Why Income Inequality Is A Myth ? And Occupy Wall Street Is Wrong
 

Sorry, the story just doesn?t hold together.

According to left-wing think tanks, columnist and bloggers ? and, of course, the Occupy Wall Street radicals ? the top 1 percent have been exploiting the 99 percent for decades.

The rich have been getting richer at the expense of the middle class and poor.

Really? Just think for a second: if inequality had really exploded during the past 30 to 40 years, why did American politics simultaneously move rightward toward a greater embrace of free-market capitalism?

Shouldn?t just the opposite have happened as beleaguered workers united and demanded a vastly expanded social safety net and sharply higher taxes on the rich? What happened to presidents Mondale, Dukakis, Gore and Kerry? Even Barack Obama ran for president as a market friendly, third-way technocrat.

Nope, the story doesn?t hold together because the financial facts don?t support it. And here?s why:

1. In a 2009 paper, Northwestern University economist Robert Gordon found the supposed sharp rise in American inequality to be ?exaggerated both in magnitude and timing.? Here is the conundrum: family income is supposed to rise right along with productivity.

But median real household income ? as reported by the Census Bureau ? grew just 0.49 percent per year between 1979 and 2007 even as worker productivity grew four times faster at 1.95 percent per year. The wide gap between the two measures, if accurate, would suggest wealthy households rather than middle-class families grabbed most of the income gains from faster productivity.

But Gordon explained that this ?compares apples with oranges, and then oranges with bananas.? When various statistical quirks are harmonized between the two economic measures, Gordon found middle-class income growth to be much faster and the ?conceptually consistent gap between income and productivity growth is only 0.16 percent per year.? That?s barely one‐tenth of the original gap of 1.46 percent. In other words, income gains were shared fairly equally.

2. A pair of studies from 2007 and 2008 conducted by the Federal Reserve Bank of Minneapolis supports Gordon. Researchers examined why the Census Bureau reported median household income stagnated from 1976 to 2006, growing by only 18 percent. In contrast, data from the Bureau of Economic Analysis showed income per person was up 80 percent.

Like Gordon, they found apples-to-oranges issues such as different ways of measuring prices and household size. But in the end, they concluded that ?after adjusting the Census data for these three issues, inflation-adjusted median household income for most household types is seen to have increased by 44 percent to 62 percent from 1976 to 2006.? In addition, research shows that median hourly wages (including fringe benefits) rose by 28 percent from 1975-2005.

3. A 2008 paper by Christian Broda and John Romalis from the University of Chicago documents how traditional measures of inequality ignore how inflation affects the rich and poor differently: ?Inflation of the richest 10 percent of American households has been 6 percentage points higher than that of the poorest 10 percent over the period 1994 ? 2005.

This means that real inequality in America, if you measure it correctly, has been roughly unchanged.? And why is that? China and Wal-Mart. Lower-income families spend a larger share of income than wealthier families on goods whose prices are more directly affected by trade. Higher income folks, by contrast, spend more on services which are less subject to foreign competition.

4. A 2010 study by the University of Chicago?s Bruce Meyer and Notre Dame?s James Sullivan notes that official income inequality statistics indicate a sharp rise in inequality over the past four decades: ?The ratio of the 90th to the 10th percentile of income, for example, grew by 23 percent between 1970 and 2008.?

But Meyer and Sullivan point out that income statistics miss a lot, such as the value of government programs and the impact of taxes. The latter, especially, is a biggie. The researchers find that ?accounting for taxes considerably reduces the rise in income inequality? over the past 45 years. In addition, ?consumption inequality is less pronounced than income inequality.?

5. Set all the numbers aside for a moment. If you?ve lived through the past four decades, does it really seem like America is no better off today. It doesn?t to Jason Furman, the deputy director of Obama?s National Economic Council. Here is Furman back in 2006: ?Remember when even upper-middle class families worried about staying on a long distance call for too long? When flying was an expensive luxury? When only a minority of the population had central air conditioning, dishwashers, and color televisions? When no one had DVD players, iPods, or digital cameras? And when most Americans owned a car that broke down frequently, guzzled fuel, spewed foul smelling pollution, and didn?t have any of the now virtually standard items like air conditioning or tape/CD players.?

No doubt the past few years have been terrible. But the past few decades have been pretty good ? for everybody.

source

because as incomes remained stagnant for your average working person over the last 30-40 years the widening income gap was papered over with loose credit. when the credit bubble popped a couple years ago the reality of income inequality and wage stagnation become visible to all.

arguing about this, at this point, is academic anyway. people feel quite rightly they have been screwed and real change is afoot.

there is also another root of dissatisfaction that will not show up in any economic analysis, and that is a life and culture dedicated to the endless pursuit of increasingly expensive consumer junk is a shallow and pointless life to lead. a new dishwasher isn't satisfying. neither is a cheaper cell phone plan. though people have trouble articulating it, i think that dissatisfaction is there.

As part of the top 1% I can only hope this blows over and does not cause too much motion for change.

Because the American media is not liberal it is ring wing pro-capatalist.



People do as they are told.

Oh? What change is that? What these people are bitching about is entitlement and "why not me" issues. It's hilarious how the so called enlightened thinkers support this idiotic movement to "take back" wall street. What does that even mean? The majority of people are stupid, as evidenced by most political posts on this forum. You think any sane, rational human being would want the common man leading the country, rather than the country's elite? The elite might screw you but the common man will screw you worse and everyone else.

Looks like someone has either been living under a rock, or in pure denial to make such an idiotic statement.

i love the word 'entitlement'

i will enjoy hearing it as we dump 1% of the population into a battlefield

I don't want the common man or the elite leading this country, both are useless titles. What I want is people from both sides of the isle who sincerely want to serve their country and not milk it for every penny they can before going off on a lecture circuit.

I know it is healthy to have at least 2 ideological sides in any debate and we should not all agree on everything all the time. But being a politician used to take skill and thought. Compromise after debate created some of the best conservative and progressives laws of our land. Now all it takes to be a leader in this government is a big mouth, deep pockets and the ability to sling BS until the easily distracted and uninterested eyes glaze over and you get their vote. :2 cents:

The "rich" are part of the 99%, we are all part of the 99% - unless I'm unaware of a "too-big-to-fail" porn company/person.

Everyone here through various taxes paid for the mistakes they made, we paid to keep them in business and we paid for bonus payouts they got too.

As well, the bulk of the wealth isn't with the working rich, that includes Bill Gates. It's above him, it's above all of us. The real 1% stole 1/3 of our Countries wealth/retirements, committed fraud, screwed up and started to crash and burn, THEY called a meeting of the Fed, and a bailout happened.... until any of us can do that, we're part of the 99%.

idiot

....

:thumbsup great word

Oh look.. More propaganda to convince the peasants that they should shut up and just do and believe what all their leaders, corporate or otherwise, tell them to.

2008 and the results of it over the last 3 years have opened a lot of those peasants eyes to reality.

I just found out, contrary to all reality, that the world is actually FLAT!

No shit - I just saw it on Fox!

This was not about you

oh god :1orglaugh

Next up... Gold.... again!

Hahaha, who are these elites "above bill gates"?
Name them or at least point them out as they hide under your bed next to the boogie man.:1orglaugh

Jimmy Carter did a pretty good job of articulating it in 1979, and he was voted out of office for it because people don't want to hear the truth.

They only exist in the swamps of their fever dreams. The Marxists need a class enemy to villanize and they have settled on the mythical "1%"....... whatever the fuck that means. Hitler had the Jews...... Stalin had the Kulaks....... and now the Alinskyites have the "1%". Same old shit. :disgust

why does jimmy carter do that thing with his fist? i may try that out in every day conversation.

Did you compose that brilliant and meaningless diatribe of nonsense yourself, or did you cheat by incorporating your Mad Libs - Idiot edition?

Come on, be honest....

(just kidding)

Did Bill Gates get a bailout, and didn't he get nailed by the gov, yeah clearly someone is above him. At that, it's not like Bill Gates himself has 50 billion dollars, MS is worth that much because of stock values, that someone else more powerful than him controls.

Oh and to point them out, here's some of the 'some' corps that got a bailout and took a bonus with our tax dollars, after they first took billions in scam and fraud markets, and they got away with it: Freddie Mae and Mac, Goldman Sachs, Deutsche Bank, Merrill Lynch, Societe Generale, Calyon, Barclays, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group.

Shit, that's just a few... and the best part is, they aren't all American. And the crazy part? You're okay with giving them your tax dollars and then bashing others for being pissed about what happened and is happening all over the World.

Don't believe the propaganda that people don't know what they're protesting about, or they're all simply hooligans. They know exactly what they're protesting about. Just because the average person isn't able to articulate concepts in modern money mechanics, or other economic concepts, it doesn't mean they don't know they've been fucked by their government. How ironic is it that the very same people that bailed the banks out with their tax dollars are being foreclosed upon? Of course that's just one specific example, but the problem is much deeper.

And why shouldn't they be protesting against the Federal Reserve system? Prior to the Federal Reserve being established there was no need for federal income tax. Federal Income tax was put into place to pay off the interest on the Federal Reserve notes the government has to borrow. Don't you think the government should be controlling their own money supply?

Well put...

odd, I don't see a single person named here.
I guess it is just the boogie man.

Hahaha, because I listed corporations... which are legally people, which are also ran by ceo's and boards, so if you really want names, go look them up yourself ya lazy bastard.


Anyway, to entertain myself and make you look like more of an idiot, I will play the name game, errr boogie man game.

John Houldsworth CEO of General Reinsurance Corp - which pleaded guided to conspiracy on security fraud, and got a killer got a $5k fine *yep, he helped set it up and got a fine*. Christian Milton (AIG VP) 4 years prison, Ronald Ferguson (GR CEO) 2 years prison, Elizabeth Monrad (CFO of GF) 18 months, and Christopher Garand (VP of CR) 1 year prison.

That's just 2 corp... and ones that "happened" to screw up so bad they couldn't avoid being caught.


So stick a sock it, like it's not the top brass of those companies that make these decisions. But hey, I'll let ya get back to playing stupid, pretending like they're all good people just trying to make a living.

What I still find funny, is you are openly willing to give these people (criminals) your tax dollars while you shit on anyone below you, most of which are not trying to fuck you, ever.

12clicks can kill a good thread as fast as paul markham nowadays.

In other news: "Why it's a myth that water is wet."

Yeah, but those guys at the top have pretty much milked a system which allows them to get away with it, and obliterated our economy in doing so.

just to recap, this useful idiot thinks John Houldsworth, Christian Milton, Ronald Ferguson, Elizabeth Monrad, and Christopher Garand are all of the 1% who's above bill gates.
:1orglaugh

and he wonders why he can't find work.

who are you, again?

you seem to want to be noticed so tell us a little about yourself.

Only you could get the 1% explained to them, and still confuse what the meaning is.

I said "the bulk of the wealth isn't with the working rich, that includes Bill Gates. It's above him, it's above all of us. The real 1% stole....."

See what the real 1% is? It says "stole...." and other related, scamming, thieving, fraud, b.s.. it has nothing to do with personal income, wealth, what tax bracket they are in, and whatever other stupid ass twist you want to come up with. Which has been explained to you, several times now - but some how you can't grasp this very basic concept.


So yeah, without question, they are the 1% and Bill Gates isn't... just like you aren't the 1%, I'm not, and you don't know anyone that is, like most of us, because we're all part of the 99%.

Hippie

well again. you can certainly define the 1% to fit whatever fantasy land you're living in but here in the real world, we'll stick to reality.:thumbsup

HAHAHAHAHAHAHA LOL

You keep thinking that it's about the 1% tax class and I'll keep laughing when so many of them are protesting in the streets.

You keep thinking that it's about 1% wealthy, when nobody is chanting off will Bill Gates head and burn Microsoft down.


It could be my fantasy land or it could be your delusion....

Hey Ron, I seem to remember you used to make it your mission in life to weed out and expose cheaters, fraudsters, and scumbags. I'm surprised you aren't more to the left on this issue.

:2 cents:

I wish I had free time to hang out and sing and dance in the streets these days.

Electronics being cheap has nothing to do with rising incomes.

Technology has made us "richer" in the sense a poor person today has access to healthcare and toys even an emperor from 1000 years ago could not buy - but that is mixing apples and oranges too.

:thumbsup

It's the delusions of the unable, uneducated that imagine success comes from cheaters, fraudsters, and scumbags.
I'm never on the side of the deluded.
A bunch of losers demanding "equity" without ever working a hard day in their lives isn't something someone like me would ever be sympathetic to.

The left says current levels of income inequality echo the late 1920s and the Gilded Age. They?ve zeroed in on the richest 1%, citing Census Bureau data showing these top earners ?grabbing? more income than the bottom 90%.

But the census stats are misleading.

For one, they are a snapshot of income distribution at a single point in time. Yet income is not static. It changes over time. Low-paying jobs from early adulthood give way to better-paying jobs later in life.

And income groups in America are not fixed. There?s no caste system here, really no such thing even as a middle ?class.? The poor aren?t stuck in poverty. And the rich don?t enjoy lifetime membership in an exclusive club.

A 2007 Treasury Department study bears this out. Nearly 58% of U.S. households in the lowest-income quintile in 1996 moved to a higher level by 2005. The reverse also held true. Of those households that were in the top 1% in income in 1996, more than 57% dropped to a lower-income group by 2005.

Every day in America, the poor join the ranks of the middle, the middle join the ranks of the rich, and the rich fall out of comfort.

So even if income inequality is increasing, it does not mean income mobility is decreasing. There is still a great deal of movement in and out of the richest and poorest groups in America.



.:2 cents:

Accused of Deception, Citi Agrees to Pay $285 Million
 

Ummm, okay?

Not sure why you feel your argument is emboldened by that video, but again... okay?

Just as relevant as your post was.....




.

If something wasn't wrong, tons of people wouldn't be rising up and taking to the streets.