarily because they don't track people. Most people progress through the quintiles as a function of their experience and education.

It's a nearly tautological analsis which means next to nothing.; 9/8/10, 9:44 AM
Alex said...: Of course the root of all evil is income inequality! This is tautology btw.; 9/8/10, 10:15 AM
Alex said...: BTW in Latin American socialist utopias, the top 1% owns 99% of the wealth. I'd take our inequality over theirs. It's a myth that you can achieve true equality among everyone, there always will be an elite. Look at the Soviet Union, the party apparatchiks all had their dachas, cars, caviar while the people suffered. The most destructive thing people can do is allow themselves to buy into the notion of equality of outcomes, instead of being productive.; 9/8/10, 10:20 AM
GMay said...: garage mahal said: "And there are a host of good reasons to buy refurbished."

Did anyone else catch garage's inner capitalist coming out there?; 9/8/10, 10:34 AM
Hoosier Daddy said...: >Did anyone else catch garage's inner capitalist coming out there?

Oh please. Most of your big bucks liberals talk a good game about the less fortunate. Hell look at Hollywood where you have no problem finding a whole slew of those at the 1% of the top earning class but are about as miserly with their money as any rich CC Republican. I mean Oprah's worth what a billion dollars but I guess she can assuage her income disparity by buying a few cars for some middle class soccer moms.

That's why liberals are like interior decorators. Good at spending other people's money.; 9/8/10, 10:57 AM
William said...: Not that I would decline the offer, but tripling or quadrupling my income would not radically alter my level of happiness. If, however, I was granted solid athletic ability, a porn worthy penis, and extraordinary good looks, I think my life would have been a great deal more interesting than the current edition......Poverty can absolutely guarantee misery, but above a certain level, there's no great pay off in wealth. I think we all know some people with five or ten million whose lives are not substantially better than ours. (That said, I think it would take some doing to be unhappy with 100 million or more.) Anyway if you redistributed all the wealth equably (which is, of course, impossible), you would not even out those inequities that keep people awake at night.; 9/8/10, 12:11 PM
jr565 said...: Alex wrote:
TW in Latin American socialist utopias, the top 1% owns 99% of the wealth. I'd take our inequality over theirs.

Even in countries that have no currency there are still rich and poor. Some African tribes used cows as currency and of course, even in those societies there were haves and have nots. In those societies though it was usually the tribal leaders that had the wealth. There was very little in the way of a free market whereby poor villagers could rise to richness by investing in cows. And isn't it funny that even in socialistic countries that supposedly value the worker over the owner, there is still a small group of people who own everything or control everything? No wonder Hugo Chavez likes socialism so much, he's been able to get rich beyond his wildest dreams.; 9/8/10, 1:36 PM
Paul Brinkley said...: Hoosier Daddy: That's why liberals are like interior decorators. Good at spending other people's money.

Wrong. That's how they're not like interior decorators.; 9/9/10, 8:18 PM