Yes, it’s claiming that the rise in inequality that’s showing up in the numbers isn’t as bad as it actually looks because the cost of living goes up more slowly for poor people and other hilarious reasons. Like I said before, there are a whole bunch of conservative economists who’ve been making a living explaining away the effects of conservative economic policies for the past couple of decades. A few years ago this guy, or his fellow travellers, were claiming that median wage stagnation wasn’t relevant because the average American was so much richer due to the housing boom and the consequent huge increase in the equity they had in their home.
Come on Sam, let’s have an answer please. Or this is just yet another in an endless string of threads where you make claims backed up by flimsy or incorrect “evidence” and then run away when you’re called on it. And if you don’t answer please don’t make the ridiculous claim that wealth hasn’t become more concentrated in the hands of the wealthy over the past couple of decades in future threads. Otherwise a link to this thread will be the first thing posted.
Are you for real? I just finished backing up my claims with repeated cites to source data. I pointed out explicitly how the author of that piece selectively cherry picked his end points to support the conclusion he did. In another thread on this subject, I went to the trouble of cross-referencing the data to other data sets drawn out of other data, to show they were accurate. AND, I made my own spreadsheet and did my own regression analysis to verify the actual trends.
The table I posted above is the table that the author of that piece used for the graph he drew. I believe it was originally sourced to the census office, but you can go dig out that information, because I’m getting very tired of you and your wild accusations and insistence on making every debate personal.
Your numbers seem to conflict with everything the guy you claim produced them has had to say about the distribution of wealth in the US over the past few decades. And what we do know is that the economist in question is an expert on wealth, has written a book about it and is managing editor of something called the Review of Income and Wealth, so I’m guessing he knows what he’s talking about .So I’m wondering if those numbers are actually his numbers. There’s no link to where you actually got them so could you provide a link please? This isn’t a wild accusation, I’m simply pointing out that there now exists a long string of threads where you make claims based on “evidence” which turns out to be nonsense and then head for the exits when you get called on it. That isn’t a wild claim, it’s a factual statement. And this isn’t personal, it’s just annoying when you debate somebody and they always end up exiting the debate and then bring up the exact same claims at a later date, which is what 's happening here. So can you provide the link please?
I told you the numbers are his numbers. They are shown in this cite, which has been linked to repeatedly in those other threads. I linked to it in this thread, and you acknowledged the source, saying,
So it’s pretty weird of you to now be claiming that I never cite my data, and that I’ve never told you where this particular data came from.
Click the first link, and scroll down to table 3. I copied it verbatim *. It directly contradicts what he’s saying. And in particular, please note the bar graph immediately following, which is created using the data from that table. Notice the big ‘hump’ in the graph in the middle of the 1970’s. That’s a real anomaly in the data. If you remove that hump, you will see that there is NO trend of increasing wealth from 1929 to 2007. It’s essentially a flat line with a bunch of variance.
(* The last data point is different. It looks like he’s updated the table on that page with some new data, since he references Wolff, 2009 as an update. I’ll be happy to use the new number, since it doesn’t change the point at all)
As someone who sometimes analyzes data like this for a living, what I see is a spike in wealth transfer to the bottom 99% in the 1970’s, then a period of regression back to the mean. So we have to ask ourselves, what was special about the 1970’s, and can it account for an anomalous bump in the data like we see? My hypothesis is that stagflation wiped out a lot of wealth at the upper end in a very few years. Inflation destroys the real value of wealth - $1000 in 1974 was only worth $610 by 1980. The combination of high inflation and stagnant growth and a flat stock market (the DJIA was 803 on Jan 1 1974, and 822 on Jan 1 1980) meant that there was nowhere for capital to hide, and it got wiped out. Lower income people typically have debt, which actually benefits from inflation, and if they have wealth it’s usually in the form of real-estate, which appreciated due to inflation. But the truly wealthy invest in corporations, in the stock market, in bonds, etc. Those assets got hammered.
So if we can account for that strange six-year hump in the data, we should remove it from the series. If we do that, we see no trend at all. Hell, since the hump is fairly smooth, you can leave it in and get the same result.
Of course, if you want the most partisan, tendentious interpretation of that data, you’ll start from the peak of that hump and use it to ‘show’ that wealth in America is on a never-ending trend upwards. Which is exactly what Wolff does - he repeatedly used the years 1976-1980 as starting points for his trends, which I find highly dishonest.
In addition, you’ll note that after 1998 the share of wealth held by the top 1% starts to decline again. But Wolff conveniently ignores that data, instead choosing to talk about “The 25 years since 1976”, or in your own quote a few messages above, stopping in 1992.
Do you have Excel? If you do, try this - take his table of data, and plug it into excel, and draw a scatter plot chart with it. And include a trendline. You’ll instantly see that the trendline of the data is DOWN. The slope I get is -.00021 per data point, indicating that real wealth held by the top 1% has actually been on a decreasing trend since 1922. And notice that I’m being really fair and including every single data point. Had I done what he did, I could have chosen 1929 instead of 1922, and the trend would have been REALLY down.
This is not rocket science. I’m using his own data. I’m just using it fairly, and not cherry picking highs and lows like he did.
And the bottom line is that the total amount of wealth held by the top 1% today is at best 34.3%, and I’m guessing it’s quite a bit lower because of the market crash and recession (look what happened to wealth between 1929 and 1933 - it dropped dramatically). But even at 34.3%, that’s lower than it was between 1998 and 1989. It was also higher in 1965, 1939, 1929, and 1922. It’s also right about on the mean for the entire series - which is where you’d expect it to be if there was no rising trend of wealth.
You know, I think you’re severely biased on this. Someone always has to be the last one to post in a thread. Every time it doesn’t happen to be me, you see it as confirmation of your belief that I always ‘run away’ and that I don’t cite my data. But that’s not the case at all. Usually when I stop talking to you, it’s either because you decided to make it personal again and turn it into an ad-hominem attack like you just did again in this thread, or because you refuse to acknowledge my own points or refuse to read my sources or simply jump to conclusions like you just did in this thread. So I give up, and you chalk it up as a ‘win’.
I wasn’t going to come back to this particular thread again, but your last message was reasonable in tone so I responded. Had I not come back, I’m sure you would have seen it as another example of me refusing to provide cites and ‘running away’. But as you can also see with my response, it’s you who were wrong - both about my lack of a cite, and in the debate in general. Maybe you should be more careful about your accusations in the future.
So the numbers come from the website of some sociologist, not the economist himself, Wolff. There’s no actual numbers direct from Wolff, only somebody’s interpretation of them. Meanwhile Wolff himself is adamant that there’s been a huge increase in wealth inequality going back to the mid-seventies after wealth inequality had fallen since 1928, the premise of this thread.
Heres’ what he had to say again :
***MM: What have been the trends of wealth inequality over the last 25 years? *
Wolff: **We have had a fairly sharp increase in wealth inequality dating back to 1975 or 1976.
Prior to that, there was a protracted period when wealth inequality fell in this country, going back almost to 1929. So you have this fairly continuous downward trend from 1929, which of course was the peak of the stock market before it crashed, until just about the mid-1970s. Since then, things have really turned around, and the level of wealth inequality today is almost double what it was in the mid-1970s.
Income inequality has also risen. Most people date this rise to the early 1970s, but it hasn’t gone up nearly as dramatically as wealth inequality.
But that’s not the only evidence that wealth inequality has risen over the past few decades. Here’s a Citibank memo making the same points :
http://www.scribd.com/doc/6674229/Citigroup-Mar-5-2006-Plutonomy-Report-Part-2
It says the US has become a plutonomy, a country where a small number of people run the show. The rich and everybody else. Here are some excerpts :
Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This
thesis is not without its risks. For example, a policy error leading to asset deflation, would
likely damage plutonomy. Furthermore, the rising wealth gap between the rich and poor will
probably at some point lead to a political backlash.Whilst the rich are getting a greater share
of the wealth, and the poor a lesser share, political enfrachisement remains as was – one
person, one vote (in the plutonomies). At some point it is likely that labor will fight back
against the rising profit share of the rich and there will be a political backlash against the
rising wealth of the rich. This could be felt through higher taxation (on the rich or indirectly
though higher corporate taxes/regulation) or through trying to protect indigenous laborers, in
a push-back on globalization – either anti-immigration, or protectionism.We don’t see this
happening yet, though there are signs of rising political tensions. However we are keeping a
close eye on developments. …
The overall point here is that the rich continue to be in great shape, in relative terms. Indeed,
their net wealth to income ratio (Figure 3) has risen since the 2001 survey was published. It
now stands at 8.4, in other words, net wealth is over eight times annual income. In 1995 this
ratio was a relatively meager 6.2.We think this rising wealth is the real reason why the rich
are happy to keep consuming, and are behaving rationally in so doing. They simply do not
3
need to save as much to maintain a healthy wealth balance, as they did in prior decades,
because their wealth is growing rapidly.
There’s plenty more evidence yet to come but I’d be interested in what you have to say about this bit first. Are Citibank wrong as well. Are you still going to contend that the rich stopped getting richer in 2001, which I think is your current position. Which economic policies enacted since 2001 do you think have reduced wealth inequality? According to Citibank they’re going to keep getting richer too. Do you think this is correct?
Would you please read the damned cite before saying this stuff? And for that matter, read my messages?
The table in question is attributed thusly:
I mean really, this isn’t hard. The attribution is right below the table.
You really didn’t read what I wrote, did you? OF COURSE there’s been an increase in wealth inequality going back to the ‘mid 70’s’ - The mid 70’s represent an outlier - a sudden trough in the amount of wealth held by the top 1%, probably due to inflation. If you start your measurement from 1965 instead of the mid-70’s, there has been a DECREASE in wealth held. Likewise, if you start from 1998, there’s been a decrease. Or if you start from just about any damned year other than the mid 70’s, you’ll find no trend that rises above the noise level. Is this really that hard to understand?
This is a serious question: How much math background do you have? Is this stuff going over your head? Because I don’t know how to explain this any better than I already have, and I’ve also given you the tools to do the analysis yourself.
I have rebutted this very paragraph in detail about four or five times now. I’m not going to do it again. He’s dishonest, and you’re wrong. He’s choosing to start his measure from an historically anomalous data point. Again: If you take the ENTIRE series, representing wealth held by the top 1% from 1922 to 2007, the trendline is DOWN. Try it yourself.
If you’re going to insist on using the ‘mid-70’s’ as your starting point, I expect you to explain to me why that starting point is any more valid than starting from 1965, 1989, 1992, 1933, or 1929 - all of which would show a decreasing trend. Or more fairly, using the historical mean over the period since records have been kept, which would show a flat line.
Any statistician looking at that would immediately question the choice of that particular data point to start from, given that it represents such an outlier from the rest of the data. You better have a damned good reason for choosing it. I mean, other than it’s the only number you can possibly pick out of the entire damned series that allows you to make the claim you want to make.
[quote]
Can you cite their source data? The link isn’t working for me. But also note they aren’t looking at exactly the same measure. I haven’t run the numbers for wealth held by the top 5%, or the top quinitile, or other possible ways to slice and dice the data, so I’m not ready to say whether they are right or wrong until I know exactly what they are measuring.
But I’m not going to let you deflect and change the subject after the amount of crap you’ve put me through over that stupid table. Before we go any further, I’d like a rebuttal on the specific points I’ve brought up, or an admission that you were wrong.
Never mind the cite. The link worked for me now. The source material is the survey of consumer finances from the Federal Reserve. If I get time, I’ll dig through it tonight.
Having read the source documentation, I just want to point out for now that it does not reference the top 1% at all.
Dick Dastardly - your problem is that you are smearing together all sorts of data under the single category of “inequality”. You mix in income with wealth, you treat data about the top 1% as equivalent to data about the top 20%, etc. To you, anything that show the ‘rich’ getting richer is evidence for your case.
But there is a gigantic difference between saying that the top 1% are getting richer, and sayin the top 10-20% are getting richer. Because the top 10-20% of the population does not equal the mega-rich. To get into the top quintile of income in America, you just need to be a family with two solid income earners. For example, a middle class family with two union workers, or a family with a teacher and someone earning the median salary. 77% of families in the top income quintile have two wage earners in them. If their wealth is growing, I have a hard time seeing this as a bad thing. They’re the people doing exactly what we tell our kids we want them to do.
The top 1%, on the other hand, is the super-rich - CEOs, professional athletes, millionaire entrepreneurs, investment bankers, etc. Generally people with ivy league educations and strong connections. They have net worths in the millions of dollars. The top 10% on the other hand are the upper middle class - salaried professionals, white-collar government workers, etc. I’ll bet a whole lot of people on this board fit in this category. Anyone with a household income over $100,000 fits in this category.
It is absolutely true that there is a gap growing between the bottom two quintiles and everyone else. But whether that gap is caused by mega-millionaires taking all the wealth, or whether it is caused by formerly middle-class people doing better because they’re working harder and becoming more educated is a critical distinction, with very different social policy implications.
In the last thread we had about this, I went over this stuff in detail. I suggest you go back and read it with an open mind, because you’ve simply rehashed all your old statements in this thread, and pretty much ignored everything I’ve had to say. There is no point going over it again.
I’m tempted to start a new thread with a more nuanced discussion of wealth and income inequality, and what its source is and what to do about it. The source data for that article breaks down wealth and income in many different ways, which is great if you want to seriously analyze what’s going on.
However, the source data also offers lots of fodder to pick and choose data points for political purposes, and I no longer think a reasonable discussion of such a thing is possible on this message board.
Let’s forget about top 1%, top 10% or whatever. What you were originally claiming, based on numbers from some sociologist’s website, is that there hasn’t been an increase in wealth inequality recently. Now straighr from the horse’s mouth the guy you got your numbers from says that that isn’t the case, there has been an increase. I know you claim his numbers don’t back that up but a. they’re somebody else’s (a sociologist) interpretation of the numbers, not the actual economist and b. I’m guessing that the economist in question has forgotten more about his own work and the subject of wealth in general than you and me put to gether know. I think most reasonable people will go with the economist on this one.
And secondly we have a Citibank memo saying that welth inequality is increasing. Now we both agree that top earners are earning twice the share of national income that they were in 1980, that income disparity is increasing. So here’s what Citibank have to say about wealth :
*Indeed,
their net wealth to income ratio (Figure 3) has risen since the 2001 survey was published. It
now stands at 8.4, in other words, net wealth is over eight times annual income. In 1995 this
ratio was a relatively meager 6.2.We think this rising wealth is the real reason why the rich
are happy to keep consuming, and are behaving rationally in so doing. They simply do not
3
need to save as much to maintain a healthy wealth balance, as they did in prior decades,
because their wealth is growing rapidly. *
So even as their income is increasing compared to everybody else, the disparity in wealth inequality is growing even faster!
So whether they’re talking about the top1%, top 10% or whatever, would you agree that the people who Citibank term “the rich” are seeing their wealth increase much faster than everybody else as well as their income?
You still aren’t actually reading any of this, are you? The numbers were directly attributed to Wolff himself.
Those numbers are NOT a ‘sociologist’s interpretation’. They are the EXACT numbers straight from Wolff.
I don’t give a rat’s ass how much knowledge Wolff has - his insistence on using the mid-1970’s as his baseline tells me all I need to know. It appears to me that he’s like Paul Krugman - a smart, knowledgeable guy who knows how to twist things to support his political views.
I don’t care. The math is obvious and staring you right in the face. This isn’t a matter of consensus. You can dig up as many people as you like to tell you that PI equals 3, but that doesn’t change reality.
First of all, that Citibank memo was produced by financial analysts, for the purposes of investment analysis. It’s not a sociological paper, it’s not peer reviewed, and I have no faith that a Certified Financial Analyst has any better ability to understand what’s going on under those numbers than I do. I’ve read the source material. There are no easy conclusions to be drawn from it, other than the barest of facts that the bottom two income quintiles are not moving ahead, while the top quintiles are. Thus, there’s a gap between them, and it’s growing.
See, you hand wave away the difference between the top 10% and the top 1% as a ‘whatever’. To you, they’re all the evil rich, and if they’re gaining, something’s wrong. My previous arguments were solely centered around that table referring to the top 1% (which is must closer to the traditional definition of the ‘rich’, by the way).
The policy implications of the top 10-20% getting richer, while the top 1% are not, are much different than the policy implications of the top 1% getting richer while everyone else does worse. And in any event, the policy implications are not clear. For example, one thing that jumps out of the data is that 77% of the top 10% in household wealth have on average two wage earners. The bottom quintile has on average ZERO wage earners (i.e. less than 50% employment for one person), and the quintile above that has on average one wage earner.
There are many confounding variables that have to be controlled for to draw meaningful conclusions from all that data. For example, older people tend to make more money, and the population is aging. The bottom quintiles tend to be younger people, so some of the effect we’re seeing may simply be the population bubble moving through its peak earning years. There are many other possible causes - which is why the only people who see absolute answers from this data are partisans with an agenda to push. A ‘family values’ Republican could easily use this data to ‘prove’ that wealth inequality is the result of liberal policies that have caused breakdown of the family and a rise in single-parent families.
Then of course we have that NBER paper, which carries a hell of a lot more weight than a paper from some CFA at Citibank, which suggests that most of the wage gains you see at the top end are merely compensation for the fact that the consumer price index for people in the most expensive locations has gone up much faster than it has for those in low income regions, and that the real wage gains are maybe 1/10 the amount you see in the raw numbers. But you dismissed that one awfully quickly, didn’t you? While at the same time treating the Citibank paper as the final word and unimpeachable.
Finally, the Citibank report on total wealth was written right at the height of the real-estate boom. Let’s have a look at those numbers again in a few months, when the Federal Reserve releases its 2010 household finance survey. Any guesses as to what it will show? People in the bottom two quintiles don’t own real estate as a rule. Their net worth is already close to zero. So, I suspect that we’ll see that gap between the ‘rich’ and the poor come down substantially.
But like I said earlier, I no longer have any faith in being able to have a reasonable discussion about these issues with you. The difficulty I had just trying to get you to stop and look at a simple table of numbers suggests to me that the exercise will be a complete waste of my time.
I’m surprised that no one has mentioned Allan Greenspan, Ayn Rand, and their wacky ideas on economics, fraud, and totally unregulated markets. No one seemed to notice at the time, because things did seem to be working well, but I think he let the foxes run free in the hen house.
There was a Frontline report on the housing derivatives market.
They’re a sociologist’s interpretation of Wolff’s numbers. You don’t actually have a set of numbers from anything authored by Wolff, do you? That’s a rhetorical question. Meanwhile the man himself, like the Citibank people and a bunch of other guys all say that, contrary to your claims, there’s been a great increase in wealth inequality over hte past few decades.
2. So what you’re saying is that there hasn’t been an increase in wealth inequality, instead there’s been broad-based wealth growth shared throughout American income levels provided you’re in the top 10% of earners?