ONTD Political

angry about inequality? don't blame the rich!

1:14 pm - 01/29/2012
[Note: It was hard to find what to bold, since all of it was stupid. I went with "facts I found interesting that probably need to be checked" and "stuff that made me facepalm at the author."]

Angry About Inequality? Don't Blame The Rich!
By James Q. Wilson

There is no doubt that incomes are unequal in the United States -- far more so than in most European nations. This fact is part of the impulse behind the Occupy Wall Street movement, whose members claim to represent the 99 percent of us against the wealthiest 1 percent. It has also sparked a major debate in the Republican presidential race, where former Massachusetts governor Mitt Romney has come under fire for his tax rates and his career as the head of a private-equity firm.

And economic disparity was the recurring theme of President Obama's State of the Union address on Tuesday. "We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by," the president warned, "or we can restore an economy where everyone gets a fair shot and everyone does their fair share."

But the mere existence of income inequality tells us little about what, if anything, should be done about it. First, we must answer some key questions. Who constitutes the prosperous and the poor? Why has inequality increased? Does an unequal income distribution deny poor people the chance to buy what they want? And perhaps most important: How do Americans feel about inequality?

To answer these questions, it is not enough to take a snapshot of our incomes; we must instead have a motion picture of them and of how people move in and out of various income groups over time.

The "rich" in America are not a monolithic, unchanging class. A study by Thomas A. Garrett, economist at the Federal Reserve Bank of St. Louis, found that less than half of people in the top 1 percent in 1996 were still there in 2005. Such mobility is hardly surprising: A business school student, for instance, may have little money and high debts, but nine years later he or she could be earning a big Wall Street salary and bonus.

Mobility is not limited to the top-earning households. A study by economists at the Federal Reserve Bank of Minneapolis found that nearly half of the families in the lowest fifth of income earners in 2001 had moved up within six years. Over the same period, more than a third of those in the highest fifth of income-earners had moved down. Certainly, there are people such as Warren Buffett and Bill Gates who are ensconced in the top tier, but far more common are people who are rich for short periods.

And who are the rich? Affluent people, compared with poor ones, tend to have greater education and spouses who work full time. The past three decades have seen significant increases in real earnings for people with advanced degrees. The Bureau of Labor Statistics found that between 1979 and 2010, hourly wages for men and women with at least a college degree rose by 33 percent and 20 percent, respectively, while they fell for all people with less than a high school diploma -- by 9 percent for women and 31 percent for men.

Also, households with two earners have seen their incomes rise. This trend is driven in part by women's increasing workforce participation, which doubled from 1950 to 2005 and which began to place women in well-paid jobs by the early 1980s.

We could reduce income inequality by trying to curtail the financial returns of education and the number of women in the workforce -- but who would want to do that?

The real income problem in this country is not a question of who is rich, but rather of who is poor. Among the bottom fifth of income earners, many people, especially men, stay there their whole lives. Low education and unwed motherhood only exacerbate poverty, which is particularly acute among racial minorities. Brookings Institution economist Scott Winship has argued that two-thirds of black children in America experience a level of poverty that only 6 percent of white children will ever see, calling it a"national tragedy."

Making the poor more economically mobile has nothing to do with taxing the rich and everything to do with finding and implementing ways to encourage parental marriage, teach the poor marketable skills and induce them to join the legitimate workforce. It is easy to suppose that raising taxes on the rich would provide more money to help the poor. But the problem facing the poor is not too little money, but too few skills and opportunities to advance themselves.

Income inequality has increased in this country and in practically every European nation in recent decades. The best measure of that change is the Gini index, named after the Italian statistician Corrado Gini, who designed it in 1912. The index values vary between zero, when everyone has exactly the same income, and 1, when one person has all of the income and everybody else has none. In mid-1970s America, the index was 0.316, but it had reached 0.378 by the late 2000s. One of the few nations to see its Gini value fall was Greece, which went from 0.413 in the 1970s to 0.307 in the late 2000s. So Greece seems to be reducing income inequality -- but with little to buy, riots in the streets and economic opportunity largely limited to those partaking in corruption, the nation is hardly a model for anyone’s economy.

Poverty in America is certainly a serious problem, but the plight of the poor has been moderated by advances in the economy. Between 1970 and 2010, the net worth of American households more than doubled, as did the number of television sets and air-conditioning units per home. In his book "The Poverty of the Poverty Rate," Nicholas Eberstadt shows that over the past 30 or so years, the percentage of low-income children in the United States who are underweight has gone down, the share of low-income households lacking complete plumbing facilities has declined, and the area of their homes adequately heated has gone up. The fraction of poor households with a telephone, a television set and a clothes dryer has risen sharply.

In other words, the country has become more prosperous, as measured not by income but by consumption: In constant dollars, consumption by people in the lowest quintile rose by more than 40 percent over the past four decades.

Income as measured by the federal government is not a reliable indicator of well-being, but consumption is. Though poverty is a problem, it has become less of one.

Historically, Americans have had an unusual attitude toward income inequality. In 1985, political scientists Sidney Verba and Gary Orren published a book that compared how liberals in Sweden and in the United States viewed such inequality. By four or five to one, the Swedish liberals were more likely than the American ones to believe that it was important to give workers equal pay. The Swedes were three times more likely than the Americans to favor putting a top limit on incomes. (The Swedes get a lot of what they want: Their Gini index is 0.259, much lower than America's.)

Sweden has maintained a low Gini index in part by having more progressive tax rates. If Americans wanted to follow the Swedish example, they could. But what is the morally fair way to determine tax rates -- other than taxing everyone at the same rate? The case for progressive tax rates is far from settled; just read Kip Hagopian’s recent essay in Policy Review, which makes a powerful argument against progressive taxation because it fails to take into account aptitude and work effort.

American views about inequality have not changed much in the past quarter-century. In their 2009 book "Class War? What Americans Really Think About Economic Inequality," political scientists Benjamin Page and Lawrence Jacobs report that big majorities, including poor people, agree that "it is 'still possible' to start out poor in this country, work hard, and become rich," and reject the view that it is the government's job to narrow the income gap. More recently, a December Gallup poll showed that 52 percent of Americans say inequality is "an acceptable part" of the nation's economic system, compared with 45 percent who deemed it a "problem that needs to be fixed." Similarly, 82 percent said economic growth is "extremely important" or "very important," compared with 46 percent saying that reducing the gap between rich and poor is extremely or very important.

Suppose we tax the rich more heavily -- who would get the money, and for what goals?

Reducing poverty, rather than inequality, is also a difficult task, but at least the end is clearer. One new strategy for helping the poor improve their condition is known as the "social impact bond," which is being tested in Britain and has been endorsed by the Obama administration. Under this approach, private investors, including foundations, put up money to pay for a program or initiative to help low-income people get jobs, stay out of prison or remain in school, for example. A government agency evaluates the results. If the program is succeeding, the agency reimburses the investors; if not, they get no government money.

As Harvard economist Jeffrey Liebman has pointed out, for this system to work there must be careful measures of success and a reasonable chance for investors to make a profit. Massachusetts is ready to try such an effort. It may not be easy for the social impact bond model to work consistently, but it offers one big benefit: Instead of carping about who is rich, we would be trying to help people who are poor.

James Q. Wilson, a former professor at Harvard University and UCLA, is the Ronald Reagan professor of public policy at Pepperdine University. He is the author of "American Politics, Then & Now,"
"The Marriage Problem: How Our Culture Has Weakened Families" and The Moral Sense.

source

Notes: Rip this shit apart, _p. If you throw facts at the stuff where a citation was obviously needed, it'll make you a superstar.

What was more interesting to me: in the print edition of WaPo's Outlook (opinion) section, where this appeared, this was the "cover" story -- "DON'T BLAME THE RICH" took up the entire area above the fold. Now, if you're reading the Post on a weekend, you're probably a subscriber, you probably read the Post a lot, and you know the opinion section isn't the news section, so there isn't an issue of confusing casual readers who just glance at the headlines while grabbing coffee or something on the way to work. But I can't help but wonder how many right-wing pieces like that get this splashy, page-eating layout vs. left-wing ones. It's possible I just notice the right-wing ones more, since I disagree with them.
jettakd 29th-Jan-2012 06:29 pm (UTC)
hourly wages for men and women with at least a college degree rose by 33 percent and 20 percent, respectively, while they fell for all people with less than a high school diploma -- by 9 percent for women and 31 percent for men.

Idk I'm blaming everyone I can for this bullshit.

the percentage of low-income children in the United States who are underweight has gone down, the share of low-income households lacking complete plumbing facilities has declined, and the area of their homes adequately heated has gone up.

Yeah cause it's not like poor quality food causes obesity now, and that no one actually builds houses even in low-income areas without plumbing anymore or if that's even a guarantee for good water, and how dare poor people complain when they don't freeze to death as much in winter!

Instead of carping about who is rich, we would be trying to help people who are poor.

Or you can do both. It's not as if one precludes the other.
lux_roark 29th-Jan-2012 07:11 pm (UTC)
Someone told me I live the good life because I have a wall a/c and a microwave. Not like they come with the apartment or anything. And yeah, the good life with the gangs and crap at the park and the SWAT team that was just here in August. That's definitely the good life.
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the_gabih 29th-Jan-2012 06:30 pm (UTC)
But what is the morally fair way to determine tax rates -- other than taxing everyone at the same rate?

Is this guy for real.

Also, I'm pretty fucking certain that someone working three jobs on minimum wage is putting in a fuckton more effort than your average CEO. If we're going to sort out pay and taxes according to effort, I'm pretty sure we'd see the current situation reversed.
the_gabih 29th-Jan-2012 06:31 pm (UTC)
One new strategy for helping the poor improve their condition is known as the "social impact bond," which is being tested in Britain

Would this be Cameron's Big Society thing in action? Because if so, then I love how the article writer's completely disregarded the massive protests against it.
quizzicalsphinx 29th-Jan-2012 06:31 pm (UTC)
We could reduce income inequality by trying to curtail the financial returns of education and the number of women in the workforce -- but who would want to do that?


Or we could do it by making education more affordable, but no one seems to want that either.

beoweasel 29th-Jan-2012 06:42 pm (UTC)
Benjamin Page and Lawrence Jacobs report that big majorities, including poor people, agree that "it is 'still possible' to start out poor in this country, work hard, and become rich," and reject the view that it is the government's job to narrow the income gap.

Right, because that concept hasn't been drilled into peoples' skulls for the better part of a century and a half in this country. But the thing is, there are millions of people who work hard all their lives, and have nothing to show for it, and many families who claw their way to a decent standard of living, could have it all torn apart by a single medical emergency.
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atomic_joe2 29th-Jan-2012 06:46 pm (UTC)
I'd like to see how long the rich would last without those 'beneath them' running the power stations, policing the streets, making the bread...

We need each other and those who are not born into wealth (ie most of us) should be helped out or at least feel like there is a safety net should we get into difficulty. Only fair isn't it?
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tigerdreams 30th-Jan-2012 01:26 am (UTC)
It's just not possible for everyone to be on that tier of income, unless someone's going to start paying the school janitor 40 grand a year.

It would be awesome to see shitty or thankless jobs pay a decent living wage. Sadly, too many people don't seem to think this is a worthwhile idea.
ceruleanst 29th-Jan-2012 07:39 pm (UTC)
A business school student, for instance, may have little money and high debts, but nine years later he or she could be earning a big Wall Street salary and bonus LIKE HIS DAD.

If only the poor had the sense to get themselves an MBA at Harvard and pledge ФBK like the clever rich people did! What, I say, what could be stopping them?
romp 29th-Jan-2012 08:31 pm (UTC)
I wish all these faux-concerned editorials could be replaced by this summary.
kishmet 29th-Jan-2012 08:11 pm (UTC)
So a rich dude says DON'T BLAME THE RICH! I mean I'm sure he'd deny he's rich just like half the GOP candidates do, but he's rich. Which makes him sound like a self-serving douchewaffle in this article- oh wait! I think he IS a self-serving douchewaffle!
romp 29th-Jan-2012 08:30 pm (UTC)
It's hard to point out what isn't wrong with this article. His assumptions and values and world view are all screwed up.

He's got an agenda of pushing marriage which is warping his vision IMO. He says people with money have 2-income marriages and maybe so but is that good if they have kids? People who make near minimum wage LOSE money by paying for childcare so they can work. As a result, many use unlicensed childcare which is often okay but can be dangerous. And warehousing kids is not an improvement! If our culture actually liked children and cared about all people, we'd support those with young children so a parent could stay with kids.

And perhaps most important: How do Americans feel about inequality?
I'm a little bitter today about trying to save USers from themselves regarding who they vote into power. I know it's more complicated than that but DAMN.
roseofjuly 29th-Jan-2012 11:54 pm (UTC)
I was about to say this - until we were old enough to take care of ourselves, my mother didn't work because paying for childcare would've taken her entire income. And I watch my cousins struggling with that now - they're a middle-income household with two children and they can't afford the full-time childcare they'd need even just for the youngest one, who's two. Right now they have a grueling schedule in which one of them works 9-5 and the other works 6:30-2:30 am so that one of them is always home with the children.

(Bonus: In this heterosexual couple, guess which one gets home at 6 and puts the kids to bed by 8 and gets to sleep from 10 to 7, and guess which one gets home at 3 am and wakes up with the kids at 7 and stays awake with them until the other one gets home?)
tabaqui 29th-Jan-2012 09:00 pm (UTC)
Arrrgh. I am just....

I am just really, really tired of this subtle and not-so-subtle bullshite constantly being preached that if the 'poor' weren't so lazy, ignorant, vulgar, shiftless, whiney, promiscuous, not-white, WHATEVER, and just got up and worked their fat buns off, we'd all be millionaires!

It so fucking doesn't work that way, and this guy has no damn clue.
roseofjuly 29th-Jan-2012 11:51 pm (UTC)
I love the not so subtle attack on people of color that has nothing to do with his point.

Low education and unwed motherhood only exacerbate poverty, which is particularly acute among racial minorities. Brookings Institution economist Scott Winship has argued that two-thirds of black children in America experience a level of poverty that only 6 percent of white children will ever see, calling it a"national tragedy."

Even if his stupid argument made sense, what the fuck does that have to do with the fact that black people are disproportionately poor (other than the fact that you want to make a dig at people of color)?
othellia 29th-Jan-2012 09:01 pm (UTC)
Also, households with two earners have seen their incomes rise. This trend is driven in part by women's increasing workforce participation, which doubled from 1950 to 2005 and which began to place women in well-paid jobs by the early 1980s.

We could reduce income inequality by trying to curtail the financial returns of education and the number of women in the workforce -- but who would want to do that?


OH FUCK NO. DON'T YOU DARE TRY TO SHIFT THE BLAME ONTO WOMEN.
emofordino 29th-Jan-2012 09:42 pm (UTC)
SERIOUSLY. we don't need any more people jumping on frothy's "radical feminism has convinced the women that having a career is more important than family and they took all the jobs from men wah wah wahhh" soapbox. RAGE.
youkiddinright 29th-Jan-2012 11:11 pm (UTC)
But the problem facing the poor is not too little money, but too few skills and opportunities to advance themselves.

That's all very cute, but that doesn't change the fact we need the job people do for incredibly low salary. Even if every single poor person in America got a college degree, we would still need people to work in grocery stores, in clothes stores, people to clean buildings, etc. And those jobs don't give people a salary high enough to live on.

Unless he wants to start growing his own food and to make his own $2,000 suits, he should think of a better way to end poverty.
roseofjuly 29th-Jan-2012 11:46 pm (UTC)
whose members claim to represent the 99 percent of us against the wealthiest 1 percent

I actually don't think the OWS protesters claim to represent the 99% of us. They are just stating that they are *part* of the 99% of people in the country without the wealth of the 1%. There's a difference.

found that less than half of people in the top 1 percent in 1996 were still there in 2005. Such mobility is hardly surprising: A business school student, for instance, may have little money and high debts, but nine years later he or she could be earning a big Wall Street salary and bonus.

And what is the point in stating that? OWS protesters weren't targeting specific people or even an unchanging rich. They are angry at the policies that the rich (new or old) use, that exploit the poor and their labor and rob from the rest of us to make themselves rich. That business school student, even thought they might have been middle-class in business school, participates in that culture when he goes to Wall Street. As a matter of fact, he or she may even be preparing to participate in that exploitative culture - at my university's business school, most of the students aim to be on Wall Street.

We could reduce income inequality by trying to curtail the financial returns of education and the number of women in the workforce -- but who would want to do that?

No, you idiot, why the fuck would you even suggest that? Disingenuousness at its best.

We could reduce income inequality by making education (including college) more affordable and accessible to all, and by bringing women up to wage parity with men since we still make around 80 cents on the dollar.

Making the poor more economically mobile has nothing to do with taxing the rich and everything to do with finding and implementing ways to encourage parental marriage, teach the poor marketable skills and induce them to join the legitimate workforce. It is easy to suppose that raising taxes on the rich would provide more money to help the poor. But the problem facing the poor is not too little money, but too few skills and opportunities to advance themselves.

Even if "parental marriage" and simply teaching the poor skills were the way through (and correlation does not equal causation - it's not unwed motherhood that exacerbates poverty, it's the fact that single mothers carry a stigma and there's no affordable childcare or assistance programs for them), those things cost money. Taxing the rich is the best way to get that money, since they are the ones most often exploiting the single mothers and other low-wage earners in their hypermarkets (I'm looking at you, Wal-Mart) and other service positions.

And what kind of idiot says "the problem facing the poor is not too little money"? YES IT IS. If they had more money they wouldn't be poor, duh.

That Greece and United States comparison is probably the worst comparison I've ever seen. Yes, the UK's and Australia's income inequality has risen since the 1970s, but it is still much lower in both of those countries than the U.S.'s. Norway, Canada, Japan, France, and Italy lowered their income inequality, and Sweden's and Germany's has stayed relatively the same since the 1970s (although Germny's saw a peak in 1970). Why not compare us to those countries instead of Greece? Oh right, because it doesn't serve your agenda.

Our income equality is on par with China's right now, and is just below Mexico's.

http://en.wikipedia.org/wiki/Gini_coefficient#US_income_Gini_indices_over_time

The fraction of poor households with a telephone, a television set and a clothes dryer has risen sharply.

That's because the prices of these things have fallen, not because the poor are doing better.

roseofjuly 29th-Jan-2012 11:46 pm (UTC)

In other words, the country has become more prosperous, as measured not by income but by consumption: In constant dollars, consumption by people in the lowest quintile rose by more than 40 percent over the past four decades.

How much of that rise in consumption is due to healthcare costs?

Income as measured by the federal government is not a reliable indicator of well-being, but consumption is. Though poverty is a problem, it has become less of one.

How? Buying more stuff isn't a reliable indicator of well-being. One look at our nation's credit card debt will tell you that. Just because the poor buy stuff doesn't mean they can afford it; we have to buy stuff to live. Nowadays a telephone is essential for conducting business; a clothes dryer cuts down time to do laundry and gives more time for work. And seriously, are we measuring the health of our poor by whether they own a telephone? You can buy a telephone at Wal-Mart for $10 these days.


But what is the morally fair way to determine tax rates -- other than taxing everyone at the same rate?

That's not fair at all and anyone with a basic grasp of math should be able to see that. A person who makes $15,000 a year with a 15% tax rate will be left making $12,270 a year, which leaves them with very little to work with financially. But a person making $15 million a year on a 15% tax rate is left making 12.75 million a year, which is more than enough to live on. How is it fair to leave millionnaires with far more than they need to survive while others are scraping the bottom of the barrel?

Aptitude and work effort are poor arguments against progressive taxation, not good ones. There's exactly zero evidence that poor people have less aptitude than rich people, and in fact, they probably work harder - since a large percentage of the poor have two jobs and are single parents. Conversely, a very large percentage of the wealthy are wealthy at least in part because their parents were wealthy. Wealth begets wealth.

political scientists Benjamin Page and Lawrence Jacobs report that big majorities, including poor people, agree that "it is 'still possible' to start out poor in this country, work hard, and become rich,"

And a majority of Southerners in the early 20th century believed that African Americans and other ethnic minorities were inferior to white and should be separated from them in daily life. Just because a bunch of people believe it doesn't mean it's true. It's also true that most Americans don't understand basic economics, nor do middle-class American understand the obstacles facing poor people. And that's a false dichotomy - economic growth and reducing inequality are not mutually exclusive, as is shown by strong economies with more equality.

private investors, including foundations, put up money to pay for a program or initiative to help low-income people get jobs, stay out of prison or remain in school, for example. A government agency evaluates the results. If the program is succeeding, the agency reimburses the investors; if not, they get no government money.

These means that private investors have to decide to actually help poor people when they have little incentive to do so, and as was already stated - they have to have a chance to make a profit. First of all, to think that reducing income inequality has to be accompanied by turning a profit is so disgusting and ludicrous that it makes me a little sick inside. I can't think of a way that this doesn't turn out to be exploitative. Second of all, why the fuck do we need a middle man? What we end up having is successful programs getting funded by the government anyway, and the least exploitative way for them to make a profit is for the government to pay them more than they invested. That would cost taxpayers more money and...again, put money back in the pockets of the rich. Why the fuck would we do that when the government could cut out the middleman and run the program itself?

This article makes no sense!
othellia 30th-Jan-2012 12:03 am (UTC)
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mrasaki 30th-Jan-2012 08:52 pm (UTC)
So....a tl;dr version of BOOTSTRAPS. Okay.

the net worth of American households more than doubled, as did the number of television sets and air-conditioning units per home. In his book "The Poverty of the Poverty Rate," Nicholas Eberstadt shows that over the past 30 or so years, the percentage of low-income children in the United States who are underweight has gone down, the share of low-income households lacking complete plumbing facilities has declined, and the area of their homes adequately heated has gone up. The fraction of poor households with a telephone, a television set and a clothes dryer has risen sharply.

...should the poor not have television or air conditioning or telephones? what is this?
wemblee 30th-Jan-2012 09:12 pm (UTC)
Remember: you're not really poor unless you're living in a box, wearing rags, and eating gruel made of rats you caught, killed, and ground up yourself.
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