Doug Short at Global Economic Intersection has a must-read post that pulls together some Census Report data on US incomes since 1967 and draws some conclusions. He looks first at real, rather than nominal, incomes, and shows how income in the top 5% and top quintile have grown faster than for the rest of the population:
And he includes an analysis that shows that people in all these cohorts are on average worse off than they were:
He also provides an analysis of income trends by age cohort, and captures one of the things I’ve commented on, how many people in their 40s and 50s take a big dive income-wise when they lose their jobs. Remember, 45-54 is historically the peak earning years for household heads:
I suggest you read his post pronto. He has more good, if depressing, charts and accompanying discussion. Bottom line: anyone who gets optimistic about growth trend in the US needs to confront the fact that the seeming prosperity before the global crisis was fueled by rising household debt, not growing incomes. And even if the powers that be prevent further deleveraging by lowering borrowing costs on outstanding debt, that still fails to set the foundation for anything other than lackluster growth. Expecting consumers to lever up even further is not a way out of the stagnant incomes box.
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The mean income of the top 5% may be $311,000, but $311,000 remains chump change. The real story is income distribution within that top 5%.
the census only breaks out the top 5% and quintiles…
let me also point out that doug short is excellent at illustrating with great charts almost all economic data in the manner above; especially by adjusting for inflation and population growth..i’ve followed his posts at advisor prospectives for almost 2 years…
http://advisorperspectives.com/dshort/updates/index.php
For some information, an income of a million dollars a year will place you at the bottom of the top 1/3 of 1%. It’s hard to get more specific information than that due to the lack of data out of the census.
Given these trends, GDP and tax revenue may both increase by gearing more of the productive capacity to expensive and luxury items, those consumed by the top quintile, top decile, top 5%, top 1%, in an quasi-exponential fashion (to reflect the diverging rates of increase). This might be accompanied by an increased taxation effort directed to top earners to make the State people happy too.
One troubling question is how many yachts would any particular 1% household purchase? Should we build more yachts, or should we keep production levels the same while gold-plating them all?
It’s truly vexing.
Also, might there be a future market for pine boxes and backhoes? These might be required by the rich to bury the poor who die just outside their gated estates. The smell could become quite offensive otherwise. (If the poor weren’t such whiny victims, they’d bury their own dead even if they had to dig the graves with their hands. Properly respectful poor would do it just out of concern for their betters’ sensitive noses.)
In the case of yatchs, gold plating is in bad taste and affects speed, but the regular top-earner always wants a bigger one.
Regarding corpses and still living losers wandering about, the State should pick them and remove them from sight, or outsource that service to job-creating entrepreneurs, that’s what taxes are for.
As a worker bee who built more than one yacht for the masters of the universe, I can report that gold plating is far from sufficient. In one case the gold leaf walls of the master bathroom clashed with the dress the wife was wearing on that day, so we ripped it out and had special Italian marble flown in to replace it.
Never fear, the rich can always find ways to spend our money— after all that is their full time occupation.
Obviously, the rich will need to hire more “people”.
Sure they will need gravediggers and security people, but I see an opportunity for engineers too – someone needs to design yachts that fly:
http://en.wikipedia.org/wiki/Hughes_H-4_Hercules
I’ve always thought that we should simply feed the homeless to the hungry.
What will become of Walmart when the only consumers remaining are rich people?
The poor will always need to eat, wear clothes, move around, have dreams.
The point is where is the demand, the really increasing demand? The fact that the price of luxury items has been increasing so much faster than the price of the average consumption item since the 80s hints that demand of top earners for the items they want is exceeding supply of those items right now.
Probably Walmart will start to grow luxury items departments? There is so much potential given current trends.
“The poor will always need to eat, wear clothes, move around, have dreams.”
And when they can no longer afford to buy stuff from Walmart they will start growing their own food, making their own clothes, etc. They will become a part of the underground economy through necessity. Hello Pakistan.
An economy based on the sale of predominantly luxury items would be very small indeed.
1 in a 100 people pay taxes on $375,000 or more. The population of 0.1% is vanishingly small. What would they need from us?
Walmart is worried their bread and butter is under threat. They’ve lobbied Washington about this in the past. I’m not sure about now.
Walmart will really be hurting when President Romney ends all entitlement programs.
After all food is now considered and entitlement by Romney and Ryan.
Gee, maybe they can come up with a voucher to help the starving masses find jobs at Walmart in a “Will work for food” job creation program.
Walmart will just apply for the contract to do the food stamp goods distribution, but arranged to make it look like shopping, for the sake of self esteem of the shopper.
…oh, wait, that contract for procurements was settled in the 90s!
Dear Ruben;
America did just that during the Fifties and Sixties. Those decades are still fondly remembered as the “Golden Age” of America.
The Gorillla in the room – Highest income quintile had more “extra” income to invest , took greater risk , and were rewarded for it , specifically from 1980 to the present.
Top 5% graph looks alot like the DOW or SPX graph since 1980. That pretty much sums up this article . But I’m secure in knowing I am in the 2nd quintile ( big deal). That and a quarter can get me on a bus .
And extracted net funds to boot from the spending pool. The parasite devours the host.
Dear Bill;
“..took greater risk, and were rewarded for it.”
Rewarded only because the government stepped in and supported them when disaster loomed. True ‘lassaise faire’ [sic] would have let them take enormous losses. Their gambling would have ‘crapped out.’ So now we are faced with the spectacle of the poor subsidizing the rich. What kind of risk was that?
I’ve named that process ‘revese socialism’.
You have to be careful though, in that regard, the poor have made out as well because with huge losses, it would have cut more into their wages as the economy collapsed. By “bailing” out the system, it saves incomes and wages.
It is one of the wasy the wealthy make sure in real time, they don’t lose much, even if nominally, they take huge losses. It is why they quit that system as it was causing the poor to think anti-capitalistically.
“Laissez faire” just FYI.
>> it would have cut more into their wages<<
You see by the chart above that wages for the poor have improved by approximately zero the past few decades, right?
Obviously you haven’t taken a bus for quite a while.
Whenever I see Doug Short’s posts, my reaction is one of envy: Man, I wish I could get my hands on his graph templates!
As to the dismal substance of Doug’s post, it’s time to retire the rhetorical ‘Are you better off now than you were four years ago?’ query, which Depublicrat hacks have been posing ever since I was still biking with training wheels.
If the victim cohorts in these charts asked themselves ‘Am I more pissed off than I was four year years ago?’, doubtless they would give up their destructive habit of trooping to the pools to re-elect their red ‘n blue exploiters.
In fact, they might even smash the infernal Diebold machines, so the courts could just determine the ‘winners’ directly without the bothersome need for citizen input. Demoncracy — it’s what’s for dinner!
No need for Doug Short’s templetes. Global Econ Intersect is a very good aggregator of global econ news, but DS has his own site with everything he does updated continuosly:
http://advisorperspectives.com/dshort/updates/index.php
As bad as things are in the US, at least it doesn’t have a Draghi-like “statesman” unilaterally dictating fiscal policy from his unelected perch in Brussels.
The US continues to have democracy, in one form or another.
Far superior to the EuroSystem, where Eurocrats have decided that the voters can’t be trusted to vote the right way.
“The US continues to have democracy, in one form or another”
Now thats an assertion without any evidence. How many nations in the “euro system have indefinite detention without due process? How many are blowing kids up in the ME? How many kids are illiterate?
You really don;t know much do you? How exactly is the U.S. better? The honest politics? The rule of law? The health care system? Oh wait–the transit systems, trains and first rate primary ed system?
Only in the US does the Supreme Court just decide to give the election to the guy who got fewer votes.
Our election systems are so fraud-prone that international election observers refuse even to observe them (this is true — even the election observer organizations *based in the US*).
Largest prison population in the world, and largest prison population per capita. President claims the right to *assassinate* citizens without trial. Police murder people in the street and get away with it regularly in many large cities (Oakland, LA, and NY come to mind).
We don’t appear to have democracy or the rule of law. Europe still does — the unelected European Commission is *not* the ultimate authority in Europe.
I am just as concerned how the republinos spin the fact that President Obama had a 60 seat majority in the senate and a house majority for his first two years and still couldn’t get everything done that he wanted. How many elected officials only get to govern for half their term yet are expected to be effective for the whole term? In reality President Obama, after winning his reelection, should be allowed to serve for six more years so he could have his full two terms without republino interference.
Do you also maintain that interference by Republicans explains, among other things, Obama’s failure to push for Single Payer or a Public Option in health care and to make deals with Pharma behind the scenes while he was publicly touting the Public Option to his constitutency? Or Obama’s expansion of the NDAA? Or Obama’s DOJ’s willful inaction vis a vis financial fraud crimes by the Real players? Or Obama’s Treasury Department’s bailout of Wall Street at the expense of Main Street?
I ask because your broad-brush claim that Republican pressure had obstructive effect on Obama’s “real agenda” does not square with a lot of the Facts on the ground that have emerged since the man’s election.
If you are just here to provoke with screed, on the other hand, please ignore these questions and Thanks for Sharing, because Your Comments Are Important to All of Us.
Spin’s important. Americans as a body are ill-informed and have short memories. They respond to spin. A politician has to know how to use it in order to be effective. Obama, due, I think, to his political inexperience and nervousness, during those crucial two years failed to use the bully pulpit to his advantage to force the Republicans and the Blue Dogs to go along with his programs. So yes, by not pushing his advantage he failed quite a bit. The Repubs were rewarded at the midterms for the political success they achieved while seemingly in a much weakened position.
= General George McClellan
Actually, It’s also likely just as Ms G implies. Obama’s really not especially progressive at heart.
You have to be impressed with Obamacrat excuses. It is too bad the 99% can’t eat them, or wear them, or drive them, or live in them.
I’m more impressed with the excuses “progressives” make for the dearth of democracy in Europe, and for Draghi, who continues to craft and impose fiscal policy in Brussels, regardless of what the Greek or Spaniard voter wants.
Oh yes Jim the big choices you have in the U.S. Wow–what a system even corporations get to choose. Yes the envy of the world. I would take Draghi over Obama or Romney any day of the week. Clowns in D.C. Fed government really can;t even carry the jockstrap of the Ecole Grads and the Italians in Brussels.
I don’t mean to be an “Obama-crat”. I don’t know if he has any real governing philosophy or not, beyond getting some kind of majority together to get some kind of legislation out to hopefully manage whatever the crisis is. I haven’t been impressed that he has any particular idea at all about how he wants to manage the economy except to listen to his advisors.
Obama’s a very average right-winger of the 1980s.
However, the Republicans are now putting up candidates who are clinically insane and very dangerous, so yeah, it’s better to have someone like Obama who *doesn’t* think nuclear war is a good idea, rather than a Republican end-timer who *does* think nuclear war is a good idea.
There have been many factual discussions on NC, at least as long as I’ve been visiting, regarding the Great Obama Deception. You can google “great deceiver” and that will likely lead you to some of the root posts and lively discussions that have occurred here in the past year or so.
I voted Democratic my whole life (playing along in the Democratic vs Republican frame)and I voted for Obama in 2009. Then came the shock and awe of having been Had in a Big Way, by Obama, DNC and all the horses that Kleptocrats and their Minions rode in on.
I chose the Obama ticket over the McCain ticket mostly because McCain scared me by choosing Palin as his running mate. I didn’t buy any of that Obama hopey-changey BS. He wasn’t saying anything, but I thought he might be the more stable personality.
Obama couldn’t not take the unprecedented step of ordering the assassination of American citizens since his party did not control Congress, or something.
Also he couldn’t not blackmail and bully the state attorneys general into dropping their title fraud investigations.
And he couldn’t not blackmail and bully Spain into dropping its torture investigations of Bush officials.
And he couldn’t not prosecute twice as many whistleblowers as every previous president combined, and couldn’t not refuse to investigate any of the crimes they exposed.
And he couldn’t not tamper with Bradley Manning’s trial by publically declaring him guilty, something Richard Nixon had to run away from with when the accused was Charles f***ing Manson and the trial was being conducted in a civilian court, not a military court constituted from officers who answer to the C-in-C.
And he couldn’t not impose a no fly zone over the Deepwater Horizon spill, and couldn’t not ban reporters from filming the affected coastline, and couldn’t not order all science vessels to vacate the area so no samples could be taken to determine the extent of the pollution.
And he couldn’t not make it official U.S. military policy to kill any rescue workers who show up when an area is drone-bombed, and couldn’t not give that policy the charming and humanitarian name “double tap”.
The Republicans made him do it! The Republicans!
(Funny how the Democrats could never make Bush do stuff when he was president and they were a weak congressional opposition, isn’t it?)
I consider Obama a right-winger. Like all too many Democratic officials.
Right-wingery needs to be stopped. It’s metastatized beyond conservatism into a disturbing attraction for regimes like that of the Sun King.
Well, I guess we know where the productivity gains and the knock on wealth effects of technological advancements went, as well as the lion’s share of the benefits of globalization.
I am not envious of what the upper economic classes have. Could care less really, except I think as long as the bottom classes have to bear the brunt of these enabling economic and political policies and there is no “shared” pain, things will not change. They have captured the political and economic processes, so why should they? But when the upper classes begin to suffer from globalization and they begin losing their wealth, then our trade and economic policies will begin to shift, politicians will address their concerns, and new strategies and policy will be placed on the table.
But once again to the feast will probably go to the upper classes. I guess the most the lower classes can hope for is a few crumbs will fall our way. Kind of eats away at you when you think about it? I mean, why is their economic well-being more important than mine? I’m a human being, a citizen, it’s my country, and they are my public servants aren’t they? Why haven’t they changed policies to address my economic well being?
“But once again to the feast will probably go to the upper classes.”
Where else can it go? The natural and inevitable flow of funds is from wage-earners to profit-takers. There is no flow possible in the other direction other than consiscatory taxation on excess wealth.
Dear paul;
Right on! I vote for confiscatory taxation. Just like Eisenhower did, and Nixon, and even dear old Jerry Ford. (Why do people make fun of President Ford? A person doesn’t get to be Speaker of the House by being an idiot. I’ll bet a lot of closet progressives wish we had him back as Speaker today.)
Every president you mentioned is to the left of Obama.
“The natural and inevitable flow of funds is from wage-earners to profit-takers.”
Too bad we can’t invent an economy where they’re the same people…
Veblen made this point memorably in his Theory of the Leisure Class. The conservation of archaic institutions is a consequence of Leisure Class contentment with the status quo. Also of the essential conservatism of lower classes who have no energy left over from survival struggles to push for change. And nobody likes radicals, whether their proposals are sensible or even moderate. They remain skunks at the garden party celebrating pecuniary emulation. Those with the energy to read only one book could do worse than this one, although they might find it tough going without a dictionary.
I re-read it once a year!
“Why haven’t they changed policies to address my economic well being?”
“They” haven’t changed them because those policies are in their interests and “they” won’t until “we” change “them”. If we keep re-electing the same folks who made those policies, what can we expect? It really boggles my mind that we refuse to use the best, IMO, nonviolent tool we have for effecting change – the ballot box …
hrm.. how’s that saying go? oh yeah…
So, if we look at those options one at a time;
(i) soap box – blahblahblah … except an extra-exceptional orator such as a MLKJ sure made this most effective ..as did (in a slightly different way) Lincoln, but so did Civil War combatants of that era and neither in the same way — language had eloquence then
(ii) mail box — hrmph — not part of the original 4 (?), but seemingly a purely respectable alternative and slot to fill within the pentagram, since these days, with e-mail making mail cost nothing (well, maybe an inet conn. cost or so) …yet online petitions seem to get only bait-sized catches when they offer real change (or atleast a real 1st step). That noted, think about how much harder it’d be to get each individual to handwrite their own letter and use/pay the snail-mail fees.
(iii) ballot box — what a joke, — except perhaps, and only in certain situations, very *locally* ..however, one must admire the way eminent-domain-law (each successive larger municipality laws superseding their smaller counterparts) – just look at the *horizontal* hydraulic fracturing fracking issues in the northeastern states as an example, not to mention…. meh-the list is too long!
(iv) jury box — Jury Nullification; fija.org, i don’t need to say anymore (since: if we can’t even get Prosecutors to indict the criminals, then we must either indict the prosecutors ourselves, or delegitimize all their offerings and decisions, and laws/rules/acts/statutes/regs/ordinances/rules).
(v) ammo box – this doesn’t jive with me, nor with the NAP (non-aggression principle), yet self-defense is a just cause for employing use of force.
It is clear, and always has been, the *incentive* is $, and the more the merrier: it allows for a greater *liberty* (and we all know it). So, the incentive part of the root system, if not the entire system itself, needs to be abated.
Love
Hay Bill, where do you live that you can ride the bus for a quarter? Goodness, all us less fortunate folks sure could use that system.
Assuming those are nominal figures, add to that a.) increasing cost of health insurance an care, b.) fewer benefits associated with work, c.) increasing cost of gas, d.) taxes going up, e.) increasing cost of food driven by (c.) and more junk fees by local government. f.) overall lower quality of serices A heady brew…
And not just the inceasing cost of food but the flat out unavailability of what I call real food as opposed to antifood. Food nourishes. Antifood taxes well being.
You are absolutely correct. I shop the “perimeter” and the increases in prices of real food are astrononomical–up 35% in my budget. Guess its the downside of going for meats, veg and fruit and not eating anything packaged/nothing in a box and nothing that does not spoil in 24 hours. I bet if I did pasta, processed foods, mac and cheese, pizza pockets and cereals and other assorted crap the hit would be down to 15% or so but the toxic effects would be serious….
Its not just Scamerica. Xtrevilism is cleaning up and herd thinning everywhere…
Excerpt
“BERLIN—The economic “miracle” that has enabled Germany to escape the worst of Europe’s debt crisis is largely passing by some of the most vulnerable people in society, critics say.
And as Germany finally begins to feel the pinch from a crisis that has pushed most of its neighbors into recession, it is the low-wage workers and the old-age pensioners who are being hit hardest, the critics charge.
According to a new four-yearly poverty report drawn up by the labor ministry, the gap between rich and poor in Europe’s top economy is continuing to widen.
In 1998, 45 percent of Germany’s total wealth was owned by the wealthiest 10 percent of the population.
Ten years later, that proportion had risen to 53 percent, while around half of all households owned just 1.0 percent, the study found”
More here…
http://business.inquirer.net/83476/german-economic-miracle-leaves-the-poorest-behind
Deception is the strongest political force on the planet.
Of course means are always skewed it would be interesting to see the breakdowns within the groupings–probably a sadder tale.
While I think the post makes an interesting point, I think I have to quibble about how the data was used here, especially since there are various similar graphs showing income growing and shrinking at different rates depending on how the data is used across the internet. First the good news about the numbers here is that inflation is taken into account, although personally I would have taken a median between CPI and RPI measures. This would have made the numbers look a lot worse and you have to consider that inflation has tended to affect the lower income households much more than the higher.
Ezra Klein had a post up last year on similar data and used it to show that the top 0.1% median income went up a lot more than the rest of the populations median income.
http://voices.washingtonpost.com/ezra-klein/2011/01/a_graph_im_trying_to_understan.html
Looking through the census website which is the data source for this report I found a couple of interesting facts about the definition for income. For example :
Income is exclusive of certain money receipts such as capital gains.
Income does not reflect the fact that some families receive part of their income in the form of noncash benefits, such as food stamps, health benefits, subsidized housing.
Income is before payments for personal income taxes, social security, union dues, medicare deductions.
Capitals gains is actually tricky to include and should only be included in my view if the capital gains are realised (not just on paper). This I think would tend to push up the income of the top income earners on the graphs. Tax rates over the period have also dropped which needs to be taken into account and would affect the incomes of the highest and lowest paid (higher disposable income). You also need to take into account some benefits which are not included which would somewhat boost the incomes of the lowest earners. Perhaps the CBO does a slightly better job of including these things, but they seem to fail to take into account inflation or the change in value of the currency.
http://cbo.gov/sites/default/files/cbofiles/attachments/10-25-HouseholdIncome.pdf
I not altogether happy with comparisons with peak earnings years in this post (see original) as I cannot understand why the real median household income decline from peak year by age bracket seem to be a lot higher than by earnings quintile (see source post). Intuition tells me the highest quintile of income has done ok, the lowest pretty poorly but has been rescued somewhat by low taxes and benefits, and the inbetweeners did badly except of course when they were withdrawing equity from their houses (realised capital gains).
Ezra had a stab at why median incomes falled to rise, but I was a little unhappy with the conclusions. You can blame financialisation, the demise of unions, increasing red tape, china’s growth model, social safety nets, but non of them really disrupt the flow of money. Certainly they add a slight tax as the money flows through the hands of some of the very wealthy but it seems to me it can not be the whole story in the significant drop in productivity gains being passed into income. My candidates for the explanation would be.
1) Investment in productivity gains do not match expectations. The productivity gain cycle is too quick for businesses to efficiently keep up. (Off shoring bias for example)
2) Incorrect measurement of productivity growth. Includes domestic processes, supply chain efficiency, foreign supplier processes and real domestic productivity is no where near as high. (Sources for this type of argument seem a bit biased to me)
3) Productivity gains leak back down the supply chain to the raw materials. Extraction processes for energy and raw materials are becoming more expensive.
4) Wage growth may exceed productivity gains in emerging markets, so to compensate wage growth must be below productivity gains elsewhere. (Bad interest/growth policies in emerging markets)
5) Money gets increasingly syphoned off into the black market, through bribery and corruption.
I am not even convinced any of those is correct.
This is a textbook example of taking a simple concept and making it complicated.
The bottom line is that the income distribution is badly skewed and there is no process currently in action that will reverse it.
In concise terms I am arguing that income inequality is worse than depicted in the post and the top 5% earners may not have seen a drop in their income. I am also suggesting not only is there no process to reverse it but that real solutions are not even on the drawing board.
Of course as the country as a whole becomes continually poorer–there may be no solutions only unpleasant outcomes.
“…also suggesting not only is there no process to reverse it but that real solutions are not even on the drawing board.”
Sorry, I didn’t mean for my comment to come across as so harsh. I was trying to make two unrelated points at the same time.
Many of us know the things you posted. Casual readers will be turned off by long comments and not even read them. Folks like you that obviously have in-depth knowledge would be more helpful if you could communicate at the lowest level. Yves intimated this the other day.
Keep it simple should be the one lesson we’ve learned from the right. Liberals lose the complicated arguments to the simple one, even though they are right.
Second, there isn’t currently any process that is working to return spending to the wage-earners, but the obvious one is heavy taxation on capital gains and excess wealth coupled with near-zero income-related taxes on those earning below say $100,000/year. We’ve done this before for the most part, and it was working pretty well.
Another thing that needs to be pointed out is that businesses, if they earn a profit (most do), are the antithesis of job-creators. They remove more spending from the economic system than they add. This is a mathematical constraint on a stable economy that is one of the elephants in the room, but we never see it discussed.
Yes my fault, my post was not particularly focused or lucid and the intent was not clear. Apologies to everyone, especially Paul who was kind enough to point it out.
I am not sure all business are the antithesis of job-creators. Very large businesses possibly, but I am not sure about small ones.Could you expand on the idea.
Brick,
Yes, I was in general referring to the biggest businesses, not small business. I doubt small businesses account for more than a neglegible amount of accumulated wealth.
Mathematically, profits imply that investment removes more spending than it adds, so the net flow of funds is towards profits and excess wealth if it isn’t spent back into the economy. There isn’t much evidence that has been.
We’ve “printed” (created) $15 Trillion in net dollar assets since 1980. About $5 Trillion is held by foreigners. Who holds the rest? I doubt that it’s held by the middle class or the poor.
Add to that $54 Trillion in outstanding credit ($13 Trillion in home mortgages), meaning $54 Trillion of additional dollars offset by equal liabilities.
Who is holding the dollar assets from that and who is holding the liabilities?
Another thing that needs to be pointed out is that businesses, if they earn a profit (most do), are the antithesis of job-creators. They remove more spending from the economic system than they add. paul
The Bible makes a clear distinction between “profits” (good) and “profit-taking” (bad).
Too bad the analysis of income mal-distribution stops at the upper 5% or 1%. My guess is that the upper .01% account for the majority of growth in income disparity. If that is the case, seizing all the assesses of as few as 1,000 individuals, liquidating their status as a ruling class and shipping them to Guantanamo would be a giant step in returning economic democracy the the USA.
Maybe a bit harsh but I agree with the sentiment. We do after all outnumber them by at least 1000 to 1 so if they succeed it’s only because we allow them to.
Brilliant.
It will be easy to tell the day Americans get serious about establishing genuine democracy in this sorry excuse of a country. Billionaires simply cannot be allowed (the people suffer them. It need not be that way at all.).
If the remaining wealthy among us wish to set policy, write laws, and exexute and enforce such, then they can serve in government. Otherwise, they get one vote, like the rest of us (our society could easily be ordered this way).
Stagnant incomes for the many. Exponentially grwoing incomes for the few.
Thank God we live in a democracy. Think how much worse it would be if the people did not govern.
This is where a DemoBot Troll would jump in and screech, non-sequitur and all: “That’s why you have to vote for Obama!”
+10
I’d rather be a DemoBot troll than a EuroZoneBot Troll who continues to cling to an ill-fated, artificial construct known as the Eurozone, even if it means the suppression of democracy and stifling fiscal policy.
Are there more DemoBots or EuroZoneBot Trolls in NC?
I’d bet more EZB trolls.
You are clearly an America firster with little grasp of the situation in Europe. As bad as things in Europe are emphasized in on U.S. media rest assured things much, much worse in U.S. For starters we are not obese and barely literate in one language. There there is the true economic condition of the respective areas–Europe excellent infrastrucure and the U.S.–maybe a cut above brazil. Rule of law? In U.S.–don;t make us laugh.
Sticking to the post–ever compared income distribution data for the U.S. with say France and or Germany? That alone makes a hash of your U.S.A. far better than Eurozone–again better how Jim?
Actually that first graph is a reprise of the one I created for a post here on income inequality and the death of trickledown. The sole difference is that Short has added a line for the top 5%.
The second graph is important because it illustrates something we have known but really slams it home. Workers’ incomes in their prime, highest earning years have been decimated. Many lost their jobs and even if they found new employment it was at much lower wages.
We tend to focus on unemployment, and unemployment is considerably understated: 8.15% reported vs 12.9% real, but a story that has been unreported or underreported is that the deteriorating quality of American jobs in terms of stability, income, and benefits.
I thought that chart looked familiar. It would be most interesting to see a similar breakdown within that upper 5%. I’ll bet it’s even more starkly divergent, with the top 1% at nosebleed altitude.
The evidence is now overwhelming that the elite are parasitizing the herd, but as Paul and Brick suggest above, the reality is even worse than the charts show, and worst of all, there’s no political force or will in sight to slow it down. Contrary to its rhetoric, the Fed is pouring gasoline on the fire with a fire hose.
Last time I saw such numbers (from tax data), the top 1% actually don’t break out that much…
— it’s the top 0.33%, million-dollar-a-year men, where the divergence REALLY starts to show up. And the top 0.1% has amounts of money sufficient to buy governments. (And, well, they do.)
And as you pointed out at the time – this information is cold hard proof that trickle down does not work.
Agree!
One part of “trickle down” is true; that capital concentration for economies of scale is good. But capital concentration does not require wealth concentration.
Hence we should encourage the use of common stock as private money. But skippy, he apparently doan like “sharing.” :)
Hint to self… Fat kids should not play – Hide and Seek –
Skippy… nuff said…
Funny that I should have to teach the value of “sharing” to a Leftist. But it’s always about power with you guys, isn’t it? So “sharing” power is the last thing you want to do? Beause God forbid the world proves it doesn’t need you?
Funny that you constantly try to label (left et al), use terms such as value and sharing, when you are quite fine with shoving down humans that don’t share your cults beliefs.
Skippy… Teach me about sharing? ROFLMAO… Everything I do these days is pro bono, everything…. All you want is some delusional private world, common stock, gawd is omnipotent, economic financial rationalism actor thingo, voodoo that makes Reaganomics look intelligent.
When is divorce most likely to occur?
Who is the target and what are the derivative effects?
What does the demographic line of partipation look like.
hitler and stalin did not come to power because a few rich people wanted to avoid taxes. what is the last bait and switch before final consolidation?
If you think about it, the prototypes to implement this outcome have been under construction for quite some time, which calculus, or a quick look at that graph’s convexity/concavity tells you.
this is the easiest time in history to swim upstream physically, but the most difficult psychologically.
So we’ve had a rundown on our great capitalist experiment from 1840 to 2012 today. 1967 was the beginning of inflated prices due to the Cold War. Remember the Cold War? When it was “over” (not) lots of people lamented because it had been a very productive time for technology. Paid for by various governments (that’s you and me). And there is no “earthly” reason (as Elvis would say) why we cannot now spend on needed technology, except for entrenched interests. Afraid they will lose control and lose their wealth and power… But back to the point: we do see in these stats that it wasn’t so productive for the lower classes. Gee, ya think? They only managed to tread water at best. The very guys who fought in Korea and Vietnam; and who now fight in Afghanistan and wherever. This is not only proof that trickle down is a lie; this is proof that an argument for our entire system because it provides opportuniity, jobs and blah blah blah, is a total lie. Our system does not work. Whether or not it can even be classified as capitalism is another rant.
Does not work and realistically putting aside myth and cant–has had a lot of warts just like any set of arrangements devised by humans. But now, we dont even have the appearance of fairness or decency by the ruling elite. Old enough to remember back in 1970 when we are all agog at 4 billion humans on earth, now with close to 7.5 we all become more and more expendable……
Dna and motor control; the engine is always there.
swim upstream, recognize your mate, swim upstream, recognize your community…
benny still has the clutch engaged, but is puting in gear. swim.
if there is no police force, where do you want to be, to begin your journey?
“Expecting consumers to lever up even further is not a way out of the stagnant incomes box.” However, this IS an admission that the “job creators” and wealth generators may actually be us ordinary folk who are not capitalists or bankers. All hail the revelation!
On the one hand, Joe and Jane Ordinary are credited with the capacity to get the economy moving again. But on the other hand, they are still spat upon, castigated as moochers. Interesting times we live in.
““Expecting consumers to lever up even further is not a way out of the stagnant incomes box.” However, this IS an admission that the “job creators” and wealth generators may actually be us ordinary folk who are not capitalists or bankers.”
Astute observation. Please repeat it at every opportunity so that it becomes internalized by others.
quite frustrating ; my post is being blocked for some reason ; no URLs and no html tags, yet less than an hour ago, i used both
Love
Very interesting charts, though I would be careful not to draw too many conclusions based on the data. There are lots of things that can impact these numbers:
1) Many, many workers get their health insurance through their employers. They pay the full cost of that, but only see half of it taken out of their paycheck. The other half is “paid” by the company, but they account for this by lowering workers’ wages. With the rise in health care costs well above inflation since at least 1980, take-home pay has suffered as a result. This would impact high-wage earners less.
2) Income includes interest and dividends, but not capital gains, as per the report. Thus the secular decline in interest rates has lowered investment income for everyone.
3) Many pensions are not indexed for inflation and many have a reduced payout for a surviving spouse in the event of the primary earner’s death. This goes hand-in-hand with:
4) Demographics. The makeup of the population has changed as more individuals move from net earning to net spending of a lifetime’s worth of savings. They earn less because they’re no longer working, and in an effort to maintain lifestyle in the face of the above points, they dip into savings generating further declines in income.
Yves, your point that we shouldn’t expect consumers to re-lever our way out of stagnant incomes is spot on.
First we had the “clown car” and now we have what should be referred to as the “idiot train”:
http://www.huffingtonpost.com/2012/09/24/federal-deficit-spending-cuts-tax-hikes_n_1908350.html?utm_hp_ref=business
“The best way to reduce the federal deficit is through a combination of higher taxes and spending cuts, according to a group of economists.
The 236 members of the National Association for Business Economics recently surveyed say the country needs more fiscal stimulus through 2013, but by 2014 it should be time to throttle back. The reason for the delay: the sluggish nature of the country’s economic recovery.”
We are in the midst of a technological revolution that is driving incredible gains in personal convenience as well as productivity throughout our economy. If you assume that technical breakthroughs and innovation are highly concentrated in a small group of talented individuals and that financing of these innovations is also highly concentrated, you will get the exact change in the income distribution that we see. Further, if you assume the impact of productivity gains is felt most by those workers with least skill in the workforce, we exacerbate the distribution changes. The answer to this phenomenon is not to hamper or place an additional tax on innovation as we already tax the innovator quite well. The answer is to support the impacted worker to ease their transition to this change.
Today, the US chooses to subsidize defense workers and middle to high income retirees heavily. This decision creates little benefit to the economy as these groups save the additional income or invest it in second homes and vacations that produce little in the way of multiplier effect on the domestic economy. If we want to address this situation we need to cut these subsidies and invest, instead, in programs that give opportunity to displaced workers and that have a multiplier effect on employment by focusing subsidies on recipients who will spend the new found income creating opportunity for additional workers. Here are some thoughts:
1. Expand our investment in developing teachers with strong math and science skills to teach in our public schools.
2. Expand our investment in subsidies to energy efficiency and train workers to educate the average citizen on the advantages and savings possible from conversion to more efficient alternatives.
3. Make an investment in health education by training workers to educate citizens on diet and exercise programs to improve health and reduce future medical expenses
Transferring even a small percentage of our government spending would accelerate energy efficiency and put a large number of workers back to work.
Brilliant analysis! Great ideas you get the 7th grade civics club honorable mention. Go to bed kid.
Humanity can no longer afford the parasitical labor-eating rich
Eddie, to give wealth to one group, you have to take it from others. If you don’t take wealth from the people who have income and property, then from whom do you take it?
Defense workers and a certain subset of seniors will not yield nearly enough tax to fund such ambitious education and energy schemes as you describe.
You have to tax those nice little “innovators” of yours, in order to fund all those nice little pie-growing programmes of yours. Sorry, but there it is.
Roland,
Actually to give funds to a new transfer program all you need to do is reduce funding of an existing transfer program. The funds taken from retirees and bomb builders will be sorely missed by them but using it to actually do something useful will help the economy.
Capo Whatever,
Your Malthusian leanings and dismissive tone are charming to a point but c’mon do you have anything useful to say?
Eddie,
Taxes don’t “fund” anything.” Funds are free as in beer, they come from the printing press (electronic and virtual of course).
Taxes serve to create flow, without which there is no economy. Without taxes the wealth accumulators (a very small group) remove funds from the flow and as expected, the economy collapses. This is the Paradox of Thrift@ and the Paradox of Investment™ in action.
This partially explains why massive deficit spending has not been inflationary (many will disagree with this but if one looks closely most of the inflation we have experienced over the past 30 years has been related to the price of energy).
On the other hand, if a handful of people are accumulating dollars at a rapid pace there is no solution other than spending new dollars into the economy, especially in the anti-tax environment we currently live in. The dynamic is further exacerbated by a trade deficit where $500 Billion is leaving the economy every year. Can’t have commerce if no one has any money.
The “tyranny of the arithmetic” is the “Force” in this movie.
“incredible gains in … productivity throughout our economy”
Productive of what? Also it is a fantasy that the gains are going to the “producers”. They are going to a wealthy rentier class.
“The answer to this phenomenon is not to hamper or place an additional tax on innovation as we already tax the innovator quite well.”
Yes, but back here on Earth, not so much.
Hugh,
At the root, workers are the producers. If they don’t work, nothing gets produced.
This may change through mechanization, unfortunately. The rentiers best friend.
We citizens may become nothing more than Soylent Green.
In these depressing stats I see a big opportunity for enterprising guillotine manufacturers.